Income tax Officer, V. M/s. Ganpati Ginning and Pressing Factory, Jalna

ITA 2840/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0823 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SRINIVASAN
• Keywords: Initiation of penalty proceedings; Reasonable cause; Ignorance of law
• Section: 273B; 271D

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2840/PUN/2016 / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD-2, JALNA. . / APPELLANT V/S M/S. GANAPATI GINNING AND PRESSING FACTORY, AT-PO-RANI UNCHEGAON, TQ. GAHNASAWANGI, DIST. JALNA. PAN : AGJPD2465M. . / RESPONDENT ASSESSEE BY : SHRI K. SRINIVASAN. REVENUE BY : MS. SHABANA PARVEEN. PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF TH E ORDER OF COMMISSIONER OF INCOME TAX (A) 1, AURANGABAD D ATED 01.09.2016 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN ASSOCIATION OF PERSONS (AOP) ENGAGED IN THE BUSINESS OF GINNING AND PRESSING OF RAW COTTON ON JOB WO RK BASIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTIC ED THAT / DATE OF HEARING : 20.03.2019 / DATE OF PRONOUNCEMENT: 27.03.2019 2 ITA NO.2840/PUN/2016 ASSESSEE HAD ACCEPTED THE LOANS FROM VARIOUS PERSONS IN CASH TO THE EXTENT OF RS.28,00,500/- AND HAD ALSO REPAID THE SA ME IN CASH THEREBY CONTRAVENING THE PROVISIONS OF SEC.269SS AND 269 T OF THE ACT RESPECTIVELY. AO THEREFORE VIDE PROPOSAL DT.09.04.2015 MADE A REFERENCE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271D OF THE ACT. ACCORDINGLY PROCEEDINGS U/S 271D OF THE ACT WERE INITIAT ED AND A NOTICE WAS ISSUED AND SERVED ON THE ASSESSEE. THEREAFT ER, PENALTY ORDER U/S 271D OF THE ACT WAS PASSED VIDE ORDER DT.31 .08.2015 AND PENALTY OF RS.28,00,500/- WAS LEVIED U/S 271D OF THE ACT ON ACCOUNT OF CONTRAVENTION OF PROVISIONS OF SEC.269SS OF T HE ACT FOR ACCEPTING THE LOANS IN CASH. AGGRIEVED WITH THE PENALTY O RDER, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.01.09.2016 (IN APPEAL NO.ABD/CIT(A)-1/234/2015-2016 DATE D 05.10.2015) DELETED THE PENALTY LEVIED U/S 271D OF THE ACT . AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS JUSTIFIED IN TO CANCEL THE PENALTY OF RS . 28 , 00,500/- LEVIED U/S 271D THOUGH THERE IS NOTHING TO SHOW THAT THERE WER E BONAFIDE REASONS FOR ACCEPTANCE OF THE LOAN AND REPAYMENT TH EREOF BOTH IN CASH. 2. WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIA TING THE FACT THAT ASSESSEE HAS BANK ACCOUNT AND ESTABL I SHED BANKING CHANNEL IS AVAILABLE IN SMALL VILLAGES THROUGH OUT THE DISTRIC T CORNERS . IN THIS CASE RELIANCE HAS BEEN PLACED ON THE FINDING OF THE HONO URABLE APEX COURT IN THE CASE OF ASSISTANT DIRECTOR OF INSPECTION VS AB SHANTI (2002) 122 TAXMAN 574 RENDERED WHILE UPHOLDING THE CONSTITUTIO NAL VALIDITY OF SECTION 269SS AND 271D OF IT ACT WHICH AFFIRMED TH E JUDGEMENT OF THE HONOURABLE DELHI HIGH COURT IN CIT VS SAMORA HOTEL S ( PRIVATE) LIMITED (2012) 19 TAXMAN HOLDING THAT THE EXISTENCE OF A G ENUINE OR BONAFIDE TRANSACTION IS NOT SUFFICIENT TO ATTRACT THE RELIEF U/S 273 IT ACT 1961. IT MUST BE ESTABLISHED THAT FOR SOME BONAFIDE REASONS THE ASSESSEE COUNT NOT GET A LOAN OR DEPOSIT BY AN ACCOUNT PAYEE CHEQ UE OR ACCOUNT PAYEE BANK DRAFT. WITHOUT A CLEAR FINDING OR BO T H THE ASPECT REFERRED TO IN THE SAID SUPREME COURTS DECISION THE TRIBUNAL IN LAW CO ULD NOT HAVE CONCLUDED THAT THE ASSESSEE HAD A 'REASONABLE CAUSE FOR ITS FAILURE TO ACCEPT THE SAID AMOUNT IN COMPLIANCE WITH SECTION 2 69SS OF THE SAID ACT . THERE IS NOTHING ON RECORD TO SHOW THAT THERE WERE BONAFIDE REASON 3 ITA NO.2840/PUN/2016 FOR NOT ACCEPTING THE SAID AMOUNTS THROUGH ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE BANK DRAFT AND UNLESS THAT IS ESTABLI SHED THE SHELTER OF SECTION 273B OF THE IT ACT IS NOT AVAILABLE . 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED . 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 4. BEFORE US, LD.D.R. TOOK US THROUGH THE PENALTY ORDER A ND SUBMITTED THAT ASSESSEE HAD ACCEPTED THE CASH LOANS IN CONTRAVENTION OF PROVISIONS OF SEC.269SS OF THE ACT AND T HEREFORE PENALTY WAS RIGHTLY LEVIED BY THE AO AND THAT LD.CIT(A) HA S ERRED IN DELETING THE PENALTY. HE THUS SUPPORTED THE ORDER OF A O. LD.A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DELETION OF PENALTY LEVIED U/S 271D OF THE ACT. LD.CIT(A) WH ILE DELETING THE PENALTY HAS GIVEN A FINDING THAT THE AOP CON SISTS OF AGRICULTURIST MEMBERS. IT IS ENGAGED IN THE BUSINESS OF AG RICULTURAL COMMODITIES. THE MEMBERS OF AOP ARE UNEDUCATED AND ARE NOT AWARE OF THE PROVISIONS OF LAW, THE LENDORS AND THE MEMBE RS WERE UNEDUCATED AGRICULTURISTS AND IT WAS ONLY A TECHNICAL VIOL ATION OF THE PROVISIONS OF SEC.271D OF THE ACT. HE THEREAFTER RELY ING ON THE VARIOUS DECISIONS CITED IN THE ORDER HAS GIVEN A FINDING THA T THOUGH ASSESSEE HAD VIOLATED THE PROVISIONS OF SEC.269T OF THE AC T BUT ASSESSEE HAD SHOWN EXISTENCE OF REASONABLE CAUSE ON A CCOUNT OF IGNORANCE OF LAW. HE HAS FURTHER NOTED THAT NEITHER IN TH E 4 ITA NO.2840/PUN/2016 ASSESSMENT ORDER NOR IN THE PENALTY ORDER THERE WAS A FINDING THAT THE TRANSACTION WAS NOT A BONAFIDE TRANSACTION OR THE T RANSACTION WAS WITH A VIEW TO AVOID TAXES. HE THUS CONSIDERING THE AFORESAID FACTS DELETED THE PENALTY. BEFORE US, REVENUE HAS NOT P OINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). IN SUCH A SITUATION, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 27 TH DAY OF MARCH, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 27 TH MARCH, 2019. YAMINI '#$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4 5. 6. THE CIT(A)-1, AURANGABAD. THE PCIT-I, AURANGABAD. !,# ! , / DR, ITAT, A PUNE; &'(/ GUARD FILE. / BY ORDER // TRUE COPY // ) *+, - / SR. PRIVATE SECRETARY # ! , / ITAT, PUNE.