The ITO, Ward-2 (3) (5), RAJKOT-GUJARAT V. Late Ushaben G. Vasjaliya, L/H Sh. Gordhanbhai V. Vasjaliya, RAJKOT-GUJARAT

ITA 68/RJT/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6691 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P BHATIA
• Assessee Lawyers: CHETAN L AGARWAL AR
• Keywords: Reasonable cause
• Section: 273B; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDCIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.68/RJT/2016 ( / ASSESSMENT YEAR : 2010-11) THE ITO WARD-2(5) RAJKOT / VS. LATE USHABEN G.VASJALIYA L/H SHRI GORDHANBHAI VASRAMBHAI VASJALIYA SATYAM PARK-19 NR. SUN CITY SADHU VASVANI ROAD RAJKOT ./ ./ PAN/GIR NO. AAXPV 6850 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI C.P. BHATIA, SR.DR ! / RESPONDENT BY : SHRI CHETAN L. AGARWAL, AR ' #$% ! & / DATE OF HEARING 10/02/2017 '( ! & / DATE OF PRONOUNCEMENT 22/02/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, RAJKO T [CIT(A) IN SHORT] DATED 18/12/2015 PERTAINING TO ASSESSMENT Y EAR (AY) 2010-11. ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 2 - 2 . REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROU ND OF APPEAL:- THE LD.CIT(APPEALS)-2, RAJKOT HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DIRECTING TO DELETE THE PENALTY UNDER S ECTION 271D OF RS.17,50,000/- FOR ACCEPTING LOANS MORE THAN RS.20, 000/- IN CASH WHICH IS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961. 3. BRIEFLY STATED, THE ASSESSEE (DECEASED) WAS AN I NDIVIDUAL. THE RETURN OF INCOME FOR AY 2011-12 WAS FILED SHOWING T OTAL INCOME ON RS.1,85,780/-. THE ASSESSMENT WAS FRAMED UNDER SEC TION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') BY MAKING AN ADDITION OF RS.961/- ONLY. SUBSEQUENTLY, NOTICE UN DER S.274 READ WITH SECTION 271D OF THE ACT WAS ISSUED ON THE LEGAL HEI R OF THE ASSESSEE TOWARDS ALLEGED CONTRAVENTION/VIOLATION OF SECTION 269SS OF THE ACT. IT WAS NOTED BY THE ASSESSING OFFICER (AO) THAT THE AS SESSEE HAS TAKEN CASH LOANS OF RS.17,50,000/- AND ADMITTED AS SUCH DURING THE ASSESSMENT PROCEEDINGS. THE AO OBSERVED THAT THE ASSESSEE HAD TAKEN CASH LOANS IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS AND AC CORDINGLY IMPOSED PENALTY UNDER SE.271D OF THE ACT WHICH WAS LEVIED A T RS.17,50,000/-. 4. IN THE FIRST APPEAL AGAINST THE PENALTY ORDER , THE CIT(A) HOWEVER FOUND MERIT IN THE CONTENTIONS RAISED BEFORE IT ON BEHALF OF THE ASSESSEE ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 3 - AND CANCELLED THE PENALTY. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) READS AS UNDER:- 7. DECISION : I HAVE CAREFULLY CONSIDERED THE ISSUE, GONE THROUGH SUBMISSION OF AR AND DISCUSSION MADE BY JCT IN THE PENALTY ORDER. IT IS SEEN THAT JCIT HAD IMPOSED PENALTY FOR VIOLAT ION OF PROVISIONS OF SECTION 263SS, SINCE APPELLANT HAS OBTAINED CASH LOANS OF RS.17,50,000 FROM SEVEN PERSONS. THE ASSESSING OFF ICER ASSESSING OFFICER (AO) HAS CONTENDED THAT THE FACTS OF THE IN STANT CASE, A SUM OF RS.17,50,000/- HAS BEEN TAKEN BY WAY OF LOAN BY THE RESPONDENT FROM TEN DIFFERENT PERSONS. ADMITTEDLY, THIS WAS B Y WAY OF LOAN OF LOAN IN CASH EXCEEDING RUPEES TWENTY THOUSANDS AND THE SAME THEREFORE CONTRAVENES THE PROVISIONS OF SECTION 269 SS OF THE ACT. CONTENTION OF AR THAT LOANS WERE OBTAINED IN EMERGE NCY TO DEPOSIT IN BANK FOR OBTAINING VISA FOR APPELLANTS SON HAVE FORCE AND NEEDS TO BE APPRECIATED. ALSO, LOANS WERE ACCEPTED AS GENUINE IN ASSESSMENT PROCEEDINGS AFTER DUE VERIFICATION OF LE NDERS, HENCE THERE WAS REASONABLE CAUSE WITHIN THE MEANING OF PR OVISIONS OF SECTION 273B. VIOLATION OF PROVISIONS OF SECTION 2 69SS CAN BE REGARDED AS TECHNICAL AND VENIAL BREACH, IN VIEW OF FACT THAT APPELLANT BEING OLD LADY NOT WELL VERSED WITH PROVI SIONS OF LAW. CONSIDERING CONSPICUOUS FACTS OF THE CASE DECISION OF HON.GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAA KHODIYAR CONS TRUCTION 365 ITR 474 IS RELEVANT WHICH IS SQUARELY APPLICABLE TO FACTS OF THE PRESENT CASE. SECTION 269SS OF THE ACT AT THIS ST AGE REQUIRES CONSIDERATION ALONG WITH SECTIONS 271D AND 273B OF THE ACT. ANY LOAN OR DEPOSIT, IF, ACCEPTED BY ANY PERSON OTHERWI SE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT FR OM ANY PERSON EXCEEDING RUPEES TWENTY THOUSAND RUPEES OR M ORE. SECTION ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 4 - 269SS OF THE ACT PROHIBITS THE SAME AFTER THE 30 TH JUNE 1984. SECTION 271D MAKES SUCH PERSON WHO RECEIVED THE AMO UNT IN CONTRAVENTION OF PROVISION OF SECTION 263SS LIABLE FOR PENALTY, A SUM EQUAL TO THE AMOUNT OF LOAN OR DEPOSIT SO ACCEP TED. SECTION 273B OF THE ACT OF COURSE CARVES OUT THE WAY IN CER TAIN CASES AND PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFER RED TO IN THE SAID PROVISIONS WHICH INCLUDES SECTION 271D IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. WHAT IS THEREFORE NECESSARY TO PROVE IS THE REASONA BLE CAUSE BY THE ASSESSEE ON ITS HAVING FAILED TO ABIDE BY THE C ONDITIONS INCORPORATED IN THE SAID PROVISION OF SECTION 269SS . IN RESPONSE WHAT IS PLEADED BY THE RESPONDENT WAS T HAT ALL THESE PERSONS WERE AGRICULTURISTS AND THAT THE GENUINENES S OF THE TRANSACTIONS AT NO POINT OF TIME HAD BEEN DOUBTED B Y THE REVENUE. THEY STAYED IN REMOTE AREAS. BOTH THE AUTHORITIES, THEREFORE, WERE OF THE OPINION THAT REASONABLE CAUSE HAD BEEN SUFFI CIENTLY MADE OUT AND WHEN THE VERY TRANSACTIONS WERE NEVER DOUBT ED BY THE REVENUE AUTHORITIES, THE BREACH IS TO BE TREATED AS A MERE TECHNICAL OR VENIAL BREACH. IT IS NOTICED THAT THE REQUIREMENT OF SECTION 273B IS FOR THE ASSESSEE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR ITS HAVING FAILED TO ABIDE BY THE PROVISIONS OF SECTION 269SS . AS EMERGES FROM TE RECORD, NOT ONLY THE SUBSTANTIATING EVIDENC E LIKE 7/12 EXTRACT WERE PRODUCED, BUT, ALSO ADDITIONALLY, TRAN SACTIONS WERE REFLECTED IN THE ACCOUNTS OF ASSESSEE AND THE ADVAN CEMENT OF LOAN TO THE ASSESSEE HAD BEEN REFLECTED IN THE BOOKS OF ACCOUNT OF THOSE PERSONS FROM WHOM THE LOAN HAD BEEN RECEIVED. THE IDENTIFY OF THOSE PERSONS HAS ALSO BEEN WELL ESTABLISHED. THE ASSESSEE ALSO HAD GIVEN SATISFACTORY REASON FOR TAKING SUCH LOAN. HIS BONA FIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT ATTRACT PRO VISION OF SECTION ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 5 - 269SS ON THE GROUND THAT THEY WERE AGRICULTURISTS A ND LIVED IN REMOTE VILLAGE ALSO WAS ONE OF THE GROUNDS WHICH HA S WEIGHED WITH BOTH THE AUTHORITIES. THE APPELLANT PLACED RELIANCE ON THE DECISION IN CA SE OF HINDUSTAN STEEL LIMITED V. STATE OF ORISSA [SUPRA] ALSO REQUI RES A SPECIFIC REPRODUCTION AT THIS STAGE WHERE THE APEX COURT HAS HELD THAT,.. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI CRIMI NAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPO SED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST, OR ACT IN CONSCIOUS DISREGARD TO ITS OBL IGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FA ILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. E VEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FRO M A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. THUS, IT IS CONCLUSIVELY PROVED IN THE FINDINGS GIV EN BY VARIOUS HIGH COURT AND BY APEX COURT CITED SUPRA THAT NOTWI THSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF SECTION 271 D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, A S THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE PROVISIONS O F SECTION 269SS OF THE INCOME TAX ACT, IF THERE IS A REASONABLE CAUSE FOR SUCH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS A REASONA BLE CAUSE FOR FAILURE TO TAKE A LOAN OTHERWISE THAN BY ACCOUNT PA YEE CHEQUE OR ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 6 - ACCOUNT PAYEE BANK DRAFT AND IN SUCH CIRCUMSTANCES THE PENALTY SHALL NOT BE LEVIED. IN VIEW OF THE FACTS, IT IS A PPARENT THAT THERE IS A DISCRETION LEFT WITH THE AUTHORITY CONCERNED WHET HER TO LEVY THE PENALTY OR NOT IN THE GIVEN CIRCUMSTANCES IF THE AS SESSEE COMES AND PROVES A REASONABLE CAUSE FOR NOT ACCEPTING THE LOA N BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. IN THE C ASE OF CIT VS. MANOJ LALWANI (2003) 260 ITR 590 (RAJ), HONBLE RAJA STHAN HIGH COURT HELD THAT SECTION 273B PERMITS THE ASSESSING AUTHORITY NOT TO IMPOSE A PENALTY PROVIDED UNDER SECTION 271D OF A S UM EQUAL TO THE AMOUNT OF LOAN OR DEPOSIT TAKEN OR ACCEPTED IN SPITE OF THE BREACH OF THE PROVISIONS OF SECTION 269SS, IF THE A SSESSEE OR THE PERSON PROVES BEFORE THE ASSESSING AUTHORITY THAT T HERE WAS REASONABLE CAUSE FOR NOT ACCEPTING THE AMOUNT OF LO AN OR DEPOSIT BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BAN K DRAFT. THE ASSESSING OFFICER HAS NOT APPRECIATED THE REASONABL E CAUSE OF THE APPELLANT IN THE GIVEN FACTS OF THE CASE IN TOTALIT Y. IN VIEW OF ABOVE, DISCUSSION AND FOLLOWING DECISION OF JURISDICTIONAL GUJARAT HIGH COURT PENALTY OF RS.17, 50,000/- IMPOSED U/S.271D FOR VIOLATION OF PROVISIONS OF SEC TION 269SS IN HEREBY CANCELLED. 5. AGGRIEVED, THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A). 6. THE LD.DR FOR THE REVENUE MR.C.P.BHATIA RELIED U PON THE ORDER OF THE AO AND SUBMITTED THAT THE CASH LOANS TAKEN BY T HE ASSESSEE ARE PROHIBITED IN LAW TO COUNTER BOGUS TRANSACTIONS. T HE ASSESSEE OUGHT TO HAVE TAKEN THE LOAN BY THE METHOD NOTIFIED UNDER T HE LAWAND NOT OTHERWISE. HE ALSO SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE REASONABLE CAUSE FOR FAILURE TO ABIDE BY THE PROV ISIONS OF SECTION 269SS ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 7 - AND, THEREFORE, THE ACTION OF THE CIT(A) IN REVERSI NG THE ORDER OF THE AO WAS NOT JUSTIFIED. 7. THE LD.AR MR.CHETAN L.AGARWAL, ON THE OTHER HAND , AT THE OUTSET SUBMITTED THAT THE AFORESAID CASH LOANS WERE TAKEN FROM SOME OF THE NEARS AND DEARS ON ACCOUNT OF EMERGENCY AROSE AS TH E ASSESSEES SON TRIED TO GO TO USA FOR HIGHER STUDIES AND WAS ALSO OFFERE D SCHOLARSHIP WHICH WOULD HAVE LAPSED IF HE COULD NOT REACH IN PARTICUL AR YEAR AND NOT GET ADMISSION IN PARTICULAR TIME. THE ASSESSEE ACCEPTED TO LOANS DUE TO THIS EMERGENCY AND DEPOSITED THE TOTAL AMOUNT IN ITS BAN K ACCOUNT. HOWEVER, DUE TO NON-RECEIPT OF VISA TO HER SON, THE ASSESSEE RETURNED BACK TOTAL MONEY THROUGH BANKING CHANNEL ONLY. THE LD.AR SUBM ITTED THAT PURSUANT TO SUMMONS ISSUED UNDER S.131 OF THE ACT, TWO OF THE PARTIES ENDORSED THE TRANSACTION WITH ASSESSEE WHICH PROVE S THE GENUINENESS OF THE CASH DEPOSITS. THE LD.AR VEHEMENTLY CONTENDED THAT THE GENUINENESS OF THE TRANSACTIONS WAS NOT IMPEACHED IN THE ASSESS MENT PROCEEDINGS. AS A COROLLARY, THE LOANS WERE ACCEPTED AS BONAFIDE BY THE AO HIMSELF. THE LD.AR POINTED OUT THAT THE ASSESSEE WAS AN OLD LADY AND NOT WELL-VERSED WITH THE PROVISIONS OF INCOME TAX ACT, AND THEREFOR E COMMITTED MISTAKE WHICH REQUIRES TO BE CONDONED. THE LD.AR THEREFORE SUBMITTED THAT THERE EXISTED REASONABLE CAUSE FOR FAILURE TO ABI DE SECTION 269SS OF THE ACT. HE THEREFORE SUBMITTED THAT IMMUNITY FROM PEN ALTY UNDER S.271D WAS RIGHTLY GRANTED BY CIT(A). ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 8 - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND THE ORDERS OF THE AUTHORITIES BELOW. THE SHORT POINT FOR DETE RMINATION IS WHETHER IMPOSITION OF PENALTY UNDER S.271D OF THE ACT IS JU STIFIED FOR CONTRAVENTION OF SECTION 269SS OF THE ACT BY TAKING CASH LOANS. AS STATED ON BEHALF OF THE ASSESSEE, THE ASSESSEE CL AIMED TO BE PURPORTEDLY NOT FAMILIAR WITH THE PROVISIONS OF THE INCOME TAX ACT. THE CASH LOANS WERE TAKEN FROM SEVERAL PARTIES SOME OF WHOM HAVE V OUCHED FOR THE TRANSACTION IN PURSUANCE OF THE SUMMONS ISSUED TO T HEM. THE LOANS WERE ADMITTED AS BONAFIDE BY THE AO. THE CASH LOANS HAV E BEEN FINALLY RETURNED THROUGH BANKING CHANNELS. A COPY OF VISA APPLICATION FOR HER SON TO USA WAS ALSO ADVERTED IN THE COURSE OF THE H EARING. ON CONSPECTUS OF THE FACTS NARRATED ABOVE, WE FIND THA T MITIGATING CIRCUMSTANCES DO EXIST IN THE CASE OF ASSESSEE WHI CH PROVES REASONABLE CAUSE FOR COMMITTING DEFAULT UNDER S.269SS. THER EFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A) IN CANCELLING PENALTY. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 22 /02/2 017 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 22/02/2017 ..#, $.,#../ T.C. NAIR, SR. PS ITA NO. 68/RJT/ 2016 ITO VS. LATE USHABEN G.VASJALIYA ASST.YEAR 2010-11 - 9 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-2, RAJKOT 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 17.2.17 (DICTATION-PAD 11- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 17.2.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 22.2.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.2.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER