ITO 15(2)(4), MUMBAI V. PRAKASH H. MEHTA, MUMBAI

ITA 5029/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92311 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: V C SHAH
• Keywords: Reasonable cause
• Section: 2

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 5029 /MUM/20 13 , / ASSESSMENT YEAR - 2009 - 10 ITO15 (2)(4) MATRU MANDIR,R.N.111,MUMBAI - 7 VS PRAKASH H MEHTA SHOP NO 1 MEHTA MANSION NO.1, KUMBHARWADA LANE,MUMBAI - 4 PAN: AGIPM0763C ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY : SHRI V C SHAH / REVENUE BY : SHRI PREMANAN D J / DATE OF HEARING : 30 - 0 4 - 2015 / DATE OF PRONOUNCEMENT : 30 - 0 4 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 26/4/2013 OF THE CIT(A) - 26 ,MUMBAI, ASSESSING OFFICER(AO) HAS FILED FOLLOWING GROUNDS OF APPEAL: 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.20,30,000I - LEVIED BY THE ADDL. COMMISSIONER OF INCOME TAX RANGE - 1 5(2), MUMBAI HOLDING THAT THE TRANSACTIONS IN QUESTION WERE GENUINE, FOR THE PURPOSES OF THE BUSINESS AND NOT APPRECIATING THAT THE ASSESSEE WAS LIA BLE FOR PENALTY U / S2698S FOR ACCEPTING MONEY IN FORM OF LOAN AND DEPOSIT IN CASH FROM HIS FIRM M/S. HEMANT BROTHERS.' 2'APPELLANT CRAVES LEAVE TO ADD, TO ALTER,TO AMEND AND TO MODIFY ANY OF THE GROUND OF APPEAL.' 2. ASSESSEE, AN INDIVIDUAL , FILED ITS RETURN OF INCOME ON 31.122009 , DECLARING TOTAL INCOME OF RS . 3,42,242/ - .THE AO COMPLETED THE A SSESSMENT U/S.143(3) OF THE ACT, ON 29.6.2012 ,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 3.42 LACS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE AS SESSEE HAD TAKEN AN AMOUNT OF 20.30 LACS IN CASH AS LOAN/DEPOSIT FROM HIS FIRM M/S. HEM ANT BROTHERS. HE WAS OF THE OPINION THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SEC. 269SS OF THE ACT BY ACCEPTING DEPOSIT,AMOUNTING TO RS.20.30 LACS, IN CASH. THE A O ISSUED A NOTICE FOR LEVY ING PENALTY U/S. 2 71D OF THE ACT TO THE ASSESSEE, VIDE HIS NOTICE DT.12.6.2012. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED THAT THE CASH WAS WITHDRAWN FROM THE FIRMS ACCOUNT, THA T DUE TO SHORTAGE OF CASH RECEIPT COUNTERS AS GHATKOPAR (E) BRANCH OF THE RAJASTHAN BANK HE WOULD DEPOSIT THE CASH INTO HIS SAVING BANK ACCOUNT WHERE IT WAS EASIER TO DEPOSIT CASH. HOWEVER, THE AO DID NOT AGREE WITH THE SUBMISSION OF THE ASSESSEE AND OBSERVED T HAT HE HAD TAKEN THE CASH FROM HIS FIRM - H EMANT BROTHERS .THAT IT WAS LOAN/DEPOSIT FROM THE FIRM THAN AS WITHDRAWAL FROM HIS CAPITAL ACCOUNT, THAT TRANSACTION OF FIRST WITHDRAWING THE CASH FROM THE FIRM AND LATER RETURNING IT BY CHEQUE HAD TAKEN THE COLOUR OF LOAN/DEPOSIT IN THE HANDS OF THE ASSESS EE, THAT HE HAD VIOLATE THE PROVISION OF SEC. 269SS OF THE ACT BY ACCEPTING THE DEPOSIT OR LOANS FROM HIS FIRMS WITHOUT ANY REASONABLE CAUSE ITA/502 9/MUM/2013,AY.2009 - 10 - PHM 2 DURING THE YEAR UNDER CONSIDERATION. FINALLY, HE LEVIED A PENALTY OF RS.20.3 LACS AS PER THE PROVISIONS OF SEC.271D OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).BEFORE HIM, IT WAS CONTENTED THAT THE ASSESSEE HAD WITHDRAWN THE DISPUTED AMOUNT FROM PARTNERSHIP FIRM OUT OF SALE PROCEEDS OF GOODS RECEIVED BY D EBITING TO HIS CAPITAL ACCOUNT, THAT THE AMOUNT WAS DEPOSIT ED IN HIS PERSONAL CREDIT ACCOUNT, THAT THE VERY AMOUNT SO DEPOSITED IN THE PERSONAL SAVING ACCOUNT W AS TRANSFERRED TO PARTNERSHIP FIRM BY ISSUE OF CHEQUES, THAT THE REMITTANCES MADE WE RE CREDITED TO HIS CAPITAL ACCOUNT, THAT EFFECTIVELY THE ASSESSEE HAD WITHDRAWN CASH FROM THE FIRM BY DEBITING HIS CAPITAL ACCOUNT, THAT THE WITHDRAWAL AND DEPOSITING OF CASH/CHEQUES WAS CARRIED OUT AS PER THE CONSENT OF ALL THE PARTNERS THAT IT WAS DONE O NLY FOR THE SAKE OF CONVENIENCE, THAT TRANSACTION AFFECTED WERE NOT PROHIBITED U/S. 269SS, THAT WITHDRAWAL OF CAPITAL COULD NOT BE CONSTRUED AS ACCEPTANCE OR REPAYMENT OF LOAN. THE ASSESSEE ALSO REFERRED TO THE PROVISION OF SEC.273B OF THE ACT AND RELIED U PON CASES OF LOAKHPAT FILMS EXCHANGE (212 CTR 371), SHREE MAHAVIR INDUSTRIES (82 TTJ 549) AND BALAJI TRADERS (TC NO.49 OF 2004) OF MADRAS HIGH COURT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER, THE FAA HELD THAT THE AMOUNTS I N QUESTION WERE THE SALE PROCEEDS OF THE FIRM, THAT THE ASSESSEE WAS A PARTNER IN THE FIRM,THAT THE MONEY WAS DEPOSITED IN THE BANK ACCOUNT OF THE PARTNER OF THE FIRM I.E. TO THE BANK ACCOUNT OF THE ASSESSEE, THAT THE AMOUNT DEPOSITED IN HIS ACCOUNT WAS T RANSFERRED TO THE ACCOUNT OF THE FIRM BY CHEQUE, THAT THE PRACTICE WAS FOLLOWED FOR THE SAKE OF CONVENIENCE, THAT THE AO HAD ADMITTED THAT ALL THESE AMOUNTS WERE TRANSFERRED FROM THE BANK ACCOUNT OF THE ASSESSEE TO THE FIRMS BANK ACCOUNT, THAT HE HAD NOT U TILIZED ANY AMOUNT FOR HIS OWN PURPOSES, THAT THE ASSESSEE HAD NOT ACCEPTED ANY CASH DEPOSIT/LOAN FROM HIS FIRM, THAT THERE WAS A GENUINE REASON FOR DEPOSITING THE CASH OF HIS FIRM IN HIS OWN ACCOUNT . FOLLOWING THE DECISION OF M/S. BALAJI TRADERS, (SUPRA) THE FAA HELD THAT THE TRANSACTIONS IN QUESTION WERE GENUINE , THAT IT DID NOT CONSTITUTE THE VIOLATION OF SEC.269SS FINALLY HE D ELETED THE PENALTY IMPOSED U/S. 271 D OF THE ACT. 5 . BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO. AUTH ORISED REPRE - SEN TATIVE (AR) ARGUED THAT THE ASSESSEE HAD NOT VIOLATED THE PROVISION OF SEC.269SS OF THE ACT, T HAT HE HAD NOT TAKEN ANY LOAN/DEPOSIT FROM THE FIRM. HE RELIED ON THE CASE OF MUTHOOT FINANCERS (371 ITR 408), DELIVERED BY HONBLE DELHI COURT. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT FROM THE DAY ONE THE ASSESSEE HAD EXPLAINED THAT DUE TO OVERCROWDING AT THE BANK SITUATED NEAR THE FIRM THE CASH BELONGING TO THE FIRM WAS DEPOSITED IN HIS PERSONAL ACCOU NT, THAT HE WOULD ISSUE CHEQUES IN FAVOUR OF THE FIRM FROM HIS PERSONAL ACCOUNT, THAT THE AO HAD ALSO NOT DISPUTED THE FACT OF DEPOSITING THE CASH OF THE FIRM IN THE ACCOUNT OF THE PARTNER AS WELL AS THE ISSUE OF CHEQUES BY THE PARTNER TO THE FIRM. IN THES E CIRCUMSTANCES WE ARE OF THE OPINION THAT THE DISPUTED AMOUNT COULD N O T BE TREATED AS LOAN/DEPOSIT AS PER THE PROVISIONS OF SEC.269SS OF THE ACT. THE TRANSACTIONS IN QUESTION WERE GENUINE AND WERE DONE UNDER COMPELLING CIRCUMSTANCES FOR SMOOTH CONDUCT OF T HE BUSINESS OF THE FIRM WHERE THE ASSESSEE WAS A PARTNER. WE FIND THAT IN THE CASE OF MUTHOOT FINANCERS(SUPRA)THE HONBLE DELHI HIGH COURT HAS HELD THAT TRANSACTIONS ENTERED IN TO BETWEEN THE PARTNERS AND THE FIRM ARE NOT COVERED BY THE PROVISIONS OF SECTI ON 269SSOF THE ACT . ITA/502 9/MUM/2013,AY.2009 - 10 - PHM 3 CONSIDERING THE ABOVE,WE ARE OF THE OPINION THAT LEVY OF PENALTY U/S. 271 D OF THE ACT WAS NOT JUSTIFIED AND THE FAA HAD RIGHTLY DELETED IT. THEREFORE, CONFIRMING HIS ORDER, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH , APRIL ,2015. , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 30 .0 4 .2015 JV / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR C BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.