Shri Kamen Jaswantlal Shah, Baroda V. The Income tax Officer,Ward-5(3), Baroda

ITA 2805/AHD/2011

• Counselvise Citation: 280520514 RSA 2011
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAWANSHI
• Keywords: Reasonable cause; Commercial expediency
• Section: 273B

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI G.C. GUPTA, V.P.AND A. L. GEHLOT,AM.) ITA NO.2805/AHD/2011 ASST. YEAR:2005-06 SHRI KAMEN JASWANTLAL SHAH, PROP.SHAH TRAVELS, D-3 KUNJ RESIDENCE CUM PLAZA, PALACE ROAD, BARODA. VS. INCOME TAX OFFICER, WARD 5(3), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. (APPELLANT) .. (RESPONDENT) ITA NO.2806/AHD/2011 ASST. YEAR:2005-06 SHRI KAMEN JASWANTLAL SHAH, PROP.SHAH TRAVELS, D-3 KUNJ RESIDENCE CUM PLAZA, PALACE ROAD, BARODA. VS. INCOME TAX OFFICER, WARD 5(3), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- MR. SUNIL TALATI RESPONDENT BY:- MR. G.S. SOURYAWANSHI, SR D.R. DATE OF HEARING : 12/1/2012 DATE OF PRONOUNCEMENT : 10-2-2012 ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 2 2 O R D E R PER A. L. GEHLOT, ACCOUNTANT MEMBER. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT (A)-V, BARODA BOTH DATED 22-9-2011 FOR THE ASSESSME NT YEAR 2005-06 PASSED U/S.271D AND 271E OF THE I.T. ACT. 2. THE GROUND RAISED IN APPEAL IS IN RESPECT OF LEV Y OF PENALTY OF RS.2,36,850/- U/S. 271D AND RS.3,10,750 U/S. 271E OF THE ACT. THE FACTS OF BOTH THE APPEALS ARE IDENTICAL THEREFORE, FOR TH E SAKE OF CONVENIENCE BOTH THESE APPEALS ARE DECIDED BY THIS COMMON ORDER . 3. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS ACCEPTED AND REPAID LOAN IN CASH VIOLA TING SECTION 269SS AND 269T OF THE ACT. THE DETAILS OF LOAN ACCEPTED ARE N OTED IN THE PENALTY ORDER U/S. 271D ARE AS UNDER:- SR.NO. NAME AMOUNT OF LOAN/DEPOSITS 1. BIPINBHAI BHATT 19,500 2. BEENABEN SOLANKI 19,500 3. DEEPIKABEN JAISWAL 19,750 4. HEENABEN BRHMBHATT 19,500 5. JAGRUTIBEN BHATT 19,500 6. KAUSHAL SHAH 19,800 7 MAMTABEN PARIKH 19,800 8 MANUBHAI SHAH 19,900 9 PRAVINBHAI MISTRY 19,500 10. RAJUBHAI A. JAISWAL 19,800 11 SANJAY JAISWAL 19,500 12 ZANKHANABEN A.SHAH 19,800 TOTAL 2,35,850 ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 3 3 4. THE AO WHILE EXAMINING THE REPAYMENT OF LOANS AN D DEPOSIT NOTED THAT IN CASE OF MANUBHAI SHAH, PRAVINBHAI MISTRY, R AJUBHAI JAISWAL, SANJY JAISWAL SOME MORE CASH PAYMENT OF RS. 19,900/ - AND RS.19,800/- WERE REPAID IN ADDITION TO THE DETAILS GIVEN ABOVE . THUS, THE AO NOTED THE REPAYMENT OF CASH LOAN DEPOSIT RS.3,10,750/-.T HE AO LEVIED PENALTY IN CONTRAVENTION OF THE PROVISIONS U/S. 269SS AND 2 69T OF THE ACT. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND PERUSED RECORDS. LET US SEE THE RELEVANT STATUTORY STATUS O F PROVISIONS AND THE SCHEME OF THE ACT. CHAPTER XX-B PROVIDES REQUIREMEN TS TO MODE OF ACCEPTANCE PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX. SECTION 269SS PROVIDES THAT NO PERSON SHALL , AFTER THE 30TH DAY OF JUNE, 1984, TAKE OR ACCEPT FROM ANY OTHER PERSON A NY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUN T PAYEE BANK DRAFT IF, (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGR EGATE AMOUNT OF SUCH LOAN AND DEPOSIT ; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN O R DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH P ERSON FROM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HA S FALLEN DUE OR NOT), THE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID ; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT RE FERRED TO IN CLAUSE (B), IS [TWENTY] THOUSAND RUPEES OR MORE : PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPO SIT TAKEN OR ACCEPTED BY, ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 4 4 (A)GOVERNMENT ; (B) ANY BANKING COMPANY, POST OFFIC E SAVINGS BANK OR CO-OPERATIVE BANK ; (C) ANY CORPORATION ESTABLIS HED BY A CENTRAL, STATE OR PROVINCIAL ACT ; (D) ANY GOVERNMENT COMPAN Y38 AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 195 6) ;(E) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REA SONS TO BE RECORDED IN WRITING, NOTIFY39 IN THIS BEHALF IN THE OFFICIAL GAZETTE [PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPOSIT IS T AKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABLE TO TAX UNDER THIS ACT. THE MEANING OF LO AN AND DEPOSIT HAS BEEN IN EXPLAINED IN IN THE EXPLANATION IN THE EXPL ANATION LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF MONEY. 5.1 SIMILARLY IN SECTION 269T PROVIDES THAT NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIVE BANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAS MADE THE LOAN OR DEPOSIT IF (A) THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WI TH THE INTEREST, IF ANY, PAYABLE THEREON, OR (B) THE AGGREGATE AMOUNT OF THE LOANS OR DEPOSITS HELD BY SUCH PERSON WITH THE BRANCH OF THE BANKING COMPANY OR CO -OPERATIVE BANK OR, AS THE CASE MAY BE, THE OTHER COMPANY OR C O-OPERATIVE SOCIETY OR THE FIRM, OR OTHER PERSON EITHER IN HIS OWN NAME OR JOINTLY WITH ANY OTHER PERSON ON THE DATE OF SUCH R EPAYMENT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE ON SUCH LOANS OR DEPOSITS, IS TWENTY THOUSAND RUPEES OR MORE. ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 5 5 THE SECTION SHALL NOT APPLY TO REPAYMENT OF ANY LO AN OR DEPOSIT TAKEN OR ACCEPTED FROM (I) GOVERNMENT;(II) ANY BANKING COMPANY, POST OFFIC E SAVINGS BANK OR CO-OPERATIVE BANK;(III) ANY CORPORATION ESTABLIS HED BY A CENTRAL, STATE OR PROVINCIAL ACT; (IV) ANY GOVERNMENT COMPANY45 AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956); (V) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REA SONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN THE OFFICIAL G AZETTE. FOR THE PURPOSES OF THIS SECTION LOAN OR DEPOSIT MEANS ANY LOAN OR DEPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD AND, IN THE CASE OF A PERSON OTHER THAN A CO MPANY, INCLUDES LOAN OR DEPOSIT OF ANY NATURE. 5.2 FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269TPENALTY IS PROVIDED IN SECTION 271E. IF A PERSON REPAYS ANY [L OAN OR] DEPOSIT REFERRED TO IN SECTION 269T OTHERWISE THAN IN ACCORDANCE WIT H THE PROVISIONS OF THAT SECTION, HE SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF THE [LOAN OR] DEPOSIT SO REPAID.]. SI MILARLY PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 26 9SS PROVIDED IN SECTION271D. [(1)] IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, H E SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT O F THE LOAN OR DEPOSIT SO TAKEN OR ACCEPT-TED 5.3 AFTER CONSIDERING NATURE OF TRANSACTIONS THE ISSUE TO BE EXAMINED IN THE CASE UNDER CONSIDERATION WHETHER PENALTY UND ER SECTION 271D AND 271E IS LEVIABLE WHEN ASSESSEE WAS HAVING REASONABL E CAUSE. WE NOTICED THAT WHILE INTRODUCING SECTION 269SS & 269T, SECTIO N 273B WAS ALSO ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 6 6 INCORPORATED IN THE STATUTE WHICH PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON A PERSON OR AN ASSESSEE, AS THE CASE M AY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IF THE ASSESSEE P ROVES THAT THERE WAS A REASONABLE CAUSE FOR SUCH FAILURE. IN OTHER WORDS, PENALTY IS NOT AUTOMATIC UNDER SECTION 271D/271E ON MERE VIOLATIONS OF PROVI SIONS OF SECTION 269SS/269T.THE WORDS REASONABLE CAUSE HAVE NOT BE EN DEFINED UNDER THE ACT, BUT THEY COULD RECEIVE THE SAME INTERPRETA TION WHICH IS GIVEN TO THE EXPRESSION SUFFICIENT CAUSE. THEREFORE, IN TH E CONTEXT OF THE PENALTY PROVISIONS, THE WORDS REASONABLE CAUSE WOULD MEAN A CAUSE WHICH IS BEYOND THE CONTROL OF THE ASSESSEE. REASONABLE CAU SE OBVIOUSLY MEANS A CAUSE WHICH PREVENTS A REASONABLE MAN OF ORDINARY P RUDENCE ACTING UNDER NORMAL CIRCUMSTANCES, WITHOUT NEGLIGENCE OR INACTIO N OR WANT OF BONA FIDES. BEFORE IMPOSITION OF PENALTY UNDER THESE SEC TIONS, THE ASSESSING OFFICER MUST BE SATISFIED, NOT ARBITRARILY BUT JUDI CIOUSLY, THAT THE ASSESSEE HAS WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH THE PROVISIONS. WHILE CONSIDERING REASONABLE ONE SHOULD KEEP IN MIND COMM ERCIAL EXPEDIENCY AND OBJECT OF THE SECTION FOR WHICH IT WAS INSERTED . IT IS TO SEE WHETHER THE TRANSACTION IS IN ACCORDANCE WITH COMMERCIAL EXPEDI ENCY. THUS SUCH CASES ARE REQUIRED TO DECIDE CONSIDERING FACTS OF T HE EACH CASE. THEREFORE THE CASES ON WHICH RELIED UPON THE PARTIES DO NOT H ELP THEM. IF WE SEE THE FACTS OF THE CASE UNDER CONSIDERATION IN CONSOLIDAT ED WAY WE NOTICED THAT THE ASSESSEE HAS DEMONSTRATED THE FUNDS WERE ARRANG ED IN CASH ON URGENT REQUIREMENT OF THE BUSINESS WHICH IS IN ACCORDANCE WITH COMMERCIAL EXPEDIENCY OF ASSESSEES BUSINESS. WE NOTICED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING OF VEHICLES ON H IRE. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES THAT THE BUSINESS OF THE ASSESSEE WAS SUCH IN NATURE WHERE THE EXPENSES HAVE TO BE INCURRED IN CASH IMMEDIATELY WHEREAS THE COLLECTION OF HIRE CHA RGES RECEIVED AFTER SOMETIME. IT WAS ALSO SUBMITTED THAT IN CASE OF URG ENCY IN BUSINESS, THE ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 7 7 ASSESSEE TOOK LOAN FROM THE RELATIVES AND FRIENDS E ACH AMOUNTING BELOW RS.20,000/-.THE AO DID NOT DOUBTED ABOUT THE GENUIN ENESS OF THE TRANSACTIONS. FROM THE FACTS OF THE CASE, WE FIND T HAT THE EXPENDITURE AND REPAYMENT OF TEMPORARY LOAN IN CASH WAS IN ACCORDAN CE WITH COMMERCIAL EXPEDIENCY OF ASSESSEES BUSINESS OF ASSESSEES BUS INESS AS THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH. THE BONA FIDE TRA NSACTIONS OF THE ASSESSEE CARRIED OUT IN ACCORDANCE WITH COMMERCIAL EXPEDIENCY AND BUSINESS NEED AMOUNTS TO REASONABLE CAUSE AND IN TH E CASE OF REASONABLE CAUSE THE PENALTY U/S.271D AND 271E IS NOT LEVIABLE . WE THEREFORE, CANCEL THE PENALTY LEVIED BY THE AO U/S. 271D AND 271E OF THE ACT, 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 10-2-2012 SD/- SD/- (G.C. GUPTA) (A. L. GEHLOT) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD, PATKI COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, BARODA. 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITA NO. 2805 & 2806/AHD/2011 ASST. YEAR 2005-06 8 8 ITAT, AHMEDABAD 1.DATE OF DICTATION 8 /2/2012. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 9 /2/2012 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 9-2-2012 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 10-2-2012.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 10-2-2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10 -2-2012 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..