Shri. Inderjit sharma, Ferozepur V. The Joint commissioner, Ferozepur

ITA 385/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5740 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Non passing of speaking order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.385(ASR)/2010 ASSESSMENT YEAR:2005-06 PAN :BHLPS3982C SHRI INDERJIT SHARMA VS. JOINT COMMR. OF INCOME-TA X, C/O M/S. REE FILLING STATION, RANGE-III, BHAGTA BHAI KA. FEROZEPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.P.N. ARORA, ADV. RESPONDENT BY: SH. TARSEM LAL, DR ORDER PER MEHAR SINGH, AM, THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE CIT(A), BHATINDA, DATED 14.06.2010, PASSED U /S 250(6) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO IN SHORT THE ACT), FOR IMPOSITION OF PENALTY UNDER SECTION 271D, FOR THE ASSESSMENT YEA R 2005-06. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THAT THE ASSESSEE APPELLA NT IS NOT AN AGRICULTURIST AS HE IS PARTNER IN THE FIRM M/S. REE FILLING STATION AND DRAWN SALARY FROM THE SAID FIRM, THEREFORE, VIO LATED THE PROVISIONS OF SECTION 269SS WITHOUT APPRECIATING TH AT THE ASSESSEE APPELLANT HAS JOINED THE PARTNERSHIP FIRM ON 26.08.2004 WHEREAS THE LOANS HAVE BEEN TAKEN ON 20. 08.2004. 2. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THAT THE ASSESSEE APPELLA NT IS A PARTNER IN THE FIRM AND DRAWN SALARY FROM THE SAID FIRM WHEREAS PER EXPLANATION FILED NO INCOME HAS ACCRUED OR RECE IVED BY THE 2 ASSESSEE APPELLANT TILL THE DATE OF ACCEPTING LOANS , THEREFORE, HAVING ONLY AGRICULTURE INCOME AND, AS SUCH, HAS NO T VIOLATED THE PROVISIONS OF SECTION 269SS. 3. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE PENALTY ORDER MERELY ON THE BASIS OF OBSERVATIONS OF THE AO WITHOUT CONSIDERING THE SUBMISSIONS MADE DURING THE APPELLATE PROCEEDINGS B Y THE ASSESSEE APPELLANT. THEREFORE, THE ORDER PASSED IS NON SPEAKING ORDER, THE SAME BE SET ASIDE. 4. WITHOUT PREJUDICE TO ABOVE, THAT ON FACTS & CIRC UMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN UPHOLDI NG THE PENALTY ORDER WITHOUT CONSIDERING THE REASONABLE AN D SUFFICIENT CAUSE AS THE ASSESSEE APPELLANT WAS UNDER THE BONAF IDE BELIEF THAT PROVISIONS OF SECTION 269SS ARE NOT APPLICABLE TO HIM BEING AN AGRICULTURIST AND ON THE DAY OF ACCEPTANCE OF TH E LOANS HAVING NO OTHER INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT YEAR 2005- 06, THE AO IMPOSED PENALTY UNDER SECTION 271D OF T HE ACT, AT RS.10.27 LAKHS, ON THE GROUND THAT THE ASSESSEE VIOLATED TH E PROVISIONS OF SECTION 269SS OF THE ACT. THE LD. CIT(A), CONFIRMED THE FIN DINGS OF THE A.O. NOW AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSESSE E IS IN APPEAL BEFORE US. 4. IN THE COURSE, OF PRESENT APPELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT PROVISIONS OF SECTION 269SS ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE, THEREFORE, THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT, IS UNCALLED AND THE SAME BE DELETED. TO SUPPORT HIS CONTENTION, HE PLACED RELIANCE ON THE FOLLOWING CASE LAWS: I) DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF ASHWANI KUMAR VS. ITO, 309 ITR (AT) 69, WHEREIN IT HAS BEEN HELD AS UNDER: PENALTY UNDER S. 271D CONTRAVENTION OF S. 269SS -PERSONS HAVING AGRICULTURAL INCOME ONLY ASSESSEES TAKING LOAN FROM THEIR GRANDFATHER, ALL HAVING AGRICULTURAL INCOME A ND NEITHER OF THEM HAVING ANY INCOME CHARGEABLE TO INCOME-TAX AS ON THE DATE OF TRANSACTION, PENALTY U/S 271D WOULD NOT BE ATTRACTED BY 3 APPLICATION OF SECOND PROVISO TO S. 269SS SEC. 26 9SS BEING TRANSACTION SPECIFIC, IT IS IMMATERIAL THAT ASSESSE ES SUBSEQUENTLY EARNED TAXABLE INCOME IF NO TAX IS PAYABLE BY A P ERSONS, HE CANNOT BE TREATED AS AN ASSESSEE SO AS TO SUBJECT H IM TO THE RIGOURS OF SS. 269SS AND 271D. II) DECISION OF ITAT, AMRITSAR BENCH, IN THE CASE O F ITO VS. AGGARWAL TRADING COP. ITA NO.557(ASR)/1994 (ASSESSM ENT YEAR 1990-91, ORDER DATED 28.02.2001), WHEREIN IT H AS BEEN HELD AS UNDER: AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE O F THE VIEW THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE PRES ENT CASE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE PENA LTY LEVIED BY THE AO UNDER SECTION 271D OF THE ACT. IT IS STATED THAT THE ASSESSEE-FIRM IS A NEW FIRM, WHICH WAS CONSTITUTED ONLY ON 6.1.1988 WITH THREE PARTNERS AND THE ASSESSMENT YEA R INVOLVED IS 1990-91. IT WAS EXPLAINED BY THE ASSESSEE THAT P ARTNERS WERE NOT CONVERSANT WITH THE RELEVANT PROVISIONS OF TAX LAW, WHICH ARE BEING AMENDED FREQUENTLY BY THE LEGISLATURE. IT IS STATED THAT OUT OF THREE PARTNERS, TWO WERE ILLITERATE. AT THE RELEVANT TIME, THE CONCERNED TAX COUNSEL WAS RESIDING AT BHATINDA AND IN THE MONTH OF MARCH, 1990, HE WAS BUSY IN HIS WORK DUE TO THE FAG- END OF THE FINANCIAL YEAR AND THEREFORE, THE ASSESS EE COULD NOT TAKE THE PROPER ADVICE FROM HIS COUNSEL. IN THE CAS E OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UTTAR P RADESH AND OTHERS (1979) 118 ITR 326, IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT THERE IS NO PRESUMPTION THAT EV ERY PERSON KNOWS THE LAW. THE HONBLE SUPREME COURT, FURTHER OBSERVED THAT IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW THE LAW BUT THAT IT NOT A CORRECT STATEMENT AND THERE IS N O SUCH MAXIM KNOWN TO THE LAW. IN OUR CONSIDERED VIEW, ON THIS S CORE ALONE, THE PENALTY LEVIED BY THE AO IS NOT SUSTAINABLE. 5. THE LD. DR, ON THE OTHER HAND RELIED ON THE OR DERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY PERUSED THE RELEVANT FACTS OF THE CASE, RIVAL SUBMISSIONS AND THE RELEVANT PROVISIONS SECTION 260 SS OF THE ACT, INCLUDING THE CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSE SSEE. IT IS EVIDENT THAT THE 4 ASSESSEE BECAME PARTNER IN THE FIRM ON 26.08.2004. THE LOANS WHICH WERE CONSIDERED BY THE LOWER AUTHORITIES , IN THE LIGHT OF PROVISIONS OF SECTION 269SS READ WITH SECTION 271D OF THE ACT, WERE PRIOR TO THE DATE OF BECOMING A PARTNER OF THE ASSESSEE-FIRM. BOTH THE LENDER AND BORROWER, AS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, ARE AGRICULTUR ISTS AND DID NOT HAVE ANY INCOME CHARGEABLE TO TAX. THIS FACTUM COULD NOT BE REBUTTED BY THE LD. DR. THEREFORE, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE, IS SUPPORTED BY THE SECOND PROVISO TO SECTION 269SS OF THE ACT, AND BY THE AFORESAID CASE LAWS RELIED UPON BY HIM. WE HAVE CON SIDERED THE ABOVE CASE LAWS AND FIND THAT THE SAME ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN VIEW OF THE ABOVE DISCUSSION, THE PENALTY IMPOSED ON THE ASSESSEE IS DELETED, IN THE LIGHT OF THE SAID D ECISIONS. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 13TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: SH. INDERJIT SHARMA C/O M/S. REE FILL ING STATION, BHAGTA BHAI K. 2. THE JT. CIT,R-III, FEROZEPUR. 3. THE CIT(A), BHATINDA. 4. THE CIT,BHATINDA. 5. THE SR DR, ASR TRUE COPY BY ORDER 5 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.