Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 90504 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 2 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-06-2015
Appeal Filed By
Assessee
Bench Allotted
A
Next Hearing Date
17-06-2015
Assessment Year
2008-2009
Appeal Filed On
27-03-2013
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.514 /MDS./2013 ( ! '! / ASSESSMENT YEAR :2008-09) M/S.MAGAM INC ., 9,50 TH STREET, ASHOK NAGAR, CHENNAI 600 083. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS RANGE IV,CHENNAI. PAN AAEFM 5274 G ( / APPELLANT ) ( / RESPONDENT ) #$ % & / APPELLANT BY : MR.PHILIP GEORGE, ADVOCATE '(#$ % & / RESPONDENT BY : MR.P.RADHAKRISHNAN,JCIT, D.R ) * % +, / DATE OF HEARING : 17.06.2015 -' % +, /DATE OF PRONOUNCEMENT : 19.06.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-VIII, CHE NNAI DATED 14.12.2012 IN ITA NO.03/11-12/(A)-VIII PASSED UNDE R 271D READ WITH SECTION SEC. 250 OF THE ACT. ITA NO.514 /MDS/2013 2 2. THE ASSESSEE HAS RAISED EIGHT ELABORATE GROUNDS IN ITS APPEAL; HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD UPHELD THE PE NALTY LEVIED U/S.271D OF THE ACT. 3. IN THE CASE OF THE ASSESSEE, ASSESSMENT WAS COM PLETED U/S. 143(3) OF THE ACT ON 20.07.2010 WHEREIN IT WAS OBSE RVED THAT THE ASSESSEE HAD ACCEPTED CASH LOANS OF ` 17,74,500/- FROM MOHANCHATARA MONUMENTS IN VIOLATION OF THE PROVISIO NS OF SECTION 269SS OF THE ACT AND THEREFORE PENALTY PROCEEDINGS WERE INITIATED BY ISSUING OF NOTICE U/S. 274 R.W.S SECTION.271D OF TH E ACT WHICH WAS DULY SERVED ON THE ASSESSEE ON 24.09.2010. IT WAS FURTHER OBSERVED IN THE PENALTY PROCEEDINGS THAT THE CASH BOOKS OF T HE ASSESSEE AS WELL AS MOHANCHATARA MONUMENTS REVEALED THAT THE A SSESSEE HAD RECEIVED CASH ADVANCE ON 91 INSTANCES OF ` 19,500/- EACH AGGREGATING TO ` 17,74,500/-. IT WAS ALSO OBSERVED BY THE LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE AND MOHANCHATARA MONUMENTS DID NOT HAVE ANY TRADE LINKS WITH EACH ITA NO.514 /MDS/2013 3 OTHER, HOWEVER IN THE BOOKS OF THE ASSESSEE THE ACC OUNT OF MOHANCHATARA MONUMENTS APPEARED AS SUNDRY CREDITORS . THE CASH TRANSFER BY MOHANCHATARA MONUMENTS TO THE ASSESSEE WERE ALMOST ON DAILY BASIS AND THE AMOUNT WAS CONSCIOUSLY KEPT BELOW THE THRESHOLD LIMIT OF ` 20,000/- IN ORDER TO AVOID THE PROVISIONS OF SECTIO N 40A(3) OF THE ACT. FOR THE ABOVE SAID REASONS, THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD VIOLA TED THE PROVISIONS OF SECTION 269SS OF THE ACT AND THEREFORE LIABLE TO PENALTY U/S.271D OF THE ACT. 4. THE ASSESSEE HAD TAKEN THE FOLLOWING PLEA BEFOR E THE LD. ASSESSING OFFICER:- I) THE ASSESSEE AND MOHANCHATARA MONUMENTS ARE PARTNERSHIP FIRMS HAVING TWO COMMON PARTNERS AND TH EREFORE THEY WERE SISTER CONCERNS. II) BOTH THE FIRMS HAVE QUARRIES AT SRIKAKULAM DIS TRICT ANDHRA PRADESH. THE AMOUNT OF ` 17,74,500/- WAS RECEIVED BY THE ASSESSEE AS LOAN FROM MOHANCHATARA MONUMENTS TO MEE T CERTAIN URGENT PAYMENTS. ITA NO.514 /MDS/2013 4 III) NO BANKING FACILITIES WERE AVAILABLE IN THE LO CALITY WHERE THE QUARRIES OF THE ASSESSEE AND THE MOHANCHATARA MONUM ENTS ARE LOCATED. IV) THE ASSESSEE AND MOHANCHATARA MONUMENTS WERE BO TH HAVING PAN NUMBERS AND ARE ASSESSED TO TAX AT BUSIN ESS CIRCLE-IV. V) SINCE THE ASSESSEE AND THE MOHANCHATARA MONUME NTS ARE SISTER CONCERNS, THE ASSESSEE HAD A BONA FIDE BELIE F THAT IN SUCH TRANSACTIONS PROVISIONS OF SECTION 269SS AND 2 71 D WOULD NOT BE ATTRACTED AND EVEN IF ATTRACTED THERE WERE PROVISIONS UNDER SECTION 273B OF THE ACT FOR GRANTI NG RELIEF TO THE ASSESSEE BECAUSE THERE WAS REASONABLE CAUSE FOR THE ASSESSEE TO RECEIVE CASH LOAN FROM MOHANCHATARA MONUMENTS. 5. THE LD. ASSESSING OFFICER DID NOT ACCEPT THE A BOVE MENTIONED ARGUMENTS OF THE ASSESSEE BECAUSE OF THE FOLLOWING REASONS:- ITA NO.514 /MDS/2013 5 I) BOTH THE ASSESSEE AND MOHANCHATARA MONUMENTS AR E TWO DISTINCT ASSESSABLE ENTITIES EVEN THOUGH THEY HAD T WO COMMON PARTNERS. II) IT WAS REVEALED IN THE ENQUIRY THAT THERE WERE SEVERAL BANKS IN THE SRIKAKULAM DISTRICT. III) THERE WERE NO TRADE LINKS BETWEEN THE ASSESSE E FIRM AND MOHANCHATARA MONUMENTS AND THEREFORE, THE TRANSACTI ON AS NOTHING BUT CASH LOAN. IV) NO EVIDENCE WAS PRODUCED TO ESTABLISH THAT THE ASSESSEE HAD TO MEET URGENT PAYMENTS DUE TO WHICH IT HAD OBT AINED CASH LOAN. MOREOVER THE ASSESSEE WAS IN THE HABIT O F OBTAINING LOAN FROM MOHANCHATARA MONUMENTS ON A REG ULAR BASIS FOR ` 19,500/- ON EACH OCCASION IE., ALMOST EVERY DAY AND IN A ROUTINE MANNER. V) THE CASE LAWS CITED BY THE ASSESSEE WERE NOT APP LICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE BECAUSE NO RE ASONABLE CAUSE WAS CONVINCINGLY EXPLAINED. ITA NO.514 /MDS/2013 6 6. FOR THE ABOVE SAID REASONS, THE LD. ASSESSING O FFICER LEVIED PENALTY ON THE ASSESSEE BY INVOKING THE SECTION 271 D OF THE ACT. 7. ON APPEAL THE LD. CIT (A) ALSO CONFIRMED THE OR DER OF THE LD. ASSESSING OFFICER BY OBSERVING AS UNDER:- 6. I HAVE VERIFIED THE DETAILED ORDER PASSED BY TH E ASSESSING OFFICER IN HER ASSESSMENT ORDER AS WELL AS PENALTY ORDER, THE GROUNDS OF APPEAL FILED BY THE AR OF THE APPELLANT AND WRITTEN SUBMISSION. EVEN THOUGH THE AR OF THE ASSESSEE CLAIMS IN HIS WRITTEN SUBMISSIONS THAT THE CASH TRANSACTION MADE WITH SISTER CONCERNS WILL NOT ATTRACT PENALTY, THE SAME COULD NOT BE CONSIDERED AS THERE WERE NO TRADE LINKS BETWEEN THE TWO FIRMS. ALTHOUGH THE ASSESSEE HAS BEEN SHOWN AS S UNDRY DEBTOR IN THE FINAL ACCOUNTS OF MOHANCHATARA MONUMENTS, HE HAS NO T SUSTAINED THE TRADE TRANSACTION BETWEEN THEM DURING THE RELEVANT PREVIO US YEAR AND THESE CASH TRANSFER PARTAKE OF THE NATURE OF LOANS WHICH WERE GIVEN IN CASH BY MOHANCHATRA MONUMENTS TO THE ASSESSEE. IT IS ALSO NOTICED THAT THE ASSESSEES FIRM (MAGAM INC) COULD NOT EXPLAIN THE N ATURE AND CIRCUMSTANCES OF CASH PAYMENTS AMOUNTING TO 17,74,500/- FROM M/S. MOHANCHATARA MONUMENTS. AS THE ASSESSEE COULD NOT FURNISH ANY DETAILS CALLED FOR BY THE ASSESSING OFFICER WITH REGARD TO THE PAYMENT EXCEPT STATING THAT THE ASSESSEE HAD TO MEET URGENT PAYMEN TS IN CASH, THE SAME CANNOT BE CONSIDERED. THE ASSESSING OFFICER HAS AL SO OBSERVED FROM THE LEDGER ACCOUNT OF MAGAM INC IN THE BOOKS OF MOHANCH ATARA MONUMENTS INDICATES THAT THE CASH PAYMENTS OF 19,500/- HAD BEEN MADE IN A ROUTINE MANNER THROUGHOUT THE PERIOD 02.06.2007 TO 31.03.20 08. ONCE THERE IS NO REASONABLE CAUSE FOR NOT FURNISHING VARIOUS DETAILS CALLED FOR BY THE ITA NO.514 /MDS/2013 7 ASSESSING OFFICER WHICH ARE NEITHER FILED BEFORE TH E ASSESSING OFFICER NOR BEFORE ME, THE PENALTY LEVIED BY THE ASSESSING OFFI CER IS JUSTIFIED AND THEREFORE CONFIRMED ON ACCOUNT OF DETAILED REASONS MENTIONED IN THE PENALTY ORDER. 8. LD. A.R REITERATED HIS SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES ON THE EARLIER OCCASIONS AND ALSO FILED BEFORE US VARIOUS DECISIONS AND ARGUED THAT THE ASSESSEE HAD REASONAB LE CAUSE FOR OBTAINING CASH LOANS. IT WAS THEREFORE PLEADED THA T THE PENALTY LEVIED U/S.271D MAY BE DELETED. LD. D.R ON THE OTHER HAND ARGUED IN SUPPORT OF THE REVENUE AND ALSO RELIED IN THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KASI CONSU LTANT CORPORATION VS. DCIT REPORTED IN [2009] 311 ITR 419(MAD.). 9. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF T HE CASE IT IS CLEAR THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SE CTION 269SS OF THE ACT. FURTHER, NO REASONABLE CAUSE IS EXPLAINED BE FORE US WITH COGENT EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE AS SESSEE. THE REVENUE HAS ALSO MADE A FINDING THAT IN THE PLACE W HERE THE ITA NO.514 /MDS/2013 8 ASSESSEE AND ITS SISTER CONCERN HAD QUARRIES THERE WERE NUMBER OF BANKS AVAILABLE WHICH COULD HAVE BEEN UTILIZED BY T HE ASSESSEE TO COMPLY WITH THE PROVISIONS OF THE ACT. THE URGENT REQUIREMENT OF THE ASSESSEE TO OBTAIN CASH LOANS ON DAILY BASIS IS ALS O NOT CONVINCINGLY EXPLAINED BEFORE US. TRADE LINKS BETWEEN THE ASSESS EE AND ITS SISTER CONCERN IS ALSO NOT ESTABLISHED. THE COMPELLING BUS INESS EXIGENCIES DUE TO WHICH THE ASSESSEE WAS FORCED TO ACCEPT CASH LOAN IS ALSO NOT EXPLAINED. MOREOVER, SINCE THE ASSESSEE WAS IN THE HABIT OF OBTAINING CASH LOANS ON A ROUTINE AND CONSISTENT MANNER ON DA ILY BASIS IT APPEARS TO BE A CASE OF DELIBERATE VIOLATION OF THE PROVISION OF THE ACT. IN THIS SITUATION THE DECISION OF THE CASE CI TED BY THE LD. D.R SUPRA WILL BE SQUARELY APPLICABLE TO THE FACTS OF T HE CASE OF THE ASSESSEE. IN THE CASE CITED BY THE LD. D.R SUPRA T HE HONBLE JURISDICTIONAL MADRAS HIGH COURT HAD HELD THAT ON THE FACTS OF THE GIVEN CASE, IT WAS NOT IN DISPUTE THAT EXCEPT FOR P LEADING THAT THE ASSESSEE FIRMS HAD ACCEPTED THE DEPOSITS ONLY FOR B USINESS EXIGENCIES, THERE WAS NO MATERIAL TO SHOW THE REASO NABLE CAUSE FOR SUCH EXIGENCIES AND THE ASSESSEE HAD ALSO NOT DEMON STRATED THE SHORTAGE OF CASH IN THE BUSINESS WHICH MADE THE ASS ESSEE TO ACCEPT ITA NO.514 /MDS/2013 9 THE CASH. AS THE ASSESSEE HAD MISERABLY FAILED EVEN BEFORE THE ASSESSING OFFICER ON THE VERY FIRST INSTANCE TO ADD UCE SUCH DOCUMENTS AND HAD FAILED TO INVOKE AN ORDER FROM TH E TRIBUNAL, IMPOSITION OF PENALTY ON THE ASSESSEE WAS JUSTIFIED . FURTHER IN ALL THE DECISIONS RELIED UPON BY THE ASSESSEE REASONABLE C AUSE WAS ESTABLISHED FOR OBTAINING CASH LOAN DUE TO WHICH PE NALTY WAS DELETED THEREFORE THOSE DECISIONS WILL NOT COME TO THE RESC UE OF THE ASSESSEE. IN THE CASE BEFORE US, THE ASSESSEE HAS NOT CONVINC INGLY EXPLAINED WITH COGENT EVIDENCE THE REASONABLE CAUSE FOR HAVIN G OBTAINED CASH LOAN AND FOR THE REASONS CITED HEREIN ABOVE WE DO N OT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LD. A SSESSING OFFICER AND THE LD. CIT (A). 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON 19 TH JUNE, 2015 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH JUNE, 2015. K S SUNDARAM. % '+./ 0 /'+ /COPY TO: 1. #$ /APPELLANT 2. '(#$ /RESPONDENT 3. ) 1+ () /CIT(A) 4. ) 1+ /CIT 5. /4 '+5 /DR 6. 6! 7* /GF ITA NO.514 /MDS/2013 10
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