ASNEW BARRELS P.LTD, MUMBAI V. ADDL CIT RG 10(2), MUMBAI

ITA 4133/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9026 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.4133/MUM/2012 ASSESSMENT YEAR: 2006-07 ASNEW BARRELS P. LTD., 221, SWASTIK CHAMBERS, CST ROAD, CHEMBUR, MUMBAI-71 PA NO.AACCA 0165 H ADDL. CIT, RANGE 10(2), MUMBAI (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI SHEKHAR GUPTA RESPONDENT BY: MS NEERAJA PRADHAN DATE OF HEARING: 27 .8.2012 DATE OF PRONOUNCEMENT: 14.9.2012 ORDER PER B.R.MITTAL, JM: THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST ORDER DATED 12.4.2012 OF LD CIT(A)-21, MUMBAI DISPUTING THE CONFIRMATION OF ORDER OF AO LEVYING PENALTY OF RS.5,08,607 UNDER SECTION 271E O F THE ACT. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE REPAID PART OF THE LOANS TAKEN FROM MRS DEPINDER KAUR SANDHU AND AMRUT PAL SINGH SANDHU IN CASH AGGREGATING TO RS.2,63,607 AND RS.2,55,000, RESPECT IVELY ON VARIOUS DATES. THE AO ISSUED SHOW CAUSE NOTICE UNDER SECTION 269T OF THE ACT STATING THAT ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 269T OF THE A CT. ASSESSEE IN ITS REPLY STATED THAT IN CASE OF MRS DEPENDER KAUR SANDHU, LOANS REPAID I N CASH DURING THE PREVIOUS YEAR AGGREGATING ONLY TO RS.2,06,000 AS RS.10,000 WAS PA ID BY CEHQUE ON 7.11.2005 AND AN AMOUNT OF RS.47,607 WAS REPAID TO HER BY WAY OF DEB ITING HER ACCOUNT FOR EXPENSES INCURRED AND PAID BY ASSESSEE COMPANY. THUS, ASSES SEE CONTENDED THAT AN AMOUNT OF RS.2,06,000 WAS PAID IN CASH TO MRS DEPINDER KAUR S ANDHU ONLY IN CONTRAVENTION OF SECTION 269T OF THE ACT. ITA NO.4133/MUM/2012 ASSESSMENT YEAR: 2006-07 2 3. AO ACCEPTED THE CONTENTION OF THE ASSESSEE IN RE SPECT OF RS.10,000 PAID BY CHEQUE AND DID NOT AGREE THAT PAYMENT OF RS.47,607 REPAID BY WAY OF DEBITING HER ACCOUNT FOR EXPENSES INCURRED IS NOT IN CONTRAVENTI ON OF PROVISIONS OF SECTION 269T OF THE ACT. AO STATED THAT PROVISIONS OF SECTION 269T OF THE ACT COVERS IN ITS AMBIT THE REPAYMENTS OF ANY LOAN OR DEPOSIT, WHICH ARE OTHERW ISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAM E OF THE PERSON, WHO HAS MADE THE LOAN OR DEPOSIT. ASSESSEE FURTHER ADVANCED THE FOLLOWING GROUNDS IN ITS EXPLANATION: (I) THE ASSESSEE THOUGH A PRIVATE LIMITED COMPANY, MORE OR LESS IT IS OWNED BY THE SANDHU FAMILY. (II) COMPANY IS IN HUGE LOSSES SINCE LAST 10 YEARS AND L ENDING BANKERS HAVE INITIATED RECOVERY PROCEEDINGS AGAINST IT. (III) DUE TO THE FINANCIAL DIFFICULTIES MRS. DEPNDER KAUR SANDHU AND MR. AMRUTPAL SINGH SANDHU WERE REPAID IN CASH WHICH WIR E BELOW RS. 20,000/- EACH TIME DURING THE YEAR. THE FUNDS WERE REQUIRED BY THE PAYEES FOR THE TREATMENT OF A FAMILY MEMBER. (IV) ASSESSEE CITED THE DECISION OF HYDERABAD TRIB UNAL STATING THAT PROVISIONS OF SECTION 269SS HAVE BEEN INTRODUCED TO CURB THE P RACTICE OF EXPLAINING AWAY UNACCOUNTED MONEY AND THE PROVISIONS ARE NOT A PPLICABLE TO THE TRANSACTIONS WHICH ARE CONDUCTED IN OPEN AND GENUI NE MANNER. (V) THE TRANSACTION IN QUESTION IS GENUINE AND ARE MERE TECHNICAL BREACH OF PROVISIONS. 4. AO DID NOT ACCEPT ABOVE EXPLANATIONS OF ASSESSEE . AO STATED THAT A STATUTORY PROVISION MUST STRICTLY BE ADHERED TO IN LETTER AS WELL IN SPIRIT AND ITS INFRINGEMENT CANNOT BE TAKEN LIGHTLY. THE ONUS IS UPON THE ASSESSEE TO PROVE THE EXISTENCE OF CERTAIN EXIGENCIES AND UNAVOIDABLE CIRCUMSTANCE COMPELLING THE ASSESSEE TO CONTRAVENE THE PROVISIONS OF SECTION 269T OF THE I.T.ACT. SINCE A SSSSEE HAS FAILED TO DISCHARGE THIS ONUS AND ALSO JUSTIFY THAT THE PAYMENT WAS MADE IN CAS H DUE TO FINANCIAL DIFFICULTIES, AO HELD THAT ASSESSEE HAS CONTRAVENED THE PROVISIONS O F SECTION 269T OF THE ACT. AO IMPOSED PENALTY OF RS.5,08,607 BEING EQUAL TO THE A MOUNT REPAID IN CASH (RS. 2,5 3,607 TO MRS. DEPINDER KAUR SANDHU AND RS. 2,55,000 TO AM RUTPAL S. SANDHU) UNDER SECTION 271E OF THE ACT. BEING AGGRIEVED, ASSESSEE FILED AP PEAL BEFORE LD CIT(A). 5. DURING THE COURSE OF HEARING, LD A.R. REITERATED THE SUBMISSIONS AS MADE BEFORE THE AO. LD CIT(A) CONFIRMED THE ACTION OF AO. HEN CE, THIS APPEAL BY THE ASSESSEE. ITA NO.4133/MUM/2012 ASSESSMENT YEAR: 2006-07 3 6. DURING THE COURSE OF HEARING BEFORE US, LD A.R. REITERATED THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW AND ALSO FILED AN AFFIDAVIT OF AMRITPAL SINGH SANDHU STATING THAT ASSESSEE COMPANY IS A COMPANY PROMOTED BY HIS FATHER IN LAW MR BALBIR ONKAR SINGH AND HIS FAMILY. THE ASSESSEE COMPANY W AS FACING SERIOUS FINANCIAL PROBLEMS AND AT THE REQUEST OF MR BALBIR ONKAR SING H, HIS FATHER IN LAW, HE HIMSELF AND HIS WIFE MRS DEPINDER KAUR SANDHU GAVE LOANS TO THE COMPANY. IT IS STATED THAT DURING THE FINANCIAL YEAR 2005-06, HIS FATHER WAS SERIOUSL Y ILL AND WAS HAVING MULTIPLE HEALTH PROBLEMS AND, THEREFORE, ASSESSEE COMPANY REPAID A PART OF THE LOAN IN CASH FOR INCURRING MEDICAL EXPENSES. LD A.R. ALSO RELIED UP ON THE FOLLOWING JUDGMENTS: I) HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS TRI UMPH INTERNATIONAL FINANCE (I) LTD., 22 TAXMANN.COM 138( BOM), II) HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. N ATVARLAL PURSHOTTAMDAS PAREKH, 303 ITR 5 (GUJ) III) HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS. SUNIL KUMAR GOEL, 315 ITR 163(P&H) IV) HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHESHWARI NIRMAN UDYOG, 302 ITR 201(RAJ) 7. HE FURTHER SUBMITTED THAT THE AMOUNT WAS REPAID BY THE ASSESSEE COMPANY TO THE LENDERS AND THE SAID AMOUNT WAS REPAYABLE AT AN Y TIME ON DEMAND BY THE LENDER AND HENCE, THIS COULD NOT BE A LOAN OR DEPOSIT. TH EREFORE, REPAYMENT OF THE AMOUNT IN CASH DOES NOT AMOUNT TO CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE ACT. 8. LD D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELO W. SHE SUBMITTED THAT ASSESSEE FAILED TO DISCHARGE THE ONUS THAT THE AMOUNT WAS RE PAID IN CASH DUE TO EXIGENCIES AND, THEREFORE, PENALTY HAS BEEN RIGHTLY IMPOSED. 9. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTAT IVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE C ASES CITED BY LD A.R. (SUPRA). 10. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE H AS REPAID PART OF THE LOAN TO MRS DEPINDER KAUR SANDHU AND AMRUTPAL SINGH SANDHU IN C ASH AGGREGATING TO RS.2,63,607 ITA NO.4133/MUM/2012 ASSESSMENT YEAR: 2006-07 4 AND RS.2,55,000, RESPECTIVELY ON VARIOUS DATES I.E. VARYING FROM 12.4.2005 TO 31.3.2006, DETAILS PLACED ON RECORD. ON PERUSAL OF THE SAID D ETAILS, IT IS OBSERVED THAT ASSESSEE HAS PAID SAID AMOUNT NOT ON ONE DATE BUT OVER A PERIOD OF ONE YEAR TO EACH OF THE LOAN CREDITOR. ON PERUSAL OF THE DETAILS AND AFTER CONS IDERING EXPLANATION OF THE ASSESSEE, WE AGREE WITH LD CIT(A) THAT ASSESSEE HAS NOT GIVEN AN Y REASONABLE CAUSE FOR REPAYMENT OF LOAN IN CASH. WE DO NOT FIND ANY MERIT IN THE CON TENTION OF LD A.R. THAT THE SAID LOAN WAS REPAID IN CASH AS FATHER OF AMRUTPAL SINGH SAND HU WAS NOT WELL AND AMOUNT WAS REQUIRED FOR HIS ILLNESS. IT COULD BE JUSTIFIABLE ON ONE OR TWO OCCASIONS BUT WE OBSERVE ON PERUSAL OF THE SAID STATEMENT THAT THE LOAN HAS BEEN REPAID ON 15 OCCASIONS. THEREFORE, CONSIDERING THE FACTS OF THE CASE, WE HO LD THAT THERE IS NO BONAFIDE REASON OR JUSTIFIABLE EXPLANATION FURNISHED BY THE ASSESSEE T HAT THE LOAN WAS REPAID IN CASH DUE TO EXIGENCIES. 11. HOWEVER, IN RESPECT OF REPAYMENT OF LOAN OF RS. 47,067 TO MRS DEPINDER KAUR SANDHU BY WAY OF DEBITING HER ACCOUNT AND NOT PAID IN CASH BY THE ASSESSEE COMPANY, WE ARE OF THE CONSIDERED VIEW THAT SAID REPAYMENT C OULD NOT BE CONSIDERED TO BE CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE ACT. HONBLE BOMBAY HIGH COURT IN THE CASE OF TRIUMPH INTERNATIONAL FINANCE (I) LTD., (SUPRA) HAS HELD THAT SETTLING THE CLAIMS BY MAKING JOURNAL ENTRIES IN THE RESPECTIVE BOOKS IS ALSO ONE OF THE RECOGNIZED MODES OF REPAYING LOAN/DEPOSIT AND NO PENALTY UNDER SECTION 271E SHALL BE LEVIABLE IN CASE OF BONAFIDE REPAYMENT. SIMILAR VIEW HAS ALSO BEEN TAKEN BY HONBLE GUJARAT HIGH COURT IN THE CASE OF NATVARLAL PURSHOTTAMDAS PAREK H(SUPRA) BY HOLDING THAT AMOUNTS REPAID BY MERE BOOK ENTRIES AND TRANSACTIONS ON BEH ALF OF FAMILY MEMBERS DOES NOT AMOUNT TO VIOLATION OF SECTIONS 269SS AND 269T OF THE ACT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT AUTHORITIES BELOW ARE NOT JUST IFIED TO CONSIDER THE AMOUNT OF RS.47,607 WHILE CONSIDERING LEVY OF PENALTY U/S.271 E OF THE ACT. 12. FURTHER, ASSESSEE HAS PLACED RELIANCE OF HONBL E P&H HIGH COURT IN THE CASE OF SUNIL KUMAR GOEL(SUPRA). WE ARE OF THE CONSIDERED VIEW THAT SAID CASE IS NOT OF ANY ASSISTANCE TO THE ASSESSEE AS IN THAT CASE, IT WAS FOUND THAT CASH TRANSACTIONS OF THE ASSESSEE WERE WITH SISTER CONCERN AND DUE TO BUSINE SS EXIGENCIES. FURTHER, IN THE CASE BEFORE US, ASSESSEE HAS FAILED TO DISCHARGE THAT RE PAYMENT OF CASH WAS DUE TO ANY EXIGENCIES. SIMILARLY, THE CASE OF RAJASTHAN HIGH COURT IN THE CASE OF MAHESHWARI NIRMAN UDYOG,(SUPRA) IS ALSO NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS IN THAT ITA NO.4133/MUM/2012 ASSESSMENT YEAR: 2006-07 5 CASE IT WAS FOUND THAT THERE WAS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS OF THE ACT. WE HAVE HE LD HEREINABOVE THAT ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH ANY REASONABLE CAUSE FOR REP AYMENT OF LOAN IN CASH TO MRS DEPINDER KAUR SANDHU OF RS.2,06,000 (RS.2,53,607 RS.47,607) AND TO AMRUTPAL SINGH SANDHU OF RS.2,55,000 AGGREGATING TO RS.4,61, 000. HENCE, SAID REPAYMENT IN CASH WAS MADE DURING FINANCIAL YEAR RELEVANT TO ASS ESSMENT YEAR UNDER CONSIDERATION IN CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A) BY CONFIRMING PENALTY TO THE EXTENT OF RS.4,61,000 EQUAL TO AMOUNT REPAID IN CASH. THEREFORE, GROUND OF APPEAL TAKEN BY ASSE SSEE IS ALLOWED IN PART. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART. PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2012 SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 14 TH SEPTEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),21, MUMBAI 4. COMMISSIONER OF INCOME TAX, MC-X , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI