Jai Sri Saraswathi Davi Educational Society, Narsapur V. THE JCIT, Eluru

ITA 303/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6809 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 303 /VIZAG/ 201 5 ( / ASSESSMENT YEAR: 20 1 0 - 1 1 ) JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY D.NO.4 - 3 - 10, SIVALAYAM STREET, NARSAPUR 534 275 WEST GODAVARI DISTRICT (AP) (PAN : A AAAJ7989C ) JT. COMMISSIONER OF INCOME TAX ELURU RANGE, K.K.S.TOWERS, RR PETA, ELURU 534 002 ( / APPELLANT) / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, A R / RESPONDENT BY : SHRI V APPALA RAJU , D R / DATE OF H EARING : 01 .0 8 .2017 / DATE OF P RONOUNCEMENT : 09 . 0 8 . 2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME TAX (APPEALS) [ CIT (A ) ] , RAJAHMUNDRY VIDE ITA NO.0053/2014 - 15/JT.CIT ELR RANGE/2015 - 16 DATED 01.06.2015 . 2 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR 2. ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE PENALTY IMPOSED U/S 271D OF I.T. ACT. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11, THE ASSESSEE HAS ACCEPTED THE LOANS OF RS.60,45,000/ - ON WHICH THE JT. COMMISSIONER OF INCOME TAX HAS LEVIED T HE P ENALTY U/S 271D R.W.S.269SS OF I.T. ACT FOR ACCEPTING THE LOANS IN CASH . AGGRIEVED BY THE ORDER OF THE JT. COMMISSIONER OF INCOME TAX, THE ASSESSEE WE NT ON APPEAL BEFORE THE CIT(APPEALS) AND THE LD. CIT(APPEALS) DELETED THE PENALTY OF RS.41,90,000/ - AND CONFIRMED THE PENALTY OF THE REMAINING AMOUNT OF RS.18,55,000/ - . AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 2.1. DURING THE APPEAL HEARING, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS TAKEN LOANS FRO M THE FOLLOWING PERSONS IN CASH : SL. NO. SRI/SMT DATE OF ACCEPTANCE LOANS ACCEPTED IN CASH TOTAL AMOUNT ACCEPTED FROM EACH CREDITOR MODE OF ACCEPTANCE 1. G.N.A.LAKSHMI 09.06.2009 2,50,000 CASH 15.06.2009 2,00,000 4,50,000 CASH 2. S.INDIRAVANI 15.06.2009 3,25,000 CASH 10.09.2009 30,000 CASH 3 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR 26.11.2009 2,00,000 CASH 11.02.2010 1,00,000 CASH 16.02.2010 95,000 7,50,000 CASH 3. A. NARSIMHA RAO 30.11.2009 1,30,000 CASH 16.02.2010 55,000 1,85,000 CASH 4. A.SURYANARAYANA 18.09.2009 50,000 CASH 11.02.2010 1,00,000 CASH 16.02.2010 15,000 1,65,000 CASH 5. CH.LAVA KUMAR 29.10.2009 50,000 CASH 02.03.2010 35,000 CASH 10.03.2010 1,00,000 1,85,000 CASH 6 . G.SAI RADHAKRISHNA 15.06.2009 3,00,000 CASH 22.10.2009 2,50,000 5,50,000 CASH 7 . J.VENKATESWARA RAO 26.11.2009 1,95,000 1,95,000 CASH 8. K.CHANDRA RAO 18.09.2009 50,000 CASH 16.02.2010 1,30,000 1,80,000 CASH 9. KEERTHI KUMAR JAIN 10.06.2009 1,00,000 CASH 15.06.2009 3,25,000 CASH 10.09.2009 50,000 CASH 19.09.2009 25,000 CASH 26.11.2009 25,000 CASH 30.11.2009 1,25,000 CASH 16.02.2010 1,00,000 CASH 05.03.2010 1,00,000 CASH 26.03.2010 50,000 9,00,000 CASH 10. KISHORE KUMAR JAIN 15.07.2010 3,20,000 CASH 10.09.2009 30,000 CASH 11.02.2010 1,50,000 5,00,000 CASH 11. K.RAMBABU 26.11.2009 70,000 CASH 30.11.2009 1,20,000 1,90,000 CASH 12. PRAVEEN KUMAR JAIN 15.06.2009 3,20,000 CASH 10.09.2009 30,000 CASH 4 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR 11.02.2010 50,000 4,00,000 CASH 13. P.SATYANARAYANA 26.11.2009 1,95,000 1,95,000 CASH 14. P.VENKATESWARA RAO 26.11.2009 1,90,000 1,90,000 CASH 15. S.RAMESH BABU 15.06.2009 3,25,000 CASH 19.09.2009 30,000 CASH 20.10.2009 18,000 CASH 23.10.2009 12,000 CASH 26.11.2009 2,25,000 CASH 11.02.2010 1,50,000 CASH 17.02.2010 2,50,000 10,00,000 CASH TOTAL 60,45,000/ - CASH OUT OF WHICH THE LD. CIT (APPEALS) DELETED THE PENALTY TO THE TUNE OF RS.41,90,000/ - AND CONFIRMED THE BALANCE AMOUNT . THE ASSESSEE HAS OPENED THE BANK ACCOUNT ON 26.11.2009 AND EXPLAINED TO THE CIT(A) THAT THE ADVANCES WERE TAKEN FROM THE PROMOTERS OR THE MEMBERS OF THE SOCIETY TILL THE DATE OF 26.11.2009 SINCE T HE ASSESSEE HAD NO BANK ACCOUNT. T HE LD. CIT(APPEALS) BELIEVED THAT THERE WAS REASONABLE CAUSE F OR ACCEPTING THE LOANS IN CASH IN THE ABSENCE OF BANK ACCOUNT AND ACCORDINGLY DELETED THE PENALTY. HOWEVER, THE LD.CIT(APPEALS) DI D NOT FIND ANY REASON TO ACCEPT THE LOANS IN CASH SUBSEQUENT TO OPENING THE BANK ACCOUNT I.E. FROM 26.11. 2009 AND HENCE CONFIRMED THE PENALTY . 5 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR 3. DURING THE APPEAL HEARING THE LD.AR ARGUED THAT SUBSEQUENT TO OPENING THE BANK ACCOUNT, THE ASSESSEE HAS TO MAKE SOME CASH TRANSACTIONS FO R PURCHASE OF LAND FROM FARMERS WHO INSISTED FOR CASH PAYMENTS. THEREFORE, THE ASSESSEE HA D NO OPTION EXCEPT ACCEPTING THE LOANS IN CASH TO MAKE THE PAYMENTS TO THE PARTNERS. THE LD.AR FURTHER ARGUED THAT ALL THE CREDITORS HAVE BEEN CO - OPTED AS MEMBERS OF THE SOCIETY SUBSEQUENTLY. THE SOURCES WE RE EXPLAINED A N D THE PAYMENT S MA DE BY THE CREDITORS WERE GENUINE. SINCE THE PAYMENT WAS MADE DUE TO EXIGENCIES AND THE LOANS WERE ACCEPTED FROM THE MEMBERS OF THE SOCIETY, THE LD.AR ARGUED THAT THE PENALTY IMPOSED U/S 271D MAY BE DELETED . 4. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LD. CIT (APPEALS). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS A SOCIETY IMPARTING EDUCATIONAL ACTIVITIES AND CHARITABLE ORGANIZATION WITHOUT PROFIT MOTIVE. THE BANK ACCOUNT OF THE ASSESSEE WAS OPENED ON 26.11.2009. SUBSEQUENT TO OPENING TH E BANK 6 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR ACCOUNT, THE ASSESSEE HAD ACCEPTED THE CASH ADVANCES OF RS. 18,5 5,000/ - FROM ITS MEMBERS TO MEET ITS IMMEDIATE REQUIREM ENTS . THE TRANSACTIONS WERE BETWEEN THE MEMBERS AND THE SOCIETY. THE ADVANC ES GIVEN BY THE MEMBERS ARE VERIFIABLE AND THE SOURCE WAS NOT DISPUTED BY THE ASSESSING OFFICER. THE DEFAULT IS PURELY TECHNICAL IN NATURE AND THE TRANSACTIONS HAVE TAKEN PLACE ON ACCOUNT OF NEED TO INCUR THE EXPENDITURE AT THE SITE LOCATED AWAY FROM THE TOWN IN ORDER TO CARRY OUT THE ACTIVITIES OF THE SOCIETY. HOWEVER, THE LD.AR ALSO SUBMITTED THAT THE FARMERS HAVE INSISTED FOR CASH PAYMENTS. HONBLE H IGH C OURT OF D ELHI IN[2015] 55 TAXMANN.COM 202 (DELHI) IN THE CASE OF COMMISSIONER OF INCOME - TAX, DELHI - VIII, NEW DELHI. V. MUTHOOT FINANCIERS IN CONNECTION WITH THE LOANS ACCEPTED FROM PARTNERS TO PARTNERSHIP FIRM HELD THAT PROVISIONS OF SECTION 269SS WOULD NOT BE VIOLATE D WHEN MONEY IS EXCHANGED INTER - SE BETWEEN PARTNERS AND PARTNERSHIP FIRM IN SPITE OF THE FACT THAT PARTNERSHIP FIRM AND INDIVIDUAL PARTNERS ARE SEPARATE ASSESSES. SIMILARLY IN THE INSTANT CASE THE MEMBERS OF THE SOCIETY HAS GIVEN THE LOANS TO THE SOCIETY A ND ALL THE CREDITORS ARE ASSESSED TO TAX AND WE ARE OF THE CONSIDERED VIEW THAT W HEN THE TRANSACTIONS WERE BETWEEN THE MEMBERS OF THE SOCIETY AND THE ADVANCES ARE VERIFIABLE AND THE SOURCES ARE NOT DISPUTED, PENALTY 7 ITA NO. 3 0 3 /VIZ/2015 JAI SRI SARASWATHI DEVI EDUCATIONAL SOCIETY, NARSAPUR U/S 271D REQUIRED TO BE CONSIDERED LENIENTLY AND ACCORDINGLY WE SET ASIDE THE ORDER S OF THE CIT(APPEALS) AND CANCEL THE PENALTY IMPOSED BY THE JT.CIT. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 TH AUG 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 09 . 0 8 .2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT JAI SRI SARASWATHI DEVI , EDUCATIONAL SOCIETY , D.NO.4 - 3 - 10, SIVALAYAM STREET, NARSAPUR 534 275 , WEST GODAVARI DISTRICT (AP) 2 . / THE RESPONDENT JT. COMMISSIONER OF INCOME TAX ELURU RANGE, K.K.S.TOWERS, RR PETA, ELURU 534 002 3 . / THE CIT, RAJAHMUNDRY 4 . ( ) / THE CIT (A) , VISAKHAPATNAM AND RAJAHMUNDRY 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM