Potru Siddhartha Shankar Rao, , Kovvur V. Additional Commissioner of Income Tax, Eluru Range, Eluru

ITA 480/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3764 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Reasonable cause; Competent authority
• Section: 271D; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 480 / VIZ /201 8 (ASST. YEAR : 20 13 - 14 ) POTRU SIDDHARTHA SHANKAR RAO, PROP. : SRI KRISHNA WINES, D.NO. 4.234, MAIN ROAD, ISUKAPATLA PANGIDI, KOVVUR MANDAL, W.G. DISTRICT. V S . ADDL. CIT, ELURU . PAN NO. BEAPP 1639 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 28 / 0 8 /201 9 . DATE OF PRONOUNCEMENT : 30 / 0 8 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM , DATED 2 8 /0 6 /201 8 FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ONE SRI SUNKAVALLI SRIRAM , C/O M/S. COASTAL C HEMICALS LTD., NIDADAVOLE HAS TO PAY A SUM OF RS.22.04 LAKHS TO THE ANDHRA BANK, NIDADAVOLE IN ORDER TO RELEASE THE PROPERTY OF 5.51 ACRES OF LAND WHICH WAS OFFERED AS SECURITY. 2 ITA NO. 480/VIZ/2018 ( POTRU SIDDHARTHA SHANKAR RAO ) THE COMPETENT AUTHORITY OF THE B ANK HAS PERMITTED HIM TO MAKE PAYMENT OF THE SAID AMOUNT IN INSTALMENTS ON OR BEFORE 15/06/2012 . THE ASSESSEE HAS CLEARED OFF THE SAID LOAN ON BEHALF OF SRI SUNKAVALLI SRIRAM AND IN THAT PROCESS HE OBTAINED CASH LOAN OF RS. 6.63 LAKHS FROM SRI Y. RAMBABU ON 11/06/2012 . SRI SUNKAVALLI SRIRAM HAS SOLD THE SAID PROPERTY TO THE ASSESSEE ON 28/07/2012 . THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS BORROWED AN AMOUNT OF RS. 6.63 LAKHS FROM SRI Y.RAMBABU ON 11/06/2012 , WHICH IS CONTRARY TO THE MODE OF TAKING LOAN AS PER SECTION 269SS OF THE ACT. THE CASE OF THE ASSESSEE IS THAT HE CLEARED OFF THE LOAN ON BEHALF OF SUNKAVALLI SRIRAM ON 15/06/2012 OTHERWISE IT IS DIFFICULT FOR HIM TO GET IT REGISTERED IN HIS FAVOUR , THEREFORE THERE IS AN URGENCY TO BORROW AN AMOUNT OF RS. 6.63 LAKHS FROM SRI Y. RAMBABU AND PAID THE SAME TO THE BANK AND RELEASED THE PROPERTY AND IMMEDIATELY ON 28/07/2012 THE PROPERTY GOT REGISTERED IN HIS FAVOUR . THE ASSESSEE ALSO EXPLAINED THAT THE TRANSACTION IS GENUINE AND ACTUAL TRANSACTION THEREFORE SECTION 269SS CANNOT BE INVOKED AND NO PENALTY CAN BE LEVIED U/SEC. 271D OF THE ACT . H OWEVER, THE ASSESSING OFFICER NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THERE IS NO URGENCY TO BORROW CASH LOAN TO DEPOSIT THE SAME IN THE BANK , THEREFORE THE ASSESSEES CASE IS NOT 3 ITA NO. 480/VIZ/2018 ( POTRU SIDDHARTHA SHANKAR RAO ) COVERED UNDER THE EXCEPTION PROVIDED T O SECTION 271D OF THE ACT. FURTHER, HE OBSERVED THAT SECTION 269SS ONLY APPLIES IN THE CASE OF GENUINE TRANSACTIONS AND NOT OTH ERWISE . ACCORDINGLY, HE LEVIED PENALTY U/SEC. 271D OF THE ACT. 3 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PLYING LORRIES AND LIQUOR , THEREFORE ASSESSEE CANNOT BE SAID THAT HE IS A PURE AGRICULTURIST . THE LENDER MAY BE AN AGRICULTURIST BUT THAT DOES NOT ALONE ABSOLVE THE ASSESSEE FROM THE RIGORS OF SECTION 271D. IT IS CLAIMED THAT THE LENDER HIMSELF HAD DEPOSITED THE MONEY IN THE BANK ACCOUNT OF THE ASSESSEE, BUT NO PROOF OF PAY - IN - SLIP WAS FURNISHED . IT IS ALSO NOT KNOWN WHETHER THE SAID LOAN IS CLEARED OFF OR NOT. 4 . BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DUE TO URGENCY , THE ABOVE A M OUNT OF RS. 6.63 LAKHS IN CASH IS BORROWED AND CLEARED OFF THE LOAN OF SRI SUNKAVALLI SRIRAM AND SUBMITTED THAT SECTION 269SS CANNOT BE INVOKED . 5 . LD.DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE FIND THAT THERE IS AN UNDERSTANDING BETWEEN THE ASSESSEE AND SRI SUNKAVALLI SRIRAM THAT ASSESSEE HAS UNDERTAKEN TO CLEAR OFF THE LO A N WHICH HAS BEEN OBTAINED BY SRI SUNKAVALLI SRIRAM FROM ANDHRA BANK, NIDADAVOLE BY KEEPING 5.51 ACRES OF LAND AS 4 ITA NO. 480/VIZ/2018 ( POTRU SIDDHARTHA SHANKAR RAO ) SECURITY . AS PER THE UNDERSTANDING , THE ASSESSEE HAS PAID CERTAIN INSTALMENTS TO THE ANDHRA BANK AND THERE IS A SHORT OF RS. 6.63 LAKHS AND I F THAT AMOUNT IS NOT PAID IN A GIVEN TIME, IT IS NOT POSSIBLE FOR THE ASSESSEE TO GET REGISTERED THE PROPERTY IN HIS FAVOUR . UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , THE ASSESSEE IS COMPELLED TO BORROW THE MONEY FROM SRI Y. RAMBABU AND THE SAME IS DEPOSITED IN THE BANK . IT IS ALSO A FACT THAT ASSESSEE CLEARED OFF THE LOAN ON BEHALF OF SRI SUNKAVALLI SRIRAM AND IMMEDIATELY THE PROPERTY TO THE EXTENT OF 5.51 ACRES OF LAND IS TRANSFERRED TO THE ASSESSEE . THEREFORE, THE ENTIRE TRANSACTION IS A GENUINE TRANSACTION . WE ALSO FIND THAT THE CIRCUMSTANCES ARE COMPELLED THE ASSESSEE TO BORROW THE FUNDS FROM SRI Y. RAMBABU TO CLEAR OFF THE LOAN. THE L OAN AMOUNT BORROWED BY THE ASSESSEE FROM SRI Y. RAMBABU IS NOT DOUBTED BY THE ASSESSING OFFICER. IF AT ALL, ASSESSING OFFICER HAS ANY DOUBT ABOUT THE CREDITWORTHINESS, THE CREDITOR - SRI Y. RAMBABU HAS TO BE EXAMINED . IN THIS CASE, THE ASSESSING OFFICER HAS NOT AT ALL DOUBTED THE TRANSACTION. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT THERE IS A REASONABLE CAUSE FOR THE ASSESSEE TO BORROW THE FUNDS AND THE SAME IS DEPOSITED IN THE BANK ACCOUNT TO RELEASE THE DOCUMENT AND THE SAME IS REGISTERED IN HIS FAVOUR WITHIN A MONTH . WE FIND THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY U/SEC. 5 ITA NO. 480/VIZ/2018 ( POTRU SIDDHARTHA SHANKAR RAO ) 271D OF THE ACT. ACCORDINGLY, WE REVERSE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 3 0 T H DAY OF AUGUST , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 0 T H AUGUST , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE POTRU SIDDHARTHA SHANKAR RAO, PROP. : SRI KRISHNA WINES, D.NO. 4.234, MAIN ROAD, ISUKAPATLA PANGIDI, KOVVUR MANDAL, W.G. DISTRICT. 2. THE REVENUE ADDL. CIT,ELURU. 3. THE PR. CIT , RAJAMAHENDRAVARAM. 4. THE CIT(A) - 3, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.