PHILIP CHACKO NEERUMPLACKAL, MUMBAI V. ADDL CIT RG 23(3), MUMBAI

ITA 5124/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101222 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PERMANAND J
• Assessee Lawyers: VINAYAK GOKHALE
• Keywords: Initiation of penalty proceedings; Reasonable cause; Condonation of delay
• Section: 273B

Judgement Text

PHILIP CHACKO NEERUMPLACKAL ITA NO. 5 123 /MUM/20 1 3 ITA NO. 5124/MUM/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI . . , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , J UDICIAL MEMBER ITA NO. : 5123 /MUM/20 1 3 ( ASSESSMENT YEAR: 200 2 - 0 3 ) PHILIP CHACKO NEERUMPLACKAL, 404 GURUKRUPA BLDG, PLOT NO. 19/324 KASTUR PARK SHIMPOLI ROAD, BORIVALI (WEST), MUMBAI - 400 092 .: PAN: A BMPN 9277 H VS ADDL CIT RANGE 23(3) , C - 10, 4 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINAYAK GOKHALE RESPONDENT BY : SHRI PERMANAND J ITA N O. : 5124 /MUM/20 13 ( ASSESSMENT YEAR: 2006 - 07 ) PHILIP CHACKO NEERUMPLACKAL, 404 GURUKRUPA BLDG, PLOT NO. 19/324 KASTUR PARK SHIMPOLI ROAD, BORIVALI (WEST), MUMBAI - 400 092 .: PAN: A BMPN 9277 H VS ADDL CIT RANGE 23(3) , C - 10, 4 TH FLOOR, PRATYAKSHK AR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINAYAK GOKHALE RESPONDENT BY : SHRI PERMANAND J /DATE OF HE ARING : 06 - 07 - 201 5 / DATE OF PRONOUNCEMENT : 01 - 10 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE A FORESAID APPEAL S HA VE BEEN FILED BY THE ASSESS E E AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE , 0 8 . 0 1 .20 1 5 PASSED BY CIT(A) - X , MUMBAI FOR THE ASSESSMENT YEAR 2002 - 03 AND ASSESSMENT YEAR 2006 - 07 IN RELATION TO THE PENALTY PROCEEDINGS PHILIP CHACKO NEERUMPLACKAL ITA NO. 5 123 /MUM/20 1 3 ITA NO. 5124/MUM/2013 2 U/S 271 D. IN AY 2002 - 03, THE ASSESSEE IS AGGRIEVED BY LEVY OF PENALTY OF RS. 1,65,000/ - FOR THE ASSESSMENT YEAR 200 6 - 0 7 RS. 1 L AKH. 2. AT THE OUTSET, BOTH THE APPEALS ARE BARRED BY LIMITATION BY 76 DAYS. THE ASSESSEE ALONG WITH THE PETITION FOR CONDONATION OF DELAY HAS FILED AN AFFIDAVIT , WHEREIN IT HAS BEEN STATED THAT THE ASSESSEE IS A PARTNER IN THE FIRM WHICH IS BASED AT PUNE , WHERE THE ASSESSEE STAYS FOR MOST OF THE TIME. THE COPY OF THE IMPUGNED ORDER PASSED BY CIT(A) WAS COLLECTED BY HI S BROTHER WHO HANDED OVER THE ORDERS , ONLY WHEN ASSESSEE CAME TO MU MBA I AFTER SINE TUNE . IMMEDIATELY AFTER RECEIVING OF THE ORDER, ASSESSEE DELIVERED THE ENTIRE DOCUMENTS TO HIS CHARTERED ACCOUNTANT FOR FILING OF THE APPEAL. AS A RESULT, DELAY OF 7 6 DAYS IN FILING OF THE APPEAL HAD OCCURRED. ACCORDINGLY, THE ASSESSEE HAD GENUINE AND BONA FIDE REASON FOR NO T - FILING THE APPEAL IN TIME. 3. AFTER HEARING BOTH THE PARTIES, WE CONDONED THE DELAY OF 76 DAYS, AS THE ASSESSEE WAS PREVENTED BY SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING THE APPEAL IN TIME. ACCORDINGLY, THE APPEAL IS ADMITTED AND IS BEING HEARD ON MERITS. 4. WE WILL FIRST TAKE - UP THE APPEAL FOR THE ASSESSMENT YEAR 2002 - 03. IN THE IMPUGNED PENALTY ORDER, IT HAS BEEN NOTED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS F O R THE ASSESSMENT YEAR 2007 - 08, IT WAS NOTICED THAT THE ASSESSEE HAS ACCEPTED CASH LOAN OF RS. 1,65,000/ - FROM O NE , SHRI THOMAS CHACKO DURING THE FINANCIAL YEAR 2001 - 02. ACCORDINGLY, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF 269SS AND ACCORDINGLY , PENALTY PROCEEDINGS U/S 271D WAS INITIATED. IN RESPONSE TO THE SAID NOTICE , ASSESSEE SU BMITTED THAT HE HAS TAKEN THE LOAN FROM HIS BROTHER FOR THE PURPOSE OF PAYMENT TO THE LABOURERS WHICH WAS TO BE MADE ON DAILY BASIS AND AT THE TIME OF THE TAKING THE LOAN THERE WAS AN URGENT NEED TO MAKE THE PHILIP CHACKO NEERUMPLACKAL ITA NO. 5 123 /MUM/20 1 3 ITA NO. 5124/MUM/2013 3 PAYMENTS. IT WAS FOR THIS REASON THAT ASSESSEE H AD BORROWED MONEY IN CASH FROM IMMEDIATE RELATIVES. HOWEVER, THE LD. AO HELD THAT SINCE THE BROTHER OF THE ASSESSEE IS A NON - RESIDENT INDIAN WHO DOES NOT HAVE ANY SOURCE OF INCOME IN INDIA, THEREFORE, THE ENTIRE EXPLANATION THAT LOAN TAKEN FROM BROTHER WAS ACCEPTED IN CASH CANNOT BE ACCEPTED. ACCORDINGLY , HE LEVIED THE PENALTY OF RS. 1,68,000/ - U/S 271D. 5. THE LD. CIT(A) TOO HAS CONFIRMED THE SAID PENALTY ON THE GROUND THAT ASSESSEE COULD NOT PROVE THE SOURCE OF THE MONEY RECEIVED FROM HIS BROTHER AND T H E LOAN ITSELF REMAINED UNEXPLAINED . 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LOAN WAS TAKEN IN THE FINANCIAL YEAR 2001 - 02 AND AO HAS TAKEN NOTE OF THIS FACT IN THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE WAS LABOUR CONTACTOR AND HE REQU IRED AT TIMES TO MAKE PAYMENTS TO LABOURERS . FOR THIS PURPOSE, HE HAS TAKEN A LOAN FROM HIS FAMILY MEMBERS AND THIS YEAR HE HAS TAKEN A LOAN FROM HIS BROTHER, BUT MONEY WAS ARRANGED BY HIS BROTHER , BUT THE MONEY WAS ARRANGED BY HIS BROTHERS WIFE WHO WAS R ESIDING WITH HIM . THE SOURCE OF SUCH CASH WAS FROM HIS BROTHER ONLY WHO W AS STAYING AT OMAN. THEREFORE, T HE LOAN WAS TAKEN FOR TH E IMMEDIATE BUSINESS REQUIREMENT ; SECONDLY, HE PLEADED DUE TO HUGE DELAY IN THE INITIATION OF PROCEEDINGS SUCH A ADVERSE VIEW S HOULD NOT BE TAKEN ; LASTLY, HE PLEADED THAT LD. CIT(A) DID NOT GIVE SUFFICIENT OPPORTUNITY TO PRESENT THE CASE. 7. ON THE OTHER HAND LD. DR, STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 8. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORD ER, AND ALSO THE CONTENTION RAISED BY THE ASSESSEE, WE FIND THAT INITIATION OF PENALTY PROCEEDINGS WAS TAKEN DURING THE COURSE OF THE ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2007 - 08 ON THE PHILIP CHACKO NEERUMPLACKAL ITA NO. 5 123 /MUM/20 1 3 ITA NO. 5124/MUM/2013 4 LOAN WHICH WAS TAKEN DURING THE FINANCIAL YEAR 2001 - 02. THE A SSESSEES CASE HAD BEEN THAT HE HAS TAKEN A LOAN FROM HIS RELATIVE (BROTHER) FOR THE PURPOSE OF MAKING THE PAYMENT TO THE LABOURERS AND THEREFORE, IT WAS DUE TO BUSINESS EXIGENCY . THE LD. CIT(A) HAS CONFIRMED THE PENALTY , FIRSTLY, ON THE GROUND THAT SOURCE OF THE SAID AMOUNT OF RS. 1,65,000/ - REMAIN ED UNEXPLAINED ; AND SECONDLY, THERE IS A ACTUAL DEFAULT AND BREACH WHILE COMPLYING WITH THE PROVISION OF SECTION 269SS. FIRST OF ALL, IF THE LOAN ITSELF IS NOT GENUINE THEN THERE IS NO QUESTION OF VIOLATION OF SE CT I ON 269SS AND CONSEQUENTLY LEVYING OF PENALTY U/S 271D FOR ACCEPTING OF CASH LOAN. THE ASSESSEES ANOTHER CONTENTION BEFORE US IS THAT , THE LD. CIT(A) HAS FAILED TO GIVE PROPER OPPORTUNITY AND WITHOUT WAITING FOR ASSESSEES SUBMISSION AND EXPLAN AT I O N REG ARDING THE SOURCE OF LOAN HAS CONFIR M ED THE PENALTY . WE ARE OF THE OPINION , UNDER THE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A); FIRSTLY, TO CONSIDER THE ASSESSEES EXPLANATION ABO UT THE SOURCE OF THE LOAN , HOWEVER IF SUCH LOANS ARE ACCEPTED TO BE GENUINE , THEN ONLY THE PENALTY PRO VISIONS OF SECTION 271D SHOULD BE INITIATED OR EXAMINED; SECONDLY, TO CONSIDER, WHETHER THERE WAS ANY SUFFICIENT AND REASONABLE CAUSE WITHIN THE REALM OF SECTION 273B OR NOT . IN CASE, THE LOAN ITSELF IS NOT GENUINE THEN NEEDLESS TO SAY NO PENALTY CAN BE LEVIED U/S 271D , BUT NEED TO BE CONSIDERED UNDER DIFFERENT PROVISIONS OF THE ACT. THUS, WE RESTORE THIS MATTER BACK TO THE FILE OF THE CIT(A) TO DECIDE THE SAME AFRESH AND IN ACCORDANCE WITH THE LAW. 9 . IN THE AY 2006 - 07, THE PENALTY HAS BEEN LEVIED FOR SUM OF RS. 1 LAKH ON SIMILAR GROUND THAT ASSESSEE HAS TAKEN CASH LOAN OF RS. 1 LAKH FROM ONE M R S . RE J I THOMAS DURING THE FINANCIAL YEAR 2005 - 06. THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE, HAS SUBMITTED THAT THE LOAN WAS TAKEN FR OM THE FAMILY RELATIVE FOR THE PURPOSE OF MAKING THE PAYMENTS TO THE LABOURERS. HERE AGAIN, PENALTY HAS BEEN CONFIRMED BY THE CIT(A) EXACTLY ON THE SAME PHILIP CHACKO NEERUMPLACKAL ITA NO. 5 123 /MUM/20 1 3 ITA NO. 5124/MUM/2013 5 GROUND. THEREFORE, FOR T HE REASONS GIVEN ABOVE, THE PENALTY FROM THE IMPUGNED ASSESSMENT YEAR ALSO IS SET ASIDE TO THE FILE OF CIT(A) FOR DECIDING THE ISSUE AFRESH AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. 1 0 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICA L PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OC T O BER, 2015 . SD/ - SD/ - ( . . ) ( ) (B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 1 ST OCTOBER, 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 5 , MUMBAI. 4 ) THE CIT 2 , MUMBAI. 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS