FLOW PROCESS EQUIPMENT P.LTD, MUMBAI V. ADDL CIT RG 9(1), MUMBAI

ITA 3512/MUM/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6745 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Assessee Lawyers: H M SUKHIAWRITTEN SUBMISSION
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI B. RAMAKOTAI AH (A.M) ITA NO.3512/MUM/10(A.Y.2004-05) FLOW PROCESS EQUIPMENT PVT. LTD. 17, SAI NIKETAN, NEAR SIGNAL, CHANDAVARKAR ROAD, OPP. RLY. BORIVALI (W), MUMBAI 92 PAN:AAACF 1442Q (APPELLANT) VS. THE ADDL. CIT, RANGE 9(1), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI H.M.SUKHIA(WRITTEN SUBMISSION ) RESPONDENT BY : SHRI SUBACHAN RAM ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 4/3/2010 OF CIT(A)-19, MUMBAI RELATING TO ASSESSMENT YEAR 2004- 05. 2. THE ASSESSEE IS A COMPANY. IN THE COURSE OF AS SESSMENT PROCEEDINGS FOR A.Y 2004-05 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD REPAID LOANS THAT IT HAD TAKEN FROM ITS SHAREHOLDERS IN CA SH. THE DETAILS OF THE LOANS TAKEN BY THE ASSESSEE WHICH WERE REPAID IN CA SH ARE AS FOLLOWS: S.NO. NAME OF THE PARTY TO WHOM LOAN REPAID DATE OF PAYMENT TOTAL AMOUNT PAID IN CASH (RS.) 1. MRS. JYOTSNA K.CHITANIA 03.03.2004 15000 03.03.2004 20000 15.3.2004 15000 20.03.2004 8000 22.03.2004 18000 29.03.2004 7000 ITA NO.3512/MUM/10(A.Y.2004-05) 2 2. MRS. PAYAL J. CHITANIA 03.03.2004 20000 15.03.2004 15000 22.03.2004 18000 25.03.2004 3000 29.03.2004 7000 UNDER SECTION 269 OF THE INCOME TAX ACT, 1961 (THE ACT) NO PERSON SHALL REPAY ANY LOANS OTHERWISE THAN AN ACCOUNT PAYEE CHE QUE WHERE THE AMOUNT OF LOAN SO REPAID IS RS. 20,000/- OR MORE. FAILURE TO COMPLY WITH THE AFORESAID PROVISIONS INVITE PENALTY UNDER SECTION 2 71E OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271E OF THE ACT. IN TERM S OF SECTION 273B OF THE ACT IF THE ASSESSEE PROVES THAT THERE WAS A REASONA BLE CUASE FOR THE FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269T/271E OF THE ACT, NO PENALTY WILL BE IMPOSED ON THE ASSESSEE. 3. IN THE PROCEEDINGS FOR LEVY OF PENALTY UNDER SEC TION 271E OF THE ACT, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE LOAN HAD TO BE REPAID IN CASH BECAUSE MR. K.J. CHITANIA WHO IS TH E HUSBAND OF MRS. JOTHSANA K CHITANIA AND SMT. PAYAL J. CHITANIA DA UGHTER-IN-LAW OF SHRI K.J.CHITANIA, WAS UNDERGOING TREATMENT FOR ABDOMEN PROSTRATE DURING THE RELEVANT PERIOD AND CASH WAS REQUIRED URGENTLY FOR MEDICAL TREATMENT. IN SUPPORT OF THE PLEA THE ASSESSEE HAD FILED A CERTIF ICATE FROM A DOCTOR NAMELY ONE DR. HITESH K. PUNMIYA. THIS CERTIFICATE IS DAT ED 21/1/2010. IT READS AS FOLLOWS: IS TO CETIFY THAT K.J.CHITANIA WAS UNDER MY TREATM ENT FROM 01/03/04 TO 10/04/04 FOR PROSTRATE APART FROM THE ABOVE THE ASSESSEE ALSO FILED A CT S CAN REPORT DATED 27/8/2009 OF SHRI K.J.CHINTANIA AND COPY OF THE NEU ROLOGICAL EXAMINATION REPORT OF DR.MRS. B.K.DASTUR DATED 25/9/2006. THE ASSESSING OFFICER DID ITA NO.3512/MUM/10(A.Y.2004-05) 3 NOT ACCEPT THE PLEA OF THE ASSESSEE AND HE IMPOSED PENALTY ON THE ASSESSEE HOLDING THAT THERE WAS NO REASONABLE CAUSE FOR REPA YMENT OF THE LOAN IN CASH. 4. ON APPEAL BY THE ASSESSEE THE CIT(A) WAS OF THE VIEW THAT THE CT SCAN REPORT OF SHRI K.J.CHITANIA WAS DATED 28/8/09 AND THE NEUROLOGICAL EXAMINATION REPORT WAS DATED 25/9/2006. HE WAS THE REFORE, OF THE VIEW THAT WHEN THE LOAN WAS REPAID BY THE ASSESSEE IN CASH IN THE YEAR MARCH, 2004, THERE WAS NO EVIDENCE TO SHOW THE ILLNESS OF SHRI K.J. CHITANIA. THE CIT(A), THEREFORE, UPHELD THE ORDER OF THE ASSESSING OFFICE R IMPOSING PENALTY. 5. BEFORE US IT HAS BEEN POINTED OUT THAT THE LOWER AUTHORITIES HAVE IGNORED THE CERTIFICATE OF D. HITESH K. PUNMIYA CER TIFYING THAT SHRI K.J.CHITANIA WAS UNDER HIS TREATMENT FROM 1/3/2004 TO 10/4/2004. THE CT SCAN REPORT AND THE NEUROLOGICAL EXAMINATION REP ORT THOUGH THEY ARE DATED 28/8/09 AND 25/9/2006 WERE ONLY A CONTINUATIO N OF THE MEDICAL CONDITION WHICH SHRI J.K.CHITANIA FROM THE YEAR 200 4. IT WAS, THEREFORE, SUBMITTED THAT THE CIT(A) WAS NOT RIGHT IN HOLDING THAT AT THE RELEVANT POINT OF TIME WHEN LOANS WERE REPAID IN CASH THERE WAS NO MEDICAL EMERGENCY. 6. WE HAVE CONSIDERED HIS SUBMISSION AND ARE OF THE VIEW THAT THE SAME IS ACCEPTABLE. WE FIND THAT THE ASSESSING OFFICE R AS WELL AS CIT(A) HAS TOTALLY IGNORED THE CERTIFICATE OF DR. HITESH K. PU NMIYA. THIS CERTIFICATE CLEARLY ESTABLISHES THE FACT THAT SHRI K.J.CHINTANI A WAS UNDERGOING TREATMENT FOR ABDOMEN PROSTRATE FROM 1/3/2004 TO 10 /4/2004. IT IS AT THIS POINT OF TIME THAT LOANS WERE REPAID IN CASH BY THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE WAS A R EASONABLE CAUSE FOR ITA NO.3512/MUM/10(A.Y.2004-05) 4 REPAYMENT OF LOANS IN CASH BY THE ASSESSEE. CONSEQ UENTLY THE PENALTY LEVIED UNDER SECTION 271E DESERVES TO BE DELETED AND THE S AME IS HEREBY DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 22 ND DAY OF JULY, 2011. SD/- SD/- (B.RAMAKOTAIAH ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 22ND JULY.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RF BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3512/MUM/10(A.Y.2004-05) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 14/7/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 15/7/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER