DCIT CEN CIR 8(2), MUMBAI V. POOJA GANDHI, NAVI MUMBAI

ITA 4894/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7677 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 25-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: RISHABH S HAH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.4894/M/2016 ASSESSMENT YEARS: 2006-07 DY. COMMISSIONER OF INCOME TAX, CC-8(2), 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. SHRI POOJA GANDHI, A/303, BALAJI GARDENS, SECTOR-11, KOPARKHAIRNE, NAVI MUMBAI-400 709 PAN: AABPA1069Q (APPELLANT) (RESPONDENT) ITA NOS.4897 & 4899/M/2016 ASSESSMENT YEARS: 2007-08 & 2009-10 DY. COMMISSIONER OF INCOME TAX, CC-8(2), 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. SHRI DEVANG GANDHI, A/303, BALAJI GARDENS, SECTOR-11, KOPARKHAIRNE, NAVI MUMBAI-400 709 PAN: ABHPG0909H (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RISHABH SHAH, A.R. REVENUE BY : SHRI BEENA SANTOSH, D.R. DATE OF HEARING : 30.03.2017 DATE OF PRONOUNCEMENT : 30.03.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: ALL THESE APPEALS ARE FILED BY THE REVENUE INVOLVI NG ASSESSMENT YEARS 2006-07, 2007-08 & 2009-10. THE ISSUES RAISED IN A LL THE APPEALS ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE THEY ARE CLUB BED AND HEARD COMBINEDLY AND DISPOSED BY THIS CONSOLIDATED ORDER. APPEALWIS E ADJUDICATION IS GIVEN IN FOLLOWING PARAS: ITA NO.4894/M/2016 ITA NOS.4897 & 4899/M/2016 SHRI DEVANG GANDHI 2 2. IN ALL THESE APPEALS THE FACTS ARE IDENTICAL. T HEREFORE, THE ISSUE RAISED IN APPEAL FOR A.Y. 2006-07 READS AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) DELETE PENALTY OF RS.17,50,000/- LEVIED U/S. 271D OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT THE NEW SECTION 269SS PROHIBITS PERSON FROM TAKING OR ACCEPTING FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT P AYEE DEMAND DRAFT AND IN THIS CASE, THE ALLEGED LOANS WERE FIRST ACCE PTED / BOOKED IN THE BOOKS OF THE PARTNERSHIP FIRM AND THEN TRANSFERRED TO THE ASSESSEE'S ACCOUNT THROUGH PASSING JOURNAL ENTRIES. THESE FACT S CLEARLY SHOWS THAT THE INTENTION BEHIND THIS WAS TO OVERCOME THE PROVISION S OF SECTION 269SS. THE ASSESSEE USE THIS AS A DEVICES IN A VIEW TO BEAT TH E PROVISIONS OF SECTION 269SS OF THE ACT. 3. DURING THE COURSE OF HEARING THE LD. A.R. OF THE ASSESSEE SUBMITTED BEFORE US THAT THIS ISSUE RELATES TO PENALTY UNDER SECTION 271D OF THE ACT AND THE FACTS OF THE CASE ARE THAT ASSESSEE FIRM HAS CL AIMED TRANSPORT OF CERTAIN LOANS FROM THEIR PARTNERS AND ASSESSEE PASSED GENER AL ENTRY IN BOOKS OF FIRM, THEREFORE IT IS THE CONTENTION OF THE ASSESSEE THAT ENTRIES IN BOOKS OF THE FIRM ARE OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 279SS READ WITH SECTION 271D OF THE ACT. ASSESSEE RELIED UPON THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF NOIDA TOLL BRIDGE CO. LTD. 262 ITR 260 AND JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF TRIUMPH IN TERNATIONAL FINANCE (I) LTD. 22 TAXMAN.COM 138. 4. THE LD. D.R. SUBMITTED THAT THE APPEAL MAY BE DE CIDED ACCORDINGLY. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ISSUE IN CONTROVERSY IS COVERED BY ITA NO.4896/M/2016, ITA NO.4898/M/2016 A ND ITA NO.4895/M/2016 WHEREIN THE TRIBUNAL HAS DECIDED THI S ISSUE IN THE CASE OF SAME ASSESSEE BY OBSERVING AS UNDER: 5. WE HAVE HEARD THE LD DR FOR THE REVENUE AND PER USED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MAT ERIAL PLACED BEFORE US. WE HAVE ALSO PERUSED THE CITED PRECEDENTS OF THE HON'BLE HI GH COURTS (SUPRA). AFTER HEARING THE LD DR FOR THE REVENUE AND ON PERUSAL OF THE SUBMISSIONS MADE BY THE ASSESSEE, AS INCORPORATED IN THE ORDERS OF THE REVE NUE AUTHORITIES, WE FIND THAT THE ITA NO.4894/M/2016 ITA NOS.4897 & 4899/M/2016 SHRI DEVANG GANDHI 3 FACTS IN THE PRESENT CASES ARE IDENTICAL TO THAT OF THE ONE DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TRIUMPH IN TERNATIONAL FINANCE (I) LTD (SUPRA). THE SAID JUDGMENT IS RELEVANT FOR THE PROPOSITION T HAT THE JOURNAL ENTRIES MAY BE COVERED BY THE PROVISIONS OF SECTION 269SS OF THE A CT. HOWEVER, CONSIDERING THE 'BUSINESS TRANSACTIONS' BETWEEN THE 'FIRM' AND THE 'PARTNERS', THE 'REASONABLE CAUSE' MENTIONED IN SECTION 273B OF THE ACT, WE ARE OF THE OPINION, SUCH JOURNAL ENTRIES IN THE CONTEXT OF CURRENT ACCOUNT TRANSACTIONS FOR TRA NSFER OF LOANS FROM THE FIRM TO THE PARTNERS DO NOT WARRANT LEVY OF PENALTY U/S 271 D OF THE ACT. FROM THAT POINT OF VIEW, THE DECISION OF THE CIT (A) IN ALL THESE THRE E CASES IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. FOR THE SAKE OF COMPLETENESS OF THIS CASE, THE RELEVANT PARA 6.3 IS EXTRACTED AS UNDER:- 6.3. THE FACTS OF THE CASE IN TRIUMPH INTERNATIONA L FINANCE (I) LTD (22 TAXMAN. CORN 138) ARE VERY SIMILAR TO THE FACTS OF THESE CASES WHICH IS BEFORE ME. IN THESE CASES ALSO THERE WAS NO FINDING RECORDED IN THE ASSESSMENT ORDERS OR IN THE PENALTY ORDERS TO THE E FFECT THAT THE REPAYMENTS OF LOANS / DEPOSITS WERE NOT BONA FIDE T RANSACTIONS AND WERE MADE WITH A VIEW TO EVADE TAX. THE APPELLANT SUBMIT TED THAT THE LOANS WERE TRANSFERRED FROM THE FIRM IN WHICH HE WAS A PARTNER TO HIM BY PASSING NECESSARY JOURNAL ENTRIES IN THE BOOKS OF THE FIRM. IN MY VIEW, RETURNING THE LOAN AMOUNTS TO THE CREDITORS BY ACCOUNT PAYEE CHEQ UES BY THE FIRM AND THEN RECEIVING THE SAME AMOUNT FROM THOSE CREDITORS BY ACCOUNT PAYEE CHEQUES BY THE APPELLANT WOULD HAVE BEEN A MERE FOR MALITY IN THIS CASE. THEREFORE, IN MY VIEW, THE ASSESSING OFFICER WAS NO T JUSTIFIED IN IMPOSING PENALTY UNDER SECTION 271D OF THE ACT IN THIS CASE. THE GROUNDS OF APPEAL FOR THE 4 ASSESSMENT YEARS ARE ALLOWED.' 6. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEALS. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2017. SD/- SD/- (D. KARUNAKARA RAO) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.03.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ ITA NO.4894/M/2016 ITA NOS.4897 & 4899/M/2016 SHRI DEVANG GANDHI 4 BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.