Sanjay Bhalotia, Rohtak V. Addl. CIT, Rohtak

ITA 435/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2827 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Initiation of penalty proceedings; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH G , NEW DELHI BEFORE : SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 435 & 436/DEL./2012 ASSESSMENT YEAR: 2008 - 09 SH. SANJAY BHALOTIA, 2122/26, PECH PARAS RAM, MAL GODAM ROAD, ROHTAK. (PAN - AGKPB8913F) (APPELLANT) VS. ADDITIONAL C.I.T., ROHTAK. (RESPONDENT) ASSESSEE BY SH. NAVEEN GUPTA, ADVOCATE REVENUE BY SH. S.S. RANA, CIT/DR ORDER PER L.P. SAHU, A.M.: THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), ROHTAK DATED 24.11.2011 FOR THE ASSESSMENT YEAR 2008 - 09 FOR IMPOSING PENALTY U/S. 271D & 271E OF THE IT ACT, 1961. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THEIR RESPECTIVE APPEALS : GROUNDS IN ITA NO. 435/DEL./2012: 1. THAT THE ORDER OF LD. CIT(APPEALS) IS AGAINST LAW AND FACTS. 2. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE LD. ADDL. COMMISSIONER OF INCOME TAX U/S. 271D OF THE IT ACT. 3. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY U/S. 271D OF THE IT ACT ALTHOUGH THERE IS NO VALID DATE OF HEARING 19.06.2017 DATE OF PRONOUNCEMENT 22 .06.2017 ITA NO. 435 & 436/DEL./2012 2 INITIAT ION OF PENALTY PROCEEDINGS AND THUS THE WHOLE PENALTY PROCEEDINGS ARE ALSO INVALID. 4. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY U/S. 271D OF THE IT ACT ALTHOUGH NO VALID NOTICE OF DEMAND WAS ISSUED TO THE APPELLANT ALONG WITH PENALTY ORDE R PASSED BY LD. ADDL. CIT. GROUNDS IN ITA NO. 436/DEL./2012: 1. THAT THE ORDER OF LD. CIT(APPEALS) IS AGAINST LAW AND FACTS. 2. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE LD. ADDL. COMMISSIONER OF INCOME TAX U/S. 271E OF THE IT ACT. 3. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY U/S. 271E OF THE IT ACT ALTHOUGH THERE IS NO VALID INITIATION OF PENALTY PROCEEDINGS AND THUS THE WHOLE PENALTY PROCEEDINGS ARE ALSO INVALID. 4. THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY U/S. 271E OF THE IT ACT ALTHOUGH NO VALID NOTICE OF DEMAND WAS ISSUED TO THE APPELLANT ALONG WITH PENALTY ORDER PASSED BY LD. ADDL. CIT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS PROPRIETOR OF TWO CONCERNS, M/S. PURSHOTAM DASS SATISH KUMAR AND M/S. SHRI GURU KIRPA TRADING CO., ROHTAK AND DEALS IN TRADING OF BINOLA & KHAL, BIRI, MATCHES, CIGARETTES ETC. FROM AIR INFORMATION, THE AO NOTICED THAT THE ASSESSEE HAS DEPOSITED IN CASH A SUM OF RS.17,17,500/ - IN HIS SAVING BANK ACCOUNT NO. 0130 - M22405 - 001 WITH INDUSIND BANK. THE ASSESSEE HAD ACCEPTED THESE AMOUNTS AS LOAN FROM HIS RELATIVES, VIZ., MOTHER, BROTHER, WIFE, BROTHER S WIFE AND ALSO REPAID SOME OF THE LOANS TO ITA NO. 435 & 436/DEL./2012 3 THEM DURING THE YEAR IN CASH. THE DETAILS OF SUCH LOANS TAKEN AND REPAID ARE AS UNDER : NAME OF LENDER LOAN TAKEN LOAN REPAID ------------------ ---- ------------------ ------------------- PUSHPA DEVI (MOTHER) 6,30,500 69,000 SUNIL KUMAR(BROTHER) 2,40,000 1,32,000 MAMTA BHALOTIA(WIFE) 3,19,000 - ANJALI (BROTHER S WIFE) 2,69,000 1,75,000 PANKAJ (BROTHER) 2,00,000 1,50,000 -- ------------ --------------- TOTAL 16,58,500 5,26,000 -------------- --------------- 2.1 THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER ALSO ISSUED SUMMONS TO THE LENDERS/DEPOSITORS AND THEIR STATEMENTS WERE ALSO RECORDED. THE APPELLANT FILED THEIR AFFIDAVITS. THE AO NOTICED FOLLOWING FACTS FROM THE AFFIDAVITS AND STATEMENTS OF THE LENDERS : (I). NONE OF THE PERSONS WAS MAINTAINING BANK ACCOUNT; (II). ALL THE PERSONS ADVANCED MONEY IN SHAPE OF LOANS TO SHRI SANJAY BHALOTIA ON DIFFERENT DATES DURING THE YEAR UNDER CONSIDERATION; AND (III). ALL THESE LOANS WERE GIVEN TO SHRI SANJAY BHALOTIA IN CASH. 2.2. BASED ON THE ABOVE FACTS, THE ASSESSING OFFICER IMPOSED PENALTY U/S. 271D AND 271E OF THE IT ACT , AS THE ASSESSEE HAD ITA NO. 435 & 436/DEL./2012 4 RECEIVED AND REPAID THE AMOUNT IN CASH IN CONTRAVENTION OF SECTIONS 269SS AND 269T OF THE ACT . AGGRIEVED BY THE ORDERS OF THE ASSESSING OFFICER, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY AND SUBMITTE D DETAILED WRITTEN SUBMISSIONS AND RELIED ON SOME CASE LAWS. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AFFIDAVITS SUBMITTED BEFORE THE AO, CONFIRMED THE IMPUGNED PENALTIES . AGGRIEVED BY THIS ORDER, THE ASSESSEE IS IN APPEALS BEFO RE THE ITAT. 3. THE LEARNED AR REITERATED HIS SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED THAT THESE ALL ARE FAMILY MEMBERS OF THE ASSESSEE AND THEY HAVE NO BANK ACCOUNTS. IT WAS ALSO EXPLAINED THAT THIS MONEY WAS TAKEN FOR INVESTMENT IN S HARE MARKET FROM THE FAMILY MEMBERS ON PROFIT SHARING BASIS AND NOT FOR ANY BUSINESS PURPOSES NOR WAS IT THE REGULAR PRACTICE OF THE APPELLANT. THE IMPUGNED INVESTMENT WAS MADE IN JOINT VENTURE WITH HIS RELATIVES AND AT NO STAGE THE ASSESSEE HAD ACCEPTED INTEREST BEARING LOANS IN CASH. NEITHER THE IMPUGNED LOAN WAS TAKEN FOR BUSINESS PURPOSE NOR THE IMPUGNED INVESTMENT WAS MADE FROM THE BUSINESS OF THE ASSESSEE AND AS SUCH WAS UNDER THE IMPRESSION THAT THE TRANSACTIONS PERTAINING TO SHARE TRADING WERE IN H IS PERSONAL CAPACITY AND NOT COVERED BY RESTRICTIONS PUT BY SECTION 269SS & 269T OF THE ACT. HE, THEREFORE, SUBMITTED THAT THERE BEING REASONABLE CAUSE FOR ACCEPTING THE AMOUNTS IN CASH AND REPAYMENT THEREOF IN CASH AND HENCE, THE PENALTY IMPOSED BY THE AU THORITIES BELOW IS LIABLE TO BE DELETED. ITA NO. 435 & 436/DEL./2012 5 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER, AFTER CONSIDERING THE ABOVE EXPLANATION OF THE ASSESSEE FOUND THE RECEIPT OF IMPUGNED LOANS AND ITS REPAYMENT IN CASH AS GENUINE AND NO ADDITION HAS BEEN MADE ON THIS ACCOUNT, MEANING T HEREBY THE RECEIPT OF AMOUNTS FROM RELATIVES WITHOUT ANY INTEREST AND ITS INVESTMENT IN SHARES STOOD ACCEPTED BY THE ASSESSING OFFICER. THE ISSUE TO BE ADJUDICATED IN THESE APPEALS IS WHETHER THERE WAS REASONABLE CAUSE WHICH LED THE ASSESSEE TO RECEIVE AND REPAY THE AMOUNTS IN CASH IN CONTRAVENTION OF SECTION 269SS AND 269T OF THE ACT ENTAILING PENALTY U/S. 271D AND 271E OF THE ACT. IN THE INSTANT CASE, IT STANDS PROVED AND NOT COMMENTED BY THE AUTHORITIES BELOW THAT THE FAMILY LENDERS HAD NO BANK ACCOUNTS, AS ALSO EVIDENT FROM THEIR STATEMENTS RECORDED AND AFFIDAVITS SUBMITTED. ONCE THE CIRCUMSTANCES UNDER WHICH RECEIPT OF LOANS WAS ACCEPTED AS GENUINE AND THE FACTUM OF NON - MAINTENANCE OF BANK ACCOUNTS BY THE LENDERS WAS NOT ADVERSELY COMMENTED UPON, IN OUR CONSIDERED OPINION, THIS WAS THE REASONABLE CAUSE AS CONTEMPLATED U/S. 273B OF THE IT ACT, WHICH PREVENTED THE APPELLANT TO RECEIVE AND REPAY THE AMOUNTS IN CASH. SINCE NONE OF THE PERSONS FROM WHOM THE AMOUNTS WERE ACCEPTED IN CASH AND TO WHOM THE AMOUNT WAS REPAID, WERE MAINTAINING ANY BANK ACCOUNT, THE TRANSACTIONS WITH THOSE PERSONS WAS NOT POSSIBLE ITA NO. 435 & 436/DEL./2012 6 THROUGH BANKING CHANNEL, BUT ONLY IN CASH , WHICH WOULD COVER THE REASONABLE CAUSE AS CONTEMPLATED UNDER THE ACT. WE CAN USEFULLY REFER THE DECISION RENDERE D IN THE CASE OF KARNATAKA GINNING & PRESSING FACTOR VS. DY. CIT (2001) 77 ITD 478 (MUM), WHEREIN IT HAS BEEN HELD THAT IF ASSESSEE WAS ABLE TO LEAD EVIDENCE TO SHOW THAT NOT ONLY WAS THERE REASONABLE CAUSE FOR TAKING MONEY IN CASH, BUT AMOUNT DID NOT ALSO REPRESENT UNACCOUNTED MONIES EITHER OF ASSESSEE OR OF PERSON FROM WHOM MONEY WAS TAKEN, IT SHOULD BE SUFFICIENT TO HOLD THAT PENALTY WAS NOT JUSTIFIED. IN THE INSTANT CASE, THE GENUINENESS OF BORROWING WAS NOT IN DOUBT AND THE ASSESSEE WAS PREVENTED BY RE ASONABLE CAUSE FROM TAKING THE MONIES THROUGH CHEQUE OR DRAFT, THERE WAS REASONABLE CAUSE FOR THE ASSESSEE TO ACT IN CONTRAVENTION OF SECTION 269SS AND 269T OF THE ACT. IN THESE PECULIAR CIRCUMSTANCES OF THIS CASE, WE, THEREFORE FIND THAT THE PENALTIES IM POSED AGAINST THE ASSESSEE ARE NOT SUSTAINABLE. 6. AS A RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.06.2017 . SD/ - SD/ - ( BHAVNESH SAINI) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.06.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR