Shri Rakesh Bhailalbhai Patel, Ahmedabad V. The Jt. CIT, Central Range-1, Ahmedabad

ITA 3334/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8139 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Assessee Lawyers: D K PARIKH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER 1. ./ I.T.A. NO.3334/AHD/2016 2. ./ I.T.A. NO.3335/AHD/2016 ( / ASSESSMENT YEAR : 2008-09) 1-2. RAKESH BHAILALBHAI PATEL 15, STHANAKVASI JAI SOCIETY NEAR NARANPURA RAILWAY CROSSING NARANPURA, AHMEDABAD VS. 1-2. THE JT.CIT CENTRAL RANGE-1 AHMEDABAD ' ./ ./ PAN/GIR NO. : ABRPP 6848 D ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI D.K. PARIKH, AR &''%)( / RESPONDENT BY : SHRI RAJESH MEENA, SR.DR *+), / DATE OF HEARING 06/06/2018 -./0), / DATE OF PRONOUNCEMENT 11/ 06 /2018 / O R D E R PER MS. MADHUMITA ROY - JM: THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-11, AHMEDAB AD [CIT(A) IN SHORT] IDENTICALLY DATED 15/09/2016 FOR THE ASSESSMENT YEAR (AY) 2008-09 WHEREIN THE CIT(A) CONFIRMED THE LEVY OF PENALTY MADE BY THE JT .CIT, CENTRAL RANGE-1, AHMEDABAD UNDER S.271-D AND 271-E OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') FOR ALLEGED VIOLATION OF PROVISIONS UNDER S.269-SS AND ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 2 - 269-T OF THE ACT WHICH SEEKS TO PROHIBIT CERTAIN CA SH TRANSACTIONS RECEIVED AND PAID IN CASH. 2. COMMON AND INTER-CONNECTED ISSUES INVOLVED IN B OTH THE APPEALS FOR THE SAME ASSESSMENT YEAR FOR THE SAME ASSESSEE. ACCORDINGLY , BOTH THE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. 3. BRIEF FACTS OF THE CASE IS THIS THAT THE ASSESSE E ON 28.05.2007 TAKEN A LOAN OF RS.1,00,000/- IN CASH FROM HIS FATHER BHAILALBHAI B .PATEL AS THE ASSESSEE HAD TO PAY ADVANCE OF RS.2,50,000/- FOR ACQUIRING BANAKHAT RIG HTS OF A LAND WHICH WAS PAID ON THE VERY NEXT DAY I.E. 29.05.2007. THE ASSESSEE HAD IN URGENT NEED OF MONEY AND THEREFORE, THE SAID AMOUNT WAS BORROWED FROM HI S FATHER AS A FINANCIAL SUPPORT. THE ASSESSEES CASE IS THAT SINCE THERE WAS REASONA BLE CAUSE FOR TAKING SUCH AMOUNT, HE WAS NOT UNDER OBLIGATION TO REPAY AND, T HEREFORE, PROVISIONS OF SECTION 269SS IS NOT ATTRACTED. HOWEVER, IN THE MONTH OF AUGUST-2007 HE RETURNED THE SAID AMOUNT TO HIS FATHER FROM THE SURPLUS CASH. THUS, PROVISIONS OF SECTION OF 269T IS ALSO NOT APPLICABLE TO THE CASE OF THE ASSE SSEE. 4. THE LD.JT.CIT DID NOT CONSIDER THE FOLLOWING SUBMISSION MADE BY THE ASSESSEE IN THE PROCEEDING U/S.271D OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS 'THE ACT'). ALSO THE ASSESSEE HAS EARNED ALMOST RS.1 CRORE OUT OF THIS TRANSACTION OF LAND DEAL FOR WHICH SUCH ADVANCE WAS GIVEN AND THE SAID RECEIPT OF PROFIT WAS BROUGHT TO THE TAX BY THE ASSESSEE IN A.Y. 2008-09, WHICH CAN BE VERIFIED FROM THE RECORD OF ASSESSMENT OF THE SAID YEAR. AS ASSESSEE WAS HAVING A REASONABLE CAUSE FOR TAKIN G SUCH AMOUNT WHICH WAS NOT UNDER AN OBLIGATION TO REPAY, THE PROVISION OF SECTION 269SS IS NOT ATTRACTED ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 3 - AND ALSO HAVING FOUND THE SURPLUS CASH BY ASSESSEE SUBSEQUENT IN THE MONTH OF AUGUST, 2007 HAD RETURNED SUCH AMOUNT TO HIS FATHER . SO SIMILARLY PROVISION OF SECTION 269T IS ALSO NOT ATTRACTED IN CASE OF THE A SSESSEE. 4.1. THE JT.CIT HELD THAT THERE IS A VIOLATION OF THE PROVISIONS OF SECTION 269-SS AND SECTION 269-T WARRANTING LEVY OF PENALTY UNDER S.271-D AND 271-E RESPECTIVELY. ACCORDINGLY, PENALTY OF RS.1 LAKH EA CH WAS IMPOSED UNDER S.271-D AND 271-E OF THE ACT SEPARATELY. 5. THE ASSESSEE APPROACHED THE CIT(A) FOR RELIE F AGAINST THE AFORESAID ORDERS OF THE JT.CIT. THE CIT(A) EXAMINED THE SUBMISSIONS OF THE ASSESSEE BUT HOWEVER DID NOT FIND IT CONVINCING. HE ACCORDINGLY DENIED REL IEF SOUGHT IN TANDEM. THE RELEVANT PARA OF THE ORDER OF THE CIT(A) IN RESPECT OF PENALTY IMPOSED UNDER S.271- D OF THE ACT (WHICH IS BROADLY THE SAME AS PER IMPO SITION OF PENALTY MADE UNDER S.271-E OF THE ACT) ARE REPRODUCED HEREUNDER: 5. THE AR OF THE APPELLANT SUBMITTED THAT THE ASS ESSEE BORROWED SUM OF RS.1 LAKH IN CASH FROM HIS FATHER ON 28 TH MAY, 2007 AS HE HAD TO GIVE ADVANCE OF RS.2.5 LAKH FOR ACQUIRING BANAKHAT RIGHTS OF PROPE RTY BEING LAND THE ASSESSEE WAS HAVING REASONABLE CAUSE FOR TAKING SUCH AMOUNT FOR WHICH HE WAS NOT UNDER AN OBLIGATION TO REPAY. THEREFORE, THE PROVI SIONS OF SECTION 269SS WERE NOT ATTRACTED. THE PROVISIONS OF SECTION 269D ARE ALSO NOT ATTRACTED IN THE CASE OF THE ASSESSEE. THE CASH WAS RECEIVED FROM HIS FA THER WHO IS ALWAYS UNDER AN OBLIGATION TO HELP HIS SON IN NEED WITHOUT ANY CONT RA OBLIGATION ON PART OF HIS SON. THEREFORE, IT WAS PROVED THAT THERE WAS REASO NABLE CAUSE FOR THE SAID FAILURE. THE ASSESSEE WAS IN URGENT NEED OF MONEY TO MAKE PAYMENT OF BANAKHAT AMOUNT FOR PURCHASE OF LAND WHICH RESULTED IN HUGE PROFIT IN THE SUBSEQUENT PERIOD. HE RELIED ON SOME TRIBUNALS DEC ISIONS. 6. THE RATIO OF THE DECISIONS RELIED BY THE APPELLA NT HAVE BEEN GONE THROUGH AND IT WAS NOTICED THAT IN THE CASE OF K.K. ENTERPR ISE (2014) 41 TAXMAN.COM 235 (MUM.TRIB) THE ASSESSEE FIRM RECEIVED A SUM OF RS.4.35 LAKHS IN CASH FROM ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 4 - ITS SISTER CONCERN AND LATER ON A SUM OF RS.1 LAKH WAS REPAID IN CASH. THE TRIBUNAL HELD THAT THIS WAS A TRANSACTION BETWEEN T WO BUSINESS CONCERNS CONSTITUTED BY THE FAMILY MEMBERS AND BOTH THE FIRM S WERE HAVING A COMMON PARTNER, THEREFORE, TRANSFER OF CASH BY ONE FIRM TO ANOTHER WOULD OPERATE AS A REASONABLE CAUSE. IN THE INSTANT CASE THE ASSESSEE WAS NOT ABLE TO SH OW OF BEING PREVENTED BY ANY REASONABLE CAUSE IN NOT ACCEPTING THE ADVANCE THROUGH ACCOUNT PAYEE CHEQUE OR BANK DRAFT AND THERE WAS NO CONTENTION TO THAT EFFECT. THEREFORE, AFTER CONSIDERING THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION, THE ASSESSEE WAS NO T ABLE TO ESTABLISH ANY GENUINE AND REASONABLE CAUSE FOR VIOLATION OF THE R ELEVANT PROVISIONS OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE ITAT. 7. AT THE TIME OF HEARING OF THE APPEAL, THE LD. AR REITERATED THE SUBMISSION AS WAS MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITI ES. HE FURTHER RELIED UPON THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT, AHMEDABAD- IV, VS. MAA KHODIYAR CONSTRUCTION (2014) 45 TAXMANN .COM 566 (GUJARAT) AS WELL AS THE ORDER PASSED BY THE LD.ITAT KOLKATA BENCH IN ITA NOS.331 & 332/KOL/2010 PASSED ON 25/11/201. 8. NO SERIOUS OBJECTION HAS BEEN RAISED BY THE LD.D R IN THIS RESPECT. 9. WE HAVE HEARD THE LD.REPRESENTATIVES OF THE RESP ECTIVE PARTIES. WE HAVE PERUSED RELEVANT MATERIALS ON RECORD. WE FIND THAT BONAFIDE AND/OR GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN QUESTION BY THE LOWE R AUTHORITIES WHILE IMPOSING PENALTY. IDENTITY OF THE PARTIES HAS ALSO BEEN WEL L ESTABLISHED BY THE ASSESSEE WHICH WAS ACCEPTED BY THE AUTHORITIES BELOW. THE CASH BO OK SUBMITTED BY THE LD.AR ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 5 - REFLECTS THE CASH FLOW IN REGARD TO THE SAID AMOUNT OF RS.1,00,000/- IT WAS BORROWED FROM THE FATHER OF THE ASSESSEE AND REPAID SUBSEQUENTLY. ONCE FINDING AS TO THE GENUINENESS OF THE TRANSACTIONS WAS ARRIVED AT BY THE AUTHORITIES BELOW WHICH WAS NOT PROPER FOR THEM TO IMPOSE PENALTY. NEITHER THERE WAS ANY FINDING THAT THE ASSESSEE INTENDED TO EVADE TAX. THE FACTS OF THE CASE IN ITA NOS.331 & 332/KOL/2010 IS SIMILAR TO THE CASE IN HAND. WHILE ALLOWING THE ASSESSEES APPEALS, THE FOLLOWING WAS OBSERVED BY THE SAID BENCH. GOING THROUGH THE FACTS OF CASE BEFORE US, WE ARE OF THE VIEW THAT THE TRANSACTION BETWEEN SON IN LAW AND FATHER IN LAW FOR GIVING A S UPPORT AND HELP AS CONTENDED BY LD. COUNSEL AND NOT DENIED BY REVENUE, IN LAW WAS NOT A LOAN OR DEPOSIT IN STRICTER SENSE OF SECTION 269SS OF THE ACT AND IT WAS ONLY A FINAN CIAL SUPPORT. EVEN IT IS NOT THE ALLEGATION THAT THE FATHER IN LAW OF ASSESSEE HAS C HARGED ANY INTEREST ON THE ABOVE LOAN AND HENCE, THIS IS MERELY A FINANCIAL SUPPORT TO SO N IN LAW BY HIS FATHER IN LAW. ONCE THIS IS THE POSITION, THE TRANSACTION DOES NOT FALL IN THE AMBIT OF SECTION 269SS OF THE ACT. ACCORDINGLY, THESE APPEALS OF THE ASSESSEE ARE ALLOWED. 9.1. THE MOOT POINTS REQUIRED TO BE CONSIDERED BY THE HONBLE GUJARAT HIGH COURT WERE AS FOLLOWS:- (A) 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ITAT HAS ERRED IN LAW IN REJECTING THE REVENUE'S APPEAL AGAINST TH E DECISION OF CIT (A) IN DEALING THE PENALTY LEVIED U/S. 271D OF THE INCO ME- TAX ACT, EVEN THOUGH THE ASSESSEE IS NOT COVERED BY THE E XCEPTION TO SECTION 269SS OF THE ACT PROVIDED IN SECOND PROVISO TO THE SAID SECTION 269SS, AS THE ASSESSEE HAD TAXABLE INCOME UNDER THE ACT AND ACCEP TED CASH EXCEEDING THE LIMIT PROVIDED UNDER THE SAID SECTION 269SS ?' (B) 'WHETHER 'GENUINENESS OF THE LOAN/DEPOSIT' OR 'BONA FIDE NATURE OF THE LOAN/DEPOSIT TRANSACTION' IS THE CRITERIA FOR EXAMI NING THE CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE INCOME TA X ACT, 1961 FOR LEVYING PENALTY U/S. 271D OF THE INCOME TAX ACT, 19 61 ?'' ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 6 - FOLLOWING WERE FURTHER OBSERVED BY THE SAID HONBLE HIGH COURT: 12. FOR NOT INVITING THE RIGOUR OF PENALTY U/S. 271D O F THE ACT AS CONSEQUENCE, ON THE PART OF THE ASSESSEE, THE REASONABLE CAUSE N EEDS TO BE SHOWN. WHAT IS PLEADED BY THE RESPONDENT WAS THAT ALL THESE PERSON S WERE AGRICULTURISTS AND THAT THE GENUINENESS OF THE TRANSACTIONS AT NO POIN T OF TIME HAD BEEN DOUBTED BY THE REVENUE. THEY STAYED IN REMOTE AREAS. BOTH T HE AUTHORITIES, THEREFORE, WERE OF THE OPINION THAT REASONABLE CAUSE HAD BEEN SUFFICIENTLY MADE OUT AND WHEN THE VERY TRANSACTIONS WERE NEVER DOUBTED BY TH E REVENUE AUTHORITIES, THE BREACH IS TO BE TREATED AS A MERE TECHNICAL OR VENI AL BREACH. 13. WE NOTICE THAT THE REQUIREMENT OF SECTION 273B IS FOR THE ASSESSEE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR ITS HAVING FA ILED TO ABIDE BY THE PROVISIONS OF SECTION 269SS. AS EMERGES FROM THE RE CORD, NOT ONLY THE SUBSTANTIATING EVIDENCE LIKE 7/12 EXTRACTS WERE PRO DUCED, BUT, ALSO ADDITIONALLY, TRANSACTIONS WERE REFLECTED IN THE AC COUNTS OF ASSESSEE AND THE ADVANCEMENT OF LOAN TO THE ASSESSEE HAD BEEN REFLEC TED IN THE BOOKS OF ACCOUNT OF THOSE PERSONS FROM WHOM THE LOAN HAD BEEN RECEIV ED. THE IDENTITY OF THOSE PERSONS HAS ALSO BEEN WELL ESTABLISHED. THE ASSESSE E ALSO HAD GIVEN SATISFACTORY REASON FOR TAKING SUCH LOAN. HIS BONA FIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT ATTRACT PROVISION OF SECTION 269SS ON THE GROUND THAT THEY WERE AGRICULTURISTS AND LIVED IN REMOTE VILLAG ES ALSO WAS ONE OF THE GROUNDS WHICH HAS WEIGHED WITH BOTH THE AUTHORITIES . 14. IN VIEW OF FORGOING DISCUSSION, WE ARE OF THE OPIN ION THAT NO ERROR HAS BEEN COMMITTED BY BOTH THE AUTHORITIES BELOW IN DELETING THE PENALTY. IT IS TRUE THAT THE RESPONDENT HAS INCOME FROM OTHER BUSINESS AND T HESE TRANSACTIONS WERE NOT BETWEEN AGRICULTURISTS HAVING ONLY AGRICULTURE INCO ME, NOT LIABLE TO TAX WHICH HAVE BEEN EXEMPTED FROM SUCH RIGOR OF LAW AND YET, THE CAUSE ADVANCED IS WHEN FOUND TO BE SUFFICIENTLY REASONABLE, NO INTERF ERENCE WOULD BE DESIRABLE. 15. RELIANCE PLACED ON THE DECISION IN CASE OF HINDUST AN STEEL LTD. (SUPRA) ALSO REQUIRES A SPECIFIC REPRODUCTION AT THIS STAGE WHERE THE APEX COURT HAS HELD THAT, '...AN ORDER IMPOSING PENALTY FOR FAILUR E TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI CRIMINAL PROCEE DING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EIT HER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST, OR ACT IN ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 7 - CONSCIOUS DISREGARD TO ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOU LD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHOR ITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PEN ALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WH ERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' 16. WE FIND THAT BOTH THE AUTHORITIES HAVE RIGHTLY CON STRUED THE PROVISIONS AND APPLIED THE LAW TO THE FACTS AND THE SURROUNDING CI RCUMSTANCES APTLY. TAX APPEAL, RESULTANTLY, DESERVES NO FURTHER CONSIDERAT ION AND HENCE, THE SAME IS DISMISSED. 10. TAKING INTO CONSIDERATION OF THE ENTIRE F ACTS OF THE MATTER, WE FIND THAT THE RATIO LAID DOWN IN THE SAID JUDEMENT IS SQUARELY AP PLICABLE TO THE INSTANT CASE AND WE FIND THAT WHEN THE GENUINENESS OF THE TRANSACTIO N HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES AS ALSO THE IMPORTANCE OF URGENCY OF RAISING CASH LOAN, THE PENALTY U/S.271D & 271E OF THE ACT OUGHT NOT TO HAVE BEEN L EVIED. WE THUS DELETE THE ORDER OF PENALTY PASSED U/S.271D & 271E OF THE ACT. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED. T THIS ORDER PRONOUNCED IN OPEN COURT ON 11 / 06 /2018 SD/- SD/- ( ) ( ) ( WASEEM AHMED ) ( MS. M ADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/ 06 /2018 2,..*,.*../ T.C. NAIR, SR. PS ITA NOS.3334 & 3335/AHD/2016 RAKESH BHAILALBHAI PATEL VS. JT.CIT ASST.YEAR 2008-09 - 8 - !'#' / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 34 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-11, AHMEDABAD 5. 89:&*4 , ,40 , 3 / DR, ITAT, AHMEDABAD 6. :;<=+ / GUARD FILE. / BY ORDER, '8& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 6.6.18 (DICTATION-PAD 13- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7.6.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.11.6.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.6.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER