SUNDER AUTOMOBILES P. LTD, MUMBAI V. ADDL CIT RG 2(3), MUMBAI

ITA 6296/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49357 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 15-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 07-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Condonation of delay; Set aside
• Section: 271D; 271E

Judgement Text

1 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JM & SHRI R K PANDA, AM ITA NO. 6296 & 6297/MUM/2009 (ASST YEAR 2001-02) M/S SUNDER AUTOMOBILES PVT. LTD., 52, 3 RD MARINE STREET, ROOM NO. 1 & 2, DHOBI TALAO, MUMBAI 400 002 PAN AAACM 3480B VS ADDL. CIT RANGE 2(3), AAYAKAR BHAWAN, M.K. MARG, MUMBAI -20. (APPELLANT) (RESPONDENT) APPELLANT B Y SHRI B.V. JHAVERI RESPONDENT BY SHRI V.V. SASTRI PER R K PANDA, AM THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 15.7.2006 OF THE CIT(A)- XXX, MUMBAI RELATING TO ASSESSMENT YEAR 2001-02. 2. THE ASSESSEE IN THE IMPUGNED APPEALS HAS CHALLEN GED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY OF ` 2,20,016/- EACH LEVIED BY THE A.O. U/S 271-D AND 271-E OF THE I.T. ACT, 1961. 3. THERE IS A DELAY OF 433 DAYS IN FILING OF BOTH T HESE APPEALS BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE REFERRI NG TO THE SEPARATE PETITIONS FOR CONDONATION OF DELAY AND AFFIDAVITS THEREOF FIL ED BY THE DIRECTOR OF THE COMPANY SUBMITTED THAT AFTER RECEIVING THE ORDER OF THE LD. CIT(A) ON 4 TH AUG. 2008 THE DIRECTOR OF THE COMPANY HANDED OVER T HE SAME TO THE ACCOUNTANT OF THE COMPANY MR. SHAILESH GAWAND TO BE FORWARDED TO THE TAX CONSULTANT OF THE COMPANY FOR FILING THE APPEAL BEF ORE THE TRIBUNAL. 2 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. HOWEVER, MR. SHAILESH GAWAND, WHO WAS NOT KEEPING G OOD HEALTH FELL ILL AND SUBSEQUENTLY DIED IN THE MONTH OF JANUARY, 2009. D UE TO THE CHAOS IN THE OFFICE OF THE GROUP COMPANIES, THE DIRECTOR OF THE COMPANY COULD NOT KEEP TRACK OF THE ORDER OF THE LD. CIT(A). ONLY DURING THE MONTH OF AUGUST, 2009, WHEN THE ACCOUNTS OF THE COMPANY WERE SUBJECT TO AU DIT IT CAME TO THE LIGHT THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL AGAINS T PENALTY LEVIED BY THE A.O. IN THE CASE OF THE ASSESSEE COMPANY. THEREAFTE R, THE RECORDS WERE VERIFIED AND IT WAS ASCERTAINED THAT THE ORIGINAL O RDERS ARE AVAILABLE IN THE FILE. IT WAS ONLY THEN REALIZED THAT MR. SHAILESH G AWAND HAS NOT FORWARDED THE SAME TO THE TAX CONSULTANT FOR NECESSARY ACTION . SUBSEQUENTLY, THESE ORDERS WERE FORWARDED TO THE TAX CONSULTANT OF THE COMPANY AND THE APPEALS WERE FILED BELATEDLY. THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THERE IS NEITHER MALAFIDE INTENTION NOR ANY DELIBER ATE DELAY AS A DILATORY TACTIC IN FILING OF THE APPEALS AND, THEREFORE, A L IBERAL APPROACH SHOULD BE ADOPTED AND THE DELAY SHOULD BE CONDONED.FOR THIS P ROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS:- 1. N. BALKRISHNAN V. M. KRISHNAMURTHY, (1998) 7 SC C 123 2. COLLECTOR, LAND ACQUISITION V. MST. KATIJI & OR S. 3. ANGELA J. KAZI V. ITO (2006) 10 SOT 138 (MUM) 4. SRIMANT F.P. GAEKWAD (DECD.) V. ACIT (2010) 3 ITR ( TRIB) 476 ITAT 5. SURESH SHET V. ACIT (2010) 6 ITR (TRIB) 30 ITAT REFERRING TO THE ABOVE DECISIONS, HE SUBMITTED THA T IF A SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EAC H OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED. SINC E THERE IS SUFFICIENT REASON FOR NON-FILING OF THE APPEALS, THEREFORE, THE COURT SHOULD TAKE LIBERAL APPROACH IN CONDONING THE DELAY AND HEAR THE APPEAL ON MERIT. 4. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE CON DONATION OF DELAY IN FILING OF THE APPEALS. 3 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. 5. AFTER HEARING BOTH THE SIDES AND AFTER CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY IN FILING OF B OTH THE APPEALS BY THE ASSESSEE IS CONDONED. 6. NOW, COMING TO THE FACTS OF THE CASE, WE FIND TH E A.O. NOTED FROM ANNEXURE IV TO THE TAX AUDIT REPORT IN FORM 3CD THA T THE ASSESSEE HAS SHOWN TO HAVE RECEIVED AN AMOUNT OF DEPOSIT OF ` 2,20,016/- FROM SHRI PREITESH S. DUGAD IN CASH IN CONTRAVENTION OF PROVI SIONS OF SECTION 269SS. FURTHER, THE SAME AMOUNT HAS BEEN REPAID TO THE SAM E PARTY IN CONTRAVENTION OF SECTION 269T OF THE ACT. THE A.O., THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 271D AND 271E OF THE ACT. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE A.O. THAT SHRI PREITESH P. DUGA D WANTED TO PURCHASE A VEHICLE IN THE AUCTION TO BE ORGANIZED BY TATA MOTO RS FOR WHICH HE HAD PAID THE MONEY. THE TRANSACTIONS FOR PURCHASE OF VEHICLE DID NOT MATERIALIZE SINCE TELCO VEHICLES, WHICH WERE EXPECTED TO BE SOLD BY T ELCO CO. LTD. IN AUCTION, WERE NOT AVAILABLE AT THE RATES EXPECTED BY THE PAR TY. THEREFORE, THE AMOUNT RECEIVED FROM SHRI PREITESH P. DUGAD WAS REFUNDED T O HIM. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION GIVEN B Y THE ASSESSEE AND LEVIED PENALTY OF ` 2,20,016/- EACH U/S 271D & 271E OF THE ACT FOR VIO LATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE I.T. AC T, 1961. 6.1 IN APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. WHILE DOING SO, HE HELD THAT THE AMOUNT RECEIVED BY THE ASSESSE E AS ADVANCE IN CASH IF NOT CONSIDERED AS LOAN BUT CERTAINLY PARTAKES THE C HARACTER OF A DEPOSIT. THEREFORE, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T. HE ACCORDINGLY UPHELD THE ACTION OF THE A.O. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO TH E DETAILS OF CASH PAID ON 6.11.2000 DREW THE ATTENTION OF THE BENCH TO THE EN TRIES AND SUBMITTED THAT THERE WAS SUFFICIENT CASH AVAILABLE IN THE HANDS OF THE COMPANY ON 6.11.2000. THEREFORE, THIS IS NOT AN ACCOMMODATION ENTRY. HE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION SHRI PREIT ESH P. DUGAD GAVE AN 4 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. ADVANCE FOR PURCHASE OF TATA SUMO IN AUCTION AT A D ISCOUNTED PRICE WHICH WAS BEING OFFERED BY M/S TELCO FROM TIME TO TIME ON SPECIAL RATES DUE TO RECESSION IN THE MARKET. AS THE VEHICLE, WHICH WAS DEMANDED BY SHRI PREITESH P. DUGAD IN AUCTION, WAS NOT AVAILABLE, TH E ADVANCE RECEIVED IN CASH FROM HIM WAS REFUNDED IMMEDIATELY TO HIM ON TH E NEXT DAY. HE SUBMITTED THAT IT HAS NEITHER RECEIVED A LOAN NOR A DEPOSIT IN CASH NOT IT HAS REPAID THE LOAN OR DEPOSIT IN CASH AS ENVISAGED U/S 269SS AND 269T OF THE ACT. THE ASSESSEE COMPANY HAS RECEIVED ADVANCE FOR BOOKING OF A VEHICLE FROM THE PARTY WHO WANTED TO PURCHASE A VEHICLE. T HE TRANSACTION OF RECEIPT OF ADVANCE AND REFUND OF THE SAME IS A GENUINE BUSI NESS TRANSACTION RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE CO MPANY. REFERRING TO THE PROVISIONS OF SECTION 269SS, HE SUBMITTED THAT THE SAID SECTION DEFINES LOAN OR DEPOSIT AS ANY LOAN OR DEPOSIT OR MONEY WHICH I S REPAYABLE AFTER A PERIOD AND IN THE CASE OF A PERSON OTHER THAN A COMPANY LO AN OR DEPOSIT OF ANY NATURE. REFERRING TO THE CONFIRMATION GIVEN BY SHRI PREITESH S. DUGAD, HE SUBMITTED THAT THE ASSESSEE COMPANY HAD NOT RECEIVE D ANY LOAN OR DEPOSIT FROM THE SAID PARTY. REFERRING TO A NUMBER OF DECI SIONS, HE SUBMITTED THAT THIS BEING A TRANSACTION IN THE NORMAL COURSES OF B USINESS OF THE ASSESSEE AND THIS BEING NEITHER A LOAN NOR A DEPOSIT, THEREF ORE, THE PROVISIONS OF SECTION 269SS AND 269T ARE NOT APPLICABLE. IN HIS ALTERNATIVE CONTENTION, HE SUBMITTED THAT IN VIEW OF PROVISIONS OF SECTION 273 B SINCE THERE IS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR AC CEPTING THE AMOUNT AS AN ADVANCE FOR PURCHASE OF A VEHICLE IN AUCTION AND SI NCE THE ASSESSEE WAS NOT AWARE OF THE CONSEQUENCES OF VIOLATION OF PROVISION S OF SECTION 269SS AND 269T, WHICH THE ASSESSEE STRONGLY BELIEVE IT HAS NO T VIOLATED ANY OF THE PROVISIONS, NO PENALTY U/S 271D AND 271E SHOULD BE LEVIED. 8. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE O RDER OF THE LD. CIT(A). 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED 5 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT ON 6.11.2000, THE ASSESSEE HAS RECEIVED AN AMOUNT OF ` 2,20,016/- FROM ONE SHRI PREITESH S. DUGAD WHICH WAS REPAID TO HIM ON 7.11.2000. WE FIND THE A.O. CONSIDERED THE SAME AS LOAN/DEPOSIT AND SINCE THE SAME WAS RECEIVE D IN CASH AND REPAID IN CASH, HE LEVIED PENALTY U/S 271D AND 271E OF THE AC T FOR VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE ACT RES PECTIVELY. WE FIND THE ASSESSEE ALL ALONG WAS STATING BEFORE THE A.O. AND THE LD. CIT(A) THAT THE SAME IS NEITHER A LOAN NOR AN ADVANCE AND IT WAS RE CEIVED FROM SHRI PREITESH S. DUGAD AS AN ADVANCE FOR THE PURCHASE OF VEHICLES IN AUCTION BEING OFFERED BY TELCO FROM TIME TO TIME. WE FIND THE LOWER AUTH ORITIES HAVE IGNORED THE CLAIM OF THE ASSESSEE AND TREATED THE AMOUNT RECEIV ED FROM SHRI PREITESH S. DUGAD IN CASH AS LOAN/ADVANCE IN NATURE WHICH HAS B EEN REPAID SUBSEQUENTLY IN CASH. NO DOUBT, AS OBSERVED BY THE LD. CIT(A) SECTION 269SS OF THE INCOME TAX ACT, 1961 WAS INSERTED WITH A VIE W TO PREVENT TRANSACTIONS IN BLACK MONEY AND TO ENSURE THAT PAYM ENTS OF ` 20,000/- AND ABOVE ARE TRACEABLE TO TRANSACTIONS THROUGH A BANK. HOWEVER, IT HAS TO BE KEPT IN MIND THAT IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN VEHICLES OF TATA MOTORS AND RECEIVED THE AMOUNT FROM ONE CUSTOMER FOR PURCHASE OF THE VEHICLE WHO H AS CONFIRMED THE SAME. THE COPY OF THE CONFIRMATION IS PLACED AT PAPER BOO K PAGE 5. THE PARTY HAS GIVEN THE PAN ALSO AND THE SAME WERE AVAILABLE BEFO RE THE A.O. AND THE LD. CIT(A). WE FIND NO ONE HAS CONSIDERED THE SAME. TH ERE IS NO WHISPER IN THE BODY OF THE ASSESSMENT ORDER AS TO WHETHER SIMILAR ACTION HAS BEEN INITIATED IN THE HANDS OF SHRI PREITESH S. DUGAD WHO IS ALSO AN INCOME-TAX PAYEE AND WHOSE PAN WAS BEFORE THE A.O. FROM THE VARIOUS DET AILS FURNISHED DURING THE COURSE OF PENALTY PROCEEDINGS AND APPELLATE PRO CEEDINGS AS WELL AS BEFORE US, WE ARE SATISFIED THAT THE AMOUNT OF ` 2,20,016/- CANNOT BE HELD AS LOAN OR DEPOSIT. IN OUR OPINION, IT IS AN ADVANC E FOR THE PURPOSE OF PURCHASE OF A VEHICLE IN AUCTION WHICH WAS REFUNDED IN THE VERY NEXT DAY. EVEN OTHERWISE ALSO IF THE SAME IS ACCEPTED AS LOAN WHICH HAS SUBSEQUENTLY BEEN REPAID, THE ASSESSEE, IN OUR OPINION, HAS GIVE N EXPLANATION FOR SUCH ACCEPTANCE AND REPAYMENT SO AS NOT TO ATTRACT THE R IGORS OF PROVISIONS OF 6 ITA NO.6296 & 6297/MUM/2009 METRO MERCANTILE PVT. LTD. SUNDER AUTOMOBILES P. LTD. SECTION 271D AND 271E IN VIEW OF PROVISIONS OF SECT ION 273B. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT NO PENALT Y U/S 271D AND 271E SHOULD HAVE BEEN LEVIED UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AN D DIRECT THE A.O.TO CANCEL THE PENALTY SO LEVIED U/S 271E & 271D OF THE ACT. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE AR E ACCORDINGLY ALLOWED. 10. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED ON 24.6.2011 SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 24.6.2011 RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT(A) 8 MUMBAI 4 CIT - 4, MUMBAI 5 DR BENCH H 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI