M/s M.D.Educational Society, Gurgaon V. Addl.CIT (Exemption), Panchkula

ITA 5000/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5635 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 21-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T R TALWAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.5000/DEL/2016 ASSESSMENT YEAR: 2010-11 M/S. M.D. EDUCATION SOCIETY, C/O M.D. HIGH SCHOOL, JHARSA, GURGAON, HARYANA. VS. ADDL. CIT, RANGE-2 (EXEMPTION), PANCHKULA. TAN/PAN: AAATM 7182P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI T.R. TALWAR, CA RESPONDENT BY: SHRI RINKU SINGH, SR.D.R. DATE OF HEARING: 24 01 2019 DATE OF PRONOUNCEMENT: 01 2019 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 30.06.2016, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, GURGAON, I N RELATION TO THE PENALTY PROCEEDINGS U/S.271E FOR TH E ASSESSMENT YEAR 2010-11. THE ASSESSEE IS MAINLY AGG RIEVED BY LEVY OF PENALTY OF RS.4,90,000/- IMPOSED BY ADDI TIONAL COMMISSIONER OF INCOME TAX, U/S.271E ON VARIOUS GRO UNDS. 2. AT THE OUTSET, THE APPEAL OF THE ASSESSEE IS B ARRED BY LIMITATION BY 11 DAYS. IN THE APPLICATION FOR CONDO NATION OF DELAY, THE ASSESSEE HAS STATED THAT THE ORDER OF TH E LD. I.T.A. NO.5000/DEL/2016 2 COMMISSIONER OF INCOME TAX (APPEALS) WAS RECEIVED O N 12.07.2016, ON THE ADDRESS OF THE SCHOOL RUN BY THE APPELLANT SOCIETY, HOWEVER, DUE TO LACK OF COMMUNICATION BETW EEN THE SCHOOL STAFF AND THE CHAIRMAN OF THE SOCIETY WHO HA D TO SIGN THE APPEAL PAPERS AND THE CA/LEGAL ADVISOR WAS BASE D IN DELHI, THE ORDER COULD NOT BE SENT ON TIME, HENCE A DELAY OF 11 DAYS HAS BEEN CAUSED. THUS, DUE TO THIS BONA FIDE REASON APPEAL COULD NOT BE FILED ON TIME AS IT WAS PURELY AN INADVERTENT FAULT. 3. AFTER CONSIDERING THE SUBMISSION MADE BY LEARNED COUNSEL AND OBJECTIONS RAISED BY THE LEARNED DEPART MENT REPRESENTATIVE, WE FIND THAT THERE IS NO LATCHES ON THE PART OF THE ASSESSEE TO PURSUE THE APPEAL AND THE REASONS G IVEN BY THE ASSESSEE APPEARS TO BE BONA FIDE AS THERE WAS INADVERTENT FAULT OF THE FUNCTIONARIES OF THE SCHOOL IN NOT COM MUNICATING APPELLATE ORDER TO THE CHAIRMAN OF THE SOCIETY AND TO THE CONCERN LEGAL ADVISOR/CA. ACCORDINGLY, DELAY OF 11 DAYS ARE CONDONED. 4. THE FACTS IN BRIEF QUA THE LEVY OF PENALTY ARE THAT, ASSESSEE IS AN EDUCATIONAL SOCIETY, RUNNING A SCHOO L FOR WHICH IT HAS CLAIMED EXEMPTION U/S. 10(23C)(IIIAD). AS AG AINST THE NIL RETURN OF INCOME FILED ON 29.09.2010, ASSESSM ENT WAS COMPLETED U/S. 143(3) VIDE ORDER DATED 29.11.2012 A T A NIL INCOME ACCEPTING THE EXEMPTION CLAIMED BY THE ASSES SEE U/S.10(23C)(IIIAD). HOWEVER, DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER HAD WRITT EN A LETTER I.T.A. NO.5000/DEL/2016 3 TO THE ADDITIONAL CIT (EXEMPTION), CHANDIGARH THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT CAME TO HIS NOTICE THAT THE ASSESSEE-SOCIETY HAS RAISED A LOAN OF RS.1 0,30,000/- BY CHEQUE FROM SHRI SATBIR SINGH FOR PURCHASE OF LA ND ON 16.112007. IN THE RELEVANT FINANCIAL YEAR THE APPEL LANT SOCIETY HAS MADE THE REPAYMENT OF RS.4,90,000/- IN CASH TO HIM; AND ACCORDINGLY, THERE WAS DEFAULT IN TERMS OF SECTION 269T AND HENCE PENALTY PROCEEDINGS U/S.271E SHOULD BE INITIA TED. LD. ADDL. CIT HAS NOTED VARIOUS DATES WHEREBY CASH HAS BEEN PAID ON VARIOUS DATES IN VARIOUS INSTALLMENTS OF SU MS BELOW RS.20,000/-. SUCH PAYMENT OF CASH AS RECORDED IN TH E BOOKS OF ACCOUNTS AGGREGATED TO RS.4,90,000/-. AS CULLED OUT FROM THE IMPUGNED PENALTY ORDER, CHAIRMAN OF THE SOCIETY , SHRI SATBIR SINGH HAD PURCHASED 2 ACRES OF LAND ON 16.11 .2007 FOR WHICH HE HAS MADE THE PAYMENT IN CHEQUE FOR SUMS AMOUNTING TO RS.10,30,000/- ON BEHALF OF THE SOCIET Y AS A LAND WAS PURCHASED FOR THE SOCIETY TO BE USED FOR E DUCATIONAL PURPOSE. SINCE, SHRI SATBIR SINGH HAS MADE THE PAYM ENT ON BEHALF OF THE SOCIETY, THE SOCIETY TREATED THE SAME AS LOAN FROM SHRI SATBIR SINGH AND STARTED MAKING REPAYMENT IN INSTALLMENTS. LD. ASSESSING OFFICER HELD THAT SUCH A REPAYMENT IN CASH AMOUNTS TO REPAYMENT OF LOAN IN V IOLATION OF SECTION 269T; AND ACCORDINGLY HE LEVIED THE PENA LTY U/S 271E OF RS.4,90,000/-. 5. BEFORE THE LD. CIT (A) ASSESSEE HAS CHALLENGED T HE PENALTY PROCEEDINGS ON VARIOUS GROUNDS:- I.T.A. NO.5000/DEL/2016 4 FIRSTLY , THE ASSESSING OFFICER COULD HAVE ISSUED THE DIRECTIONS TO INITIATE THE PENALTY PROCEEDINGS ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT AFTER THE EXPIRY OF THREE YEARS AND; SECONDLY , PENALTY IS BARRED BY LIMITATION IN TERMS OF SECTION 275(1)(C). LD. CIT (A) HAS DISMISSED BOTH THE CONTENTIONS RAIS ED BY THE ASSESSEE AFTER DETAILED REASONING. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE APART F ROM RAISING THE LEGAL CONTENTION THAT THE ASSESSING OFF ICER DID NOT HAD JURISDICTION TO INITIATE PENALTY PROCEEDINGS U/S . 271E ON 16.02.2015 FOR A TRANSACTION WHICH TOOK PLACE IN TH E FINANCIAL YEAR 2009-10; AND ON MERITS SUBMITTED THAT, FIRSTLY , THE TRANSACTION IN QUESTION IS NOT IN THE NATURE OF LOA N OR DEPOSIT, BECAUSE SUCH A LIABILITY WAS CREATED BY WAY OF JOURN AL ENTRY; AND SECONDLY , HE SUBMITTED THAT ASSESSEE SOCIETY WAS UNDER A BONA FIDE BELIEF THAT THIS TRANSACTION IS NOT IN THE NATURE OF LOAN OR DEPOSIT AS REPAYMENT OF CASH ON MONTHLY INS TALLMENTS IS NOT PROHIBITED BY LAW. IN SUPPORT, HE RELIED UPO N THE FOLLOWING JUDGMENTS. 1. CIT VS. MUTHOOT FIANCERS, (2015) 371 ITR 408 (DELHI 0 2. CIT VS. T PERUMAL (INDL.) (2015) 370 ITR 313 (MAD.) 3. CIT VS. PANCHSHEEL OVERSEAS ASSOCIATION (201 7) 395 ITR 380 (GUJ.) I.T.A. NO.5000/DEL/2016 5 7. ON THE OTHER HAND, LEARNED DEPARTMENT REPRESENTA TIVE SUBMITTED THAT, PENALTY U/S.271D AND 271E HAS NO RE LEVANCE TO ASSESSMENT PROCEEDINGS AS BOTH ARE INDEPENDENT A ND IN SUPPORT HER CONTENTION, SHE STRONGLY RELIED UPON TH E JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HISARIA BROTHERS WHICH HAS BEEN CONFIRMED BY TH E HON'BLE SUPREME COURT VIDE JUDGMENT AND ORDER DATED 20 TH AUGUST, 2016 IN CIVIL APPEAL NO.5252/2008. IN SO FAR AS ISS UE OF LIMITATION OF PENALTY PROCEEDINGS IS CONCERNED, SHE RELIED UPON THE DECISION OF SPECIAL BENCH, CHANDIGARH IN T HE CASE OF DEWAN CHAND AMRIT LAL VS. DCIT, (2006) 98 ITD 200. ON MERITS, SHE SUBMITTED THAT IT WAS A CLEAR CUT CASE OF REPAYMENT OF LOAN IN CASH, AND THEREFORE, PENALTY U /S.271 E HAS RIGHTLY BEEN LEVIED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS. HERE, IN THIS CASE, CHAIRMAN OF THE ASSESSEE SOCIETY, SRI SA TBIR SINGH HAS GIVEN AN ADVANCE OF RS.10,30,000/- DIRECTLY FOR PURCHASE OF 2 ACRES OF LAND ON 16.11.2007 ON BEHALF OF APPEL LANT SOCIETY. SUCH AN ADVANCE WAS TREATED AS A LIABILITY BY THE SOCIETY IN ITS BOOKS OF ACCOUNT AND START MAKING RE PAYMENT IN CASH IN INSTALLMENTS BELOW SUM OF RS.20,000/-. DURI NG THE FINANCIAL YEAR 2009-10 AGGREGATE PAYMENT OF RS.4,90 ,000/- WAS MADE TO SRI SATBIR SINGH. ONE OF THE MAIN CONTE NTIONS RAISED BY THE LEARNED COUNSEL BEFORE US IS THAT ASS ESSEE- SOCIETY WAS UNDER A BONA FIDE BELIEF THAT SUCH A LIABILITY CREATED BY A JOURNAL ENTRY FOR WHICH REPAYMENT WAS MADE IN I.T.A. NO.5000/DEL/2016 6 CASH ON MONTHLY BASIS IS NOT IN THE NATURE OF LOAN OR DEPOSIT AND SAME IS NOT PROHIBITED BY LAW. THERE WAS NO INT ENTION TO VIOLATE ANY PROVISIONS OF THE LAW. SINCE, IT WAS A BONA FIDE TRANSACTION AND IT WAS NOT FOR PURPOSE OF ANY EVASI ON OF TAX, THEREFORE, NO PENALTY SHOULD BE LEVIED. 9. THE PROVISION OF SECTION 269SS AND 269T WAS BROUGHT IN THE STATUTE TO PREVENT TAX EVASION DONE IN THE GARB OF CASH PAYMENT AND REPAYMENT. HERE, IN THIS CASE, THE FIRS T LIMB OF THE TRANSACTION, THAT IS, THE PAYMENT OF RS.10,30,0 00/- FOR PURCHASE OF PLOT ON BEHALF OF THE SOCIETY HAS BEEN ACCEPTED TO BE GENUINE AND SINCE THE PAYMENT WAS MADE ON BEHALF OF THE ASSESSEE SOCIETY, THE SOCIETY HAS TREATED THE SAME AS A LIABILITY. SUCH LIABILITY HAS BEEN DISCHARGED BY MA KING MONTHLY INSTALLMENTS OF SUMS BELOW RS.20,000/-. IN SUCH CIRCUMSTANCES, IT CANNOT BE HELD THAT SECOND LIMB O F TRANSACTION WAS TO AVOID ANY TAX OR TRANSACTION ITS ELF IS NOT GENUINE. IN SUCH CIRCUMSTANCES, IT COULD BE VERY WE LL INFERRED THAT THERE WAS BONA FIDE AND REASONABLE BELIEF ON SUCH REPAYMENT OF LIABILITY IN MONTHLY INSTALLMENTS. THE REFORE, IN TERMS OF PROVISION OF SECTION 273B, PENALTY CANNOT BE IMPOSED FOR ANY FAILURE OF SECTION 269T. ACCORDINGL Y, WE HOLD THAT NO PENALTY IS LEVIABLE DUE TO BONA FIDE AND REASONABLE BELIEF AND ACCORDINGLY SAME IS DIRECTED TO BE DELET ED. 9. SINCE, WE HAVE ALREADY DELETED THE PENALTY ON ME RITS, THEREFORE, OTHER CONTENTION RAISED BY THE LEARNED C OUNSEL ARE I.T.A. NO.5000/DEL/2016 7 TREATED AS ACADEMIC. ACCORDINGLY, APPEAL OF THE ASS ESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2019. SD/- SD/- [G.D. AGARWAL] [AMIT SHUKLA] VICE PRESIDENT JUDICIAL MEMBER DATED: 31 ST JANUARY, 2019 PKK: