SURESH R. SOLANKI, MUMBAI V. ADDL CIT RG 25(2), MUMBAI

ITA 6185/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6644 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Bonafide belief; Reasonable cause
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDI CIAL MEMBER . / ITA NO. 6185 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 8 09 ) MR. SURESH R. SOLANKI SHAILA COTTAGE, RAI DONGRI CARTER ROAD NO.5, BORIVALI (W) MUMBAI 400 066 .. / APPELLANT V/S ADDL. COMMISSIONER OF INCOME TAX RANGE 25(2), PRATYAKSHAKAR BHAVAN C 11, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 067 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AFZPS1882G / ASSESSEE BY : MR. A NIL THAKRAR / REVENUE BY : MR. R.K. SAHU / DATE OF HEARING 24 . 0 3 .201 4 / DATE OF ORDER / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEA L HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 3 RD AUGUST 2012 , FOR THE ASSESSMENT YEAR 2008 09, PASSED BY THE LEARNED COMMISSIONER MR. SURESH R. SOLANKI 2 (APPEALS) XXXV, MUMBAI, FOR THE ASSESSMENT YEAR 2008 09. THE SOLE DISPUTE IN THIS APPEAL IS, WHET HER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING THE PENALTY OF ` 1,15,000 UNDER SECTION 271E OF THE ACT LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF REPAYMENT OF LOAN TO MR. RAJMAL D. SOLANKI, WHO IS FATHER OF THE ASSESSEE. 2 . FACT S IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF BUYING AND SELLING OF SILVER ARTICLES FROM HIS PROPRIETARY CONCERN M/S. SILVER PALACE, AND ALSO IS ENGAGED IN THE CONSTRUCTION OF BUSINESS FROM HIS ANOTHER PROPRIETARY CONCERNED M /S. NIRMALA CONSTRUCTION. IN THIS ASSESSMENT YEAR , THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED VIDE ORDER DATED 29 TH OCTOBER 2012, WHEREIN THE RETURN OF INCOME OF THE ASSESSEE WAS ACCEPTED. LATER ON, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE FOR LEVY OF PENALTY UNDER SECTION 271E, AS THE ASSESSEE, DURING THE RELEVANT FINANCIAL YEAR, HAD RE PAID AN AMOUNT OF ` 1,15,000 IN CASH TO MR. RAJMAL D. SOLANKI, WHO IS ASSESSEES FATHER WHICH WAS ON ACCOUNT OF REPAYMENT OF LOAN TAKEN FROM HIM EARLIER. SINCE THE PAYMENT OF LOAN WAS IN CASH I.E., IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269T , THEREFORE, THE ASSESSING OFFICER INITIATED THE PROCEEDINGS UNDER SECTION 271E. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT HE HAD TAKEN A TEMPO RARY LOAN OF ` 1,15,000 FROM HIS FATHER , WHICH WAS THROUGH ACCOUNT PAYEE CHEQUE S IN THE DIFFERENT FINANCIAL YEARS I.E., ` 15,000 IN THE FINANCIA L YEAR 2004 05 AND ` 50,000 ON 16 TH OCTOBER 2006 AND ` 50,000 ON 25 TH APRIL 2007. THE SAID LOAN WAS REPAID IN CA SH IN THIS YEAR. THE REASON FOR RE PAYMENT OF LOAN IN CASH WAS THAT THE ASSESSEES FATHER REQUIRED IMMEDIATE FUND FOR HIS MEDICAL TREATMENT DUE TO HIS ILLNESS. THE ASSESSING OFFICER REJECTED THE ASSESSEES EXPLANATION ON THE GROUND THAT NO DOCUMENTARY EVID ENCE WAS FILED IN MR. SURESH R. SOLANKI 3 SUPPORT OF THIS REASONING THAT HE HAD TO REPAY THE LOAN IN CASH TO HIS FATHER FOR MEDICAL TREATMENT. HE HELD THAT THERE IS A CLEAR CUT VIOLATION OF THE PROVISIONS OF SECTION 269T AND ACCORDINGLY, HE LEVIED THE PENALTY OF ` 1,15,000 UNDER SECTION 271E. 3 . BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE REITERATED THE SAME EXPLANATION AND SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 273B, THE PENALTY SHOULD NOT BE IMPOSED AS THE ASSESSEE HAD A REASONABLE CAUSE FOR RE PAYING THE LOAN IN CASH AS THERE WAS URGENT MEDICAL REASON FOR THE TREATMENT OF HIS FATHER. THE ASSESSEES DETAIL EXPLANATION HAS BEEN INCORPORATED BY THE LEARNED COMMISSIONER (APPEALS) FROM PAGE 3 TO 7 OF THE APPELLATE ORDER. HOWEVER, THE LEARNED COMMISSIONER (APPEA LS) HELD THAT IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, REASONABLE CAUSE FOR RE PAYMENT OF LOAN TO HIS FATHER DUE TO HIS ILLNESS CANNOT BE ACCEPTED. HE ALSO REJECTED THE LETTER FROM ASSESSEES FATHER WHICH WAS SUBMITTED BEFORE HIM AND HELD THAT SUCH A LE TTER IS AN AFTER THOUGHT AND CANNOT BE ACCEPT E D. ACCORDINGLY, HE CONFIRMED THE PENALTY. 4 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GENUINENESS OF THE TRANSACTION OF RECEIVING THE LOAN AND RE PAYMENT OF LOAN HAS NOT BEEN DOUBTED. HE ALSO FILED A COPY OF BANK STATEMENT OF THE ASSESSEE TO SHOW THAT THE ASSESSEE HAD WITHDRAWN CASH OF MORE THAN ` 1.30 LAKHS FROM HIS BANK ACCOUNT TO REPAY THE LOAN TO HIS FATHER , AS HE WAS UNDERGOING MEDICAL TREATMENT AND INSISTED UPON IN PAYING THE AMOUNT OF LOAN IN CASH. HE ALSO REFERRED TO THE LETTER SUBMITTED BY THE ASSESSEES FATHER WHEREIN HE HAS CONFIRMED THAT HE INSISTED O N CASH PAYMENT FOR HIS MEDICAL TREATMENT. THUS, THE ASSESSEES RE PAYMENT OF LOAN IN CASH WAS ON ACCOUNT OF BONAFIDE AND REASONAB LE GROUND . IN ANY CASE, SUCH A TRANSACTION WITHIN THE FAMILY, MR. SURESH R. SOLANKI 4 SHOULD NOT BE ADVERSELY VIEWED AND PENALTY SHOULD BE DELETED IN VIEW OF THE PROVISIONS OF SECTION 273B. 5 . LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LEAR NED COMMISSIONER (APPEALS) AND SUBMITTED THAT THE PROVISIONS OF LAW ARE AMPLY CLEAR THAT IF THE LOAN HAS BEEN REPAID IN CASH, THEN PROVISIONS OF SECTION 269T ARE APPLICABLE AND, ACCORDINGLY , PENALTY UNDER SECTION 271E IS TO BE LEVIED IN SUCH A CASE. THE AS SESSEES EXPLANATION ABOUT REASONABLE CAUSE CANNOT BE ACCEPTED AS NO EVIDENCE HAS BEEN FILED BY TH E ASSESSEE TO SHOW THE URGENT NEED FOR RE PAYMENT OF LOAN IN CASH FOR MEDICAL TREATMENT OF HIS FATHER. THE REASONABLE CAUSE HAS TO BE PROVED BY THE ASSESSEE W HICH HAS NOT BEEN DONE AND, ACCORDINGLY, PENALTY SHOULD BE CONFIRMED. 6 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD TAKEN LOAN FROM HIS FATHER IN THE EARLIER FINANCIAL YEARS THROUGH CHEQUE S FOR SUMS AGGREGATING ` 1 , 50 ,000. THE SAID LOAN HAS BEEN RE PAID BEFORE 31 ST MARCH 2008 , ALBI E T IN CASH. THE RE PAYMENT OF A LOAN IN CASH CLEARLY VIOLATE S THE PROVISIONS OF SECTION 269T AND, ACCORDINGLY, PENAL PROVISI ONS UNDER SECTION 271E, ARE TRIGGERED. THE R I GOR S OF PENALTY UNDER SECTION 271E CAN ONLY BE WAIVED OFF , IF THE ASSESSEE PROVED THAT THERE WAS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PENALTY PROVISIONS WITHIN THE MEANING OF SECTION 273B. THE RE ASONABLE CAUSE HAS TO BE SEEN FROM THE CONTEXT OF THE SITUATION WHEREIN A PERSON HAS A REASONABLE AND BONAFIDE BELIEF OF TAKING AN ACTION BEYOND HIS CONTROL I.E., THE CAUSE WHICH PREVENTS REASONABLE PERSON IN ORDINARY PRUDENCE , ACTING UNDER NORMAL CIRCUMS TANCES FOR TAKING SUCH AN ACTION . THE REASONABLE CAUSE HAS TO BE SEEN IN A JUDICIOUS MANNER BY STEPPING INTO THE SHOES OF SUCH A MR. SURESH R. SOLANKI 5 PERSON AS TO WHAT WERE THE CIRCUMSTANCES IN WHICH HE HAD ACTED UPON. IN THE PRESENT CASE, THE ASSESSEE HAD SUBMITTED THAT THE RE PAYMENT OF LOAN IN CASH WAS UNDER THE CIRCUMSTANCES WHEN HIS FATHER WAS IN URGENT NEED OF CASH FOR THE PURPOSE OF HIS MEDICAL TREATMENT WHICH HE WAS UNDERGOING AT THAT TIME. THOUGH, NO CORROBORATIVE EVIDENCE WAS GIVEN, HOWEVER, A LETTER OF CONFIRMA TION WAS FILED BY HIS FATHER REITERATING THE SAME CAUSE. UNDER THESE FACTS, THE SAID CONFIRMATION LETTER FROM THE FATHER CANNOT BE COMPLETELY BRUSHED ASIDE, ESPECIALLY WHEN THE TRANSACTION IS BETWEEN A VERY CLOSE RELATIONSHIP I.E., FATHER AND SON. UNDER TH ESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT PENALTY OF ` 1,15,000 LEVIED UNDER SECTION 271E CANNOT BE SUSTAINED IN VIEW OF THE REASONABLE CAUSE, AS ENVISAGED IN SECTION 273B. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 7 . 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 11 TH APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL 2014 SD / - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 11 TH APRIL 2014 MR. SURESH R. SOLANKI 6 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COP Y / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI