Shri Vimal J. Kanodia, Bharuch V. The Addl. CIT, Bharuch Range, Bharuch

ITA 2890/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6125 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHAVERI
• Assessee Lawyers: GYAN PIPARA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI VIMAL J. KANODIA, PROP. OF ASHOK TRADING COMPANY, A - 28, PATEL SUPER MARKET, STATION ROAD, DISTRICT:BHARUCH - 392001,BHARUCH PAN: AEVPK6885Q (APPELLANT) VS THE ACIT, BHARUCH RANGE, BHARUCH (RESPONDENT) REVENUE BY : DR. JAYANT JHAVERI , SR. D . R. ASSESSEE BY: S H RI GYAN PIPARA , A.R. DATE OF HEARING : 31 - 03 - 2 017 DATE OF PRONOUNCEMENT : 19 - 04 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2006 - 07 , AR I SES FROM ORDER OF THE CIT(A) - VI, BARODA DATED 11 - 09 - 2013 IN APPEAL NO. CAB - VI/115/10 - 11 , IN PROCEEDINGS UNDER SECT ION 271D OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2890 / A HD/20 13 A SSE SSMENT YEAR 200 6 - 07 I.T.A NO. 2890 /AHD/20 13 A.Y. 2006 - 07 PAGE NO SHRI VIMAL J. KANODIA VS. ADDITIONAL CIT 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S.271D OF THE ACT AMOUNTING RS.2,67,000/ - LEVIED BY THE ADDL. CIT WITHOUT PROPER CONSIDERATION AND APPRECIATION O F THE FACTS AND EVIDENCES AVAILABLE ON RECORD. IN VIEW OF THE FACTS AND SUBMISSIONS FILED AS WELL AS LEGAL POSITION IN SUPPORT THEREOF, MORE PARTICULARLY THE FACT THAT THE TRANSACTIONS BEING GENUINE, THE IMPUGNED PENALTY OF RS.2,67,000/ - REQUIRES TO BE QUA SHED/DELETED. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT AS PER THE PROVISIONS OF SECTION 275(1) OF THE ACT, THE IMPUGNED PENALTY ORDER WAS BARRED BY LIMITATION. THE ORDER U/S.271D OF THE ACT THUS REQUIRES TO BE QU ASHED AS VOID - AB - INITIO ON THIS GROUND ITSELF. 3. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT WAS UNDER A BONAFIDE AND GENUINE BELIEF THAT CASH COULD BE ACCEPTED FROM AGRICULTURIST AND THAT THE AMOUNTS WERE OTH ER WISE ACCEPTED TO MEET URGENT BUSINESS EXIGENCIES AND HENCE IT CONSTITUTED A REASONABLE CAUSE FOR ITS FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS OF THE ACT. ACCORDINGLY, NO PENALTY IS WARRANTED U/S.271D OF THE ACT. 4. THE LD. CIT(A) FUR THER ERRED IN NOT APPRECIATING THE FACT THAT SINCE THE AMOUNTS WERE BORROWED FROM RELATIVES/FRIENDS WITHOUT INTEREST, THE REQUIREMENT OF REASONABLE CAUSE IS HELD TO BE SATISFIED IN SUCH CIRCUMSTANCES AS HELD BY VARIOUS COURTS OF LAW. ACCORDINGLY, NO PENALT Y U/S.271 D IS WARRANTED. ALL THE GROUND OF APPEAL ARE INTERCONNECTED AND THESE ARE DECIDED TOGETHER AS UNDER. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 93117/ - WAS FILED ON 31/03/2007. SUBSEQUENTLY, THE CASE OF THE ASSESSEE I.T.A NO. 2890 /AHD/20 13 A.Y. 2006 - 07 PAGE NO SHRI VIMAL J. KANODIA VS. ADDITIONAL CIT 3 WAS SE LECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 22/10/2007. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED UNSECURED LOAN OF RS. 2 , 67 , 000/ - BY CASH FROM THE FOLLOWING PART IES. SR. NO. NAME OF THE PARTY DATE OF RECEIPT AMOUNT RECEIVED I N CASH 1. ASHOK PRINTERS 11.04.2005 RS. 1,00,000 2. PUNAMCHAND DEVECHAND 01.12.2005 RS. 40,000 3. SHYAM CORPORATION 02.12.2 005 RS. 77,000 4. SHYAM CORPORATION 1 2.01.2005 RS. 50,000 THE PENALTY PROCEEDINGS U/S. 269SS OF THE ACT WAS INITIATED BECAUSE OF RECEIVING ABOVE STATED LOAN AMOUNT IN CASH BY THE ASSESSEE . SUBSEQUENTLY, THE A DDL. CIT HAS LEVIED PENALTY U/S. 271D OF THE ACT OF RS. 2 , 6 , 7000/ - IN THE CASE OF THE ASSESSEE IN CONTRAVENTION OF THE PRO VISIONS OF SECTION 269SS OF THE ACT. THE RELEVANT PART OF THE ORDER OF ADDL. CIT IS REPRODUCED AS UNDER: - I HAVE CONSIDERED THE REPLY/EXPLANATION OF THE ASSESSEE AND ALSO VERIFIED THE DETAILS FILED BY THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE DERIVED INCOME FROM I.T.A NO. 2890 /AHD/20 13 A.Y. 2006 - 07 PAGE NO SHRI VIMAL J. KANODIA VS. ADDITIONAL CIT 4 COMMISSION AND INTEREST. HE HAS DEPOSITED RS.39,92,594/ - TO VARIOUS PARTIES AND EARNED INTEREST INCOME FROM INVESTMENTS. THE ASSESSEE IN HIS REPLY OF DATED 24.11.2009 STATED T HAT ON DATED 11.04.2005 HE HAS RECEIVED RS. 1, 00,000/ - FROM DHARMESH T PATEL IN CASH BECAUSE HE IS A FARMER. SHRI DHARMESH T PATEL IS NOT ONLY A FARMER BUT ALSO PROPERITOR OF M/S ASH OK. PRINTE RS I.E . BUSINESS MAN. THE ASSESSEE IS SILENT IN RESPECT, OF BANK ACCOUNT OF THE ASSESSEE. FURTHER, THE ASSESSEE HAS MADE PAYMENT TO THIRD PARTY ON BEHALF OF DHARMESH T PATEL BY CHAQUE AND CASH TO D HARMESH T PATEL. THE ASSESSEE HA S FAILED TO PROVE THE GENUINENESS OF T RANSACTION MADE IN CASH AS PER SECTION 273B OF INCOME - TAX ACT. SIMILARLY, IN THE OTHER CASES ASSESSEE HAS NOT PRODUCED ANY EVIDENCES DURING THE COURSE OF ASSESS MENT PROCEEDINGS AS WELL AS DU RING THE COURSE OF PENALTY PROCEEDINGS FROM WHICH IT CAN BE PROVED THAT THE ABOVE TRANSACTIO NS WERE MADE IN CASH DUE TO NON - AVAILABILITY OF BANKING FACILITIES OR EMERGENCY. IN VIEW OF THE ABOVE DISCUSSION, I AM SATISFIED THAT THE ASSESSEE HAS ACCEPTED LOAN BY WAY OF CASH AMOUNTING TO RS.2,67,000/ - IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT FOR WHI CH THE ASSESSEE HAS NOT SUBMITTED ANY REASONABLE CAUSE FOR SUCH FAILURE. ACCORDINGLY, AS LAID DOWN UNDER THE PROVISIONS OF SECTION 27ID OF THE I.T. ACT, I HEREBY IMPOSE A PENALTY OF RS.2,67,000/ - UPON THE ASSESSEE. THE ITO, WARD - 1, BHARUCH SHALL ISSUE THE DEMAND NOTICE AND CHALLAN 5. AGGRIEVED AGAINST THE ORDER OF THE ADDL. CIT, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY BY STATING THAT ASSESSEE FAILED TO ADDUCE ANY EVIDENCE TO ESTABLISH EXISTENCE OF AN Y REASONABLE CAUSE AS ELABORATED ON PAGE 13 TO 17 OF THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FAILED TO SUBSTANTIATE HIS CONTENTION THAT LENDERS WERE FARMERS. THE J UDICIAL PRONOUNCEMENT I.T.A NO. 2890 /AHD/20 13 A.Y. 2006 - 07 PAGE NO SHRI VIMAL J. KANODIA VS. ADDITIONAL CIT 5 RELIED UPON BY THE LD. COUNSEL IN THE CASE OF CIT VS. BARODA EXTRUSION LTD. IN ITA NO. 592007 IS DISTINGUISHABLE FROM THE CASE OF THE ASSESSEE AS IN THAT CASE ALL THE PERSONS WERE AGRICULTURISTS AND STAYED IN REMOTE AREAS WHEREAS IN THE CASE OF THE ASSESSEE THE LENDER WAS PROPRIETOR AND BUSINESS MAN. AFTER CONSIDERING ALL THE FACTS AND FINDINGS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). 7. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 04 - 201 7 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 19 /04 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,