Income Tax Officer, Buldhana V. SHRI Nadekha Roshankha Pathan, Buldhana

ITA 53/NAG/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5813 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Non compliance; Ignorance of law
• Section: 273B

Judgement Text

1 - -- - IN THE INCOME TAX APPELLATE TRIBUNAL-E-BENCH, NAGPU R ( ! '#$ $ % '$ / THROUGH VIDEO CONFERENCE AT MUMBAI) '& ' '& ' '& ' '& ' ( (( (. .. . . .. . , ,, ,%+ %+ %+ %+ ' '' ' ,$-. ,$-. ,$-. ,$-., ,, ,$ $$ $. .. .' '' '. . . . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ' '' './ ././ ./ ITA NO.53/NAG/2012 & & & & 0& 0& 0& 0& / // / ASSESSMENT YEAR 2007-08 ITO,AYAKAR BHAVAN, NR.RAILWAY STATION, KHAMGAON,BULDHANA. V/S. NADEKHA ROSHANKHA PATHAN DULEGAON MAHI, BULDHANA. PNR AQSPP9745P. ( 12 / // / APPELLANT ) ( 3412 / RESPONDENT ) REVENUE BY : SH.K.K.NATH ASSESSEE BY : NONE ' 56 / DATE OF HEARING : 2 1- 01 -201 4 7!0 56 /DATE OF PRONOUNCEMENT : 29- 01 -201 4 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) )$ $$ $ -5&5 -5&5 -5&5 -5&5 ?$@ ?$@ ?$@ ?$@ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM - -- -$ '?A $ '?A $ '?A $ '?A, ,, ,,$-. $ ' ,$-. $ ' ,$-. $ ' ,$-. $ ' : CHALLENGING THE ORDER DATED 02.11.2011 OF THE CIT(A )-I,NAGPUR,ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271D OF RS. 55,75,007/- ON THE G ROUND THAT THERE WAS REASONABLE CAUSE FOR ACCEPTANCE OF THE LOANS IN CASH AND THE ASSESSEES CASE WAS COVERED UNDER EXEMPTION PROVIDED U/S 273B OF THE INCOME TAX ACT, 1961. 2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271D WITHOUT CONSIDERING THE FAC T THAT RS. 21 LAKHS WERE ACCEPTED IN CASH BY THE ASSESSEE EVEN BEFORE THE SO CALLED LIABILITY TO PAY THE COLLECTOR HAD ARISEN WHICH IS CLAIMED AS REASON FOR ACCEPTING THE FUNDS IN CASH. 3.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONSIDERING IGNORANCE OF LAW AS A REASONABLE CAUSE FOR VIOLATIN G THE PROVISIONS OF SECTION 269-SS. FACTS O F THE CASE : 2. ASSESSEE,AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF S ALE OF RIVER-SAND,FILED HIS RETURN OF INCOME ON 20.03.2008,DECLARING TOTAL INCOME AT RS NIL.AO F INALISED THE ASSESSMENT ON 29-09-2008 DETERMINING THE INCOME HIS INCOME AT RS.6,67,890/-. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION OF PEN ALTY,IMPOSED BY THE AO,U/S.271D,OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS,AO OBSE RVED THAT NO BOOKS OF ACCOUNT HAD BEEN MAINTAINED BY THE ASSESSEE,EVEN THOUGH THE SALES DU RING THE YEAR AMOUNTED TO RS.11,31,500/-, THAT THAT THE ASSESSEE HAD OBTAINED THE LOAN/DEPOSI T IN CASH OF RS.55,75,007/-.AS PER THE AO,THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269-SS OF THE.A SHOW CAUSE NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE AND HE WAS DIRE CTED TO EXPLAIN THE DEFAULT WITHIN THE MEANING OF PROVISION OF SECTION 269-SS OF THE ACT A ND TO EXPLAIN WHY PENALTY SHOULD NOT BE 2 LEVIED U/S.271D OF THE ACT.AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE ,HE HELD THAT ALTHOUGH THE LOAN APPEARED TO BE GENUINE BUT THE MO DE OF RECEIPT OF THE LOAN WAS CASH,THAT PROVISION OF SECTION 269-SS OF THE ACT WERE APPLICA BLE,THAT PROVISIONS OF SECTION 271D WERE ATTRACTED,THAT THE ASSESSEE HAD GIVEN GENERAL REASO NS BUT NO SPECIFICS CIRCUMSTANCES WERE EXPLAINED WHICH COMPEL THE ASSESSEE TO TAKE LOAN/DE POSITS IN CASH,THAT THERE WAS NO BUSINESS EXPEDIENCY OR ANY BARE NECESSITY OF REQUIREMENT OF BUSINESS FUND IMMEDIATELY WHICH FORCED THE ASSESSEE TO ACCEPT IN CASH WITHOUT ANY REASONABLE G ROUND,THAT THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 269-S5 OF THE ACT,WITHOUT ANY REASONABLE CAUSE. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,SHE HELD THAT THE ASSESSEE BEING IN URGENT OF FUNDS HAD BORROWED AMOUNTS IN CASH FROM FRIENDS AND RELATIVES WHO WERE AGRICULTURISTS,THAT THE LOANS HAD BEEN ACCEPTED AS GENUINE BY THE AO AF TER DUE VERIFICATION,THAT THE ASSESSEE WAS IN URGENT NEED OF FUNDS TO PAY THE COLLECTOR ON AN AWA RD OF A CONTRACT FOR RETIGHAT,THAT THE MAJORITY OF CREDITORS BEING AGRICULTURISTS DID NOT OPERATE A NY BANK ACCOUNT,THAT THE ASSESSEE BEING AN AGRICULTURIST WAS ALSO UNAWARE OF THE STATUTORY PRO VISIONS OF THE ACT,THAT ONCE HE WAS APPRAISED OF THE POSITION OF LAW HE ENSURED THAT THE REPAYMEN T OF THE SAID LOANS WAS DONE THROUGH BANKING CHANNEL,THAT THE GENUINENESS OF THE TRANSACTIONS OR THE BONAFIDE OF THE ASSESSEE WERE NOT IN DISPUTE,THAT THE HE HAD A REASONABLE CAUSE FOR THE CONTRAVENTION OF PROVISIONS OF SECTION 269SS,THAT THE ASSESSEE WAS IN URGENT NEED OF FUNDS TO PAY THE COLLECTOR, BULDHANA FOR AWARD OF A RETHIGHAT IN AUCTION,THAT CIRCUMSTANCES COMPELLED HIM TO BORROW MONEY BY WAY OF CASH FROM FRIENDS AND RELATIVES WHO WERE AGRICULTURIST.FAA RE LIED UPON THE CASES OF BOMBAY CONDUCTORS & ELECTRICALS LTD.(301ITR 328),SPEEDWAYS RUBBER (P) L TD.(326 ITR 31)KASI CREDIT CORP. & ANR. (280ITR129) AND JAYASAKTHI BENEFIT FUND LTD.(303ITR 29)AND HELD THAT THERE WAS INFRACTION OF LAW DUE TO IGNORANCE OF LEGAL PROVISIONS,THAT THE C IRCUMSTANCES OF THE ASSESSEE AND THE LENDERS BEING AGRICULTURISTS CREATED A SITUATION WHERE UNFA MILIARITY WITH THE PROVISIONS AND THE ABSENCE OF BANK ACCOUNTS RESULTED IN CASH TRANSACTIONS.FINALLY ,FAA HELD THAT THE AO HAD ALSO NOT DOUBTED THE GENUINENESS OF THE TRANSACTION OR THE BONAFIDE OF THE ASSESSEE,THAT THE APPELLANT HAD A REASON - ABLE CAUSE,AS PER SECTION 273B,FOR NON COMPLIANCE O F THE PROVISIONS OF SECTION 269SS OF THE ACT.AS A RESULT,SHE DELETED THE PENALTY LEVIED U/S. 271D OF THE ACT. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO.WE HAVE HEARD HIM AND PERUSED THE MATERIAL BEFORE US.UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE WAS AN AGRICULTURIST IN A SMALL VILLAGE,THAT DURING THE PR EVIOUS YEAR IN QUESTION HE HAD GIVEN TENDER FOR RETIGHAT CONTRACT FOR THE FIRST TIME AND WAS AWARDE D THE CONTRACT,THAT HE HAD TO PAY RS.1.36 CRORES TO THE DISTRICT ADMINISTRATION IN A VERY SHO RT TIME,THAT HE DID NOT HAD ACCESS TO SUCH HUGE FUNDS SO HE COLLECTED AMOUNTS FROM HIS RELATIVES AN D FRIENDS FROM NEARBY VILLAGES AND SOME FROM HIS OWN VILLAGE,THAT ALL THE PERSONS FROM WHOM HE B ORROWED MONEY WERE PURELY AGRICULTURISTS HAVING NO OTHER INCOME EXCEPT AGRICULTURAL INCOME,T HAT WHEN THE LOAN TRANSACTIONS WERE ENTERED INTO HAD NO OTHER INCOME EXCEPT AGRICULTURE.FROM TH E ORDERS OF THE AO AND THE FAA IT IS CLEAR THAT THE AO HAD CALLED UPON THE ASSESSEE TO PROVE THE SOURCE OF SAID PAYMENT AND HE HAD FILED AFFIDAVITS OF ALL THOSE PERSONS WHO WERE HIS FRIEND AND RELATIVES AND WHO WERE ALL AGRICULTURIST. THEY HAD CONFIRMED THAT THEY HAD LENT THE MONEY, TH AT THEY WERE AGRICULTURIST AND THEIR ONLY SOURCE OF INCOME WAS FROM AGRICULTURE.AO HAD ALSO E XAMINED SOME OF THE PERSONS ON OATH AND HE WAS SATISFIED ABOUT THE GENUINENESS OF THE LOANS . IT IS ALSO A FACT THAT REPAYMENTS WERE MADE BY DRAFTS OR CHEQUES ONLY,THAT WHEN THE ASSESSEE BO RROWED MONEY FROM THOSE VARIOUS PERSONS 3 MOST OF THEM HAD NO BANK ACCOUNTS AND NO IDEA ABOUT THE TAX LAWS. 4.1. IT IS SAID THAT PENAL PROVISIONS OF SECTION 271 ARE NOT AUTOMATIC AND MANDATORY LIKE CHARGING OF INTEREST U/S.234.SECTION 273B OF THE ACT GOVERNS THE PENALTY PROVISIONS AND PER THAT SECTION IF AN ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR HIS FAILURE;FOR NOT COMPLYING WITH THE MANDATE OF SECTION 269 SS;NO PENALTY SHALL BE IMPOS ABLE UNDER SECTION 271D OF THE ACT.FAA HAD GIVEN A CATEGORICAL FINDING OF FACT THAT THERE WERE REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE.CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THERE IS NO NEED TO INTERFERE WITH HER ORDER,AS IT DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.AS STATED EARLIER, GENUINENESS OF THE TRANSACTIONS IN NOT IN DOUBT AND PERSONS INVOLVED IN TRANSACTIONS WERE AGRICULTURISTS HAVING NO OTHER SOURCE OF INCOME.THE RE WAS URGENCY OF DEPOSITING THE AMOUNT WITH STATE GOVERNMENT AUTHORITIES AND ASSESSEE BORROWED MONEY,INCLUDING RS.21 LAKHS,FROM THE PERSONS WHO DID NOT HAVE BANK ACCOUNTS.IN THESE CIR CUMSTANCE EVEN IF THERE WAS CONTRAVENTION OF THE PROVISIONS OF SEC.269 SS,IT WAS TECHNICAL IN NA TURE.FAA HAD ANALYSED THE FACTS AND HAS RELIED UPON CERTAIN CASES.THEREFORE,CONFIRMING HER ORDER W E DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FI LED BY THE AO STANDS DISMISSED. B 5C &B5 6 D ?E ,F ,5 G . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2014. ?$@ 7!0 $ - 29 , 6 , 2014 ! . SD/- SD/- (H.L.KARWA/ ( (( (. .. . . .. . ) ( ,$-. ,$-. ,$-. ,$-. / RAJENDRA) PRESIDENT/ %+ $ $ $ $ '?A '?A '?A '?A /ACCOUNTANT MEMBER / MUMBAI, ? / DATE: 29.01.2014 SK ?$@ ?$@ ?$@ ?$@ 35 35 35 35 H$05 H$05 H$05 H$05 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 12 2. RESPONDENT / 3412 3. THE CONCERNED CIT(A)/ 'I J , 4. THE CONCERNED CIT / 'I J 5. DR ITAT,NAGPUR BENCH/ K 35 , . . - . - . 6. GUARD FILE/ & L . '45 35 //TRUE COPY// ?$@ ' / BY ORDER, M / ' , DY./ASST. REGISTRAR , /ITAT, MUMBAI.