M/s. PMS International P.Ltd., Phagwara V. The Additional CIT, Phagwara

ITA 618/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0705 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVISH SUD
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.617 & 618(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN: AACCP1274G M/S. PMS INTERNATIONAL PVT. LTD. VS. DY. COMMR. OF INCOME TAX, G.T.ROAD, PHAGWARA. PHAGWARA RANGE, PHAGWARA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.RAVISH SUD, ADVOCATE RESPONDENT BY: SH. UMESH TAKYAR, DR DATE OF HEARING: 17/05/2016 DATE OF PRONOUNCEMENT: 02/06/2016 ORDER PER T.S. KAPOOR, AM THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE AG AINST THE SEPARATE ORDERS OF LD. CIT(A), JALANDHAR, EACH DA TED 20.08.2013. 2. THE GRIEVANCE OF THE ASSESSEE IN ITA NO.617(ASR) /2014 IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE PENA LTY IMPOSED BY THE AO UNDER SECTION 271D OF THE ACT, IN VIOLATION OF THE PROVISIONS OF SECTION 269SS. THE AO HAS IMPOSED THIS PENALTY OF RS.20,40 ,000/- CONSISTING OF RS.11,10,000/- PERTAINING TO CURRENT ACCOUNT TRA NSACTIONS OF THE DIRECTORS WITH THE ASSESSEE-COMPANY AND RS.9,30,000 /- FOR TRANSACTIONS WITH THE SISTER CONCERNS OF THE ASSESSEE-COMPANY. ITA NOS. 617 & 618(ASR)/2013 A.Y. 2006-07 2 3. THE GRIEVANCE OF THE ASSESSEE IN ITA NO.618(ASR) /2014 IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE PENA LTY OF RS.30,000/- IMPOSED BY THE AO UNDER SECTION 271E FOR VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. 4. THE BRIEF FACTS, AS NOTED IN THE PENALTY ORDER A RE THAT DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006 -07, THE AO OBSERVED THAT THE ASSESSEE HAD RECEIVED CERTAIN AMO UNTS IN CASH FROM THE DIRECTORS OF THE COMPANY AS WELL AS FROM THE SI STER CONCERNS OF THE COMPANY. THE AO HELD THAT THESE CASH TRANSACTIONS W ERE IN VIOLATION OF PROVISIONS OF SECTION 269SS AND, THEREFORE, HE IMPO SED THE PENALTY. 5. SIMILARLY, THE AO OBSERVED THAT THE ASSESSEE HA D REPAID AN AMOUNT OF RS.30,000/- IN CASH ON ACCOUNT OF REPAYME NT OF UNSECURED LOANS AND, THEREFORE, HE IMPOSED PENALTY U/S 271E F OR VIOLATION OF PROVISIONS OF SECTION 269T. 6. AGGRIEVED WITH THE ORDERS, THE ASSESSEE FILED AP PEALS BEFORE THE LD. CIT(A) AND MADE VARIOUS SUBMISSIONS AND RELIED UP ON THE VARIOUS CASE LAWS, WHEREIN IT WAS HELD THAT THE CURRENT ACCOUNT TRANSACTIONS WITH THE DIRECTORS WERE NOT LOANS AND DEPOSITS AND, THEREFO RE, THE PROVISIONS OF SECTIONS 269SS AND 269T WERE NOT APPLICABLE TO SUCH TRANSACTIONS. ITA NOS. 617 & 618(ASR)/2013 A.Y. 2006-07 3 7. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE CONT ENTIONS OF THE ASSESSEE AND UPHELD THE PENALTY AND WHILE RECORDING HIS FINDINGS, HE DISTINGUISHED THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE. 8. AGGRIEVED WITH THE ORDERS, THE ASSESSEE IS NOW I N APPEAL BEFORE US. 9. AT THE OUTSET, THE AR SUBMITTED THAT THE CASE L AWS RELIED UPON BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE AO WERE IDENTICAL TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES AND BOTH TH E AUTHORITIES BELOW HAVE WRONGLY DISTINGUISHED THE SAME AND IN THIS RES PECT OUR ATTENTION WAS INVITED TO THE ORDER OF THE HONBLE MADRAS HIG H COURT IN THE CASE CIT VS. IDHYAM PUBLICATIONS LTD., 283 ITR 221, A CO PY OF WHICH WAS PLACED AT PB 1 TO 4. THE LD. AR SUBMITTED THAT IN T HIS CASE ALSO, THERE WERE CASH TRANSACTIONS OF DIRECTORS WITH THE ASSESS EE AND THE HONBLE MADRAS HIGH COURT HAS HELD THAT THE CURRENT ACCOUNT TRANSACTIONS COULD NOT BE CONSIDERED AS A LOAN OR ADVANCE. HE SUBMITTE D THAT THE AUTHORITIES BELOW HAS SIMPLY DISTINGUISHED THIS CAS E LAW ON THE BASIS THAT IN THIS CASE THERE WERE VARIOUS TRANSACTIONS O F DEPOSITS AND WITHDRAWALS, WHEREAS IN THE CASE OF THE ASSESSEE, T HERE WAS ONLY ONE TRANSACTION FOR WITHDRAWALS AND REST OF THE TRANSAC TIONS WERE FOR DEPOSITS. 10. FURTHER, THE LD. AR SUBMITTED THAT WHILE DECID ING THE ISSUE OF PENALTY U/S 271D, THE LD. CIT(A) OVER-LOOKED THE FA CT THAT THE AO HAD IMPOSED PENALTY FOR TWO VIOLATIONS I.E., FOR CURREN T ACCOUNT TRANSACTIONS WITH DIRECTORS AND TRANSACTIONS WITH THE SISTER CO NCERNS, WHEREAS WHILE ITA NOS. 617 & 618(ASR)/2013 A.Y. 2006-07 4 DECIDING THE CASE, HE ONLY REFERRED TO THE TRANSACT IONS CARRIED OUT BY THE DIRECTORS WITH THE ASSESSEE-COMPANY AND IN THIS RES PECT OUR ATTENTION WAS INVITED TO PARA 14 OF THE LD. CIT(A)S ORDER. T HEREFORE, IT WAS ARGUED THAT THE CASES MAY BE SENT BACK TO THE LD. CIT(A), WHO SHOULD DECIDE THE SAME AFRESH IN VIEW OF THE JUDGMENTS AND CONTRADICT IONS AND NON- ADJUDICATION ON THE ISSUE OF SISTER CONCERNS. 11. THE LD. DR, ON THE OTHER HAND, RELIED ON THE OR DERS OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORDS. WE FIND THAT THE ASS ESSEE HAS ACCEPTED THE AMOUNT OF RS.20,40,000/- FROM SISTER CONCERNS AND THROUGH CURRENT ACCOUNT OF DIRECTORS OF THE COMPANY AND HAS ALSO RE PAID THE AMOUNT OF RS.30,000/- TO ONE OF THE DIRECTORS. THE LD. CIT(A) WHILE DISMISSING THE APPEAL OF THE ASSESSEE DISTINGUISHED THE CASE LAWS OF CIT VS. IDHYAM PUBLICATIONS LTD., 285 ITR 221 (MADRAS) BY HOLDING AS UNDER: THE LD. AR OF THE ASSESSEE COMPANY HAS HEAVILY RELI ED UPON THIS DECISION. IN THIS CASE THE TRANSACTIONS OF DEPOSITS AND WITHDRAWALS OF MONEY FROM CURRENT A/C HELD BY A DIRECTOR WITH THE COMPANY WERE NOT CONSIDERED AS THE TRANSACTIONS OF LOAN OR ADVANCE. AS HELD EARLIER THAT THE TRANSACTION UNDER CONSIDERATION AR E NOT IN THE NATURE OF CURRENT ACCOUNT TRANSACTIONS OR THE TRANSACTION IN RESPECT OF DEPOSITS AND WITHDRAWALS BY THE DIRECTORS OF THE AS SESSEE COMPANY BUT ARE THE TRANSACTIONS OF DEPOSITS ONLY AS THERE IS A SOLITARY WITHDRAWAL SHOWN DURING THE YEAR. MOREOVER, LOOKING TO THE QUANTUM AND FREQUENCY OF TRANSACTIONS THESE CANNOT BE REGARDED AS CURRENT A/C TRANSACTIONS. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN MY CONSIDERED OPIN ION, THE RATIO OF THE DECISION RELIED UPON IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE AS THE TRANSACTIONS HAVE BEEN PROVED TO BE DEPOSIT TRANSACTIONS. ITA NOS. 617 & 618(ASR)/2013 A.Y. 2006-07 5 13. THE ABOVE FINDINGS OF THE LD. CIT(A) CLEARLY S TATES THAT THE LD. CIT(A) DID NOT CONSIDER THE DEPOSITS AND WITHDRAWAL S BY THE DIRECTORS AS CURRENT ACCOUNT TRANSACTIONS FOR THE REASONS THAT T HERE WAS ONLY ONE WITHDRAWAL DURING THE YEAR. THE LD. CIT(A) HAS FUR THER HELD THAT THESE TRANSACTIONS CANNOT BE REGARDED AS CURRENT ACCOUNT TRANSACTIONS AND THEREFORE, HE DISTINGUISHED THE CASE LAWS RELIED UP ON BY THE ASSESSEE. HOWEVER, WE FIND THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. IDHYAM PUBLICATIONS LTD. (SUPRA) HAS CLEA RLY HELD THAT THE DEPOSIT AND THE WITHDRAWAL OF THE MONEY FROM THE CURRENT ACCOUNT COULD NOT BE CONSIDERED AS A LOAN OR ADVANCE. THE HONBLE MADRAS HIGH COURT, HAS NOWHERE MENTIONED THAT IF THERE IS LESSER WITHDRAWA L THEN THE SAME WILL BE TREATED AS LOAN OR DEPOSIT. FURTHER, WE FIND THA T IN THE CASE OF CIT VS. PREETI FUELS & FLAMES (P) LTD., 330 ITR 129, THE HO NBLE CHHATTISGARH HIGH COURT HAS HELD THAT AS PER DEFINITION OF DEPO SIT UNDER THE COMPANY (ACCEPTANCE DEPOSITS) RULES, 1975, ANY AMOUNT RECEI VED FROM A PERSON WHO AT THE TIME OF THE RECEIPT OF THE AMOUNT WAS A DIRECTOR OF THE COMPANY IS EXEMPT FROM THE DEFINITION OF DEPOSIT. 14. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANC ES, WE ARE OF THE OPINION THAT THE ISSUE NEEDS TO GO BACK TO THE LD. CIT(A), WHO SHOULD DECIDE THE ISSUE AFRESH, AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND AFTER CONSIDERI NG THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE. ITA NOS. 617 & 618(ASR)/2013 A.Y. 2006-07 6 15. IN VIEW OF THE ABOVE, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT, BOTH THE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02/06/ 2016. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 02/06/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. PMS INTERNATIONAL PVT. LTD. PHAG WARA 2. THE DCIT, PHAGWARA 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER