Naranbhai Nathabhai Bathwar, RAJKOT-GUJARAT V. The Additional Commissioner of Income Tax, Range-3, RAJKOT-GUJARAT

ITA 283/RJT/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0045 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DM RINDANI
• Keywords: Reasonable cause
• Section: 131; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO.283/RJT/2013 ( / ASSTT YEAR : 2007-08) NARANBHAI NATHABHAI BATHWAR RONI, 11, DARSHAN SOCIETY 150 RING ROAD UNIVERSITY ROAD RAJKOT. VS. ACIT, RANGE-3 RAJKOT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.M. RINDANI, CA / RESPONDENT BY : SHRI USHA SHROTE, DR / DATE OF HEARING 24-11-2016 / DATE OF PRONOUNCEMENT 23-12-2016 O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSTT.YEAR 2007-08 ARISES AGAINST CI T(A)-III, RAJKOTS ORDER DATED 28.2.2013 PASSED IN CASE NO.CIT(A)-III/0041/12-13 AFFIR MING ASSESSING OFFICERS ACTION IMPOSING PENALTY OF RS.12.27 LAKHS, IN PROCEE DINGS UNDER SECTION 271D OF THE INCOME TAX ACT, 1961, THE ACT FOR SHORT. 2. WE NOTICE AT THE OUTSET THAT THE INSTANT APPEAL SUFFERS FROM DEL AY OF 37 DAYS IN FILING. THE ASSESSEE HAS FILED CONDONATION AFFIDAVIT STATING THER EIN THAT THERE WAS SOME COMMUNICATION GAP BETWEEN HIMSELF AND HIS INSTRUCTING AUDITORS IN COLLECTING THE NECESSARY DOCUMENTS FOR THE PURPOSE OF INSTANT APPEAL. THE L EARNED DEPARTMENTAL REPRESENTATIVE IS VERY FAIR IN NOT DISPUTING SOLEMN AVERMENTS THER EIN. WE THUS ACCEPT ITA NO.283/RJT/2013 - 2 ASSESSEES CONTENTION PETITION TO CONDONE THE DELAY IN QUESTION OF 37 DA YS IN FILING OF THE INSTANT APPEAL. 3. WE NOW COME TO RELEVANT FACTS OF THE CASE. THE INSTANT LITIG ATION HAS ADMITTEDLY ARISEN OUT A CASH RECOVERY CASE IN BHOPAL. THE POLIC E AUTHORITIES OF THE SAID CITY NABBED ONE SHRI NAVNIT THAKKER CARRYING CASH SUM OF RS .14.6 LAKHS ON 24.8.2006. HE NAMED THE ASSESSEE TO BE THE TRUE OWNER THEREOF. HIS CA SE WAS THAT THE ASSESSEE HAD GIVEN THE MONEY IN QUESTION FOR THE PURPOSE OF GETTING AN MB BS ADMISSION FOR HIS DAUGHTER IN PEOPLES MEDICAL COLLEGE, BHOPAL. T HIS MADE THE TAX AUTHORITY OF THE SAID CITY TO REQUISITION THE ABOVE CASH UNDER SECTION 132 OF THE ACT. 4. WE NOW COME TO ASSESSEE-APPELLANT. THE ADIT(INVESTIGATION) AT RAJKOT SUMMONED HIM UNDER SECTION 131 OF THE ACT. THE ASSESSEE CONFIRMED THAT THE SAID CASE BELONGED TO HIM. HE PLEADED SOURCE THEREOF TO VARIOUS CASH LOANS RECEIVED FROM RELATIVES ALONG WITH CASH WITHDRAWALS IN PRECEDING AND THE IMPUGN ED ASSESSMENT ORDER. HE NAMED TOTAL FIVE RELATIVES/FRIENDS TO BE THE LENDERS IN ABOVE CASH LOANS. THE ASSESSING OFFICER ACCEPTED GENUINENESS OF THE ABOVE EXPLANA TION. HE HOWEVER INITIATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING VIOLATION OF SECT ION 269SS SINCE THE CASH LOANS IN QUESTION EXCEEDED THE SPECIFIED LIMIT THEREON OF RS.20,000/-. 5. THE ASSESSEE FILED REPLY TO THE ABOVE PENALTY NOTICE. HE INTERALIA STATED THAT HE ALONG WITH HIS WIFE WERE BOTH EMPLOYED IN PUBLIC SECTOR, HE H AD AVAILED THE CASH LOANS HEREINABOVE FOR THE PURPOSE OF PAYMENT OF CAPITATION FEE AS PER THE SAID COLLEGE AUTHORITYS INSISTENCE AND ALSO THAT HIS DAUGHTER COULD NOT SECURE A DMISSION BECAUSE OF THE ABOVE INCIDENT. THE ASSESSING OFFICER REJECTED ALL THES E PLEAS IN HIS PENALTY ORDER DATED 17.5.2012 AFTER TAKING A STRICTER VIEW OF SECTION 269SS. HE WOULD OBSERVE THAT THE ASSESSEE HAD NOT PROVED LACK OF BANKING FACILITY SO A S TO RESORT TO THE CASH LOANS OPINION IN THE ABOVE FACTS AND CIRCUMSTANCES. HE THUS IMPOSE D SECTION 271D PENALTY OF RS.12.27 LAKHS. THE CIT(A) CONFIRMS THE SAME. 6. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STA NDS. THERE IS ADMITTEDLY NO DISPUTE ABOUT THE GENUINENESS OF THE ASSESSEES CLA IM TO HAVE OBTAINED THE CASH LOANS IN QUESTION OF RS.12.27 LAKHS FROM FIVE RELATIVES/FRIENDS WHICH WAS ITA NO.283/RJT/2013 - 3 LATER ON SEIZED IN BHOPAL CITY. WE FURTHER NOTICED THAT BOTH THE LOWE R AUTHORITIES NOWHERE HAVE DISPUTED THE ASSESSEES CLAIM THAT THE ABOVE CASH SEI ZED WAS MEANT FOR PAYMENT OF CAPITATION FEES FOR GETTING FOR HIS DAUGHTERS ADMISS ION IN MEDICAL COLLEGE. WE NOTICE IN THIS BACKGROUND THAT HONBLE JURISDICTIONAL HIGH COURT IN (2008) 303 ITR 5 (GUJ) CIT VS. NATWARLAL PURSHOTTAMDAS UPHOLDS TRIBUNAL S ORDER DELETING IDENTICAL PENALTY AFTER FINDING A REASONABLE CAUSE INVOLVI NG THE CASH LOANS IN QUESTION. THEIR LORDSHIPS FURTHER HOLD IN (2008) 6 DTR (GUJ) 169; CIT VS. S HRI AMBICA FLOUR MILLS LTD. THAT GENUINE TRANSACTION BETWEEN THE SISTE R CONCERN DOES NOT COME UNDER SECTION 269SS OF THE ACT. WE FURTHER FIND THAT HONBLE ALL AHABAD HIGH COURT IN ITA 174/2015 CIT VS. DIMPLE YADAV DECIDED ON 21.8.2015 DISCUSSES AT LENGTH RELEVANT BACKGROUND ALONG WITH AMBIT SCOPE OF SECTION 269SS. THE IR LORDSHIP OBSERVED THAT THIS SECTION WAS INSERTED IN THE ACT WITH A PURPOSE TO ENSURE THAT AN ASSESSEE IS NOT ALLOWED TO TENDER A FALSE EXPLANATION FOR UNACCOUNTE D MONEY OR IN MAKING FALSE ENTRIES. IT IS FURTHER OPINED THEREIN THAT SECTION 273 B OF THE ACT MITIGATES UNDUE HARDSHIP IN CASE OF GENUINENESS AND BONAFIDE TRANSACTIONS. WE OBSERVE IN THIS BACKDROP OF LAW AND FACTS THAT ADMITTEDLY, THERE IS NO DISPUTE ABOUT GENUINENESS AND UNDUE HARDSHIP INVOLVED IN ASSESSEES ACT OF OBTAINING CASH LOANS FOR SECURING MBBS ADMISSION FOR HIS DAUGHTER. THE SAME ALSO FORTI FIES BECAUSE OF THE REASONS THAT THE VERY LOAN AMOUNT WAS SEIZED IN BHOPAL WHERE THE COLLEGE IN QUESTION WAS SITUATED. WE THUS ACCEPT ASSESSEES CONTENTION CHALLENGING THE IMPUGNED SECTION 271D PENALTY OF RS.12.27 LAKHS, AS IMPOSED BY BOTH THE LOWER AUTHORITIES. 7. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 23 RD DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER AHMEDABAD; DATED, 23/12/2016