The ITO, Ward-9(2), Ahmedabad V. Maa Khodiyar Construction, Ahmedabad

ITA 583/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67620 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: S N SOPARKAR
• Keywords: Question of law; Reasonable cause
• Section: 273B; 143(3)

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.583/AHD/2010 WITH CO NO.59/AHD/2013 [ASSTT.YEAR : 2006-2007] ITO, WARD-9(2) AHMEDABAD. /VS. M/S.MAA KHODIYAR CONSTRUCTION B-11, TAKSHILA SOCIETY NR.SARASWATI SCHOOL NIKOL GAM ROAD, AHMEDABAD. PAN : AALFM 7810 Q ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI J.P. JANGID, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI S.N.SOPARKAR 5 1 &(*/ DATE OF HEARING : 12 TH AUGUST, 2013 678 1 &(*/ DATE OF PRONOUNCEMENT : 23-08-2013 )9 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS IS REVENUES APPEAL AND THE ASSESSEES CO DIRECTED AGA INST THE ORDER OF THE CIT(A)-XV, AHMEDABAD DATED 18.12.2009 FOR THE ASSE SSMENT YEAR 2006- 2007. THE REVENUE IS AGGRIEVED BY THE ACTION OF TH E CIT(A) IN DELETING THE PENALTY OF RS.42,75,000/- LEVIED UNDER SECTION 271D FOR VIOLATION OF SECTION 269SS OF THE INCOME TAX ACT. ITA NO.583/AHD/2010 WITH CO NO.59/AHD/2013 -2- 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS TAKEN LOAN FROM THE PARTIES, WHO ARE AGRICULTURISTS AND THEY ADVANCED THE MONIES OUT OF THEIR AGRICULTURAL INCOME, WHICH IS E XEMPT. IT IS SUBMITTED THAT THE IMPUGNED LOAN TRANSACTIONS HAVE BEEN DULY REFLECTED IN THE ACCOUNTS OF THE ASSESSEE, WHICH WERE NOT DOUBTED BY THE DEPARTMENT. IT IS SUBMITTED THAT THE DEPARTMENT HAS ONLY QUESTIONED T HE MODE OF PAYMENT I.E. BY WAY OF CASH, WHICH THE AO HELD TO BE PROHIBITED BY THE LAW. IT IS SUBMITTED THAT ALL THE PERSONS FROM WHOM LOANS TAKE N WERE AGRICULTURISTS AND STAYING IN REMOTE AREA. IT IS SUBMITTED THAT T HE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT SINCE LOANS WERE TAKEN IN CASH FRO M THE AGRICULTURISTS, STAYING IN REMOTE AREAS, WOULD NOT ATTRACT THE RIGO UR OF SECTION 269SS, AND THEREFORE, NO PENALTY IS LEVIABLE UNDER SECTION 271 D. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) OMEC ENGINEERS VS COMMISSIONER OF INCOME-TAX, 294 ITR 599 (JHAR); II) COMMISSIONER OF INCOME-TAX VS BALAJI TRADERS, 303 ITR 312 (MAD) III) COMMISSIONER OF INCOME-TAX VS LOKHPAT FILM EXCHANGE (CINEMA), 304 ITR 172 (RAJ) IV) COMMISSIONER OF INCOME-TAX VS SAINI MEDICAL STORE, 276 ITR 79 (P&H) IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS RIGHTLY APPRECIATED THE FACTS OF THE CASE OF THE ASSESSEE AND DELETED THE IMPUGNED P ENALTY, AND ACCORDINGLY, THE ORDER OF THE LD. CIT(A) BE CONFIRMED, AND THE A PPEAL OF THE REVENUE BE DISMISSED. 3. THE LEARNED DR ON THE OTHER HAND RELIED ON THE O RDER OF THE AO AND SUBMITTED THAT THE LOAN TAKEN BY THE ASSESSEE IN CA SH EXCEEDING RS.20,000/- WAS CLEARLY IN VIOLATION OF PROVISIONS OF SECTION 2 69SS, AND THE AO HAS RIGHTLY IMPOSED PENALTY UNDER SECTION 271D OF THE A CT. RELYING ON THE DECISION ON HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMORA HOTELS P. LTD., 19 TAXMANN.COM 285 (DELHI) HE SUBMI TTED THAT EXISTENCE OF A GENUINE OR BONA FIDE TRANSACTION IS NOT SUFFICIEN T TO ATTRACT THE RELIEF UNDER ITA NO.583/AHD/2010 WITH CO NO.59/AHD/2013 -3- SECTION 273B AND THAT THE ASSESSEE SHOULD GIVE REAS ONS FOR NOT GETTING THE LOAN OR DEPOSITS BY AN ACCOUNT PAYEE CHEQUE OR ACCO UNT PAYEE BANK DRAFT, AND THEREFORE, THE AO HAS RIGHTLY IMPOSED THE PENAL TY, WHICH BE CONFIRMED. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IT IS NOT A FIT CASE FOR IMPO SITION OF PENALTY UNDER SECTION 271D IN VIOLATION OF SECTION 269SS OF THE I .T.ACT. IT IS NOT IN DISPUTE THAT THE PERSONS FROM WHOM THE ASSESSEE HAS RECEIVED LOANS ARE AGRICULTURISTS AND ARE STAYING IN REMOTE AREA, AS T HE RELEVANT EVIDENCES SUCH AS 7/12 EXTRACTS SHOWED THE IDENTITIES OF THE PERSO NS WERE PROVED. THE ASSESSEE HAS ALSO FILED COPIES OF DRIVING LICENCE A ND ELECTION CARDS OF THE PERSONS IN THE PAPER BOOK BEFORE US. THE REVENUE H AS ALSO NOT DOUBTED THE GENUINENESS AND CREDIT-WORTHINESS OF THE LENDERS. WE FIND THAT THE ASSESSEE HAS MAINTAINED ITS ACCOUNTS IN WHICH IT HA S SHOWN THE IMPUGNED LOAN TRANSACTIONS, AND ASSESSEE WAS UNDER A BONAFID E BELIEF THAT THE IMPUGNED TRANSACTION WOULD NOT ATTRACT SECTION 269S S AND BECAUSE CASH TRANSACTIONS WITH AGRICULTURISTS ARE NOT PROHIBITED WITHIN THE MEANING OF SECTION 269SS OF THE ACT. WE FIND THAT THE CIT(A) HAS RECORDED A FINDING THAT EVIDENCES LIKE 7/12 EXTRACTS ETC. GIVEN TO THE AO IN SUPPORT OF THE ARGUMENT THAT ALL THE PERSONS FROM WHOM LOANS WERE TAKEN WERE AGRICULTURISTS, HAVE NOT BEEN CONSIDERED BY THE AO WHILE IMPOSING PENALTY. THE CIT(A) FURTHER NOTED THAT ALL THE LOANS HAVE BE EN ACCEPTED AS GENUINE IN THE SCRUTINY ASSESSMENT ORDER, NOT ONE HAS BEEN DOUBTED, AND RELYING ON VARIOUS DECISIONS OF VARIOUS HIGHER AUTHORITIES, TH E CIT(A) DELETED THE PENALTY IMPOSED BY THE AO. WE FIND THAT THE CASE L AW CITED BY THE LEARNED DR OF THE ASSESSEE IS DISTINGUISHABLE ON FACTS OF T HE PRESENT CASE, AS IN THAT CASE THE CASH RECEIPTS BY THAT ASSESSEE-COMPANY, WH ICH IS A LIMITED COMPANY, WERE IN THE FORM OF LOANS/ADVANCES TAKEN F ROM THE DIRECTORS AND SHARE HOLDERS AND THERE WAS NO PROOF OF EXCEPTIONAL CIRCUMSTANCES OR URGENT REQUIREMENT OF FUNDS FOR BUSINESS EXIGENCIES, AND T HE LENDERS ARE NOT SAID TO ITA NO.583/AHD/2010 WITH CO NO.59/AHD/2013 -4- BE STAYING IN REMOTE AND NON-BANKING AREAS. IN THE CASE OF OMEC ENGG. VS. CIT (SUPRA), THE HONBLE COURT HAS CONCLUDED AS UND ER: IN THE INSTANT CASE, AS NOTICED ABOVE, THERE IS NO FINDING OF THE ASSESSING AUTHORITY, THE APPELLATE AUTHORITY OR THE TRIBUNAL THAT THE TRANSACTION MADE BY THE ASSESSEE IN BREACH OF THE P ROVISIONS OF SECTION 269SS WAS NOT A GENUINE TRANSACTION. ON THE CONTRARY, THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED AFTER SCR UTINY UNDER SECTION 143(3) OF THE ACT. FURTHER, THERE IS NO FIN DING OF THE APPELLATE AUTHORITY THAT THE TRANSACTION IN BREACH OF THE AFORESAID PROVISIONS MADE BY THE ASSESSEE WAS MALA FIDE AND W ITH THE SOLE OBJECT TO DISCLOSE THE CONCEALED OR UNDISCLOSED MON EY. THE AUTHORITIES HAVE PROCEEDED ON THE BASIS THAT BREACH OF CONDITION PROVIDED UNDER SECTION 269SS OF THE ACT SHALL LEAD TO PENAL CONSEQUENCES. IN OUR VIEW, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, THE IMPOSITION OF PENALTY MERELY ON TECHNICAL MISTAKE COMMITTED BY THE ASSESSEE, WHICH HAS NOT RESULTED I N ANY LOSS OF REVENUE, SHALL BE HARSH AND CANNOT BE SUSTAINED IN LAW. IN THE CASE OF CIT VS. SAINI MEDICAL STORES (SUPRA) , THE HONBLE HIGH COURT HAS HELD AS UNDER: ... IN THE PRESENT CASE, THE COMMISSIONER OF INCOM E-TAX (APPEALS) IN HIS ORDER DATED JANUARY 18, 1999, WHEREBY THE P ENALTY UNDER SECTION 271D OF THE ACT WAS DELETED, HAD ACCEPTED THE VERSION GIVEN BY THE ASSESSEE THAT VIOLATION OF THE PROVISIONS O F THE ACT WAS UNDER A BONA FIDE BELIEF OF THE ASSESSEE AND THE SAME WA S NOT WITH ANY INTENTION TO AVOID OR EVADE THE TAX. THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) HAVE BEEN CON FIRMED IN APPEAL BY THE TRIBUNAL. THEREFORE, THE FINDINGS RE CORDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBU NAL THAT THE ASSESSEE HAD SHOWN REASONABLE CAUSE FOR THE FAILUR E TO COMPLY WITH THE PROVISIONS OF SECTION 269SS IS A FINDING OF FA CT BASED ON APPRECIATION OF MATERIAL ON RECORD. IT DOES NOT GIV E RISE TO ANY QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW. THERE IS NO MERIT IN THE APPEAL AND ACCORDINGLY, THE SAME IS DI SMISSED. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY VALID REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE, WHICH IS CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSE D. CO NO.59/AHD/2063 (ASSESSEES CO) ITA NO.583/AHD/2010 WITH CO NO.59/AHD/2013 -5- 5. THE ONLY GROUND RAISED IN THIS APPEAL OF THE ASS ESSEE IS AS UNDER: 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT QUASHING THE ORDER U/S.271D SINCE IT WAS BARRED BY LIMITATION AS PER THE PROVISIONS OF SECTION 275(1)(C) OF THE ACT. LD.CIT (A) FAILED TO APPRECIATE THAT ORDER U/S.271D PASSED ON 31.8.2009 THAT OUGHT TO HAVE BEEN PASSED BEFORE 30/6/2009 WAS BARRED BY LIM ITATION AND INSTRUCTOUS DESERVES TO BE QUASHED BEING AGAINST LA W AND JUDICIAL PRINCIPLES. 6. WE FIND THAT THE GROUNDS RAISED BY THE ASSESSEE IN THE CO BEFORE US WAS NOT RAISED BEFORE THE CIT(A), AND IT DOES NOT A RISE OUT OF THE ORDER OF THE CIT(A), AND THEREFORE THE GROUND OF THE CO IS D ISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD