Manoharan Stalin, CHENNAI V. ITO Non Corporate Ward 7(5)(i/c), CHENNAI

ITA 2838/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6441 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S VIDYA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2838/CHNY/2018 & '& / ASSESSMENT YEAR : 2012-13 SHRI MANOHARAN STALIN, A1 PRECISION ENGINEERING, NO.11, TASS AVENUE, TASS INDUSTRIAL ESTATE, AMBATTUR, CHENNAI - 600 098. PAN : BIWPS 9260 D V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 7(5), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SMT. S. VIDYA, FCA +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 03.01.2019 12' - 0# / DATE OF PRONOUNCEMENT : 09.01.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -7, CHENNAI, D ATED 18.07.2018, CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFI CER UNDER SECTION 271D OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT '), FOR THE ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.2838/CHNY/18 2. SMT. S. VIDYA, THE LD. REPRESENTATIVE FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ENG INEERING WORK. DURING THE YEAR UNDER CONSIDERATION, ACCORDING TO T HE LD. REPRESENTATIVE, THE ASSESSEE RECEIVED HUGE JOB WORK ORDERS. FOR TH E PURPOSE OF EXECUTION OF THE SAID JOB ORDERS RECEIVED BY HIM, T HE ASSESSEE NEEDED TO PURCHASE NEW MACHINERIES AND ALSO EMPLOY MORE PEOPL E. THE ASSESSEE, IN FACT, ACCORDING TO THE LD. REPRESENTAT IVE, APPROACHED BANKS AND FINANCIAL INSTITUTIONS FOR LOAN. THE ASSESSEE BEING A SMALL TIME BUSINESSMAN, BANKS AND FINANCIAL INSTITUTIONS REFUS ED TO GIVE LOAN. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE APPROACHED HIS FRIENDS AND RELATIVES FOR HAND LOAN. THE ASSES SEE, IN FACT, RECEIVED HAND LOAN FROM VARIOUS FRIENDS AND RELATIVES TO THE EXTENT OF 45,65,959/-. THE ASSESSING OFFICER FOUND THAT A SUM OF 3 LAKHS WAS RECEIVED IN CHEQUE AND THE BALANCE OF 42,65,959/- WAS RECEIVED BY THE ASSESSEE IN CASH. THEREFORE, ACCORDING TO THE LD. REPRESENTATI VE, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271D OF THE AC T IGNORING THE REASONABLE CAUSE PLEADED BY THE ASSESSEE. WHEN THE ASSESSEE COULD NOT GET LOAN FROM BANKS AND FINANCIAL INSTITUTIONS BECAUSE OF HIS FINANCIAL POSITION, THE AMOUNT WAS BORROWED FROM RELATIVES AN D FRIENDS, WHO ARE MAINLY AGRICULTURISTS, FOR THE PURPOSE OF BUSINESS NECESSITY. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THERE WAS REAS ONABLE CAUSE ON THE 3 I.T.A. NO.2838/CHNY/18 PART OF THE ASSESSEE IN RECEIVING CASH FROM VARIOUS PERSONS FOR THE PURPOSE OF EXECUTION OF JOB WORK RECEIVED BY THE AS SESSEE. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE RECEIVE D CASH. ACCORDING TO THE LD. D.R., NOTHING PREVENTED THE ASSESSEE FRO M RECEIVING THE SAID LOAN FROM RELATIVES AND FRIENDS BY WAY OF CHEQUE. ON A QUERY FROM THE BENCH WHETHER THE ASSESSEE COULD GET BANK LOAN, THE LD. D.R. VERY FAIRLY SUBMITTED THAT THE FINANCIAL POSITION OF THE ASSESS EE COULD NOT ALLOW HIM TO BORROW FUNDS FROM BANKS AND FINANCIAL INSTITUTIO NS. HOWEVER, ACCORDING TO THE LD. D.R., THE ASSESSEE COULD HAVE RECEIVED VERY SAME AMOUNT FROM VERY SAME RELATIVES AND FRIENDS THROUGH CHEQUE INSTEAD OF CASH. THEREFORE, ACCORDING TO THE LD. D.R., THERE WAS VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT, HENCE, THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY UNDER SECTION 271D OF THE AC T WHICH WAS CONFIRMED BY THE CIT(APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PENALTY ORDER IT APPEARS THAT THE ASSESSEE HAS BORROWED 88,21,000/- FROM FRIENDS AND RELATIVES BY CASH. OUT OF THESE, 42,55,041/- WAS THE OPENING BALANCE AND 45,65,959/- WAS SAID TO BE RECEIVED DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF HEA RING, THE LD. 4 I.T.A. NO.2838/CHNY/18 REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN R ESPECT OF THE AMOUNT RECEIVED EARLIER, WHICH WAS SHOWN AS OPENING BALANC E TO THE EXTENT OF 42,55,041/-, NO PENALTY WAS LEVIED. OUT OF 45,65,959/- SAID TO BE RECEIVED DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE RECEIVED A SUM OF 3 LAKHS FROM SHRI MOOKANDI BY WAY OF CHEQUE. THIS AMOUNT WAS EXCLUDED BY THE ASSESSING OFFICER AND THE BALANCE O F 42,65,959/- WAS CONSIDERED BY THE ASSESSING OFFICER FOR LEVY OF PEN ALTY. 5. THE FACT REMAINS THAT THE ASSESSEE RECEIVED CASH TO THE EXTENT OF 42,65,959/- IS NOT IN DISPUTE. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THERE WAS REASONABLE CAUSE ON THE PART OF T HE ASSESSEE IN RECEIVING CASH TO THE EXTENT OF 42,65,959/- AS PROVIDED IN SECTION 273B OF THE ACT? THE CIT(APPEALS) FOUND THAT THERE WAS NO REASONABLE CAUSE AS PROVIDED IN SECTION 273B OF THE ACT. THE FACT R EMAINS THAT THE ASSESSEE IS A SMALL TIME BUSINESSMAN ENGAGED IN ENG INEERING WORKS. IT IS ALSO NOT IN DISPUTE THAT DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE RECEIVED HUGE ORDERS OF JOB WORK. THEREFO RE, THE ASSESSEE HAD TO MAKE NECESSARY ARRANGEMENT FOR PURCHASE OF M ACHINERIES AND EMPLOYMENT OF MANPOWER FOR WHICH THE ASSESSEE NEEDE D MONEY. THE FACT THAT THE ASSESSEE APPROACHED BANKS AND FINANCI AL INSTITUTIONS AND THEY IN TURN REFUSED TO GIVE MONEY TO THE ASSESSEE IS NOT DISPUTED BY THE REVENUE. IN THOSE CIRCUMSTANCES, THE ASSESSEE WAS LEFT WITH NO OTHER 5 I.T.A. NO.2838/CHNY/18 WAY EXCEPT TO APPROACH HIS FRIENDS AND RELATIVES. THE DETAILS OF THE RELATIVES AND FRIENDS AVAILABLE ON RECORD SHOW THAT MANY OF THE LENDERS ARE AGRICULTURISTS. OTHER THAN ONE MS. RAJALAKSHMI AND SHRI MOOKANDI, WHO ARE SAID TO BE RETIRED GOVERNMENT EMPLOYEES, OT HER PEOPLE ARE AGRICULTURISTS. IN THOSE CIRCUMSTANCES, RECEIVING LOAN FROM AGRICULTURISTS FROM DIFFERENT PLACES FOR THE PURPOSE OF MEETING UR GENT EXPENSES IN THE BUSINESS CANNOT RESULT IN LEVY OF PENALTY. IN OTHER WORDS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE WAS REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR RECEIVING THE CASH OF 42,65,959/- DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE AND IN VIEW OF SECTION 273B OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THA T LEVY OF PENALTY IS NOT JUSTIFIED. ACCORDINGLY, WE ARE UNABLE TO UPHOLD TH E ORDERS OF THE AUTHORITIES BELOW. THE ORDERS OF BOTH THE AUTHORIT IES BELOW ARE SET ASIDE AND THE PENALTY LEVIED BY THE ASSESSING OFFICER UND ER SECTION 271D OF THE ACT IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 9 TH JANUARY, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN ) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 9 TH JANUARY, 2019. 6 I.T.A. NO.2838/CHNY/18 KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-7, CHENNAI 4. PRINCIPAL CIT- 2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.