The ACIT, Circle-1, Bhavnagar V. M/s. Shiv Enterprise, Bhavnagar

ITA 2911/AHD/2009

• Counselvise Citation: 291120514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND A.L. GEHLOT, A M INCOME-TAX OFFICER, WARD 1(2), BHAVNAGAR. VS. M/S SHIV ENTERPRISE, 347, MADHAV DARSHAN, WAGHAWADI ROAD, BHAVNAGAR. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. K. MEENA, SR.DR RESPONDENT BY:- SHRI TUSHAR HEMANI, AR DATE OF HEARING : 12/10/2011 DATE OF PRONOUNCEMENT :14/10/2011 O R D E R PER A.L. GEHLOT, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 14/07/2009 FOR ASST. YEAR 2006-07. THE GROUND RAISED IN THIS APPEAL IS IN RESPECT OF CANCELLATION OF PENALT Y OF RS.16,05,040/- LEVIED UNDER SECTION 271E. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSE SSMENT PROCEEDINGS THE AO NOTICED THAT CERTAIN DEPOSITS WERE REPAID IN CASH EXCEEDING RS.20,000/- OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BAND DRAFT TOTALING TO AMOUNT OF RS.16,05,040/-. THE AO WAS OF THE VIEW THAT THERE WAS VIOLATION OF PROVISION OF SECTION 269T OF THE A CT. THE AO LEVIED ITA NO.2911/AHD/2009 ASST. YEAR :2006-07 ITA NO.2911/AHD/2009 ASST. YEAR 2006-07 2 PENALTY UNDER SECTION 271E OF RS.16,05,040/-. THE L D. CIT(A) CANCELLED THE PENALTY ACCEPTING THE FACT THAT THE REPAYMENT I N CASH WAS DUE TO ADVANCES FROM CUSTOMERS. THE ASSESSEE IS ENGAGED IN CONSTRUCTION OF FLATS, SHOPS, OFFICES ETC. THE ASSESSEE RECEIVED AD VANCES OF BOOKING AMOUNT AGAINST THE BOOKING OF OFFICE, SHOPS AND FLA TS. THE LD. CIT(A) WAS OF THE VIEW THAT SECTION 269T IS APPLICABLE WHERE L OAN OR DEPOSIT HAVE BEEN REPAID OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAFT. THE ASSESSEE FURNISHED SUFFICIENT MATERIAL IN SUPPORT O F THE FACT THAT REPAYMENT WAS ON ACCOUNT OF ADVANCES RECEIVED AGAIN ST THE BOOKING OF FLATS, SHOPS ETC. THE LD. CIT(A) WHILE CANCELING TH E PENALTY RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF SUNFLOW ER BUILDERS (P) LTD. VS. DCIT IN ITA NO.623/PN/1995 . 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES. SECTION 269T IS APPLICABLE IN THE CASE WHERE THE ASSESSEE REPAYS ANY LOAN OR DEPOSIT OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT P AYEE BANK DRAFT. EXPLANATION TO SECTION 269T DEFINES THE LOAN OR DE POSIT. THE 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 COMPANY, INCLUDES LOAN OR DEPOSIT OF ANY NATURE. IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAS FURNISHED THE MATERI AL IN SUPPORT OF THE FACT THAT THE REPAYMENT WAS NEITHER DEPOSIT NOR LOAN. TH E LD. AR BY REFERRING TO BALANCE SHEET AS ON 31 ST MARCH, 2005 OF WHICH COPY HAS BEEN PLACED AT PAGE 150 OF THE PAPER BOOK, WHERE SUCH ADVANCES FRO M CUSTOMERS HAVE BEEN SHOWN UNDER THE HEAD CURRENT LIABILITIES EST ABLISHED THAT DURING THE YEAR THE PAYMENTS MADE WERE OUT OF THAT ADVANCE FRO M CUSTOMERS. THE LD. AR DEMONSTRATED THIS FACT BY REFERRING THE RELEVANT SCHEDULE OF FINANCIAL STATEMENTS OF WHICH COPIES HAVE BEEN PLACED AT PAGE S 155 & 156 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO FURNISHED COPIES OF ACCOUNT AND ITA NO.2911/AHD/2009 ASST. YEAR 2006-07 3 CONFIRMATIONS FROM THE PARTIES WHICH HAVE BEEN PLAC ED AT PAGES 162 TO 189 OF THE PAPER BOOK. IN THE CONFIRMATIONS THE CON CERNED PARTIES CLEARLY CONFIRMED THAT THE AMOUNT WAS REFUNDED ON CANCELLAT ION OF BOOKING OF FLATS ETC. WHICH WERE GIVEN AS ADVANCE IN EARLIER Y EARS. RECEIVING ADVANCE AND REPAYMENT OF ADVANCES IS A BUSINESS TRANSACTION AND SUCH TRANSACTION IS NOT COVERED BY SECTION 269T OF THE ACT. 3.1 THE CBDT IN THE EXPLANATORY NOTE ON THE PROVISI ONS OF THE FINANCE ACT, 1984 VIDE CIRCULAR NO.387 DATED 6 TH JULY, 1984 CLARIFIED THAT THE PROVISIONS CONTAINED IN SECTION 269SS IS CONFINED T O LOANS AND DEPOSITS ONLY AND DOES NOT EXTEND TO PURCHASE/SALE TRANSACTI ON. THUS THE ADMITTED FACT IN THE CASE UNDER CONSIDERATION IS THAT THERE IS NO REPAYMENT OF LOAN OR DEPOSIT BUT THE REPAYMENT IS OF BUSINESS ADVANCE RECEIVED BY THE ASSESSEE IN EARLIER YEARS. 3.2 THE LD. DR HEAVILY RELIED UPON THE DEFINITION O F LOAN OR DEPOSIT WHERE IT MENTIONS THAT LOAN OR DEPOSIT INCLUDES OF LOAN OR DEPOSIT OF ANY NATURE. IN THIS REGARD IT IS TO STATE THAT LOAN OR DEPOSIT OF ANY NATURE IS REQUIRED TO BE READ ALONG WITH EARLIER WORDING OF T HE EXPLANATION WHICH SAYS LOAN OR DEPOSIT OF MONEY WHICH IS REPAID AFTER NOTICE OR REPAYABLE AFTER A PERIOD. THEREFORE, THE CONTENTION OF THE LD . DR IS NOT ACCEPTABLE IN THE LIGHT OF CBDT CIRCULAR (SUPRA) AND ABOVE DISCUS SION. 3.3 EVEN OTHERWISE FOR THE SAKE OF ARGUMENT IF THER E IS A REPAYMENT OF CASH, IT CANNOT BE SAID TO ATTRACT THE LEVY OF PENA LTY AUTOMATICALLY UNDER SECTION 271E OF THE ACT. SECTION 273B STATES THAT P ENALTY UNDER SECTION 271E IS NOT LEVIABLE IF THERE IS A REASONABLE CAUSE . IN THE CASE UNDER CONSIDERATION THE REPAYMENT MADE IN CASH BY THE ASS ESSEE IS IN THE NATURE OF BUSINESS TRANSACTION AND IN ACCORDANCE WITH COMM ERCIAL EXPEDIENCY. ITA NO.2911/AHD/2009 ASST. YEAR 2006-07 4 ADVANCES RECEIVED FOR BUSINESS PURPOSES AND SAME IS REPAID IN CASH, THESE ARE BUSINESS TRANSACTIONS, UNDER THE CIRCUMST ANCES THAT AMOUNT TO BONA FIDE BELIEF OF THE ASSESSEE. BONA FIDE BELIEF AMOUNTS TO A REASONABLE CAUSE, THEREFORE, PENALTY U/S 271T READ WITH SECTIO N 273B IS NOT LEVIABLE. THERE IS NO MATERIAL OR EVIDENCE OR ANY COMPELLING REASONS PRODUCED BY THE REVENUE TO PROVE THAT THE MONEY RECEIVED IS A D EPOSIT OR LOAN. IN THE LIGHT OF ABOVE DISCUSSION, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF LD. CIT(A). THE ORDER OF LD. CIT(A) IS CONFIRMED. THE A PPEAL FILED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 14/10/2011. SD/- SD/- (BHAVNESH SAINI) (A. L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO.2911/AHD/2009 ASST. YEAR 2006-07 5 1.DATE OF DICTATION 12/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 13/10/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 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..