The Jt.CIT.,range-5, Baroda V. Shri Rashmin K.Patel, Baroda

ITA 3060/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60496 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.3060/AHD/2011 A. Y. 2006-07 THE INCOME-TAX OFFICER ROOM NO.507, 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE BARODA APPELLANT VS. SHRI RASHMIN K. PATEL PROP. OF FIXO-FITWELL MATRUCHHAYA KHODIYAR MATRA LANE NAGARWADA BARODA PAN-AAACN7828A RESPONDENT DEPARTMENT BY : SHRI VINOD TANWANI, SR. D.R. ASSESSEE BY : NONE DATE OF HEARING : 31.05.2012 DATE OF PRONOUNCEMENT : 08.06.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-V, BARODA DATED 12.09.2011 PASSED IN APPEAL NO. CAB/(A)V-71/1 0-11. 2. REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL:- IN THE LAW AND ON THE FACTS OF THE CASE, THE LD. C IT(A) ERRED IN DELETING THE PENALTY OF RS.11,75,000/-, LEVIED U/S 271D OF THE I.T. ACT, IGNORING THE FACT THAT THE ASSESSEE FAILED TO ESTAB LISH ANY REASONABLE CAUSE FOR CONTRAVENTION OF THE PROVISIONS OF SECTIO N 269SS AND I.T.A. NO.3060/AHD/2011 A. Y. 2006-07 2 ALLOWING THE CONTRAVENTION OF THE CONTRAVENTION OF THE PROVISIONS OF THE SAID SECTION ON IRRELEVANT CONSIDERATION. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME OF 20.11.2006 FOR THE ASSESSMENT YEAR 2006-07. REF ERENCE WAS MADE TO J.C.I.T., RANGE-5, BARODA BY ITO WARD-5(2) BARODA THAT THE AS SESSEE, DURING THE YEAR, HAD RECEIVED/ACCEPTED LOANS/DEPOSITS EXCEEDING RS.20,00 0/- IN CASH FROM SHRI AMBICA FINANCE IN CONTRAVENTION OF THE PROVISIONS OF SECTI ON 269SS OF THE ACT, DETAILS OF WHICH ARE AS UNDER:- SR.NO. DATE AMOUNT (RS.) 1 15.05.2005 70,000 2 02.07.2005 70,000 3 09.08.2005 95,000 4 19.09.2005 50,000 5 27.10.2005 75,000 6 22.11.2005 1,00,000 7 26.11.2005 1,00,000 8 13.12.2005 50,000 9 28.12.2005 1,00,000 10 03.01.2006 45,000 11 20.01.2006 60,000 12 02.02.2006 1,00,000 13 10.02.2006 50,000 14 27.02.2006 60,000 15 30.03.2006 1,50,000 TOTAL 11,75,000 4. WHILE LEVYING PENALTY U/S 271D, THE A.O. HELD T HAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH ANY REASONABLE CAUSE FOR CONTRAVENTION OF THE PROVISION OF SECTION 269SS. SHE FURTHER OBSERVED THAT THE AS SESSEE HAS BEEN ROUTINELY TAKING CASH LOANS FROM SHRI AMBICA FINANCE AND DID NOT ESTABLISH ANY PRESSING NEED FOR UNAVOIDABLE CIRCUMSTANCE WHICH LED HIM TO OBTAIN THESE AMOUNTS IN CASH. I.T.A. NO.3060/AHD/2011 A. Y. 2006-07 3 SHE, THEREFORE, CONCLUDED THAT THE ASSESSEE HAS CON TRAVENED THE PROVISIONS OF SECTION 269SS AND IMPOSED PENALTY OF RS.11,75,000/- . 5. BEFORE LD. CIT(A) THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING SUBMISSIONS:- FACTS OF THE CASE. 1. THE ASSESSEE WAS DOING THE BUSINESS UNDER THE NA ME AND STYLE M/S FIXO FIT WELL AS PROPRIETOR FILED HIS RET URN IN INDIVIDUAL CAPACITY ON 27.11.2006 DECLARING HER TOTAL INCOME A T RS.4,29,600/-. 2. THE RETURN WAS SELECTED UNDER CESS AND THE LEARN ED ASSESSING OFFICER HAS ADDED THE SUM OF RS.17,00,000/- TO THE RETURNED INCOME ON ACCOUNT OF CASH CREDIT U/S 68. 3. THE LEARNED C.I.T.(APPEAL)-V HAD DELETED THE SU M OF RS.11,75,000/- FROM THE TOTAL ADDITION LEAVING RS.5 ,25,000/-. 4. THE ASSESSING OFFICER HAS PASSED ORDER LEVYING THE PENALTY U/S 271 OF THE INCOME TAX ACT AMOUNTING TO RS.11,75 ,000/- GROUND OF APPEAL SIR, THE I EARNESTLY REQUEST YOUR MAJESTY FOR JUDIC IOUSLY DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS. FIRST IN THE INSTANT CASE, THE WORD LOANS/DEPSOIT S REQUIRES TO BE REASSESSED FOR THE REASON THAT (A) THE TRANSACTION IS OF THE NATURE OF CHEQUE DI SCOUNTING/HUNDI TRANSACTION WITH THE SHROFF. THERE ARE SERIES OF T RANSACTION OF CHEQUE DISCOUNTING AND REPAYMENT THEREOF. THE MEANING OF THE TERM LOAN AND DEPOSIT HAS TO BE LOOKED INTO WITH REFERENCE TO THE PROVISIONS OF THE SECTION 269SS AND 269TT. THE CHEQUES WERE DISCOUNTED BECAUSE THE PETITIONER WAS REQUIRED TO MAKE PAYMENT TO THE WORKERS WORKING AT THE SITE AND MAKE PAYMENT OF SALARY TO THE STAFF. THE MAKING OF THE PAYMENT WAS THE GENUINE NEED OF THE PETITIONER. THE COPY OF THE CASH DAY BO OK INDICATES THE NATURE OF THE PAYMENT AND THE BUSINESS NEED.(ENCLOS ED AS ANNEXUR-A) THE CHEQUES WERE DISCOUNTED FOR FEW DAYS AND THE PE TITIONER HAS PAID INTEREST ON THE EARLY DISCOUNTING OF THE CHEQUES. (B) THE IDENTITY OF THE PERSON, GENUINENESS OF THE TRANSACTION AND CAPACITY OF THE PERSON WITH WHOM THE CHEQUES WE RE DISCOUNTED IS PROVED BEYOND DOUBT. COPY OF PAN, COPY OF THE ACCO UNT WITH SHREE AMBICA FINANCE IS ENCLOSED ALONG WITH THE COPY OF T HE ACKNOWLEDGEMENT OF RETURN OF INCOME IS ENCLOSED FOR THE IMMEDIATE REFERENCE AND RECORD. (C) THE ALLEGED AMOUNT OF CASH DEPOSIT IS NOTHING B UT THE CHEQUES DISCOUNTING AMOUNT. THE AMOUNT WAS NEVER P LACED AS DEPOSIT WITH THE PETITIONER. I.T.A. NO.3060/AHD/2011 A. Y. 2006-07 4 (D) IT HAS BEEN HELD BY THE VARIOUS COURTS THAT TH E PENALTY IN SITUATION LIKE THIS, WHERE THE PETITIONER IS MAINTA INING THE CURRENT ACCOUNT WITH THE PERSON ALLEGED TO HAVE GIVEN LOAN/ DEPOSIT MAY NOT BE LEVIED. COPY ENCLOSED FOR THE IMMEDIATE REFERENCE. IN VIEW OF THE INTENTIONS OF THE LEGISLATURE AND TH E GENUINENESS OF THE TRANSACTION AND THE NEED OF THE PETITIONER O F DISCOUNTING OF THE CHEQUES, I EARNESTLY PRAY YOUR HONOUR TO DELETE THE PENALTY UNDER SECTION 271D OF THE I.T. ACT, 1961. THE AREA HAS ALSO SUBMITTED COPIES OF THE FOLLOWING JUDGMENTS IN SUPPORT OF THE SUBMISSION: CIT V BALAJI TRADERS 167 TAXMAN 27(MAD) CIT V PATANA AGENCIES (MAD) CIT V SAINI MEDICAL STORE 276 ITR 79 (P&H) CIT V IDHAYAM PUBLICATIONS LTD. 163 TAXMAN 265 (MAD ) NATIONAL SURGICAL CORP. V CIT 242 ITR 667 (AP) 6. AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) DELETED THIS PENALTY. AGGRIEVED BY THIS ORD ER OF LD. CIT(A) NOW THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. DR RELIED ON THE ORD ER OF THE A.O. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOT ICE BEING SERVED UPON HIM FOR TODAYS HEARING. 8. AFTER HEARING LD. DR AND PERUSING THE RECORD, W E FIND THAT LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE IN VIEW OF THE FAC T THAT THE TRANSACTIONS WITH SHRI AMBICA FINANCE WERE ACCEPTED AS GENUINE BY THE LD. CIT(A), WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE. IT WAS ALSO ACCEPTE D THAT THE PARTY WAS DISCOUNTING CHEQUES OF THE ASSESSEE. LD. CIT(A) ALS O FOUND FROM THE DOCUMENTS FILED BEFORE HIM BY THE ASSESSEE THAT THE AMOUNT OF CASH RECEIVED THROUGH CHEQUE DISCOUNTING WERE EITHER FULLY SPENT ON THE SAME DAY OR WITHIN 2-3 DAYS. THEREFORE, THE CASH WAS TAKEN BY DISCOUNTING CHEQUES TO MEET T HE URGENT BUSINESS NEEDS OF THE ASSESSEE. WE FURTHER FIND THAT WHILE DELETING THE PENALTY LEVIED BY THE A.O. I.T.A. NO.3060/AHD/2011 A. Y. 2006-07 5 U/S 271D OF THE ACT AMOUNTING TO RS.11,75,000/-, LD . CIT(A) HAS RELIED ON THE DECISION OF CIT V. SAINI MEDICAL STORE REPORTED IN 276 ITR 79 WHEREIN HONBLE PUNJAB AND HARYANA HIGH COURT HAS HELD THAT IF THER E WAS REASONABLE CAUSE FOR VIOLATION OF SECTION 269SS, PENALTY U/S 271D WAS N OT LEVIABLE. IN VIEW OF THIS, WE FEEL NO NEED TO INTERFERE WITH THE ORDER OF LD. CIT (A) AND THE SAME IS HEREBY UPHELD. 9. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 08.06.2012 SD/- SD/- (ANIL CHATURVEDI) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *