SHRI SURESH KUMAR DAPKARA, JAIPUR V. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-1, KOTA

ITA 387/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2076 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• Assessee Lawyers: DEEPAK SHARAMA
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Reasonable cause
• Section: 143(3); 271D; 64; 13

Judgement Text

ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 387/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2012-13 SURESH KUMAR DAPKARA AMER ROAD, JAIPUR CUKE VS. THE ADD. CIT, RANGE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADUPD 2879 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VINOD KUMAR GUPTA (C.A.) & SHRI DEEPAK SHARAMA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K C GUPTA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/03/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 15/04/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), KOTA DATED 24.01.2019 FOR THE ASSESSMENT YEAR 2012- 13 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1. IMPUGNED PENALTY ORDER PASSED U/S 271D IS BAD I N LAW AND ON FACTS BEING AGAINST THE PRINCIPAL OF NATURAL JUSTICE AND FOR MANY MORE OTHER REASONS. ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 2 2. THE PENALTY ORDER PASSED U/S 271D IS BARRED BY L IMITATION U/S 275 OF THE INCOME TAX ACT, THE ORDER PASSED IS ILLEGAL, ER RONEOUS AND LIABLE TO QUASHED. 3. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS E RRED BY LEVYING PENALTY WITHOUT INITIATING THE PENALTY IN THE ASSESSMENT OR DER AND CIT (A) HAS ERRED BY CONFIRMING PENALTY OF RS. 1,00,000/- U/S 2 71D. THE PENALTY LEVIED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 4. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ER RED BY LEVYING PENALTY WITHOUT INITIATING THE PENALTY IN THE ASSESSMENT OR DER AND CIT(A) HAS ERRED BY CONFIRMING PENALTY OF RS. 1,00,000/- U/S 2 71D. THE PENALTY LEVIED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF SALE OF ELECTRONIC EQUIPMENTS AND FILED RETURN OF INCOME DATED 22.09.2012 DECLARING INCOME OF RS. 4,69,380/- AND A GRICULTURE INCOME OF RS. 69,455/-. THE ASSESSEE U/S 143(3) WAS COMPLETED MAK ING CERTAIN DISALLOWANCES OF EXPENSES AND INCOME WAS ASSESSED AT RS. 6,05,782 /- BY ITO, WARD 1(3), KOTA. 3. SUBSEQUENTLY, A SHOW-CAUSE NOTICE DATED 08.06.20 16 WAS ISSUED TO ASSESSEE BY ADDITIONAL CIT, RANGE 1, KOTA AS TO WHY PENALTY U/S 271D BE NOT IMPOSED ON THE ASSESSEE FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT AS THE ASSESSEE HAD ACCEPTED RS. 1,00,000/- (20,00 00*5) LOAN/DEPOSIT IN CASH ON VARIOUS DATES. IN RESPONSE TO THE SHOW-CAUSE, T HE ASSESSEE SUBMITTED THAT THE AFORESAID CASH RECEIPTS ARE NEITHER LOAN NOR DE POSIT AS THE SAME WAS CASH ADVANCE RECEIVED FROM M/S SHRI OM SAI STONE INDUSTR IES FOR SALE OF MOTOR AND ELECTRIC ITEMS AND IN THE NEXT YEAR VIDE BILL NO. 2 37, DATED 24.05.2012, SALE WAS MADE FOR 4,58,430/- AND THE REMAINING AMOUNT OF RS 3,58,430/- WAS RECEIVED ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 3 THROUGH BANKING CHANNELS FROM M/S OM SAI STONE INDU STRIES. HOWEVER, THE SUBMISSIONS SO FILED WERE NOT FOUND ACCEPTABLE TO T HE LD. ADD.CIT AND HE IMPOSED THE PENALTY BY HOLDING AS UNDER:- ASSESSEES REPLY HAS BEEN CONSIDERED AND IS NOT FO UND TO BE TENABLE. THE AMOUNT OF RS. 1,00,000/- IN CASH ACCEPTED BY THE AS SESSEE ON VARIOUS DATES 01.01.2012 IN FINANCIAL YEAR 2011-12 IN THE FORM OF RS.20,000/- EACH IS NOT IN THE NATURE OF ADVANCE RECEIVED AGAI NST SALE OF GOODS TO M/S OM SAI STONE INDUSTRIES BUT IT IS A DEPOSIT/LOAN RE CEIVED BY THE ASSESSEE AS CASH CREDIT, AS THE GOODS HAVE BEEN SOLD VIDE BI LL DATED 24.05.2012. THEREFORE, AFTER EXAMINING THE MATERIAL ON RECORD, IT IS HELD THAT THE ASSESSEE HAD ACCEPTED THE ABOVE-SAID DEPOSIT/LOAN R ECEIVED BY THE ASSESSEE AS CASH CREDIT, AS THE GOODS HAVE BEEN SOL D VIDE BILL DATED 24.05.2012. THEREFORE, AFTER EXAMINING THE MATERIAL ON RECORD, IT IS HELD THAT THE ASSESSEE HAD ACCEPTED THE ABOVE SAID DEPOSIT/LOAN I N CASH IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT, WITHOUT ANY REASONABLE CAUSE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL AND THE PENALTY SO LEVIED WAS CONFIRMED BY THE LD CIT(A) AND HIS FI NDINGS READS AS UNDER: I HAVE GONE THROUGH THE ASSESSEES SUBMISSIONS AND AOS FINDINGS. THE APPELLANT HAS PRODUCED SELF SERVING DOCUMENTS IN SU PPORT OF THE CLAIM MADE. THE REASONABLENESS OF GETTING AN ADVANCE OF R S.1,00,000/- IN CASH 4 MONTHS PRIOR TO THE PURPORTED SALE OF ELECTRICAL GOODS IS NOT AN ACCEPTABLE RESPONSE. THE TRANSACTION SHOWN LATER IS TO BYE PASS THE RIGORS OF THE SECTION 269SS VIOLATION. THE AMOUNT RECEIVED ON DIFFERENT DATES IS ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 4 THEREFORE TREATED AS CASH DEPOSIT/LOAN WITHIN THE M EANING OF SECTION 269SS. THUS ON THE FACTS INVOLVED, I AM IN AGREEMENT WITH THE DECISION OF ADDL.CIT RANGE-1, KOTA OF IMPOSING A PENALTY OF RS. 1,00,000/- IN HIS CASE U/S 271D OF THE ACT. THE SAME IS BEING UPHELD. 5. AGAINST THE AFORESAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. AR DRAWING OUR REFE RENCE TO THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATED 28.02.2014 SUBMI TTED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING/OBSERVATION THAT THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT. IT WAS SUBMITTED THAT IT IS A CLEAR CASE THAT THE ASSESSING OFFICER HAS NOT RECORDED ANY SAT ISFACTION REGARDING PENALTY PROCEEDING U/S 271D OF THE ACT. IN SUPPORT, RELIANC E WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. JA I LAXMI RICE MILLS (2015) 64 TAXMANN.COM 75 (SC) AND OF THE COORDINATE BENCH IN CASE OF SHRI T SHIJU VS JCIT (ITA NO. 2829/CHNY/2018 DATED 07.06.2019). 6. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS R ECEIVED CASH ADVANCE OF RS. 1,00,000/- FROM M/S OM SAI STONE INDUSTRIES IN THE LAST QUARTER OF THE FINANCIAL YEAR 2011-12 AND THEREAFTER, SALE WAS MAD E IN THE SUBSEQUENT QUARTER IN THE NEXT FINANCIAL YEAR VIDE SALE BILL DATED 24. 05.2012 FOR RS. 4,58,430/-. IT WAS SUBMITTED THAT THE AO HAS LEVIED THE PENALTY ON THE SOLE GROUND THAT SALE HAS BEEN MADE IN THE NEXT FINANCIAL YEAR, HOWEVER, THERE IS NO PROVISION IN LAW WHICH COMPELS THAT ADVANCES RECEIVED FROM CUSTOMER AGAINST WHICH SALE NOT COULD BE MADE TILL END OF FINANCIAL YEAR IS TO BE T REATED AS LOANS/DEPOSITS. IT WAS SUBMITTED THAT IN THE CASE OF SALE OF HIGH VALUE MA CHINERY, IT IS A PREVAILING INDUSTRY PRACTICE TO RECEIVE SOME AMOUNT PRIOR TO T HE DELIVERY AND THEREAFTER ON DELIVERY, THE BALANCE AMOUNT IS RECEIVED. IT WAS AC CORDINGLY SUBMITTED THAT THERE ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 5 IS NOTHING UNUSUAL IF ASSESSEE RECEIVED AN AMOUNT O F RS. 1,00,000/- IN THE LAST QUARTER OF THE FINANCIAL YEAR AND THEREAFTER SALES WERE MADE IN THE SUBSEQUENT QUARTER THOUGH FALLING IN THE NEXT FINANCIAL YEAR. IT WAS SUBMITTED THAT SIMILAR CONTENTIONS WERE ADVANCED BEFORE THE LD. CIT(A) AND COMPLETE DETAILS WERE FILED WHICH WERE NOT APPRECIATED BY THE LD CIT(A). IT WA S FURTHER SUBMITTED BEFORE THE LD CIT(A) THAT M/S OM SAI STONE INDUSTRIES HAS OBTAINED A LOAN OF RS. 3,58,430/- FROM BANK OF BARODA, RAMGANJ MANDI BRANC H FOR MAKING PURCHASE OF RS. 4,58,430/- FROM THE ASSESSEE AND BY CONSIDERING ADVANCE PAYMENT OF RS. 1,00,000/- AS MARGIN MONEY, THE BANK HAS FINANCED R S. 3,58,430/- TO M/S OM SAI STONE INDUSTRIES AND WHICH WAS SUBSEQUENTLY PAI D TO THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT IT IS A SETTLED LEGAL PROPOS ITION THAT CASH ADVANCE RECEIVED FROM PURCHASER DOES NOT FALL UNDER THE AMBIT OF SEC TION 269SS AND IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- CIT VS KAILASH CHANDRA DEEPAK KUMAR (2009) 32 DTR 3 36 (ALLAHABAD HC) CIT VS KHARATI LAL AND CO. 270 ITR 445 (2004) (P&H HC) 7. PER CONTRA, THE LD. DR IS HEARD WHO HAS SUBMITTE D THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OB SERVED THAT THE ASSESSEE HAS RECEIVED CASH OF RS 1 LACS ON VARIOUS DATES FROM M/ S SHRI OM SAI STONES INDUSTRIES IN VIOLATION OF PROVISIONS OF SECTION 26 9SS AND ACCORDINGLY, A PROPOSAL WAS SENT TO THE ADD. CIT, RANGE 1, KOTA VIDE LETTER NO 107 DATED 30.05.2016 FOR INITIATING THE PENALTY PROCEEDINGS. IT WAS SUBMITTE D THAT THE SAID PROPOSAL REFLECTS THE MIND AND THE SATISFACTION OF THE ASSES SING OFFICER AND BASIS THE SAME, THE PROPOSAL WAS SENT TO THE ADD. CIT, RANGE 1, KOTA FOR INITIATION OF PENALTY PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT UNLIKE PROVISIONS OF SECTION 271(1)(C), THERE IS NO REQUIREMENT TO RECORD THE SA TISFACTION BY THE ASSESSING OFFICER WHICH HAS TO BE DISCERNABLE FROM THE ASSESS MENT ORDER AND MORE SO, ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 6 WHERE THE ASSESSING OFFICER DOESNT HAVE THE JURISD ICTION TO LEVY THE PENALTY. FURTHER, HE RELIED ON THE ORDER AND FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSMENT HAS BEE N COMPLETED BY THE ITO WARD -1(3), KOTA AND GIVEN THAT HE DOESNT HAVE THE JURISDICTION TO LEVY THE PENALTY, HE HAS SENT A PROPOSAL TO THE ADD. CIT, RA NGE 1, KOTA VIDE LETTER NO 107 DATED 30.05.2016 FOR INITIATING THE PENALTY PRO CEEDINGS STATING THAT THE ASSESSEE HAS RECEIVED CASH OF RS 1 LACS ON VARIOUS DATES FROM M/S SHRI OM SAI STONES INDUSTRIES IN VIOLATION OF PROVISIONS OF SEC TION 269SS AND ADD. CIT, RANGE 1, KOTA HAS SUBSEQUENTLY ISSUED THE SHOW-CAUSE TO T HE ASSESSEE AND THEREAFTER, HAS LEVIED THE PENALTY. THE SATISFACTION FOR INITIA TING THE PENALTY PROCEEDINGS THEREFORE HAS TO BE OF THE AUTHORITY WHICH HAS THE REQUISITE JURISDICTION TO FINALLY LEVY THE PENALTY. THERE CANNOT BE A SITUATION WHER E TWO DIFFERENT AUTHORITIES RECORD SATISFACTION AND FINALLY LEVY PENALTY. IN T HE INSTANT CASE, GIVEN THAT THE ITO WAS CEASED OF THE MATERIAL AND INFORMATION THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 269SS HAS PASSED ON THAT MATE RIAL AND INFORMATION TO THE ADD. CIT AND WHO, ON REVIEW OF THE SAME, HAS FOUND THE SAME TO FORM THE REASONABLE BASIS FOR INITIATING THE PENALTY PROCEED INGS, WE FIND THAT THE ADD. CIT HAS RIGHTLY INITIATED THE PENALTY PROCEEDINGS BY IS SUE OF SHOW-CAUSE DATED 8.06.2016 AND WHICH HAS NOT BEEN DISPUTED BY THE AS SESSEE. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. JA I LAXMI RICE MILLS (SUPRA) AND THE COORDINATE BENCH IN CASE OF SHRI T SHIJU VS JCI T (SUPRA) ARE DISTINGUISHABLE ON FACTS AS IN THOSE CASES, IT WAS THE SAME AUTHORI TY I.E, THE ASSESSING OFFICER, WHO HAS PASSED THE ASSESSMENT ORDER U/S 143(3), WHO HAS SUBSEQUENTLY LEVIED THE PENALTY AND IN THAT FACTUAL CONTEXT, PENALTY LE VIED WAS DELETED ON ACCOUNT OF LACK OF SATISFACTION AND THUS, DOESNT SUPPORT THE CASE OF THE ASSESSEE. ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 7 THEREFORE, THE CONTENTION SO ADVANCED BY THE LD AR IN THIS REGARD CANNOT BE ACCEPTED. 9. ON MERITS, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS SUPPLIED ELECTRICAL GOODS TO M/S SHRI OM SAI STONES INDUSTRI ES VIDE SALE BILL NO. 237 DATED 24.05.2012 FOR A SUM OF RS 4,58,430/-. IT IS ALSO NOT IN DISPUTE THAT THE CASH AMOUNT OF RS 1 LAC RECEIVED EARLIER FROM M/S SHRI O M SAI STONES INDUSTRIES DURING THE LAST QUARTER OF THE IMPUGNED FINANCIAL Y EAR HAS BEEN ADJUSTED AGAINST THE SAID SALES AND ONLY THE BALANCE AMOUNT OF RS 3, 58,430/- HAS BEEN RECEIVED BY THE ASSESSEE. THUS, THE NATURE OF AMOUNT SO RECE IVED IS THE CASH ADVANCE AGAINST SUPPLY OF GOODS AND NOT LOAN/DEPOSIT OR SPE CIFIED SUM IN RELATION TO TRANSFER OF AN IMMOVEABLE PROPERTY AND THE SAME CAN NOT THEREFORE BE SUBJECT TO THE RIGOUR OF THE PROVISIONS OF SECTION 269SS OF TH E ACT. IN VIEW OF THE SAME, THE CONSEQUENT PENALTY U/S 271D SO LEVIED IS HEREBY DIR ECTED TO BE DELETED AND THE MATTER IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/04/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15/04/2020. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SURESH KUMAR DAPKARA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ADD.CIT, RANGE-1, KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 387/JP2019 SURESH KUMAR DAPKARA 8 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 387/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR