AJAY MAHIPAL MORE, MUMBAI V. ADDL CIT RG 19(2), MUMBAI

ITA 5761/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8892 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K MEHTA
• Assessee Lawyers: SAMIR DALAL
• Keywords: Reasonable cause

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI G. E. VEERABHADRAPPA, PRESIDENT & SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 5761/MUM/2009 ASSESSMENT YEAR : 2005-06 SHRI AJAY MAHIPAL MORE, FLOAT NO.504, FLORENCE APARTMENTS, NEHRU ROAD, VAKOLA, SANTACRUZ, MUMBAI-400 055 PAN NO: AHLPM 4892 Q VS. ACIT, RANGE 19(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMIR DALAL RESPONDENT BY : SHRI N. K. MEHTA DATE OF HEARING: 09.08.2012 DATE OF PRONOUNCEMENT: 05.09.2012 O R D E R PER VIVEK VARMA, J.M. : THE INSTANT APPEAL IS DIRECTED BY THE ASSESSEE AGA INST THE LEVY OF PENALTY U/S 271D OF THE INCOME TAX ACT, 1961, AT `. 10,50,000. 2. THE FACTS OF THE CASE AS COMING OUT OF THE IMPUG NED ORDERS OF THE REVENUE AUTHORITY AND SUBMITTED BY THE AR DURING TH E COURSE OF HEARING BEFORE US ARE THAT THE ASSESSEE HAD RAISED CERTAIN CASH LO ANS, AGGREGATING TO `. 10,50,000 AND DEPOSITED THE SAME IN HIS BANK ACCOUN T. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE ASSESSEE AS TO WHY NOT PROVISIONS OF SECTION 269SS BE MADE APPLICABLE ON THE SAID CAS H LOANS, EXCEEDING SHRI AJAY MAHIPAL MORE ITA NO.5761/MUM/2009 PAGE 2 OF 5 `. 20,000/-. BEFORE THE REVENUE AUTHORITY, THE ASSESS EE PLEADED THAT HE WAS NOT AWARE OF INCOME TAX LAWS AND AS TO HOW HE HAD VIOLA TED THE PROVISIONS OF SECTION 269SS. 3. THE A.O. AND THE CIT(A) OBSERVED THAT SINCE IT W AS A CLEAR VIOLATION OF MANDATORY PROVISION, THEREFORE, THE PENALTY IS EXIG IBLE EQUIVALENT TO THE AMOUNT OF THE AMOUNTS OF CASH LOANS IN EXCESS OF `. 20,000, WHICH AGGREGATED TO `. 10,50,000. 4. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 5. BEFORE US, THE AR SUBMITTED THAT THE ASSESSEE WA S A SMALL TIME BUSINESS MAN AND WAS IN THE PROCESS OF ACQUIRING A SHOP, WHI CH NECESSITATED HIM TO ARRANGE FOR LOANS, WHICH HAPPENED TO BE IN CASH. H E ALSO POINTED OUT THAT OUT OF THE TOTAL LOANS ARRANGED BY HIM, LOAN AMOUNTING TO `. 6,00,000 WAS FROM HIS FATHER. THE AR CONCEDED THAT REST OF THE CASH LOAN S WERE FROM FRIENDS AND RELATIVES AND ALL LOANS HAVE BEEN DULY ENTERED IN T HE BOOKS OF ACCOUNT AND ARE FULLY EXPLAINABLE AND ALSO THAT THERE WAS A VALID A ND COGENT REASON FOR THE ASSESSEE TO ARRANGE FOR THE PAYMENT TO BE MADE. HE , THEREFORE, PLEADED THAT NO DOUBT, THE IMPUGNED LOANS ARE CASH LOANS BUT LOO KING AT THE FACTS AND CIRCUMSTANCES, THAT THE ASSESSEE HAD NOWHERE ELSE T O LOOK UP TO, THE ASSESSEE HAD TO ARRANGE THE FUNDS, QUICK AND FAST, AND ALSO THAT THE MAJOR PORTION OF `. 6,00,000 IS FROM THE ASSESSEES FATHER, THERE WAS E VERY REASONABLE CAUSE FOR SEEKING THE CASH LOANS AND A LENIENT VIEW MAY BE TA KEN. SHRI AJAY MAHIPAL MORE ITA NO.5761/MUM/2009 PAGE 3 OF 5 6. THE DR, RELIED ON THE ORDERS OF THE REVENUE AUTH ORITY AND ADDED THAT THIS IS A FIT CASE FOR SUSTAINING THE PENALTY U/S.271D A S THERE IS A CLEAR CUT VIOLATION OF MANDATORY PROVISIONS. 7. WE HAVE HEARD THE ARGUMENTS OF THE PARTIES AND H AVE ALSO PERUSED THE ORDERS OF THE REVENUE AUTHORITY, THERE IS NO DOUBT THAT THERE HAS BEEN VIOLATION OF MANDATORY PROVISIONS AND THE PENALTY IS EXIGIBLE . BUT ON THE OTHER SIDE, WE HAVE TO LOOK INTO THE OVERALL CIRCUMSTANCE, WHICH C REATED A SITUATION WHICH NECESSITATED THE ASSESSEE FOR ARRANGING FUNDS IN A VERY SHORT TIME. THIS INCLUDED TAKING LOAN FROM THE FATHER AS WELL. 8. IN THESE CIRCUMSTANCES, WE CANNOT IGNORE THE HUM ANE POINT AND HEAD STRICTLY TOWARDS MANDATORY PROVISIONS. IN OUR CONS IDERED OPINION, THE LOAN ARRANGED FROM FATHER SHOULD BE GIVEN A LENIENT VIEW IN SO FAR AS THE PENALTY PROVISION U/S.271D IS CONCERNED. WE, THEREFORE, RE MOVE THE FIGURE OF `. 6,00,000 FROM THE AGGREGATE OF `. 10,50,000, AS A RELIEF TO THE ASSESSEE, AND SUSTAIN THE BALANCE `. 4,50,000. 9. IN THE RESULT, THE PENALTY SUSTAINED IS `. 4,50,000. 10. THE APPEAL FILED BY THE ASSESSEE, IS, THEREFORE , PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 05/09/2012. SD/- SD/- (G. E. VEERABHADRAPPA) (VIVEK VARMA) PRESIDENT JUDICIAL MEMBER MUMBAI: 05/09/2012 SHRI AJAY MAHIPAL MORE ITA NO.5761/MUM/2009 PAGE 4 OF 5 ROSHANI COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY/ ASST.REGISTRAR,ITAT MUMBAI.