RITA A PARAKH, MUMBAI V. ADDL CIT RG 16(3), MUMBAI

ITA 4264/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7178 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 13-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI ANKUR GA RG
• Assessee Lawyers: REEPAL TRALSHAWALA
• Keywords: Reasonable cause; Avoidance of tax; Commercial expediency
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 4264 & 4265/MUM/2009 (ASSTT. YEAR : 2005-06 &2006-07) RITA A PAREKH, APPELLANT PROP SKY ENTERPRISE, 184, KHETWADI MAIN ROAD, MUMBAI 400004 PAN : AAEPP2701P V/S. ADDL COMMISSIONER OF INCOME TAX, RESPONDENT RANGE 16(3), MUMBAI APPELLANT BY :MR. REEPAL TRALSHAWALA RESPONDENT BY : MR. SHRI ANKUR GA RG : O R D E R : PER R.S. PADVEKAR, J.M BOTH THESE APPEALS BY THE ASSESSEE ARE PERTAINING T O THE A.Y. 2005-06 IN WHICH THE ASSESSEE HAS CHALLENGED THE IMPUGNED O RDERS OF THE LD CIT(A) XVII, MUMBAI DATED 29.4.2009 CONFIRMING THE PENALTY LEVIED BY THE A.O U/S. 271D AND 271E OF THE I.T. ACT. 2. WE FIRST TAKE THE APPEAL BEING ITA NO. 4264/MUM/ 2009 FOR DISPOSAL. 3. THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS. THE ON LY ISSUE WHICH ARISE FOR OUR CONSIDERATION IS WHETHER THE CIT(A) JUSTIFI ED IN CONFIRMING THE PENALTY LEVIED BY THE A.O U/S. 271E AMOUNTING TO RS. 88,700 /-. 4. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER : ITA NO.4264 & 4265/MUM/2009 2 THE ASSESSEE IS A PROPRIETOR OF M/S. SKY ENTERPRIS E AND M/S. SKY HOLIDAYS AND THE PRINCIPAL BUSINESS OF THE ASSESSEE IS TOURS AND TRAVELLING RELATED SERVICES. THE ASSESSEE PROMOTED NEW COMPAN Y NAMELY M/S. SKY GOLD TRAVELS & FOREX PVT. LTD., INCORPORATING THE SAME O N 14.9.2004 WHICH WAS INCORPORATED TO CARRY OUT THE BUSINESS AS A FULL-FL EDGED MONEY CHANGER (FFMC). THE ASSESSEE IS A PROMOTER AS WELL AS THE DIRECTOR OF THE SAID COMPANY. IN THE COURSE OF THE ASSESSMENT PROCEEDIN GS, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS REPAID THE LOANS TO THE EXTENT OF RS. 88,700/- OF M/S. SKY GOLD TRAVELS & FOREX PVT. LTD. WHICH, AS NOTED BY THE A.O, WAS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269D. T HE A.O, THEREFORE, INITIATED THE PENALTY PROCEEDINGS U/S. 271E AND LEVIED THE PE NALTY OF RS. 88,700/-. THE ASSESSEE CHALLENGED THE SAME LEVY BEFORE THE LD CIT (A), BUT WITHOUT SUCCESS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES. THE LD COUNSEL ARGUED THAT BASICALLY THE ASSESSEE IS THE PROMOTER AND DIRECTOR OF M/S. SKY GOLD TRAVELS & FOREX PVT. LTD. AND IT IS THE PART O F THE ASSESSEES BUSINESS GROUP IN THE NATURE OF THE SISTER CONCERN. THE LD COUNSEL ARGUED THAT IT WAS A BUSINESS EXIGENCY, HENCE THE CASH WAS PAID URGENTLY . THE LD COUNSEL ALSO ARGUED THAT NOTHING IS PROVED BY THE A.O THAT THERE WAS ATTEMPT TO EVADE ANY TAX AND IT WAS A BONA FIDE TRANSACTION. THE LD COUNSEL RELIED ON THE FOLLOWI NG DECISIONS (1) CIT V/S. SUNIL KUMAR GOYAL, 315 ITR 1 63 (P &H) AS WELL AS HINDUSTAN STEEL COMPANY V/S. STATE OF ORISSA, 83 I TR 26 (S.C.). 6. PER CONTRA, THE LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND RELIED ON THE DECISION OF THE ITAT MUMBAI, IN T HE CASE OF 52 TTJ 96. IN THIS CASE, NOWHERE IT IS CONTROVERTED BY THE REVENU E THAT THE ASSESSEE IS A PROMOTER AND DIRECTOR OF SKY GOLD TRAVELS AND FOREX PVT. LTD. AND IT IS A SISTER CONCERN OF THE ASSESSEE. IN OUR OPINION, THE EXPLA NATION GIVEN BY THE ASSESSEE IS COVERED WITHIN THE MEANING OF REASONABL E CAUSE U/S. 271B. IN THE CASE OF SUNIL KUMAR GOYAL (SUPRA), THE HONBLE HIG H COURT HAS HELD AS UNDER: THE EXPLANATION TENDERED BY THE RESPONDENT-ASSESS EE WHICH HAS BEEN TAKEN INTO CONSIDERATION BY THE INCOME-TAX APPELLATE TRIB UNAL WAS THAT THE ACTION OF THE RESPONDENT-ASSESSEE WAS BONA FIDE AND NOT AIMED AT AVOIDING ANY TAX LIABILITY. SO FAR AS THE INSTANT ISSUE IS CONCERNED, THE INCOME-T AX APPELLATE TRIBUNAL ARRIVED AT ITA NO.4264 & 4265/MUM/2009 3 THE CONCLUSION, THAT THE ACTION OF THE RESPONDENT-A SSESSEE HAD NOT RESULTED IN THE INFRACTION OF ANY LAW, INASMUCH AS, THE DEFAULT COM MITTED BY HIM WAS TECHNICAL AND VENIAL IN NATURE. THE INCOME-TAX APPELLATE TRIB UNAL ALSO EXPRESSED THE VIEW, THAT NO PREJUDICE WAS CAUSED TO THE REVENUE, INASMU CH AS, THERE WAS NO AVOIDANCE OF TAX OR TAX EVASION AT THE HANDS OF THE RESPONDENT-ASSESSEE. RELYING UPON THE JUDGMENT RENDERED BY THIS COURT IN CIT V. SAINI MEDICAL STORE [2005] 277 ITR 420 1 THAT BONA FIDES AND GENUINENESS OF THE TRANSACTION , WOULD CONSTITUTE A REASONABLE CAUSE FOR NOT INVOKING THE PROVISIONS OF SECTIONS 271D AND 271E OF THE ACT, THE INCOME-TAX APPELLATE TRIBUNAL ARRIVED AT THE CONCLUSION THAT THE RESPONDENT-ASSESSEE HAS BEEN SUCCESSFUL TO SHOW RE ASONABLE CAUSE. AND ACCORDINGLY THE INCOME-TAX APPELLATE TRIBUNAL RETUR NED A FINDING, THAT ACCEPTANCE OF THE RETURN OF PAYMENTS RECEIVED BY THE RESPONDEN T-ASSESSEE, BY WAY OF CASH, AT THE HANDS OF THE RESPONDENT-ASSESSEE, OUGHT TO BE O VERLOOKED, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. IN OUR OPINION, THE PRINCIPLES LAID DOWN BY THE HON BLE HIGH COURT IN THE CASE OF SUNIL KUMAR GOYAL ( SUPRA ) ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. WE FIND THAT THE EXPLANATION OF THE ASSESSEE IS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B AND HENCE, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE EXPLANATION OF THE ASSES SEE AND LEVYING THE PENALTY. WE, THEREFORE, DELETE THE SAME. 7. NOW WE TAKE UP THE APPEAL NO. 4265/MUM/2009 IN W HICH THE PENALTY LEVIED BY THE A.O. U/S. 271D TO THE EXTENT OF RS. 80,000/- WAS CONFIRMED BY THE LD CIT(A). 8. THE FACTS ARE IDENTICAL IN THIS CASE. IT WAS NO TICED BY THE A.O THAT THE ASSESSEE HAS RECEIVED THE CASH LOANS OF RS. 80,000 /- FROM M/S. SKY GOLD TRAVELS & FOREX PVT. LTD. AND IN THE CASE OF A.O, THERE IS A CONTRAVENTION OF PROVISION OF SECTION 269SS OF THE ACT. HE ACCORDIN GLY INITIATED THE PENALTY PROCEEDINGS U/S. 271-D AND LEVIED THE PENALTY OF RS . 80,000/-. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD CIT(A) BUT WITHOU T SUCCESS. THE LD COUNSEL ARGUED THAT THE PRINCIPLES LAID DOWN BY THE HONBLE HIGH COURT IN THE ITA NO.4264 & 4265/MUM/2009 4 CASE OF SUNIL KUMAR GOYAL (SUPRA) ARE SQUARELY APP LICABLE TO THE FACTS OF ASSESSEES CASE AND HENCE, THE PENALTY MAY BE DELET ED. 9. WE HAVE HEARD BOTH THE PARTIES. IT IS SEEN THAT THE ASSESSEE HAS RECEIVED CASH LOAN OF RS. 80,000/- FROM M/S. SKY G OLD TRAVELS & FOREX PVT. LTD. IT IS NOT DISPUTED THAT THE ASSESSEE IS A PROM OTER AND DIRECTOR OF THE SAID COMPANY. THE FACTS ARE IDENTICAL TO THE FACTS OF TH E APPEAL RELATING TO PENALTY U/S. 271E IN WHICH WE HAVE HELD THAT EXPLANATION O F THE ASSESSEE IS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273 B. IN THE CASE OF SUNIL KUMAR GOYAL ( SUPRA ), THE HONBLE HIGH COURT HAS DELETED THE PENALTY B Y HOLDING THAT WHEN THE LOANS ARE ACCEPTED OR PAID DUE TO BUSINESS EXPEDIENCY THEN THERE IS NO JUSTIFICATION TO LEVY THE PENALTY . IN THIS CASE ALSO, NOTHING HAS BEEN BROUGHT ON RECORD BY THE A.O THAT THE ASSE SSEE TRIED TO EVADE TAX OR USED THE DEVICE OF THE CASH TRANSACTION FOR EVADING THE TAX. MOREOVER, AND BONA FIDES OF THE TRANSACTION IS NOT DISPUTED. IN OUR OPINION , THE EXPLANATION OF THE ASSESSEE THAT LOAN WAS ACCEPTED IN CASH DUE TO COMMERCIAL EXPEDIENCY IS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B AND THERE IS NO JUSTIFICATION TO SUSTAIN THE PENALTY LEVIED BY THE A.O. WE, ACCORDINGLY, DELETE THE SAME. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF MARCH, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 30TH DAY OF MARCH, 2010. ITA NO.4264 & 4265/MUM/2009 5 :US COPY TO: 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)-XVII, MUMBAI 4.THE CIT -16, MUMBAI 5.THE DR, D BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO.4264 & 4265/MUM/2009 6 US DATE INITIALS 1. DRAFT DICTATED ON 26/3/10 --------------- S R.P.S. 2. DRAFT PLACED BEFORE AUTHORITY 30/3/10 --------- ----- SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----