The Addl. CIT, Range-5, Visakhapatnam V. Sri G Srinivasa Reddy, Visakhapatnam

ITA 436/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0719 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 07-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Assessee Lawyers: C V S MURTHY
• Keywords: Set aside
• Section: 271D

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.436/VIZAG/2009 ASSESSMENT YEAR : 2003-04 THE ADDL. CIT, RANGE-5 VISAKHAPATNAM VS. SRI G. SRINIVASA REDDY VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AJCPG 1922E APPELLANT BY : SHRI G.S.S. GOPINATH, DR RESPONDENT BY : SHRI C.V.S. MURTHY, CA O R D E R PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : IN THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30-6-2009 PASSED BY LD CIT(A), VISAKHAPATNAM, THE SOLITARY ISSUE URG ED IS WHETHER THE LD CIT(A) IS JUSTIFIED IN CANCELING THE PENALTY OF RS.2,92,250/- LEVIED U/S 271D OF THE ACT FOR VIOLATION OF SECTION 269SS OF THE ACT. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS RELATING TO THE ASSESSMENT YEAR 2003-04, THE AO NOTICED THAT THE ASSESSEE HAD TAKEN LOANS BY WAY OF CASH TO THE TUNE OF RS.2,92,950/- IN VIOLATION OF THE PR OVISIONS OF SECTION 269SS OF THE ACT. IT MAY BE NOTED HERE THAT AS PER THE PROVISIO NS OF SECTION 269SS, A LOAN TAKEN FROM A PERSON FOR AN AGGREGATE AMOUNT OF RS.2 0,000/- OR MORE SHOULD BE TAKEN ONLY BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUN T PAYEE BANK DRAFT. THE VIOLATION OF SECTION 269SS ATTRACTS PENALTY U/S 271 D OF THE ACT. ON A REFERENCE MADE BY THE AO, THE JCIT INITIATED PENALTY PROCEEDI NGS U/S 271D OF THE ACT. 2 SINCE THE ASSESSEE DID NOT FURNISH ANY EXPLANATION, DESPITE PROVIDING NECESSARY OPPORTUNITIES, THE JCIT LEVIED PENALTY EQUAL TO THE AMOUNT OF LOAN TAKEN. IN THE APPEAL PREFERRED BY THE ASSESSEE, LD CIT(A) CANCELL ED THE PENALTY BY ACCEPTING THE EXPLANATIONS OF THE ASSESSEE. HENCE THE REVENU E IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE RECORD. AS NOTICED EARLIER, THE ASSESSEE DID NOT FURNISH ANY EXPLANATI ON BEFORE THE JCIT. HOWEVER, BEFORE LD CIT(A), THE ASSESSEE EXPLAINED THAT HE HA S TAKEN THE SAID LOANS BY WAY OF PAY ORDERS DRAWN IN FAVOUR OF A.P. BEVERAGES COR PORATION LTD. THAT IS, THE ASSESSEE HAS NOT RECEIVED THE PAY ORDERS DIRECTLY I N HIS NAME; INSTEAD THE IMPUGNED CREDITORS HAVE TAKEN THE PAY ORDERS DIRECT LY IN THE NAME OF A.P. BEVERAGES CORPORATION LTD, ON BEHALF OF THE ASSESS EE. THE LD CIT(A) HAS ACCEPTED THE SAID EXPLANATION OF THE ASSESSEE AND A CCORDINGLY DELETED THE PENALTY. 4. THE CONTENTION OF THE LD DR WAS THAT THE ASS ESSEE HAS FAILED TO PROVE EVEN BEFORE THE LD CIT(A) THAT THE SAID PAY ORDERS WERE ACCOUNT PAYEE CROSSED. IN THAT REGARD, THE ASSESSEE HAS FILED A CERTIFICATE D ATED 09-02-2010 FROM INDUSIND BANK BEFORE US, WHEREIN IT IS STATED THAT THE PAY ORDERS AND DEMAND DRAFTS ISSUED BY THE SAID BANK ARE CROSSED ACCOUNT PAYEE . 5. THUS WE NOTICE THAT THE VARIOUS EXPLANATIONS AND DOCUMENTS WERE NOT FURNISHED BEFORE THE JCIT AND THEY HAVE BEEN FILED ONLY AT THE APPELLATE STAGE. SINCE LD JCIT DID NOT HAVE THE CHANCE OF CONSIDERIN G THE EXPLANATION OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE ENTIRE ISSUE NEEDS RECONSIDERATION IN THE LIGHT OF EXPLANATIONS AND EVIDENCES CITED ABOVE AND ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE ISSUE TO THE FIL E OF THE JCIT WITH A DIRECTION TO CONSIDER THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY TAKING INTO ACCOUNT THE EXPLANATIONS AND EVIDENCES FURNISHED BY THE ASSESSE E. 3 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 4.6.2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 4 TH JUNE, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 THE ADDL. CIT, RANGE-5, VISAKHAPATNAM 02 SRI G. SRINIVASA REDDY, 18-4-76, KAILAS NAGAR, G AJUWAKA 03 THE CIT (A), VISAKHAPATNAM 04 THE CIT, VISAKHAPATNAM 05 THE DR, ITAT, VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH