GLOSTAR ELECTRICALS PVT. LTD., MUMBAI V. ACIT -8(3), MUMBAI

ITA 5510/MUM/2013

• Counselvise Citation: 551019914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 26-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2013
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA N O. 5 5 09&5510 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 5 - 06 ) GOLDSTAR ELECTRICALS PVT. LTD. B - 6 - 7, NANDKISHORE IND. E. MAHAKALI CAVES ROAD, ANDHERI(E), MUMBAI - 400093 VS. ACIT - 8(3), MUMBAI ./ ./ PAN/GIR NO. : A A A C G 3483 G ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SANJAY R. PARIKH /REVENUE BY : SHRI VIJAY KUMAR BORA / DATE OF HEARING : 0 7 /0 5 / 2015 / DATE OF PRONOUNCEMENT 05/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , MUMBAI FOR THE ASSESSMENT YEAR 200 5 - 06 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271D & 271E OF THE I.T.ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT RETURN FILED BY THE ASSESSEE WAS ACCEPTED BY THE AO UNDER SUMMARY ASSESSMENT U/.S143(1), WHEREIN IT WAS OBSERVED THAT AS PER THE TAX AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE COMPANY HAD ACCEPTED THE FOLLOWING AMOUNTS OF LOANS IN VIOLATION OF THE PROVISION OF SECTION 269SS OF THE ACT : - ITA NO S . 5509&5510 /1 2 SL. NO NAME OF THE PERSON MODE OF ACCEPTANCE AMOUNT (RS) DATE OF TRANSACTION 1. SMT. LATA G.SHAH J/V 12,00,000 31.03.2005 2. SHR I RAHUL SHAH J/V 3,25,000 31.03.2005 TOTAL 15,25,000 IN VIEW OF THE ABOVE OBSERVATION, THE AO ISSUED A NOTICE U/S.274 TO THE ASSESSEE COMPANY. THEREAFTER THE AO IMPOSED PENALTY U/S.271D EQUAL TO THE AMOUNT OF LOAN TAKEN. SIMILAR PENALTY WAS LEVIED U/ S.271E. 3. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO FOR LEVY OF PENALTY. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE HAS RECEIVED INSTRUCTION S FROM ONE OF THE DIRECTO R S M R. RAHUL G . SHA H TO CREDIT THE ACCOU NT OF HIS WIFE SMT. LATA G. SHAH BY RS.12,00,000/ - DEBITING HIS ACCOUNT WITH THE SAME AMOUNT. ACCORDINGLY, THE ASSESSEE HAS PASSED A JOURNAL ENTRY DEBITING RAHUL G. S HAH LOA N ACCOUNT AND CREDITING LATA G. S HAH LOA N ACCOUNT. HERE, THERE WAS NO PHYSICAL RECE IPT FROM SMT. LATA G. S HAH OR THERE WAS NO PHYSICAL REPAYMENT OF RS.12 LAC TO MR. RAHUL G . S HAH. THE ASSESSEE HAS ALSO CREDITED RS.3,25,000/ - BY WAY OF DIRECTOR REMUNERATION TO MR. RAHUL GIRISH SHAH ON 31.03.2005, BY PASSING JOURNAL ENTRY DEBITING DIRECTOR REMUNERATION. THE SAID AMOUNT IS NOT RECEIVED BY THE ASSESSEE COMPANY AS LOAN OR DEPOSIT AND THEREFORE IT CANNOT BE SAID THAT THE AMOUNT WAS RECEIVED BY ASSESSEE OTHERWISE THEN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. 5. HONBLE BOMBAY HIGH CO URT IN THE CASE OF TRIUMPH INTERNATIONAL FINANCE (I) LTD., 345 ITR 270 , HELD THAT SETTLING CLAIMS BY MAKING JOURNAL ENTRIES IN THE RESPECTIVE BOOKS IS ALSO ONE OF THE RECOGNIZED MODES OF ITA NO S . 5509&5510 /1 3 REPAYING LOAN OR DEPOSIT. IN THE ABSENCE OF ANY FINDING RECORDED IN T HE ASSESSMENT ORDER OR IN THE PENALTY ORDER TO THE EFFECT THAT THE REPAYMENT OF LOAN OR DEPOSIT WAS NOT A BONA FIDE TRANSACTION AND WAS MADE WITH A VIEW TO EVADE TAX, THE CAUSE SHOWN BY THE ASSESSEE WAS A REASONABLE CAUSE AND IN VIEW OF SECTION 273B OF THE ACT, NO PENALTY UNDER SECTION 271E COULD BE IMPOSED FOR CONTRAVENING THE PROVISIONS OF SECTION 269T OF THE ACT. 6. APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE HIGH COURT, WE FOUND THAT IN THE INSTANT CASE THERE WAS ALREADY CREDIT IN THE ACCOU NT OF MR. RAHUL G. SHAH, WHICH WAS NOT PAID IN CASH BUT WAS CREDITED IN THE NAME OF HIS WIFE. SUCH CREDIT EITHER IN THE ACCOUNT OF RAHUL G. SHAH WAS NEVER DOUBTED INSOFAR AS TH ERE WAS ALREADY CREDIT EXISTING IN THE BOOKS OF ACCOUNT OF ASSESSEE , OR CREDITI NG THIS AMOUNT IN THE NAME OF HIS WIFE BY DEBITING ACCOUNT OF RAHUL G. SHAH WAS DOUBTED AS NON - GENUINE. THE AMOUNT OF DIRECTORS REMUNERATION CREDITED TO THE ACCOUNT OF MR. RAHUL G. SHAH DOES NOT AMOUNT TO ANY LOAN BY ASSESSEE COMPANY TO R.G.SHAH, THEREFOR E, THE AO WAS NOT JUSTIFIED IN TREATING SUCH CREDIT OF DIRECTORS REMUNERATION IN HIS ACCOUNT AS LOAN TRANSACTION AND THEREBY IMPOSING PENALTY U/S.271D OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR IMPOSITION OF PENALTY BY ASSUMING THAT AMO UNT CREDITING IN THE NAME OF ASSESSEES WIFE BY DEBITING ASSESSEES LOAN ACCOUNT, WHICH WAS ALREADY THERE IN THE BOOKS OF ACCOUNT AMOUNTS TO ANY CONTRAVENTION OF PROVISIONS OF SECTION 269SS S O AS TO IMPOSE PENALTY U/S.271D& 271E. DEBITING ITA NO S . 5509&5510 /1 4 ASSESSEES ACCOUNT WAS TREATED BY THE AO AS REPAYMENT OF LOAN AND CREDITING HIS WIFES ACCOUNT WAS TREATED BY THE AO AS RECEIPT OF LOAN. 7. EVEN ON THE GROUND OF LIMITATION, WE FOUND THAT PENALTY PROCEEDINGS U/S.274 R.W.S.271D & 271E, WERE INITIATED ON 2 - 8 - 2007. AS PER SECT ION 275(1) (C), PENALTY COULD BE IMPOSED ONLY BEFORE END OF THE FINANCIAL YEAR OR WITHIN THE SIX MONTHS IN WHICH THE PENALTY PROCEEDINGS WERE INITIATED. AS THE LATER PERIOD EXPIRED ON 31 - 3 - 2008, THE PENALTY COULD HAVE BEEN IMPOSED BY THAT DATE ONLY. THUS, T HE PENALTY IMPOSED IN 11 - 9 - 2012 WAS BARRED BY LIMITATION. 8 . IN THE RESULT, BOTH APPEAL S OF THE ASSESSEE ARE ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 05/06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 05/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/