Income-tax Officer ,Ward 4 (1), Nagpur V. Shri Anand M Chandak, Nagpur

ITA 387/NAG/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2228 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 133A

Judgement Text

1 ITA NOS. 387 & 388/NAG/2012 THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO S . 387 & 388 /NAG/201 2 ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10. THE INCOME - TAX OFFICER, SHRI ANAND M. CHANDAK, WARD - 4(1), NAGPUR. VS. NAGPUR. PAN ADAPC9810Q. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. MOHANKUMAR. RESPONDENT : SHRI HIMESH DEMBLE. DATE OF HEARING : 15 - 04 - 2016 DATE OF PRONOUNCEMENT : 29 TH APRIL , 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE ARISING FROM THE ORDERS OF LEARNED CIT(APPEALS) - I, NAGPUR BOTH IDENTICALLY DATED 31 - 08 - 2012 RESPECTIVELY PASSED U/S 271D AND U/S 271E FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. THE REVENUE DEPARTMENT HAD CHALLENGE D THE DELETION OF PENALTY LEVIED U/S 271D OF RS.15,37,000/ - AND DELETION OF PENALTY U/S 271E OF RS.19,75,000/ - . 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDERS PASSED U/S 271D AND 271E BOTH DATED 25 - 02 - 2011 WERE THAT THE ASSESSEE HAD ACCEPTED THE CASH DEPOSITS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS ON SEVERAL DATE S IN THE FINANCIAL YEAR 2007 - 08 TOTALLING RS.15,37,000/ - . LIKEWISE FOR THE FINANCIAL YEAR 2008 - 09 IT WAS NOTICED THAT THE CASH WAS REPAID AMOUNTING TO RS.19,75,00 0/ - IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269T OF I.T. ACT. 2 ITA NOS. 387 & 388/NAG/2012 3. A SURVEY U/S 133A WAS CONDUCTED AT M/S MURLI INDUSTRIES . AT THE TIME OF SURVEY IT WAS FOUND THAT CASH PAYMENT WAS MADE TO ONE SHRI ANAND M. CHANDAK, THE ASSESSEE. THE PAYMENT AS WELL AS REPAYMENT BOTH WERE IN CASH THEREFORE, CONTRAVENED THE PROVISIONS OF SECTION 269SS AND SECTION 269T OF I.T. ACT. THE EXPLANATION OF THE ASSESSEE WAS THAT HE HAPPENED TO BE A CHARTERED ACCOUNTANT AND RECEIVED THE AMOUNT FOR AND ON BEHALF OF THE SAID COMPAN Y AS A FINANCIAL ADVISOR TO BE USED TOWARDS THE PURCHASE OF LAND AT RAJASTHAN. THE PAYMENT WAS NOT A LOAN OR A DEPOSIT BUT IN THE NATURE OF AN ADVANCE TO STAFF. THE ADVANCE WAS GIVEN FOR PURCHASE OF IMMOVABLE PROPERTY ON BEHALF OF M/S MURLI INDUSTRIES. HOWEVER, THE AO WAS NOT CONVINCED AND LEVIED THE PENALTY U/S 271D OF RS.15,37,000/ - AND U/S 271E OF RS.19,75,000/ - . 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE AND THEREAFTER DELETED THE IMPUGNED PENALTIES AFTER ASSIGNING THE FOLLOWING REASONS : 5. I HAVE CAREFULLY CONSIDERED THE ISSUE BEFORE ME. THE APPELLANT HAS FILED COPIES OF ACCOUNT AS APPEARING IN THE BOOKS OF ACCOUNT OF MLS MURLI INDUSTRIES LTD. IT IS EVIDE NT FROM THE COPIES OF ACCOUNTS THAT THE AMOUNTS HAVE BEEN PAID FOR PROCUREMENT OF LAND AT VARIOUS PLACES AT CHANDRAPUR, KARNATAKA AND RAJASTHAN. APPELLANT HAS ALSO PRODUCED COPIES OF CERTAIN VOUCHERS WHICH SHOW THAT CERTAIN AMOUNTS HAVE BEEN INCURRED IN C ONNECTION WITH THE TRAVELLING EXPENSES TO THESE PLACES. APPELLANT HAS ALSO STATED THAT CERTAIN AMOUNTS HAVE BEEN REFUNDED BACK TO MLS MURLI INDUSTRIES. IT HAS BEEN EMPHASIZED BY THE APPELLANT THAT THE AMOUNTS ARE NEITHER IN THE NATURE OF LOAN OR DEPOSIT S BUT ARE TRANSACTIONS ON THE CURRENT ACCOUNT. 5.1 THE QUESTION THAT REMAINS TO BE CONSIDERED IS WHETHER THE TRANSACTIONS IN QUESTION ARE LOANS OR DEPOSIT OR IN THE NATURE OF CURRENT ACCOUNT TRANSACTIONS. THE WORD 'DEPOSIT' IS .POLNTED OUT BY THE MADRAS HIGH COURT IN V. BALAKRISHNUDU VS. NARAYANSWAMY CHETTY (1914) 24 IC 852 IS DERIVED FROM THE LATIN DEPOSITUM, A TECHNICAL WORD USED IN THE ROMAN LAW OF BAILMENT FOR A BAILMENT OF A SPECIFIC T HING TO BE KEPT FOR THE BAILOR AND RETURNED WHEN WANTED AN OPPOSED TO COMMODATUM WHERE A SPECIFIC THING IS RENT TO THE BAILEE TO BE USED BY HIM AND RETURNED IN POPULAR LANGUAGE COMMODATUM IS TRANSLATED BY THE WORD . 'LOAN' AND THE DISTINCTION BE TWEEN THE DEPOSIT AND THE LOAN IS THIS THAT THE DEPOSIT IS TO BE KEPT WITH THE DEPOSITEE FOR THE DEPOSITOR AND THE LOAN IS TO BE KEPT BY THE BORROWER FOR HIMSELF. IT IS APPARENT THAT IN THE INSTANT CASE THE MONEYS WERE ADVANCED TO THE APPELLANT FOR SPEC IFIC PURPOSES AND WERE IN THE NATURE OF CURRENT ACCOUNT TRANSACTIONS. IN THIS CONTEXT THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V IDHAYAM PUBLICATIONS LTD. 285 ITR 221 IS RELEVANT. THE 3 ITA NOS. 387 & 388/NAG/2012 HON'BLE HIGH COURT HAS HELD THAT 'WHEN TRANSA CTION WAS IN THE CURRENT ACCOUNT THEY ARE NOT IN THE NATURE OF LOAN OR DEPOSIT AND THEREFORE THE PROVISIONS OF SECTION 2710 WILL NOT APPLY.' IN THE AFORESAID CASE ASSESSING OFFICER NOTED THAT ASSESSEE HAD ACCEPTED A CASH LOAN FROM ITS SISTER CONCERN IN VIOLATION OF PROVISIONS OF SECTION 26955 AND THUS HE INITIATED PENALTY 'PROCEEDINQS UNDER SECTION 2710 AND ISSUED A SHOW - CAUSE NOTICE TO ASSESSEE - IN RESPONSE, ASSESSEE STATED THAT TRANSACTION BETWEEN ASSESSEE AND '5' PROPRIETOR OF SAID CONCERN, WAS CU RRENT ACCOUNT IN NATURE AND WAS NOT A LOAN OR DEPOSIT - ASSESSING OFFICER HOWEVER, LEVIED A PENALTY UNDER SECTION 2710 - IT WAS FOUND THAT THERE WAS A RUNNING CURRENT ACCOUNT IN BOOKS OF ACCOUNT OF ASSESSEE IN NAME OF '5'AND '5' USED TO PAY MONEY IN CUR RENT ACCOUNT AND USED TO WITHDRAW MONEY ALSO FROM CURRENT ACCOUNT. THE HONBLE HIGH COURT HAS HELD THAT SINCE TRANSACTION BETWEEN ASSESSEE AND S WAS NOT A LOAN OR DEPOSIT AND IT WAS ONLY CURRENT ACCOUNT IN NATURE, THERE WAS NO VIOLATION OF SECTION 269SS . 5.2 IN A SIMILAR DECISION REPORTED IN 2 DTL 275 (ALL.) IN THE CASE OF CIT VS. KAILASHCHANDRA DEEPAK KUMAR IT HAS BEEN HELD THAT PROVISION OF SECTION 269SS ARE APPLICABLE IN THE CASE OF LOAN OR DEPOSIT AND DOES NOT COVER CASH ADVANCE FOR PURCHASE OF GO ODS. AO HAS NOT POINTED OUT ANY SUPPORTING EVIDENCE OR REASON THAT THESE AMOUNTS ARE IN THE NATURE OF LOAN AND DEPOSIT. 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN THE UNDISPUTED FACT WAS T HAT THE ASSESSEE IN THE CAPACITY OF THE CHARTERED ACCOUNTANT HAD TAKEN THE CASH FOR THE PURPOSE OF PURCHASE OF LAND AT RAJASTHAN ETC. FOR AND ON BEHALF OF THE COMPANY AND UNDISPUTEDLY THE AMOUNT IN QUESTION WAS NOT FOR THE PERSONAL USE OF THE ASSESSEE AND THAT THE ASSESSEE HAD NEVER DECL ARED THE AMOUNT IN QUESTION IN HIS HANDS, THEREFORE, IT APPEARS THAT THE ASSESSEE WAS NOTHING BUT A CUSTODIAN OF THE MONEY. THE MONEY WAS TO BE UTILIZED FOR THE LAND TRANSACTION TO BE EXECUTED IN THE BOOKS OF THE SAID COMPANY HAS ALSO BEEN PLACED ON RECOR D WHEREIN THE NARRATION WAS THAT THE AMOUNT WAS PAID TOWARDS ADVANCE AND THERE ARE ALSO CONTRA ENTRIES WHERE THE AMOUNT WAS RECEIVED BACK. THE NARRATIONS HAVE ALSO EXPLAINED THE PROCUREMENT OF LAND AT SEVERAL PLACES. CONSIDERING THE FACTS OF THE CASE AS WELL AS THE DECISION CITED BY LEARNED CIT(APPEALS) I.E. CIT VS. KAILASHCHANDRA DEEPAK KUMAR 2 DTL 275 (ALL.) WE HEREBY CONFIRM THE FINDINGS OF LEARNED CIT(APPEALS). MOREOVER IN THE CASE OF SHARDA EDUCATIONAL TRUST VS. ACIT 99 TTJ 212 (ITAT AGRA) THE PURPO SE OF INTRODUCTION OF THE SAID PROVISIONS HAS ALSO BEEN DISCUSSED WHILE DELETING THE PENALTY AS UNDER : 4 ITA NOS. 387 & 388/NAG/2012 1. THE NEXT ARGUMENT ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANT WAS THAT THE INTENTION OF LEGISLATURE WHILE ENACTING THE PROVISION OF SS. 269SS, 269T, 27ID AND 27ID WAS, AS HAVE BEEN EXPLAINED, IN CIRCULAR NO. 387, DT. 6 TH JULY, 1984, TO CURB THE TRANSACTIONS OF BLACK MONEY FOR EXPLAINING THE GENUINENESS OF CASH FOUND DURING THE TIME OF SEARCH OR OTHERWISE - MEANING THEREBY, THAT, IF THE TRANSACTION IN QUESTION DOES NOT INVOLVE THE BLACK MONEY THERE IS FOUND TO BE GENUINE THEN THERE IS NO VIOLATION OF S.269SS OR 269T, AS THE CASE MAY BE AND CONSEQUENTLY, THERE IS NO JUSTIFICATION FOR MAKING PENALTY UNDER S.271D OR 271E OF THE ACT, AS THE CASE MAY BE. REVERTING TO THE PRESENT CASE, THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE REVENUE HAS ACCEPTED THE TRANSACTION AS GENUINE, THERE WAS NO INVOLVEMENT OF BLACK MONEY AND CONSEQUENTLY, THIS IS NOT A FIT CASE WHERE PENALTY UNDER S.271D MAY BE IMPOSED . IN SUPPORT OF THIS SUBMISSION, RELIANCE WAS PLACED ON THE DECISION OF TRIBUNAL, AGRA BENCH IN THE CASE OF FARRUKHABAD INVESTMENT (I). LTD., VS. JT. CIT (2003) 80 TTJ (DEL) 82 : (2003) 85 ITD 230 (DEL), SPECIALLY THE OBSERVATIONS AT PP. 249 TO 253 IN PARA 38 TO 48 AND AT P.256 PARA 60 OF THE ORDER. 2. KEEPING THE ABOVE CIRCULAR IN VIEW, THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF INDUSTRIAL ENTERPRISES VS. DY.CIT (2000) 68 TTJ (HYD) 373: (2000) 73 ITD 252 (HYD) IN PARA 17.2 OF ITS ORDER HELD AS UNDER : PROVISION OF S.269SS WERE BROUGHT IN THE STATUTE BOOK TO COUNTER THE EVASION OF TAX IN CERTAIN CASES, AS CLEARLY STATED IN THE HEADING OF CHAPTER XX - B OF THE IT ACT, 1961 WHICH READS REQUIREMENTS AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAI N CASES TO COUNTERACT. EVASION OF TAX. LEGISLATIVE INTENTION IN BRINGING S.269SS IN THE IT ACT WAS TO AVOID CERTAIN CIRCUMSTANCES OF TAX EVASION WHEREBY HUGE TRANSACTIONS ARE MADE OUTSIDE THE BOOKS OF ACCOUNT BY WAY OF CASH. AS FAR AS THE CASE ON HAND BE FORE US IS CONCERNED, THERE IS NO CASE AGAINST THE ASSESSEE - FIRM THAT THESE TRANSACTIONS HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. AS RIGHTLY POINTED BY THE CIT(A) HIMSELF, IT MAY BE A CASE OF NEGLIGENCE. BUT A NEGLIGENT PERSON DOES NOT HAVE ANY INTENTION OR MENS REA TO PURPOSELY VIOLATE ANY PROVISIONS OF LAW, SO AS TO BE VISITED WITH STRINGENT PUNISHMENT OF HEAVY PENALTY. 3. SIMILARLY THE ASSESSEES PLEA THAT IN VIEW OF THE INTENTION OF THE LEGISLATURE WHILE ENACTING THE PROVISIONS OF S.269SS AND 269T AS WELL AS 271D AND 271E, WHICH, AS EXPLAINED IN CIRCULAR NO.387,DT. 6 TH JULY, 1984, WAS TO CURB THE TRANSACTION OF BLACK MONEY, IS ALSO LIABLE TO BE ACCEPTED BECAUSE IN THE PRESENT CASE, THE REVENUE HAS ACCEPTED THE TRANSACTION AS GENUIN E AND HAS NOT FOUND THE DEPOSIT BEING OUT OF UNACCOUNTED CASH OR THE DEPOSIT HAVING BEEN MADE WITH AN EFFORT TO EXPLAIN OR INTRODUCE CASH IN THE GARB OF LOAN/DEPOSIT. IN VIEW OF ALL THESE FACTS, WE, AFTER FOLLOWING THE DECISION OF TRIBUNAL, AGRA BENCH, IN THE CASE OF FARRUKHABAD INVESTMENT INDIA (P.) LTD. (SUPRA) ACCEPT THE ASSESSEES PLEA THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF S.269SS AND CANCEL THE PENALTY. 5 ITA NOS. 387 & 388/NAG/2012 6. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS RESPECTFULLY FOLLOWING THE PRECEDENTS CITED HEREIN ABOVE, WE HEREBY ENDORSE THE FINDINGS OF THE LEARNED CIT(APPEALS) AND DISMISS THE GROUNDS OF THE REVENUE. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON THIS 29 TH DAY OF APRIL , 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 29 TH APRIL , 2016. COPY FORWARDED TO : 1. SHRI ANAND M. CHANDAK, 202,, SUBHEDAR APARTMENT, CONGRESS NAGAR, NAGPUR. 2. I.T.O., WARD - 4(1) , NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.