SHRI VIJAYKUMAR J. DUNDANI, Nagpur V. JOINT COMMISSIONER OF INCOME TAX RANGE -8, Nagpur

ITA 450/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2132 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 27-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Opportunity of being heard; Reasonable cause

Judgement Text

1 ITA NO. 450/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 450/NAG/2014. ASSESSMENT YEAR : 200 5 - 06 . SHRI VIJAYKUMAR J. DUNDANI, JOINT COMMISSIONER OF INCOME - TAX, NAGPUR. VS. RANGE - 8, NAGPUR. PAN AALPD7492F. APPELLANT. RESPONDENT. APPELLANT BY : NONE. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 1 8 - 07 - 2016 DATE OF PRONOUNCEMENT : 21 ST JULY, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 30 - 07 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2005 - 06. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT PENALTY LEVIED UNDER SECTION 271D IS BAD IN LAW AS SAME WAS NOT INITIATED DURING THE ASSESSMENT PROCEEDINGS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE PENALTY PROCEEDINGS ARE IN CONTINUATION TO THE ASSESSMENT PROCEEDINGS AND ASSESSING OFFICER CANN OT TAKE CONTRADICTORY STAND WHILE LEVYING PENALTY THAT WHAT W A S TAKEN DURING ASSESSMENT PROCEEDINGS UNDER SECTION 143(3). 2. IN THIS CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT THE APPELLANT HAD TAKEN CASH LOAN IN CONTRAVEN TION OF THE PROVISIONS OF SECTION 269SS OF THE ACT FROM THE FOLLOWING PERSONS: - 2 ITA NO. 450/NAG/2014. SR.NO. NAME OF PERSONS AMOUNT OF LOAN (IN RS.) 1 SMT. MEENA DUNDANI. 2,00,000 2 SMT. NIRMALA ADWANI 2,00,000 3 SMT. NIRMALA DUNDANI 2,50,000 4 SHRI KISHORE ADWANI 1,00,000 5 SMT. ISHWARIDEVI DUNDANI 3,10,000 6 SMT. BARKHA ADWANI 1,50,000 7 SHRI JAMNADAS DUNDANI 1,20,000 8 SMT. MANJU DUNDANI 8,00,000 9 SHRI TEKCHAND ADWANI 8,00,000 TOTAL 26,60,000 THE EXPLANATION IN THIS REGARD BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO. HE HELD THAT THE ASSESSEE W A S NOT ABLE TO PROVIDE A REASONABLE CAUSE FOR FAILURE TO TAKE LOANS OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE. HE, THEREFORE, IMPOSED A PENALTY OF RS.26,60,000/ - U/S 271D. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. LEARNED CIT(APPEALS) HELD AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. IT IS A FACT THAT THE ADDITION AMOUNTING TO RS. 2670000/ - WERE MADE BY THE LD. A O IN' RESPECT OF LOAN TAKEN BY THE APPELLANT IN CASH FROM VARIOUS RELATIVES. THE MATTER WENT IN APPEAL BEFORE THE CIT(A) AND PART RELIEF WAS GIVEN AND ADDITION TO THE EXTENT OF RS. 1540000/ - WAS CONFIRMED BY THE CIT(A). THE APPELLANT HAS INFORMED THAT NO FURTHER APPEAL AGAINST THE ORDER OF HON'BLE ITAT HAS BEEN FILED. THE VIEW TAKEN BY THE CIT(A), NAGPUR HAS NOT BEEN DISCARDED. THUS IT IS EVIDENT THAT THE ADDITION TO THE EXTENT OF RS. 1540000/ - HAVE BEEN CONFIRMED AND HAS REACHED FINALITY WHILE THE ADDITION TO THE EXTENT OF RS. 1130000/ - STANDS DELETED IN VIEW THE ORDER OF C I T(A). 5.1 I FIND MERIT IN THE SUBMISSION OF THE APPELLANT THAT ONCE THE AMOUNT HAS BEEN ACCEPTED BY THE LD. A O AS THE INCOME OF THE APPELLANT IT CANNOT BE TAKEN TO BE A LOAN OR DEPOSIT TAKEN AND PENALTY U/S 271 D WOULD NOT BE IMPOSABLE IN SUCH A SITUATION. THE RELIANCE OF THE APPELLANT ON THE CASE OF DIWAN ENTERPRISES V CIT (2000) 246 ITR 571 (DEL) (SUPRA) ETC. SUPPORTS THE SAID CONTENTION OF THE APPELLANT. IN VIEW OF THE ABOVE FACTS SINCE OUT OF THE TOTAL PENALTY AMOUNT OF RS. 2660000/ - , SINCE THE ADDITION TO THE EXTENT OF RS. 1540000/ - HAS BEEN CONFIRMED AND THE SAME HAS BEEN 3 ITA NO. 450/NAG/2014. TAKEN TO BE THE INCOME OF THE APPELLANT, THE QUESTION OF TREATING THE SAME AS LOAN/DEPOSIT DO ES NOT ARISE AND TO THAT EXTENT THE PENALTY U/S 271D WOULD STAND REDUCED'. 5.2 IT IS ALSO A FACT THAT THE SAID PROPERTY WAS PURCHASED BY THE APPELLANT AS HIS OWN NAME AND IN THE NAME OF HIS WIFE MRS.MEENA, HIS FATHER MR. JAMNADAS, HIS MOTHER MRS. ISHWA RIDEVI AND HIS BROTHER MR. LAXMAN. THERE IS MERIT IN THE SUBMISSION OF THE APPELLANT THAT THE SAID AMOUNTS ADVANCED BY THESE PARTIES TO THE APPELLANT ARE NOT LOAN OR DEPOSIT BUT ARE REIMBURSEMENT OF THE APPELLANT MADE BY THE APPLICANT FOR PURCHASE OF R ESIDENTIAL HOUSE. THE CONTENTION OF THE APPELLANT IS FURTHER SUPPORTED BY . THE FINDINGS GIVEN IN THE CASE OF ITA V. TARLOCHAN SING (2003) 81 TT) (ASR - . :: - , TRIB) 1021 (SUPRA) AND EQBAL INN & HOTELS LTD. VS. JT. CIT ( CHD '8') 359 (2014) 161 TTJ(SUPRA). THE MONEY RECEIVED BY THE APPELLANT WAS NOT USED FOR COMMERCIAL PURPOSES B'UT INVESTED IN IMMOVABLE PROPERTY, WHICH IS PROPERTY OF FAMILY ONLY. IN VIEW OF THE ABOVE FACTS THE AMOUNT CONTRIBUTED BY SMT. MEENA DUNDANI (RS. 1,00,000 / - ), SHRI JAMNADAS DUNDANI ( RS. 1,20,000/ - ) AND MRS. ISHWARIDEVI DUNDANI ( RS. 1,50,000/ - ) HAS TO BE TAKEN TO BE THE REIMBURSEMENT OF INVESTMENT MADE BY THE APPELLANT FOR THE PURCHASE OF RESIDENTIAL HOUSE AND CANNOT TAKEN TO BE LOAN OR DEPOSIT. IN VIE W OF THE SAID FINDING, THE PENALTY WHICH HAD BEEN REDUCED AT RS. 1120000/ - (RS. 2660000 - RS. 1540000) SHALL BE FURTHER REDUCED BY THE ABOVE AMOUNT OF RS. 370000/ - ( RS. 1,00,000 + RS. 1,50,000 + RS. 1,20,000). THUS THE PENALTY U/S 271D TO THE EXTENT OF RS. 750000/ - ( RS. 1120000 - RS. 370000) IS HEREBY CONFIRMED. 4. AGAINST THIS CONFIRMATION OF RS.7,50,000/ - THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HE A RD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, IN MY CONSIDERED OPINION THE ISSUE CAN BE ADJUDICATED BY HEARING THE LEARNED D.R. AND PERUSING THE RECORDS. 6. UPON CAREFUL CONSIDERATION I FIND THAT THOUGH THE LEARNED CIT(APPEALS) HAS ACCEPTED THE CONTENTION THAT WHEN THE PROPERTY HAS BEEN PURCHASED IN THE NAME OF D UNDAN I FAMILY, LOANS TAKEN THEREFROM ARE ACTUALLY REIMBURSEMENT AND CANNOT BE ADDED AS CASH LOAN U/S 269SS. THERE ARE FOUR SUCH LOANS. HOWEVER, LEARNED CIT(APPEALS) HAS DELETED ONLY THREE ON THIS PREMISE. THERE IS NO DISCUSSION REGARDING 4 TH WHICH IS RS.2,50,00 0/ - FROM NIRMALA DUNDANI. FURTHER MORE I FIND THAT THERE IS A SUBMISSION OF THE ASSESSEE THAT THE AMOUNT RECEIVED FROM ADWANI FAMILY (RELATIVE) WAS UTILIZED FOR INVESTMENT IN FDR IN THE NAME OF SHRI TEKCHAND ADWANI JOINTLY WITH THE ASSESSEE HAVING FIRST NA ME OF 4 ITA NO. 450/NAG/2014. TEKCHAND ADWANI. THE ASSESSEE HAS FURTHER CONTENDED T HAT SIMILARLY IN THE CASE OF ADWANI FAMILY THE AMOUNT IS INVESTED IN FDR. THAT E RRONEOUSLY IT MAY HAVE BEEN ACCOUNTED FOR AS LOAN. 7. I FIND THAT THERE IS NO DISCUSSION IN THE ORDERS OF THE AUTHOR ITIES BELOW ON THIS ASPECT OF ASSESSEES PLEADING. HENCE I FIND THAT INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IN THIS REGARD IS REMITTED TO THE FILE OF THE AO. THE AO IS DIRECTED TO CONSIDER THE ISSUE OF REMAINING ADDITION U/S 271D IN THIS CASE AFR ESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 21 ST JULY, 2016. COPY FORWARDED TO : 1. SHRI VIJAYKUMA R J. DUNDANI, FLAT NO. 103, HIMALAYA SOC. CHHAPRU NAGAR, LAKADGANJ, NAGPUR - 440008. 2. J .C.I.T., RANGE - 8 , NAGPUR. 3. C.I.T. - IV, NAGPUR. 4. CIT(APPEALS), - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.