ACIT, Nashik V. M/s. Shivanand Electronics, Nashik

ITA 476/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3172 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Bonafide belief; Additional evidence; Reasonable cause
• Section: 273B; 271D; 271E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 476/PN/09 (ASSTT. YEAR 2005-06) ACIT CIRCLE-2, NASHIK .... APPELLANT VS. M/S. SHIVANAND ELECTRONICS, DEEPAK MAHAL, LAM ROAD DEOLALI CAMP DIST. NASHIK PAN NO.AAKFS9999Q . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY : SMT. DEEPA KHARE ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER O F THE CIT(A)-I, NASHIK DATED 13-02-2009 FOR THE A.Y 2004-05. GROUNDS RAISED IN THE APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN CONSIDERING THAT THE CASE OF SUNFLOWER BUILDERS PVT. LTD. (SUPRA) IS SIMILAR TO THE CASE OF THE ASSESSEE FIRM. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN TREATING THE TRANSACTION MADE WITH SHRI MAHARAJ K. BIRMANI AND SMT. RENU BIRMANI IS NOT COVERED BY THE PROVISIONS OF SE CTION 269T. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN DELETING PENALTY U/S. 271E IN RESPECT OF DEFAULT OF PAYMENTS MADE IN THE CASE OF SHRI MAHARAJ K. BIRMANI AND SMT. RENU B IRMANI. 4. THE APPELLANT REQUESTS FOR ADMISSION OF AN ADDI TIONAL GROUND OF APPEAL OR ADDITIONAL EVIDENCES IF REQUIRED TO SUPPO RT HIS CASE. 2. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL PLACED ON RECORD AND THE IMPUGNED ORDER OF THE CIT(A) AND FIND THAT PA RA NO. 4.3 AND 5 ARE RELEVANT WHICH READS AS UNDER:- ITA NO. 476/PN/09 A.Y: 2005-06 PAGE 2 OF 4 4.3 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF T HE A.O AND THE SUBMISSIONS OF THE APPELLANT AND ALSO THE DECISIONS RELIED ON BY THE APPELLANT. IT IS AN UNDISPUTED FACT THAT THE APPELL ANT FIRM HAS MADE CASH PAYMENT TO MAHARASHTRA STATE GOVERNMENT TOWARDS STAMP DUTY AD REGISTRATION CHARGES ON BEHALF OF SHRI B.L. BIRMANI AND SMT. ROMA BIRMANI AND THE DEBT WAS ACKNOWLEDGED BY THESE TWO PERSONS A ND THE AMOUNTS WERE DEBITED TO THEIR RESPECTIVE ACCOUNTS BY PASSING JOURNAL ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT FIRM WHICH ARE REGULARLY MAINTAINED AND AUDITED. THE APPELLANTS CLAIM THAT THE RATIO LAID DOWN BY THE HONBLE ITAT, PUNE IN THE CASE OF SUNFLOWER BUIL DERS (P) LTD. VS. DCIT 61 TTJ 227 IS APPLICABLE TO ITS CASE APPEARS TO BE RE ASONABLE TO ME IN VIEW OF THE APPELLANTS SUBMISSIONS THAT HE WAS UND ER THE BONAFIDE BELIEF THAT ON PAYMENT TO STATE GOVERNMENT PROVISIONS OF SEC TION 269T ARE NOT APPLICABLE APPEARS TO BE REASONABLE AS PAYMENT OF THE STAMP DUTY AND REGISTRATION FEES TO THE SUB-REGISTRAR ARE GENERALLY IN L EGAL TENDER. FURTHER, IT IS A WELL-ESTABLISHED LAW THAT BONAFIDE B ELIEF IS A REASONABLE CAUSE AS ENVISAGED BY THE PROVISIONS OF SECTION 273B OF THE ACT. THIS PROPOSITION OF LAW IS ALSO SUPPORTED BY THE FOLLOWING DECISIONS: A. CIT V. ETACHI LTD. 248 ITR 525 (BOMBAY) B. ACIT, CIRCLE 1(2), KOLHAPUR VS. M/S. MEHTA DAIRIES IN ITA NO. 423/PN/61 (PUNE) C. CIT VS. SCHELL INTERNATIONAL (2005) 278 ITR 630 (MUM BAI). FURTHER, THE PROPOSITION OF LAW THAT THE PROVISIONS OF SECTION 273B CAN BE APPLICABLE IN RESPECT OF CONTRAVENTION OF PROVISIONS O F SECTION 269SS/269T IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF A.D.I VS. KUMARI A.B. SHANTI 255 ITR 258, WHEREIN IT HAS BEEN LAID DOWN THAT ANY UNDUE HARDSHIP OF THE PROVISION IS VERY MUCH MITIGATED BY INCLUSION OF SECTION 273B OF THE ACT. THE CONTENTIO N OF THE APPELLANT THAT IN RESPECT OF GENUINE TRANSACTIONS AND WHERE THE DEFAU LT IS TECHNICAL OR VENIAL, NO PENALTY IS LEVIABLE IS SUPPORTED BY THE D ECISION IN THE CASES OF MUTHOOT M. GEORGE BROS. VS. ACIT (SUPRA) AND HINDUST AN STEEL LTD. VS. STATE OF ORISSA (SUPRA). THE CONTENTION OF THE APPELL ANT THAT THE SCOPE OF RATIONALE BEHIND THE INTRODUCTION OF PROVISIONS OF SEC TION 269SS/269T IS TO PREVENT GENERATION OF BLACK MONEY AS CLARIFIED BY THE C.B.D.TS CIRCULAR NO. 387 DATED 06/07/1984 AND IN THE CASE OF THE APP ELLANT THE PAYMENT IN CASH WAS TO MAHARASHTRA GOVERNMENT AND RECORDED BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED, AND HENCE THE CASH PAYMENT DOES NOT INVOLVE OR LIKELY TO GENERATE BLACK MONEY, APPEARS TO BE LOGICAL AND ACCEPTABLE. IN VIEW OF THE ABOVE DISCUSSION AND TH E VARIOUS DECISIONS RELIED ON BY THE APPELLANT, I AM OF THE CONSIDERED VI EW THAT THE ABOVE CASH REPAYMENTS ARE COVERED BY THE PROVISIONS OF SECTIO N 273B AND ON THE FACTS OF THE CASE LEVY OF PENALTY U/S. 271E IS NOT JUSTIFIED. THE A.O. IS THEREFORE DIRECTED TO CANCEL THE PENALTY LEVIED ON THE SAID PAYMENTS. 5. GROUNDS NO. 6 TO 8 RELATE TO THE PENALTY U/S. 271E LEVIED IN RESPECT OF LOAN REPAYMENT LOAN TO MRS. KUSUM PURI OF RS. 20,00 0/- AND SHRI P.C. PURI OF RS. 27,000/-. IN RESPECT OF LOA N REPAID TO MRS . KUSUM PURI, THE APPELLANT SUBMITTED THAT RS. 5,000/- AND RS. 15,000 /- WERE REPAID ON 10/03/2005 AND 31/03/2005 RESPECTIVELY. THE APPELLA NT CLAIMED THAT THE PARTNERS OF THE APPELLANT FIRM WERE UNDER BONAFIDE BELI EF THAT IF LOAN REPAYMENT AT A TIME IS LESS THAN RS. 20,000/-, PROVIS IONS OF SECTION 269T ARE NOT ATTRACTED. IN SUPPORT OF THIS CONTENTION, THE APPELLANT FIRM RELIED ON THE DECISION OF THE HONBLE ITAT, PUNE, IN THE C ASE OF ACIT, CIRCLE ITA NO. 476/PN/09 A.Y: 2005-06 PAGE 3 OF 4 1(2), KOLHAPUR VS. M/S. MEHTA DAIRIES IN ITA NO. 423/ PN/61, WHEREIN IT HAS BEEN HELD AS UNDER: 4. AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRC UMSTANCES OF THE CASE, WE FIND THAT THE REVENUE HAS NOT BEEN ABL E TO POINT OUT THAT THE ASSESSEES BELIEF THAT LIMIT OF RS. 20,000 /- IS APPLIED TO EACH TRANSACTION SEPARATELY AND NOT TO THE AGGREGAT E OF THE TRANSACTIONS WITH ONE PERSON WAS NOT BONAFIDE OR GE NUINE ONE. IN OUR CONSIDERED VIEW, THE AFORESAID BELIEF CAN BE CO NSIDERED TO BE BONA FIDE AND HONEST ONE AND THEIR IGNORANCE OF REAL MEANING OF THE PROVISIONS OF SEC. 269SS CAN CONSTITUTE A SUFFI CIENT AND REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B, S O THAT NO PENALTY U/S. 271D IS ATTRACTED. IN THIS CONNECTION, WE MAY REFER TO A RECENT DECISIONS OF THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. SCHELL INTERNATIONAL (2005) 278 ITR 630 WHERE THE HONBLE HIGH COURT HAS ACCEPTED THAT IGNORANCE OF T HE PROVISIONS OF LAW MAY CONSTITUTE A SUFFICIENT AND REASONABLE CAUS E FOR A DEFAULT COMMITTED BY THE ASSESSEE. SINCE THIS ISSUE CAN BE DECIDED ONLY ON THIS ASPECT OF THE MATTER, WE DO NOT PROCEED TO ENT ER INTO ANY OTHER REASONS OR BASIS MADE BY CIT(A) IN DELETING THE PENALTY U/S. 271D OF THE ACT. THE ORDER OF THE CIT(A) IS, THUS, UPHELD. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIONAL TRIBUNAL, THE CONTENTION RAISED BY THE APPELLANT FIRM IS ACCEPTED. THE PENALTY LEVIED U/S. 271E ON THE REPAYMENT OF LOAN TO MRS. KUSUM PURI AMOUNTING TO RS. 20,000/- IS CANCELLED AND THE A.O IS DIRECTED ACCORDINGLY. 3. FROM THE ABOVE, IT IS EVIDENT THAT THE PROVISIONS DO NOT COME INTO FORCE WHEN THE PAYMENTS ARE MADE BY WAY OF BOOK ENTRIES AND NOT THE ACTUAL PAYMENTS OF THE SUM IN CASH. THEREFORE, WE FIND NO REA SONS TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, GROUNDS OF THE REVENU E DISMISSED. 4. DURING THE PROCEEDINGS, LD. COUNSEL RELIED ON THE JUDGEMENT OF THE TRIBUNAL IN THE CASE OF SUNFLOWER BUILDERS (P.) LTD. VS. DCIT (PUNE) 61 ITD 227 WHEREIN THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSE E AND AGAINST THE REVENUE. CONSIDERING THE ABOVE, WE FIND THAT THE GROUND RAISED IN THE APPEAL SHOULD BE DISMISSED . 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 24 TH NOVEMBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 24 TH NOVEMBER, 2010 R ITA NO. 476/PN/09 A.Y: 2005-06 PAGE 4 OF 4 COPY OF THE ORDER IS FORWARDED TO : 1. ACIT, CIRCLE-2, NASHIK 2. ASSESSEE 3. CIT(A)-I, NASHIK 4. CIT-I, NASHIK 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE