Virat Hasmukhrai Khandhar, Surat V. The ACIT.,Range-3, Surat

ITA 427/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9719 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 427/AHD/2013 / ASSESSMENT YEAR: 2008-09 MR. VIRAT HASMUKHRAI KHANDHAR, C-5, SARVASHWA ROW HOUSE, HONEY PARK ROAD, ADAJAN, SURAT .. APPELLANT PAN : AASPK 6276 E VS ACIT, RANGE-3, SURAT .. RESPONDENT ASSESSEE(S) BY : SHRI S.N. DI VATIA , AR REVENUE BY : SHRI JAMES KURIAN , SR - DR / DATE OF HEARING 10/12/2015 /DATE OF PRONOUNCEMENT 01/02/2016 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I V, SURAT DATED 06.12.2012 FOR ASSESSMENT YEAR 2004-05, ON TH E FOLLOWING GROUNDS:- 1. THAT, THE PENALTY ORDER PASSED BY THE A.O. AND RETAINED BY THE CIT(A) IS BAD IN LAW AND FACTS, ILL EGAL, WITHOUT JURISDICTION, AND NEEDS TO BE QUASHED. 2.1 THAT, THE A.O. ERRED ON FACTS AND IN LAW BY TRE ATING ADVANCES OF RS.60,000/- FOR GOODS FROM MRS. SANAL SHAH ITA NO. 427/AHD/2013 VIRAT HASMUKHRAI KHANDHAR VS. ACIT AY 2008-09 - 2 - AS UNSECURED LOAN AND LEVIED PENALTY U/S.271D AND T HE CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED. 2.2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE A.O. ERRED BY TREATING RS. 1,00,000/- RECEIVED FROM MR. UTPAL SHAH AS 'UNSECURED LOAN' AGAINST THE INCO ME OFFERED BY THE APPELLANT AND ALSO ERRED BY LEVYING PENALTY U/S. 271D. THE CIT(A) ALSO ERRED IN CONFIRMING IT. 2.3. THAT, THE A.O. FAILED TO APPRECIATE THE SUBMIS SIONS MADE, CONFIRMATIONS FILED AND EVIDENCES ADDUCED BY THE APPELLANT AND LEVIED THE PENALTY AND THE C.I.T.(A) ALSO ERRED BY CONFIRMING PENALTY OF RS.1,60,000/-. SO, T HE PENALTY OF RS.1,60,000/- NEEDS TO BE DELETED. 3. THAT, BOTH THE A.O. AND THE C.I.T.(A) FAILED TO ESTABLISH THAT THE APPELLANT HAD USED MONEY TO EVADE TAXES. A ND THUS, THE PENALTY LEVIED BY THE A.O. AND CONFIRMED BY THE C.I.T(A) NEEDS TO BE VACATED. 4. THAT, THE APPELLANT RESERVES ITS RIGHT TO ADD, A LTER, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL HEREU NTO TAKEN BEFORE. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE HAS RECEIVED UNSECURED LOAN IN CASH AM OUNTING TO RS.1,60,000/-, I.E., THE AMOUNT AGGREGATING TO MORE THAN RS.20,000/- FROM SINGLE PERSON. THE PARTICULAR OF RECEIPT OF SUCH UNSECURED LOANS ARE AS UNDER:- NAME OF PERSON FROM WHOM UNSECURED LOAN RECEIVED DATE OF RECEIPT AMOUNT (RS.) TOTAL AMT (RS.) SONALBEN V. SHAH 06.04.2007 08.08.2007 30,000 30,000 60,000 UTPAL V. SHAH 09.08.2007 11.08.2007 50,000 50,000 1,00,000 TOTAL UNSECURED LOAN 1,60,000 ITA NO. 427/AHD/2013 VIRAT HASMUKHRAI KHANDHAR VS. ACIT AY 2008-09 - 3 - ACCORDINGLY, THE ASSESSING OFFICER HAS IMPOSED A P ENALTY OF RS.4,87,000/- U/S 271D OF THE INCOME-TAX ACT AS THE ASSESSEE HAD ACCEPTED LOAN BY WAY OF CASH AMOUNTING TO RS.1,60,000/- IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. IN APPEAL, THE CIT(A) RESTRICTED THE PENALTY TO RS.1,60,000/-, ON THE GROUND THAT THE LOAN AMOUNT A CCEPTED IN CASH WAS ONLY TO THE TUNE OF RS.1,60,000/-, THEREFO RE, THE PENALTY U/S 271D CAN ONLY BE IMPOSED ON SUCH AMOUNT . AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 2.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND MATERIA L AVAILABLE ON RECORD. WE FIND THAT, DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS RECEIVED U NSECURED LOAN IN CASH AMOUNTING TO RS.1,60,000/- FROM TWO PE RSONS NAMELY SHRI UTPAL SHAH AND SMT. SONAL SHAH AS DISCU SSED ABOVE. THE STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE HAD SHARE TRADING INCOME ALONGWITH BROKERAGE AND CO MMISSION INCOME. THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED AS PER SECTION 44AB. IN THE TAX AUDIT REPORT, THE CA HAD MENTIONED THE CASH LOAN FROM TWO RELATIVES, I.E. RS .60,000/- FROM SMT. SONAL U. SHAH, WHO IS SISTER OF THE ASSES SEE AND RS.1,00,000/- FROM SHRI UTPAL V. SHAH WHO IS BROTHE R-IN-LAW OF ITA NO. 427/AHD/2013 VIRAT HASMUKHRAI KHANDHAR VS. ACIT AY 2008-09 - 4 - THE ASSESSEE. THE AUDITOR HAS TREATED THE ADVANCE OF RS.60,000/- AS LOAN AND COMMISSION INCOME OF RS.1,0 0,000/- IN CASH WAS ALSO TREATED AS LOAN IN ABSENCE OF CONF IRMATION AT AUDIT STAGE. ON THE BASIS OF THE AUDIT REPORT, THE ASSESSING OFFICER LEVIED PENALTY U/S 271D OF RS.4,87,000/-. IN APPEAL, THE SAME RESTRICTED TO RS.1,60,000/-. IN THIS CASE , THE ASSESSEE HAS SUBMITTED THE NATURE OF TRANSACTIONS O F ASSESSEES BUSINESS WAS FOUND TO BE BONA FIDE ONE AND NOT MALA FIDE. SECTION 273B CLEARLY LAYS DOWN THAT THE OFFENCES EN TER ALIA ALONGWITH OTHER SIMILAR OFFENCES MENTIONED UNDER TH IS CHAPTER DO NOT ATTRACT PENALTY IF DEFAULTER PROVES THAT THE RE WAS REASONABLE CAUSE OF FAILURE. IN THE CASE ON HAND, THE AMOUNTS HAVE BEEN RECEIVED BY THE ASSESSEE FROM HIS CLOSE R ELATIVES. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAS E XPLAINED THAT THE AMOUNT OF RS.1,00,000/- RECEIVED FROM SHRI UTPAL SHAH WAS AS INCOME AND NOT AS LOAN. THE CONFIRMATI ON OF SHRI UTPAL SHAH IN THIS REGARD WAS ALSO FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE ASSESSEE WAS OFFERED THE SAME AS INCOME AND IT WAS A BONA FIDE MISTAKE OF ASSESSEE IN PASSING ENTRIES OF INCOME AG AINST THE CASH RECEIVED. WITH REGARD TO RS.60,000/- RECEIVE D BY THE ASSESSEE FROM HIS SISTER SMT, SONAL SHAH, IT WAS ST ATED TO BE ITA NO. 427/AHD/2013 VIRAT HASMUKHRAI KHANDHAR VS. ACIT AY 2008-09 - 5 - AN ADVANCE FROM HER PURCHASE OF SHARES/INVESTMENT A S THE ASSESSEE WAS DEALING IN SHARES AND SECURITIES. TH ESE FACTS WERE CONFIRMED BY HIS SISTER SMT. SONAL SHAH DURING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER . 2.2 UNDER THESE FACTS AND CIRCUMSTANCES, IN OUR OPI NION, IT IS NOT A FIT CASE TO LEVY PENALTY U/S 271D OF THE ACT BECAUSE THE REASONABLE CAUSE FOR MAKING THESE TRANSACTIONS WAS ESTABLISHED BY THE ASSESSEE. HENCE, THE PENALTY IN QUESTION IS DELETED. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 1 ST OF FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 01/02/2016 *BT !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), 5. !'# $$ , , / DR, ITAT, AHMEDABAD 6. #() / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD