The Income tax Officer, Jalandhar V. Rani Kamaljit Kaur,

ITA 5/ASR/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5693 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: Y K SUD
• Keywords: Reasonable cause; Avoidance of tax; Tax effect
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.05(ASR)/2011 ASSESSMENT YEAR:2005-06 PAN :AJRPKJ1434G THE INCOME-TAX OFFICER, VS. RANI KAMALJIT KAUR, WARD IV(1), JALANDHAR. THE FORT, KARTARPUR. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. AMRIK CHAND, DR ASSESSEE BY: SH. Y.K. SUD, CA ORDER PER MEHAR SINGH, AM, THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT(A), JALANDHAR, DATED 25.10.2010, PASSED UNDER S ECTION 250(6) OF THE INCOME-TAX ACT,1961 (HEREINAFTER REFERRED TO IN SHO RT THE ACT), RELATING TO ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A), ERRED IN DELETING THE PENALTY OF RS. 5 LAC IMPOSED BY THE A.O. UNDER SECTION 271 E OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A), HAS FAILED TO APPRECIATE THAT THE ASSESSEE REPAID THE LOAN OF RS. 5 LAC IN CASH VIOLATING THE PROVISIONS OF SECTION 269T OF THE ACT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), HAS FAILED TO APPRECIATE THAT THE MODE OF REPAYMENT WAS OTHER THAN THE ONE SPECIFIED IN THE RELEVANT PROVISIONS O F THE ACT. 2 3. ALL THE GROUNDS OF APPEALS RAISED BY THE REVENUE REVOLVE AROUND THE SINGLE CORE ISSUE AGAINST THE DELETION OF PENALTY O F RS.5 LACS UNDER SECTION 271E BY THE CIT(A). THE FACTS OF THE CASE ARE THAT THE AO INITIATED PENALTY PROCEEDINGS U/S 271E OF THE ACT DURING ASSESSMENT P ROCEEDINGS ON NOTICING THAT THE ASSESSEE HAD REPAID A LOAN OF RS.5 LACS IN CASH. THE AO PRAYED FOR DROPPING PENALTY BEFORE THE A.O. WHO ISSUED SHOW CA USE NOTICE AND RELIED ON VARIOUS JUDGMENTS IN SUPPORT OF HIS CASE. BUT TH E AO HELD THAT THE JUDGMENTS RELIED UPON BY THE ASSESSEE WERE NOT APPL ICABLE, SINCE THE FACTS IN JUDGMENTS RELIED UPON WERE DIFFERENT. HE REFERRED T O THE PROVISIONS OF SECTION 269T OF THE ACT, AS PER WHICH NO PERSON SHO ULD REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT P AYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN KIN THE NAME OF THE PERSON W HO HAD MADE THE LOAN OR DEPOSIT WHERE THE LOAN OR DEPOSIT TOGETHER WITH INTEREST WAS RS.20,000/- OR MORE. AS THE ASSESSEE HAS REPAID THE LOAN OF RS. 5 LAC IN CASH TO SMT. URMEET KAUR, THE AO HELD THAT PROVISIONS OF SECTION 269T HAD BEEN VIOLATED. HE, THEREFORE, LEVIED THE IMPUGNED PENALT Y OF RS. 5 LACS ON THE ASSESSEE. AGGRIEVED, THE ASSESSEE FILED AN APPEAL B EFORE THE LD. CIT(A), WHO CANCELLED THE PENALTY AFTER DETAILED DISCUSSION IN HIS ORDER. NOW, AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEA L BEFORE US. 4. THE LD. DR, RELIED ON THE ORDER OF THE ASSESSI NG OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. HE FURTHER, PLACED RELIANCE ON THE DECISION OF THE HON BLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF C.I.T. FARIDABAD VS. SUN IL KUMAR GOEL, IN I.T.A. NO.177 & 178 OF 2009, DATED 3.3.2009 AND SUBMITTED THAT THE CASE OF THE PRESENT ASSESSEE IS COVERED BY THIS DECISION. THE R ELEVANT AND OPERATIVE PART OF THE SAID DECISION OF THE HONBLE HIGH COURT, IS REPRODUCED AS UNDER: 3 THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN REC ORDING CONCLUSION THAT REASONABLE CAUSE: HAD BEEN SHOWN B Y THE RESPONDENT- ASSESSEE. THE INCOME TAX APPELLATE TRIBUNAL RELIED ON THE FACT THAT THE RESPONDENT-ASSESSEE HAD PRODUCED HIS CASH BOOKS , DEPICTING LOANS TAKEN BY HIM UNILATERALLY BEFORE THE REVENUE. ANOTH ER FACT TAKEN INTO CONSIDERATION WAS, THAT NO PREJUDICE WAS CAUSED TO THE REVENUE, IN THE INSTANT ACTION OF THE RESPONDENT-ASSESSEE INASMUCH AS, THE RESPONDENT-ASSESSEE DID NOT ATTEMPT BY THE IMPUGNE D ACT TO AVOID ANY TAX LIABILITY. FURTHERMORE, THERE IS NO DISPUTE ABO UT THE FACT, THAT THE INSTANT CASH TRANSACTIONS OF THE RESPONDENT ASSESS EE WERE WITH THE SISTER CONCERN, AND THAT, THESE TRANSACTIONS, BETWE EN TWO INDEPENDENT ASSESSES, BASED ON AN ACT OF CASUALNESS, SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF IS CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAS NO TAX EFFECT, IN OUR VIEW ESTABLISHES R EASONABLE CAUSE UNDER SECTION 273B OF THE ACT. SINCE THE RESPONDENT -ASSESSEE HAD SATISFACTORILY ESTABLISHED REASONABLE CAUSE: UNDER SECTION 273B OF THE ACT, HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIE NT CAUSE FOR NOT INVOKING THE PENAL PROVISIONS (SECTION 273D AND 271 E OF THE ACT) AGAINST HIM. 6. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND THE RELEVANT PROVISIONS OF THE ACT. THE LD. CIT(A), AFTER APPRECIATION OF THE RELEVANT PROVISIONS OF THE ACT, FACT SITUATION OF T HE CASE, DELETED THE PENALTY LEVIED UNDER SECTION 271E OF THE ACT. THE A.O. LEVI ED THE PENALTY U/S 271E OF THE ACT AT RS. 5 LACS, AS THE ASSESSEE HAD REPAI D LOAN OF R. 5 LACS IN CASH TO SMT. URMEET KAUR, BEING VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. THE RELEVANT PART OF THE DECISION OF THE LD. C IT(A) IS REPRODUCED HEREUNDER FOR THE PURPOSE OF PROPER APPRECIATION OF THE FACTUAL AND LEGAL POSITION : 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ATE CAREFULLY. THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE RECEIVED A LOAN OF RS 5 LACS FROM DAUGHTER-IN-LAW SMT. URMEET KAUR IN FEB.,2003. SMT. URMEET KAUR HAD THROUGH A CHEQUE DRAWN ON THE ICICI BANK L TD. OBTAINED A BANK DRAFT OF RS. 5 LACS FOR THE ASSESSEE. THE ASSE SSEE HAS DEPOSITED A SUM OF RS. 5 LACS CASH IN THE BANK ACCOUNT OF SMT. URMEET KAUR ON 31.3.2005 WHICH IS ACCEPTED TO BE FOR THE REPAYMENT OF THE LOAN TAKEN FROM HER. THE APPELLANT HAD CLAIMED THAT SINCE THE TRANSACTION WAS 4 BONAFIDE AND BETWEEN FAMILY MEMBERS AND BECAUSE THE AVAILABILITY OF CASH WITH HER WAS NOT DISPUTED, THE PENALTY U/S 271 E WAS NOT ATTRACTED. THE APPELLANT HAS RELIED ON SEVERAL DECISIONS IN SU PPORT OF HER CONTENTION. 4.1. IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA ) RELIED UPON BY THE LD. AR, THE ASSESSEE HAD RECEIVED AND REPAID LO ANS IN CASH IN EXCESS OF RS.20,000/- EACH. THE HONBLE HIGH COURT NOTED THAT SECTION 273B OF THE ACT, WHICH WAS A NON OBSTANTE P ROVISION, PROVIDED THAT NO PENALTY WOULD BE IMPOSED, INTER A LIA, U/S 271D OR 271E, IF THE PERSON PROVED THAT THERE WAS A REASONA BLE CAUSE FOR THE FAILURE MENTIONED UNDER THESE SECTIONS. IT WAS HELD THAT IF THE ASSESSEE ESTABLISHED REASONABLE CAUSE FOR HAVING NOT COMPLIE D WITH THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT, TH EN IT WAS OPEN TO HIM TO RAISE A CLAIM THAT HE SHOULD BE EXCUSED FROM THE CONSEQUENTIAL PENAL EFFECT. THEY NOTED THAT THE TRIBUNAL HAD DELE TED THE PENALTY ON THE GROUND THAT THE ACTION OF THE ASSESSEE WAS BONA FIDE AND NOT AIMED AT AVOIDING ANY TAX LIABILITY. THE TRIBUNAL HAD ARR IVED AT THE CONCLUSION THAT THE ACTION OF THE ASSESSEE HAD NOT RESULTED IN THE INFRACTION OF ANY LAW, IN AS MUCH AS THE DEFAULT CO MMITTED BY HIM WAS TECHNICAL AND VENIAL IN NATURE. THE TRIBUNAL ALSO E XPRESSED THE VIEW THAT NO PREJUDICE WAS CAUSED TO THE REVENUE AS THER E WAS NO AVOIDANCE OF TAX OR TAX EVASION AT THE HANDS OF THE ASSESSEE. THE TRIBUNAL RELIED ON THE JUDGMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAINI MEDICAL STORE, 2 77 ITR 420 (P&H) FOR THE PROPOSITION THAT BONA FIDE AND GENUINE TRAN SACTION WOULD CONSTITUTE A REASONABLE CAUSE FOR NOT INVOKING THE PROVISIONS OF SECTIONS 271D AND 271E OF THE ACT. THE HON HIGH COU RT HELD THAT THE FINDING THAT THERE WAS REASONABLE CAUSE SHOWN BY TH E RESPONDENT ASSESSEE WAS A FINDING OF FACT. IT WAS FURTHER HELD THAT THE TRIBUNAL WAS RIGHT IN RECORDING ITS CONCLUSION THAT REASONAB LE CAUSE HAD BEEN SHOWN BY THE ASSESSEE. IT WAS NOTED THAT THE TRIBUN AL RELIED ON THE FACT THAT THE RESPONDENT ASSESSEE HAD PRODUCED HIS CASH BOOKS DEPICTING LOANS TAKEN BY HIM UNILATERALLY BEFORE THE REVENUE. IT WAS FURTHER NOTED THAT THE ASSESSEE DID NOT ATTEMPT BY THE IMPU GNED ACT TO AVOID ANY TAX LIABILITY. IT WAS FURTHER NOTED THAT THERE WAS NO DISPUTED ABOUT THE FACT THAT THE INSTANT CASH TRANSACTIONS OF THE ASSESSEE WERE WITH THE SISTER CONCERNS AND THESE TRANSACTIONS WERE BETWEEN THE FAMILY AND DUE TO BUSINESS EXIGENCY. IT WAS HELD BY THE HON BLE HIGH COURT THAT FAMILY TRANSACTION BETWEEN THE TWO INDEPENDENT ASSE SSES BASED ON AN ACT OF CASUALNESS, ESPECIALLY IN A CASE WHERE THE D ISCLOSURE THEREOF WAS CONTAINED IN THE COMPILATION OF ACCOUNTS AND WHICH HAD NO TAX EFFECT, ESTABLISHED REASONABLE CAUSE U/S 271B OF THE ACT . 5 4.2. THE AFORESAID DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT, HOLDS THAT A TRANSACTION BETWEEN SISTER CONC ERNS, WHICH WERE RECORDED IN THE ACCOUNTS AND WHICH HAD NO TAX EFFEC T, WOULD NOT ATTRACT PENALTY U/S 271D AND 271E OF THE ACT. IN TH E PRESENT CASE, THE ASSTT. ORDER U/S 143930 DATED 16.10.2007 IN THE CAS E OF THE ASSESSEE SHOWS ALL THE INFORMATION CALLED FOR AS PER THE QUE STIONNAIRE WAS FILED BY THE ASSESSEE AND THE SAME WAS EXAMINED WITH REFE RENCE TO BOOKS OF ACCOUNTS. THE CASH BOOK, LEDGER AND COPIES OF BANK ACCOUNTS WERE ALSO EXAMINED BY THE AO THROUGH TEST CHECK. THE INC OME RETURNED BY THE ASSESSEE WAS ACCEPTED BY THE AO IN THIS ORDER T HE ACCOUNT BOOKS WERE PRODUCED BEFORE THE AO AND IT IS NOT THE CASE OF THE AO THAT REPAYMENT OF LOAN WAS NOT REFLECTED IN THE BOOKS OF THE ASSESSEE. THE TRANSACTIONS WERE UNDOUBTEDLY BETWEEN CLOSELY RELAT ED PERSONS, I.E. WITH THE DAUGHTER-IN-LAW OF THE APPELLANT. THERE IS NO ALLEGATION OF TAX EVASION ON ACCOUNT OF THE IMPUGNED TRANSACTION OF R EPAYMENT OF LOAN IN CASH. THOUGH A QUESTION DOES ARISE AS TO THE NEE D FOR REPAYMENT IN CASH WHEN THE ASSESSEE DID HAVE BANK ACCOUNTS, IN M Y OPINION, BASED ON THE TESTS LAID DOWN IN THE AFORESAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SU NIL KUMAR GOEL (SUPRA) THE DEFAULT IS TECHNICAL IN NATURE. THERE I S NO DOUBT EXPRESSED BY THE AO ABOUT THE SOURCE OF CASH USED FOR REPAYME NT OF THE LOAN, OR ABOUT THE GENUINENESS OF THE TRANSACTION. UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT PENALTY U/S 271E IS NOT ATTR ACTED ON THE FACTS OF THIS CASE. THE PENALTY IMPOSED BY THE AO IS, THERE FORE, DELETED. 6.1. IT IS EVIDENT FROM THE FACTUAL MATRIX OF THE C ASE THAT THE TRANSACTIONS BETWEEN THE PARTIES ARE BONA FIDE IN NATURE. FURTHE R, IT IS ALSO CLEAR THAT THERE IS NO ALLEGATION OF TAX EVASION IN RESPECT OF SUCH TRANSACTIONS BY THE ASSESSEE. THE CASH BOOK, LEDGER AND COPIES OF ACCOUNTS WERE P RODUCED BEFORE THE AO AND THE SAME WERE EXAMINED THROUGH TEST CHECK BY HI M. THE RETURN OF INCOME OF THE ASSESSEE WAS ALSO ACCEPTED BY THE A.O . IT IS NOT THE CASE OF THE REVENUE THAT THE SAID BOOKS OF ACCOUNT WERE NOT REF LECTED AS THE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE A.O. IN VIEW OF TH E ABOVE FACTUAL MATRIX OF THE CASE, DELETION OF PENALTY BY THE CIT(A) CANN OT BE ASSAILED. HENCE, THE FINDINGS OF THE CIT(A) ARE CONFIRMED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. 6 7. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 22ND JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 22ND JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:RANI KAMALJIT KAUR, THE FORT, KARTARPU R. 2. THE ITO IV(1), JALANDHAR. 3. THE CIT(A), JLR. 4. THE CIT,JLR 5. THE SR DR, ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.