Income-tax Officer, V. M/s. Sahastra Packaging Pvt. Ltd., Aurangabad

ITA 679/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0945 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 6 79 /PN/201 4 / ASSESSMENT YEAR : 20 08 - 09 THE JT. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . / APPELLANT VS. M/S. SAHASTRA PACKAGING PVT. LTD., K - 243, MIDC, WALUJ, AURANGABAD . / RESPONDENT PAN: AAHCS2685P / APPELLANT BY : S HRI B.C. MALAKAR / RESPONDENT BY : NONE / DATE OF HEARING : 14 . 1 0.2015 / DATE OF PRONOUNCEMENT: 28 .1 0.2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) , AURANGABAD , DATED 30 . 0 1 .20 1 4 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST PENALTY LEVIED UNDER SECTION 271D OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S.271D OF THE ACT. ITA NO. 6 79 /PN/20 1 4 M/S. SAHASTRA PACKAGING PVT. LTD . 2 2. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VA CATED. 3 . THE A PPELLANT CRAVES LEAVE TO ADD , AMEND OR ALTER ANY GROUNDS OF APPEAL. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE, NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT AND BECAUSE OF SMALLNESS OF THE ISSUE, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS AGAINST DELETION OF PENALTY UNDER SECTION 271D OF THE ACT. 5 . BRIEFLY, IN THE FACTS OF THE PRESEN T CASE, THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF CORRUGATED BOXES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ACCEPTED LOAN OF RS. 8,85, 022/ - FROM SHRI RAJKUMAR B. TRIPATHI, DIRECTOR OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID LOAN ACCEPTED COMPANY. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID LOAN ACCEPTED BY THE ASSESSEE COMPANY WAS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 2 69SS OF THE ACT. THE ASSESSING OFFICER CONSEQUENTLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE UNDER SECT ION 274 R.W.S. 271D OF THE ACT. THE JT.CIT, RANGE - 1, AURANGABAD, CONSEQUENT THERETO LEVIED PENALTY UNDER SECTION 271D OF THE ACT AT RS.8,85,022/ - . 6 . THE CIT(A) NOTED THAT THE DIRECTOR OF THE ASSESSEE COMPANY HAD MADE PAYMENTS DIRECTLY TO THE CREDITORS O F THE ASSESSEE IN CASH TO THE EXTENT OF RS. 8,85,022/ - . THE PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID AMOUNT WAS PAID OUT OF INCOME OFFERED TO TAX IN THE SAME YEAR BY THE DIRECTOR OF THE ASSESSEE COMPANY TO THE EXTENT OF RS. 15,85,500/ - . THE NE XT PLEA RAISED BY THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE SAID DIRECTOR OF THE ASSESSEE ITA NO. 6 79 /PN/20 1 4 M/S. SAHASTRA PACKAGING PVT. LTD . 3 COMPANY COULD NOT BE REGARDED AS ANY OTHER PERSON AS REFERRED TO IN SECTION 269SS OF THE ACT AND HENCE, THE TRANSACTION WITH THE DIRECTOR WAS OUTSIDE THE PURVIEW OF SECTION 269SS OF THE ACT. THE CIT(A) DELETED THE SAID PENALTY PURVIEW OF SECTION 269SS OF THE ACT. THE CIT(A) DELETED THE SAID PENALTY LEVIED UNDER SECTION 271D OF THE ACT IN TURN, RELYING ON THE RATIO LAID DOWN BY HYDERABAD BENCH OF TRIBUNAL IN DILLU ENTERPRISES (P) LTD. VS. ADDL.CIT (2002) 80 ITD 484 (HYD) . 7. ON PERUSAL OF THE RECORD, WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS WITH REGARD TO LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE DIRECTOR OF THE ASSESSEE COMPANY HAD MADE PAYMENT IN CASH TO THE CRED ITORS OF THE ASSESSEE COMPANY TO THE EXTENT OF RS. 8,85,022/ - , THERE WAS CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACE, HENCE, THE ASSESSEE WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. THE CLAIM OF THE ASSESSEE BEFORE THE AUTH ORITIES BELOW WAS THAT EV EN THOUGH CASH PAYMENT WAS MADE, BUT THERE WAS NO MERIT IN HOLDING TH E SAME IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE ACT, WHERE THE DIRECTOR OF THE ASSESSEE COMPANY COULD NOT BE REGARDED AS ANY OTHER PERSON . THE CI T(A) HAD ELABORATED ON THE ISSUE AND OBSERVED AS UNDER: - 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN NOTICED THAT THE DIRECTOR OF THE APPELLANT COMPANY HAS MADE PAYMENT TO THE CREDITORS OF THE COMPANY IN CASH. THE PROVISIONS OF SECTION 269SS READS AS UNDER '269SS. NO PERSON SHALL, AFTER THE 30TH DAY OF JUN E , 1984, TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFTER IN THIS SECTION R E FERR E D TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTH E R WISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF, - ( A ) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUCH LOAN AND DEPOSIT; OR ( B ) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTE D EARLIER BY SUCH PERSON FROM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HAS FALLEN DUE ITA NO. 6 79 /PN/20 1 4 M/S. SAHASTRA PACKAGING PVT. LTD . 4 OR NOT), THE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR ( C ) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR T HE AGGREGATE CLAUSE (A) TOGETHER WITH THE AMOUNT OR T HE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (B), IS [TWENTY] THOUSAND RUPEES OR MORE: PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED BY, - ( A ) GOVERNM E NT; ( B ) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK OR CO - OP E RATIV E BANK; ( C ) ANY CORPORATION ESTABLI S H ED BY A C E NTRAL, STAT E OR PROVINCIAL ACT; ( D ) ANY GOVERNMENT COMPANY AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956) ; THE COMPANIES ACT, 1956 (1 OF 1956) ; ( E ) SUCH OTHER INSTITUTIO N, ASSOCIATION OR BODY OR C LASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE: [PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTION SHAL L NOT APPLY TO ANY LOAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABLE TO T AX UNDER THIS ACT.] . ' 6.1 IN ORDER TO ATTRACT PROVISIONS OF SECTION 269SS, THE PAYMENTS, OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT, IS TO BE ACCEPTED FROM OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT, IS TO BE ACCEPTED FROM ANY OTHER PERSON. THE DIRECTOR OF THE PRIVATE LIMITED COMPANY CANNOT BE REGARDED AS ANY OTHER PERSON AS HELD IN THE CASE OF DILLU ENTERPRISES (P) LTD. VS. ADDL . CIT . (2002) 80 ITD 484. IN THIS CASE, IT HAS BEEN HELD BY HON'BLE ITAT THAT THE WORDS 'ANY OTHER PERSON' DOES NOT DENOTE THE DIRECTOR OF THE COMPANY; T HE ACTIVE DIRECTOR OF THE ASSESSEE COM PANY IS NOT COVERED BY EXPRESSION 'ANY OTHER PERSON' OCCURRING IN SECTION 269SS. THE HON'BLE ITAT HAS HELD THAT THE ABOVE PROPOSITION AND LEGISLATIVE INTENT CAN BE NOTED FROM THE BOARD'S CIRCULAR NO.387 DATED 6 TH SEPTEMBER, 1984. THE ABOVE PROPOSITION OF L AW IS ALSO SUPPORTED BY VARIOUS OTHER DECISIONS RELIED ON BY THE APPELLANT WHICH HAVE BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. 6.2 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING 6.2 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE DECISION IN THE CASE OF DILLU ENTERPRISES (P) LTD. VS. ADDL . CIT (2002) 80 ITD 484 (HYD.) AND VARIOUS OTHER DECISIONS RELIED ON BY THE APPELLANT I AM OF THE CONSIDERED VIEW THAT THE IMPUGNED TRANSACTION BETWEEN DIRECTOR AND THE APPELLANT COMPANY IS NOT COVERED BY PROVISIONS OF SEC TION 269SS OF THE ACT AND HENCE THE J T.COMMISSIONER OF INCOME TAX, RANGE - I, AURANGABAD IS NOT JUSTIFIED IN LEVYING PENALTY OF RS.8,85,022/ - U/S 2 71D OF THE ACT. THE PENALTY OF RS.8,85,022/ - LEVIED U/S 271D IS, THEREFORE , CANC E LLED. THE A . O. IS DIRECTED A CC ORDINGL Y . 6.3 AS THE FIRST CONTENTION OF THE APPELLANT IS ACCEPTED AND THE PENALTY OF RS.8,85,022/ - IS CANCELLED, THE OTHER CONTENTIONS RAISED BY THE APPELLANT ARE NOT REQUIRED TO BE ADJUDICATED. ITA NO. 6 79 /PN/20 1 4 M/S. SAHASTRA PACKAGING PVT. LTD . 5 8. WE FIND MERIT IN THE ORDER OF CIT(A) IN HOLDING THAT T HE DIRECTOR OF THE PRIVATE LIMITED COMPANY COULD NOT REGARDED AS ANY OTHER PERSON, IN TURN RELYING ON THE RATIO LAID DOWN BY HYDERABAD BENCH OF TRIBUNAL IN DILLU ENTERPRISES (P) LTD. VS. ADDL.CIT (SUPRA) . IN VIEW THEREOF, WE UPHOLD THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF OCTOBER , 2015. SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 28 TH OCTOBER , 2015 . GCVSR / COPY OF THE O RDER IS FORWARDED TO : / COPY OF THE O RDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), AURANGABAD ; 4. / THE CIT , AURANGABAD ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE