Shri Rameshbhai Joitaram Chaudhary, Ahmedabad V. The Jt. CIT, Range-7, Ahmedabad

ITA 642/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6261 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reasonable cause; Commercial expediency

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.642/AHD/2014 / ASSESSMENT YEAR: 2009-10 SHRI RAMESHBHAI JOITARAM CHAUDHARY, (PROP. OF M/S. APANA HARDWARE SUPPLIERS), 9, FIRST FLOOR, MANSI COMPLEX, VASTRAPUR, AHMEDABAD PAN : ADEPC 7260 R VS. JOINT COMMISSIONER OF INCOME-TAX RANGE-7, AHMEDABAD [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MR. KRUTESH PATEL WITH MS. KHUSHBOO MER, ARS REVENUE BY : MR. SANJEEV KUMAR DEV, SR DR / DATE OF HEARING : 23/03/2017 / DATE OF PRONOUNCEMENT: 10/04/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 20 09-10 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, AHMEDABAD DATED 26.12.2013 VIDE APPEAL NO.CIT(A)-XX I/293/12-13, ARISING OUT OF ORDER U/S 271D OF THE INCOME-TAX ACT, 1961 ( HEREIN AFTER REFERRED TO AS THE ACT) DATED 18.06.2012 FRAMED BY THE JCIT, RAN GE-7, AHMEDABAD. 2. ASSESSEES SOLE GRIEVANCE IS AGAINST THE CIT(A) S ORDER CONFIRMING PENALTY IMPOSED U/S 271D OF THE ACT FOR TAKING CASH LOANS AGGREGATING TO RS.4,40,000/- IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSMENT U/S 143 (3) OF THE ACT FOR AY 2009- 10 WAS COMPLETED ON 25.11.2011 WITH ASSESSED INCOME OF RS.35,75,500/-. ITA NO. 642/AHD/2014 RAMESHBHAI J. CHAUDHARY VS. JCIT AY : 2009-10 - 2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AS SESSING OFFICER NOTICED THAT ASSESSEE HAS BROUGHT IN FRESH CAPITAL OF RS.26,58,0 07/- AND, ON FURTHER VERIFICATION, IT WAS REVEALED THAT ASSESSEE HAS ACC EPTED CASH LOANS AGGREGATING TO RS.4,40,000/- ON FOUR OCCASIONS AND EACH LOAN E XCEEDED RS.20,000/-. LD. ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD COMMITTED DEFAULT U/S 269SS R.W.S. 271D OF THE ACT, WHICH IS LIABLE FOR P ENALTY. DURING THE COURSE OF PENALTY PROCEEDINGS, ASSESSEE TOOK THE BASE OF COMM ERCIAL EXPEDIENCY AND ALSO SUBMITTED THAT IN ORDER TO CLEAR POST DATED CHEQUES , IT WAS NECESSARY TO DEPOSIT THE CASH IN BANK AND, DUE TO THIS URGENCY, CASH LOA NS WERE TAKEN. HOWEVER, LD. ASSESSING OFFICER WAS NOT CONVINCED WITH THE REASON S GIVEN BY THE ASSESSEE AND ACCORDINGLY IMPOSED PENALTY U/S 271D OF THE ACT. 4. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE TH E LD. CIT(A) AND PLACED VARIOUS DECISIONS ALONG WITH REASONS FOR TAKING THE LOANS, I.E., IN THE INTEREST OF BUSINESS; BUT COULD NOT SUCCEED AS THE LD. CIT(A) C ONFIRMED THE PENALTY BY OBSERVING AS FOLLOWS:- 3.2 I HAVE CONSIDERED THE ASSESSMENT ORDER, PENALT Y ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. IT IS UNDISPUTED FACT THAT T HE APPELLANT HAS ACCEPTED THE LOAN OF RS.4,40,000/- IN CASH AND THEREFORE VIOLATE D PROVISIONS OF SECTION 269SS OF THE ACT. THE APPELLANT HAS ARGUED THAT THERE WAS A COMPULSION FOR CLEARING POST-DATED CHEQUES ISSUED TO THE SUPPLIER M/S. ASTR AL AND FOR THAT, THE APPELLANT HAD TO BORROW IN CASH FROM THE RELATIVES AND THEREFORE THERE WAS A REASONABLE CAUSE FOR VIOLATION OF PROVISIONS OF SEC TION 269SS. IN MY OPINION, THE APPELLANT HAS NOT GIVEN THE REASONS AS TO WHY THE L OAN WAS TAKEN IN CASH AND NOT BY CHEQUE. URGENCY OF CLEARANCE OF POST-DATED CHEQU ES DOES NOT REQUIRE THAT LOAN SHOULD BE TAKEN IN CASH. RELIANCE IS PLACED ON THE JUDGEMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF P. BHASKAR VS. CIT - 340 ITR 560 (MAD.). IN VIEW OF THE ABOVE, THE PENALTY LEVIED BY THE ASSESSING OFFI CER IS CONFIRMED. 5. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS AS WERE MADE BEFORE THE LD. CIT(A) AND ALSO REFERRED TO PAGE NO. 5 - 10 OF THE PAPER-BOOK SHOWING THE BANK STATEMENTS AND DEPOSIT OF CASH IN THE SAME BANK ACCOUNT AND ITA NO. 642/AHD/2014 RAMESHBHAI J. CHAUDHARY VS. JCIT AY : 2009-10 - 3 IMMEDIATELY TRANSFERRING THE AMOUNT TO THE BUSINESS ACCOUNT IN THE NAME OF APANA H/W SUPPLIERS. HE ALSO REFERRED TO SOME DOCU MENTS PLACED AT PAGE NO.11 TO 37 SHOWING FORM NO.7/12 WITH REGARD TO AGR ICULTURAL LAND OWNERSHIP IN THE NAME OF PERSONS FROM WHOM THE LOANS HAVE BEE N TAKEN. RELIANCE WAS PLACED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF MAHADEV PULSUS PRIVATE LIMITED VS. JCIT IN ITA NO.73/AHD/2009, ORD ER DATED 20.03.2009. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE SOLE GRIEVANCE OF THE ASSESSEE IS A GAINST THE CIT(A)S ORDER CONFIRMING PENALTY U/S 271D OF THE ACT FOR VIOLATIN G PROVISIONS OF SECTION 269SS OF THE ACT FOR TAKING CASH LOANS TOTALING TO RS.4,40,000/-. WE FIND THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ASSESSEE HAS TAKEN CASH LOANS AGGREGATING TO RS.4,40,000/- FROM FOLLOWING FOUR PE RSONS:- SR. NO. NAME OF THE DEPOSITOR DATE OF RECEIPT OF CASH LOAN AMOUNT OF CASH RECEIVED (RS.) 1. MOHANBHAI JESANGHBHAI CHOUDHRY 02.04.2008 1,50,0 00 2. KANJIBHAI NATHABHAI CHAUDHRY 02.04.2008 1,90,000 3. SANJAY J. CHAUDHRY 02.06.2008 50,000 4. FROM MOTHER 02.06.2008 50,000 9. THE ABOVE FOUR LOANS RECEIVED IN CASH WERE DEPOS ITED IN SAVINGS BANK ACCOUNT OF THE ASSESSEE AND TRANSFER OF THE SAME HA S BEEN MADE TO THE BUSINESS ACCOUNT OF THE ASSESSEE. LD. COUNSEL HAS CONTENDED THAT FOR COMMERCIAL EXPEDIENCY, IT WAS NECESSARY TO DEPOSIT CASH AND KE EP THE BALANCE READY IN THE CURRENT ACCOUNT SO AS TO CLEAR THE POST DATED CHEQU ES ISSUED TO M/S. ASTRAL POLYTECH LIMITED. IT WAS ALSO CONTENDED THAT ASSES SEE BEING THE DEALER OF M/S. ASTRAL POLYTECH LIMITED AND IN ORDER TO GET FRESH G OODS, IT IS NECESSARY TO ISSUE PDC CHEQUES TO THE SUPPLIER AND IF THE CHEQUE IS RE TURNED UNPAID BY THE BANK, ASSESSEE MAY FACE SEVERE LOSS OF GOODWILL AND LOSS OF BUSINESS. ITA NO. 642/AHD/2014 RAMESHBHAI J. CHAUDHARY VS. JCIT AY : 2009-10 - 4 10. LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON TH E DECISION OF CO-ORDINATE BENCH IN THE CASE OF M/S. MAHADEV PULSES PRIVATE LI MITED (SUPRA), BUT IN OUR VIEW, THE FACTS ARE DIFFERENT IN THAT CASE AS THE L OAN AMOUNT WAS RECEIVED FROM ONE OF THE DIRECTOR-CUM-SHAREHOLDERS AND IT WAS TRE ATED AS CURRENT ACCOUNT TRANSACTION WHICH IS NOT SO IN THE CASE OF THE ASSE SSEE WHEREIN THE LOANS HAVE BEEN TAKEN FROM OUTSIDE PARITIES HAVING NO BUSINESS CONNECTION WITH THE ASSESSEE. 11. FURTHER, ON GOING THROUGH THE BANK STATEMENTS R EFERRED AND RELIED ON BY THE ASSESSEE, WE FIND ASSESSEES CONTENTION OF DEPO SITING CASH OF RS.3,40,000/- ON 02.04.2008 SO AS TO CLEAR THE PDC CHEQUE OF RS.6 ,00,000/- IN THE NAME OF M/S. ASTRAL POLYTECH LIMITED TO BE INCORRECT, BECAUSE R EMAINING BANK BALANCE OF APANA H/W SUPPLIERS, AFTER CLEARANCE OF CHEQUE NO.3 79307 OF RS.6,00,000/- OF ASTRAL POLYTECH, WAS RS.5,19,694.28. IT MEANS THAT EVEN IF THE SUM OF RS.3,40,000/- HAD NOT BEEN TRANSFERRED TO THE BUSIN ESS ACCOUNT, EVEN THEN THE PDC CHEQUE WOULD HAVE EASILY CLEARED. 12. SIMILARLY, IN RELATION TO THE NEXT TWO LOANS TO TALING TO RS.1,00,000/- WHICH WERE TAKEN ON 02.06.2008, IT WAS CONTENDED THAT IT WAS NECESSARY TO CLEAR THE CHEQUE OF RS.4,72,384.83 ISSUED TO ASTRAL. WE FIND THAT, EVEN ON 02.06.2008, BEFORE CLEARING THE AMOUNT OF RS.4,72,384.83, THE A VAILABLE BALANCE IN THE BANK STOOD AT RS.6,26,138/- AND, EVEN IF THE ALLEGED AM OUNT OF RS.1,00,000/- TRANSFERRED TO THE BANK ACCOUNT IS EXCLUDED, THERE STILL REMAINS A BALANCE OF RS.5,26,138/- WHICH IS SUFFICIENT TO CLEAR THE PDC CHEQUE OF RS. 4,72,384.83. BOTH THESE FACTS CLEARLY SHOW THAT ASSESSEE HAD NO COMMERCIAL EXPEDIENCY TO BRING IN CASH LOANS OF RS.4,40,000/-. EVEN OTHERWI SE, THE PROVISIONS OF SECTION 269SS OF THE ACT ARE VERY CLEAR AND HARDLY LEAVE AN Y ROOM OF GETTING A BYPASS AS IT HEAVILY COMES UPON THE TRANSACTIONS IN A NATURE OF LOAN OR DEPOSITS EXCEEDING ITA NO. 642/AHD/2014 RAMESHBHAI J. CHAUDHARY VS. JCIT AY : 2009-10 - 5 RS.20,000/- OR MORE TAKEN OTHERWISE THAN BY AN ACCO UNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. 13. WE ARE, THEREFORE, OF THE VIEW THAT, IN THE GIV EN FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE IS NOT DISPUTING AB OUT THE CASH LOAN OF RS.4,40,000/- TAKEN FROM RELATIVES BUT HAS ONLY TRI ED TO TAKE SHELTER UNDER COMMERCIAL EXPEDIENCY, WHICH ALSO DO NOT STAND FOR ON THE BASIS OF OUR DISCUSSION AND FINDING OF FACTS, WE FIND THE OBSERV ATIONS OF THE LOWER AUTHORITIES TO BE CORRECT. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL 2017 AT AHMEDABAD. SD/- SD/- ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 10/04/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ & / CONCERNED CIT 4. & ) ( / THE CIT(A)- 5. $ , $ , /DR,ITAT, AHMEDABAD, 6. 0 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) $ ITAT, AHMEDABAD