ITO (E), New Delhi V. Maharaji Educational Trust, Ghaziabad

ITA 4209/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53220 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: VK SABHARWAL
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B; 27

Judgement Text

ITA NO. 4209/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4209/DEL/2011 A.Y. : 2007-08 INCOME TAX OFFICER (E), TW - IV, AAYAKAR BHAVAN, LAXMI NAGAR, DISTT. CENTRE, DELHI 110 092 MAHARAJI EDUCATIONAL TRUST, NO.1, SANTOSH NAGAR, PRATAP VIHAR, GHAZIABAD (UP) (PAN: AAATM5225F) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. R.S. SINGHVI, CA AND SH. V.K. SABHARWAL, ADV. DEPARTMENT BY : SH. R.S. NEGI, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 29.7.2 011 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUND RAISED READS AS UNDER:- IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECT ING TO DELETE THE PENALTY IMPOSED U/S. 271E PARTICULARLY WH EN THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269 T OF IT ACT BY PAYMENT OF ` 75 LACS IN CASH. ITA NO. 4209/DEL/2011 2 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED THAT ASSESSEE TRUST HAD REPAID LOAN AMOUNTI NG TO ` 75 LACS IN CASH TO DR. P. MAHALINGAM, THE TRUSTEE. ACCORDINGLY, IT WAS OBSERVED THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTIO N 269T OF THE ACT AND PENALTY PROCEEDINGS U/S 271E OF THE ACT WERE IN ITIATED. THE ASSESSEE SUBMITTED THE FOLLOWING SUBMISSIONS:- WITH REFERENCE TO THE ABOVE, IT IS RESPECTFULLY SUBMITTED THAT YOUR SAID SHOW CAUSE NOTICE ALLEGED TO BE ISSU ED AND TRIED TO BE COVERED U/S 271E OF THE ACT IS IN CONTR AVENTION TO THE PROVISIONS OF LAW AND TO THE RULES FRAMED UNDER THE INCOME TAX ACT/ RULES AND TO THE FACTS OF THE CASE AS SUCH UNCONSTITUTIONAL HAVING NO LOCUS STANDEE UNDER THE LAW AS NO PROPER NOTICE IF ANY ISSUED AND TO HAVE SERVED UPON THE ASSESSEE TRUST WITHIN THE PRESCRIBED PERIOD OF LIMIT ATION. HOWEVER, WITHOUT PREJUDICE TO THE ABOVE THE MERITS OF THE CASE ARE DISCUSSED HEREUNDER:- THE ASSESSEE TRUST AVAILED A LOAN FROM PUNJAB SIND BANK AND AS THE SAID LOAN COULD NOT BE REPAID IN TIME, THE SAID BANK APPROACHED THE DEBIT RECOVERY TRIBUN AL. THE DRT PASSED AN ORDER TO IMMEDIATELY PAY A SUM OF ` 75 LACS TO THE CREDITOR. AS THERE WAS NO FUNDS READI LY AVAILABLE WITH THE TRUST AT THE MATERIAL TIME, THE ASSESSEE TRU ST APPROACHED DR. P. MAHALINGAM, CHAIRMAN OF THE TRUST WHO MANAGED THE FUNDS FROM ONE AYUSH COMMERCIAL PVT. LTD. AND PASSED ON THE SAME TO THE TRUST BY WAY OF DD AND CHEQUE. IN THE EVENT OF NON-COMPLIANCE OF THE DIREC TION OF THE DRT, THE PROPERTY OF THE TRUST WOULD HAVE BEEN ITA NO. 4209/DEL/2011 3 ATTACHED WHICH WOULD HAVE BADLY AFFECTED THE REPUTA TION OF THE TRUST AND FOR THAT MATTER, THE STAFF AND STUDEN TS OF THE COLLEGES. BY THAT TIME, WHEN THE CREDITOR FROM WHO M THE CHAIRMAN ARRANGED THE FUNDS, STARTED PRESSURIZING F RO IMMEDIATE REPAYMENT OF THE SUM OF ` 75 LACS RAISED FOR M THEM. TO AVOID AN UGLY SITUATION THAT MAY ERUPT IN THE EVENT OF NON-PAYMENT TO THE CREDITOR, A SUM OF ` 75 LACS WAS TAKEN BACK IMMEDIATELY FORM THE TRUST IN CASH A ND A DD FOR THAT SUM WAS PURCHASED AND HANDED OVER TO THE CREDITOR AS THE TRUST CANNOT DIRECTLY MAKE OF THE S AID LOAN TAKEN BY THE CHAIRMAN. IT MAY ALSO BE MENTIONED HERE THAT THE MANAGING TRUSTEE HAS NOT CHARGED ANY INTEREST FROM THE TRUST TO INDICATE THAT THERE WAS NO VESTED INTE REST IN RESPECT OF THE TRANSACTION BETWEEN THE TRUST AND TH E MANAGING TRUSTEE. THAT BESIDES THE ABOVE, THE FUND S GIVEN TO THE ASSESSEE TRUST STANDS EXPLAINED AND AC CEPTED BY THE CONCERNED ASSESSING OFFICER AND AT THE TIME OF WITHDRAWAL THEREOF, THE AVAILABILITY OF FUNDS WITH THE ASSESSEE TRUST STANDS EXPLAINED AND ACCEPTED BY THE CONCERNED ASSESSING OFFICER. IN VIEW OF THE ABOVE CIRCUMSTANCES UNDER WHICH THE TRUST REPAID THE AMOUNT IN CASH TO THE CHAIRMAN WOULD BE SUFFICIENT TO SHOW THAT THERE WAS NO INTENTION AND WILLFUL VIOLATION OF THE PROVISIONS OF SECTION 269T ON THE PART OF THE ASSESSEE. THEREFORE, NO PENALTY U/S 271E IF ANY INTENDING TO BE LEVIED AT THIS STAGE IS TENABLE IN THE EYES O F LAW. HOWEVER, WITHOUT PREJUDICE TO THE ABOVE, IT IS STA TED THAT THE MERITS OF THIS ISSUE WAS ALSO ELABORATELY DIS CUSSED ITA NO. 4209/DEL/2011 4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THA T THIS CASE IS ALSO COVERED UNDER THE PROVISIONS OF LAW CO NTAINED U/S 273B OF THE ACT. KEEPING IN VIEW THE LEGALITY OF THE PROVISIONS OF LAW DISCUSSED AND AFTER TAKING INTO CONSIDERATION THE M ERITS OF THIS CASE, KINDLY THEREFORE VACATE YOUR NOTICE ISS UED OR ALTERNATIVELY DROP THE PENALTY PROCEEDINGS INITIATE D AS PER LAW AT YOUR EARLIEST POSSIBLE CONVENIENCE, IN THE I NTEREST OF EQUITY AND NATURAL JUSTICE. 3.1 ASSESSING OFFICER WAS NOT SATISFIED WITH THIS EXPLANATION. HE PROCEEDED TO IMPOSE THE PENALTY OF ` 75 LACS. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE SUBMISSIONS AND HELD AS UNDER:- I HAVE GONE THROUGH THE WRITTEN SUBMISSION OF THE L D. A.R. IN THIS REGARD WHILE LEVYING THE PENALTY ASSESSING OFFICER HAS CONCLUDED THE ISSUE BY OBSERVING AS UNDER:- PROVISIONS OF SECTION 269SS AND 269T READ WITH SECTION 271D & 271E OF THE ACT HAVE BEEN INTRODUCE D AS A MEASURE OF ANTI-TAX EVASION SO AS TO AVOID CASH PAYMENTS AND RECEIPTS BY THE ASSESSEE. ONE HAS TO EXAMINE THE CASE IN THE BACKGROUND OF THE SPIRIT BEHIND THE INTRODUCTION OF SUCH PROVISIONS IN THE STATUE INSTEAD OF EXAMINING WHETHER THEY ARE ACCOUNTED FOR OR NOT IN THE BOOKS OF ACCOUNTS. IN THE AGE OF RAPID EXPANSION OF BANKING FACILITIES ALL OV ER ITA NO. 4209/DEL/2011 5 INDIA, THERE IS NO JUSTIFICATION FOR THE ASSESSEE TO ENGAGED IN CASH TRANSACTION. I HAVE GONE THROUGH THE OBSERVATION OF THE ASSESSIN G OFFICER IN THE PENALTY ORDER. IN THIS CASE AN AMO UNT OF ` 75 LACS WAS ADVANCED BY DR. P. MAHALINGAM, TO MAHARAJI EDUCATIONAL TRUST AS UNDER:- ` 50 LACS ON 28.2.2006 BY DD DRAWN ON STANDARD CHARTERED BANK, NEW DELHI/ ` 25 LACS ON 3.3.2006 BY CHEQUE DRAWN ON STANDARD CHARTERED BANK, NEW DELHI. THE ABOVE MENTIONED AMOUNT WAS RECEIVED BACK IN LUMP SUM FROM MAHARAJI EDUCATIONAL TRUST ON 28.6.2006. THIS HAS BEEN CONFIRMED BY DR. P. MAHALINGAM VIDE CONFIRMATION LETTER DATED 12.11.2009, WHICH IS AVAILABLE AS ANN EXURE-G OF THE PAPER BOOK. IN THE SUBMISSION IT HAS BEEN AR GUED BY THE LD. A.R. THAT AMOUNT WAS RECEIVED IN CASH AND WA S PAID TO M/S AYUSH COMMERCIAL (P) LTD. FROM WHOM HE HAS RAISE D THE FUNDS TEMPORARILY FOR THE PAYMENT TO THE DRT ON B EHALF OF THE TRUST. THE PAYMENT WAS MADE TO AYUSH COMME RCIAL (P) LTD. AMOUNTING TO ` 75 LACS ON 28.6.2006 BY ACCO UNT PAYEE CHEQUE DRAWN ON THE BANK OF RAJASTHAN LTD. SO , IT IS A CLEAR THAT THERE WAS NO ELEMENT OF PENALTY IS I NVOLVED. THE AMOUNT WAS GIVEN BY DR. P. MAHALINGAM BY DD OR CHEQUE, WHICH WAS RETURNED ON 28.6.2006 IMMEDIATELY BY A CHEQUE PAYMENT OF ` 75 LACS WAS MADE IN THE NAME OF AYUSH COMMERCIAL (P) LTD. THE COPY OF CHEQUE ISS UED TO AYUSH COMMERCIAL (P) LTD. IS AVAILABLE AS ANNEXURE-J OF THE ITA NO. 4209/DEL/2011 6 PAPER BOOK SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. SO, IN MY CONSIDERED OPINION THE CASE IS COVERED U/S. 273B OF THE IT ACT, WHEREIN, ACT HAS MA DE THE PROVISION THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS, IF HE PROVES THAT THERE WAS REASONABLE FOR THE SAID FAILURE. T HE PROVISIONS OF SECTION 273B IS AS UNDER:- NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIO NS OF CLAUSE (B) OF SUB SECTION (1) OF SECTION 271, SE CTION 271A, SECTION 271AA, SECTION 271B, SECTION 271BA, SECTION 271BB, SECTION 271C, SECTION 271CA, SECTION 271D, SECTION 271E, SECTION 271F, SECTION 271FA, SECTION 271FB, SECTION 271G, CLAUSE (C) OR CLAUSE (D ) OF SUB SECTION (1) OR SUB SECTION (2) OF SECTION 27 2A, SUB SECTION (1) OF SECTION 272AA OR SECTION 272B OR SUB SECTION (1) OR SUB SECTION (1A) OF SECTION 272B B OR SUB SECTION (1) OF SECTION 272BBB OR CLAUSE (B) OF SUB SECTION (1) OR CLAUSE (B) OR CLAUSE (C) OF SUB SECT ION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILUR E. FURTHERMORE, CASE LAWS RELIED UPON LD. A.R. OF THE APPELLANT IS APPRECIATED, SPECIALLY CASE LAW IN THE CASE OF AZADI BACHAO ANDOLAN VS. UNION OF INDIA REPORTED AT 252 ITR 471 HAS DIRECT BEARING ON THIS CASE. ITA NO. 4209/DEL/2011 7 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT ASSESSEE HAS BEEN ABLE TO PROVE THAT THERE WAS REASONABLE CAUSE FOR CASH PAYMENT OF ` 75 LACS TO DR. P. MAHALINGAM. SO, IN MY CONSIDERED OPINION PENALTY LEVIED BY ASSESSING OFFICER DESERVES TO BE DELETED. GROUNDS NO. 1 TO 6 ARE ALLOWED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT PR OVISIONS OF SECTION 273B ARE ATTRACTED. IN THIS CASE THERE WAS REASONA BLE CAUSE FOR THE FAILURE TO COMPLY WITH THE PROVISIONS IN THIS REGARD . IN THIS CASE ` 75 LACS WAS ADVANCED BY DR. P. MAHALINGAM TO MAHARAJI EDUC ATIONAL TRUST VIDE DD AND CHEQUE. THE ABOVE MENTIONED AMOUNT WAS RECE IVED BACK IN LUMP SUM FROM MAHARAJI EDUCATIONAL TRUST ON 28.6.2 006. THE AMOUNT RECEIVED BACK WAS RECEIVED IN CASH AND PAID TO AYUSH COMMERCIAL (P) LTD. FROM WHOM HE HAS RAISED THE FUNDS TEMPORARILY FOR THE PAYMENT TO THE DRT ON BEHALF OF THE TRUST. THE PAYMENT WAS MADE TO AYUSH COMMERCIAL (P) LTD. AMOUNTING TO ` 75 LA CS ON 28.6.2006 BY ACCOUNT PAYEE CHEQUE DRAWN ON THE B ANK OF RAJASTHAN LTD. AS LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S RIGHTLY OBSERVED THAT THERE WAS NO ELEMENT OF PENALTY IS IN VOLVED. THE AMOUNT WAS GIVEN BY DR. P. MAHALINGAM BY DD OR CHEQUE, WHICH WAS RETURNED ON 28.6.2006 IMMEDIATELY BY A CHEQUE PAYMENT OF ` 75 LACS WAS MADE IN THE NAME OF AYUSH COMMERCIAL (P) LTD. THE COPY OF CHEQUE ISSUED TO AYUSH COMMERCIAL (P) LTD. WAS ALSO S UBMITTED. UNDER THE CIRCUMSTANCES, WE AGREE WITH THE FINDING O F THE LD. ITA NO. 4209/DEL/2011 8 COMMISSIONER OF INCOME TAX (APPEALS) THAT THE CASE I S COVERED U/S 273B OF THE IT ACT. ACCORDINGLY, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/11/2011, U PON CONCLUSION OF HEARING. SD/- SD/- [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 21/11/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES