LALLU RAM SAINI, Jaipur V. JCIT, BHARATPUR

ITA 676/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4958 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 676/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI LALLU RAM SAINI PROP. M/S. RATAN LAL LALLU RAM SAINI SIKANDARA, DAUSA CUKE VS. THE JCIT BHARATPUR RANGE BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AFGPS 9079 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI P.C. PARWAL , CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/10/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21/10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 26-05-2016 FOR THE ASSESSMENT Y EAR 2008-08 RAISING THEREIN FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AD IN LAW IN CONFIRMING THE LEVY OF PENALTY OF RS. 3,28,260/- U/ S 271E OF THE I.T. ACT, 1961. 2. THE PENALTY LEVIED BY AO U/S 271E AND CONFIRMED BY THE LD. CIT(A) IS ILLEGAL AND BAD IN L AW. ITA NO. 676/JP/2016 SHRI LALLU RAM SAINI VS. JCIT , BHARATPUR RANGE, B HARATPUR . 2 2.1 APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE WHER EIN BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BU SINESS OF MANUFACTURING AND TRADING OF STONE HANDICRAFT ARTICLES. A SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 30-01-2008. THE ASSESSE E FILED THE RETURN OF INCOME ON 16-03-2009 DECLARING TOTAL INCOME OF RS. 2,76,410/-. THE ASSESSMENT WAS FRAMED BY THE AO 31-12-2010 AT AN IN COME OF RS. 10,11,220/-. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE FILED THE INACCURATE PARTICULARS OF INCOME FOR WHICH HE INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT. IT I S FURTHER NOTED THAT THE ADDL. CIT IN THE PENALTY ORDER DATED 18-11-2014 U/S 271E OF THE ACT STATED THAT A REFERENCE WAS MADE BY THE ITO, DAUSA THAT DURING THE YEAR THE ASSESSEE HAD MADE REPAYMENT OF LOAN AGGREGATING TO RS. 4,59,560/- IN CASH I.E. RS. 3,28,260/- TO M/S. MAGMA SHRACHI FINA NCE LTD. AND RS. 1,31,330/- TO M/S. SHRI RAM STONE CUTTING INDUS TRIES WHICH IS IN CONTRAVENTION TO SECTION 269T OF THE ACT AND PENAL PROVISIONS U/S 271E ARE ATTRACTED AS THE PAYMENT OF LOAN IN THIS CASE I S RS. 20,000/- OR MORE THEREFORE, THE ADDL. CIT ISSUED SHOW CAUSE NOTICE D ATED 27-06-2014 FOR WHICH THE ASSESSEE FILED THE REPLY VIDE HIS LETTER DATED 12-08-2014 AND THE SAME IS REPRODUCED AT PAGES 1 TO 4 OF THE ADDL. CI TS ORDER. NOT ITA NO. 676/JP/2016 SHRI LALLU RAM SAINI VS. JCIT , BHARATPUR RANGE, B HARATPUR . 3 SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE, THE ADDL. CIT IMPOSED PENALTY OF RS. 4,59,560/- U/S 271E OF THE ACT ON TH E SAID TWO AMOUNTS. 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAD CONFIRMED THE PENALTY OF RS. 3,28,26 0/- ON ACCOUNT OF TRANSACTION OF PAYMENT OF CASH TO M/S. MAGMA FINANC E BY OBSERVING AS UNDER:- 4.7 I HAVE CONSIDERED THE MATERIAL AVAILABLE ON RECORD AND FIND THAT TRANSACTIONS OF PAYMENT OF MON EY TO M/S. MAGMA FINANCE IN CASH EVERY MONTH CANNOT BE JU STIFIED ON ANY GROUND AS BOTH THE PARTIES ARE IN BUSINESS A ND ARE BOUND TO COMPLY WITH THE PROVISIONS OF SECTION 269T OF THE I.T. ACT. FURTHER, I FIND THAT THE TRANSACTIONS OF RECEIPT/ PAYMENT OF MONEY WITH M/S. SHRI RAM STONE CUTTING I ND. HAVE BEEN CARRIED OUT BASED ON THE BUSINESS REQUIRE MENTS AS PARTY IS RELATED TO THE APPELLANT. FURTHER, I FIND THAT THIS FACT ALSO STANDS PROVED FROM THE COMMON STOCK FOUND ON T HE DATE OF SURVEY AND ALSO WHILE FINALIZING THE ASSESSMENT THE TOTAL AMOUNT OF SURRENDER WAS DIVIDED EQUALLY BETWEEN THE PARTIES. THEREFORE, AFTER CONSIDERING THESE FACTS A ND DECISIONS CITED BY THE APPELLANT ABOVE, I HOLD THAT PAYMENT O F RS. 1,31,330/- TO M/S. SHRI RAM STONE CUTTING WOULD FAL L OUTSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 269T OF TH E I.T. ACT. HOWEVER, THE CIRCUMSTANCES IN THE CASE OF REPA YMENTS MADE TO M/S. MAGMA FINANCE BEING DIFFERENT AND WOUL D THEREFORE, ATTRACT THE PENAL PROVISIONS UNDER THE I .T. ACT. THEREFORE, I CONFIRM THE PENALTY OF RS. 3,28,260/- ON ACCOUNT OF TRANSACTIONS OF PAYMENT OF CASH TO M/S. MAGMA F INANCE BEING IN VIOLATION OF THE PROVISIONS OF SECTION 269 T OF THE I.T. ACT, OUT OF THE TOTAL PENALTY OF RS. 4,59,560/ - IMPOSED BY THE AO UNDER THIS HEAD. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT THE ASSESSEE RAISED A FINANCE OF RS. 5.00 LACS ON 7 -04-2007 AGAINST ITA NO. 676/JP/2016 SHRI LALLU RAM SAINI VS. JCIT , BHARATPUR RANGE, B HARATPUR . 4 PURCHASE OF CRANE FROM M/S. MAGMA SHRACHI FINANCE L TD. THIS AMOUNT WAS REPAYABLE IN MONTHLY INSTALMENT ALONGWITH INTER EST. THE MONTHLY INSTALMENT WAS PAID IN CASH TO THE REPRESENTATIVE O F THE FINANCE COMPANY AGAINST THE RECEIPTS ISSUED BY HIM WHO USED TO VISI T THE PREMISES OF THE ASSESSEE EVERY MONTH FOR COLLECTION OF INSTALMENT. THE LD. AR FURTHER SUBMITTED THAT THE PAYMENT COULD NOT BE MADE BY CHE QUE AS THE FINANCE COMPANY DID NOT ACCEPT THE OUTSTATION CHEQUE WHICH CONSTITUTE A REASONABLE CAUSE U/S 273B OF THE ACT AND THEREFORE, NO PENALTY SHOULD BE LEVIED ON SUCH AMOUNT. CONCLUSIVELY, THE LD. AR PRA YED FOR DELETION OF LEVY OF PENALTY CONFIRMED BY THE LD. CIT(A) U/S 271 E OF THE ACT. 2.4 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORDS T HAT THE ASSESSEE HAD MADE REPAYMENTS OF LOANS OF RS. 4,59,560/- I.E. R S. 3,28,260/- TO M/S. MAGMA SHRACHI FINANCE LTD. AND RS. 1,31,330/- TO M/ S. SHRI RAM STONE CUTTING INDUSTRIES FOR WHICH THE ADDL. CIT OBSERVED THAT IT IS A VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT AND THUS H E IMPOSED A PENALTY OF RS. 4,59,560/- IN FIRST APPEAL, THE LD. CIT(A) CON FIRMED THE PENALTY OF RS. 3,28,260/- ONLY IN THE CASE OF M/S. MAGMA SHRA CHI FINANCE LTD. ON ACCOUNT OF TRANSACTIONS OF PAYMENT BY CASH BY THE ASSESSEE. IT IS NOTED ITA NO. 676/JP/2016 SHRI LALLU RAM SAINI VS. JCIT , BHARATPUR RANGE, B HARATPUR . 5 FROM THE LEDGER ACCOUNT OF THE ASSESSEE (PAGE 1 OF THE PAPER BOOK OF THE ASSESSEE) THAT THE ASSESSEE HAD RAISED A LOAN OF R S. 5.00 LACS FROM M/S. MAGMA SHRACHI FINANCE LTD. ON 7-04-2007 AND SUBSEQ UENTLY THE ASSESSEE USED TO PAY THE INSTALMENTS EVERY MONTH IN CASH TO THE REPRESENTATIVE OF THE FINANCE COMPANY WHO ISSUED T HE RECEIPTS FOR TAKING THE CASH PAYMENT FROM THE PARTIES. THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE REVEALS THAT THE PAYMENT COULD NOT BE MADE BY CHEQUE AS THE FINANCE COMPANY DID NOT ACCEPT THE OUTSTATION CHEQU E. IT IS ALSO NOTED THAT THE ASSESSEE HAS FILED THE COPIES OF THE CASH RECEI PTS ISSUED BY THE REPRESENTATIVE OF M/S. MAGMA SHRACHI FINANCE LTD. W HICH IS FILED AT PAGES 2 TO 8 OF THE PAPER BOOK. THE ASSESSEE HAD SU BMITTED THE BIFURCATION OF THE TOTAL AMOUNT OF RS. 3,28,260/- P AID TO M/S. MAGMA SHRACHI FINANCE LTD. WHICH COMPRISES OF RS. 41,418/ - IN RESPECT OF PAYMENT OF INTEREST AND RS. 2,86,842/- IN RESPECT O F REPAYMENT OF LOAN AMOUNT. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF ITAT GAUHATI BENCH IN THE CASE OF ADDL .CIT VS. SMT. PRAHATI BARUAH 133 TAXMAN 74 (MAZ) WHEREIN IT IS HE LD THAT THE INTRODUCTION OF SECTION 269T AND SECTION 271E IN TH E STATUTE IS TO PREVENT PROLIFERATION OF BLACK / UNACCOUNTED MONEY DEPOSITE D WITH BANKS AND OTHER PERSONS BY INTRODUCING THE SYSTEM OF REPAYMEN T THROUGH ACCOUNT ITA NO. 676/JP/2016 SHRI LALLU RAM SAINI VS. JCIT , BHARATPUR RANGE, B HARATPUR . 6 PAYEE CHEQUES AND DRAFTS AND, THUS, TO ENSURE THAT THE IDENTITY OF THE PAYEE IS ESTABLISHED. WHERE THE IDENTITY OF THE LENDER TO WHOM REPAYMENT HAD BEEN MADE WAS KNOWN TO THE DEPARTMENT AND THE GENUI NENESS OF THE LOAN TRANSACTION WAS NOT IN DOUBT, IT COULD NOT BE SAID THAT THE BREACH OF LAW, IF ANY, WAS DELIBERATE AND THE DEFAULT, IF ANY, COULD BE SAID TO BE A TECHNICAL DEFAULT FOR WHICH NO PENALTY WOULD BE LEVIABLE. HEN CE, IN VIEW OF THE ABOVE DELIBERATIONS AND THE CASE LAW CITED (SUPRA), I DIRECT THE AO TO DELETE THE PENALTY OF RS.3,28,260/- IMPOSED U/S 271 E OF THE ACT. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 /10/201 6 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI LALLU RAM SAINI, DAUSA 2. IZR;FKHZ@ THE RESPONDENT- THE JCIT, BHARATPUR RANGE, BHARATP UR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 676/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR