The Jammu & Kashmir Bank Ltd, Srinagar V. The Joint Commissioner of Income-tax, Srinagar

ITA 75/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0697 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.75(ASR)/2015 ASSESSMENT YEAR: 2009-10 THE JAMMU & KASHMIR BANK LTD. M.A. ROAD, SRINAGAR. PAN:AAACT 6167G VS. J CIT, RANGE-3, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. GUPTA (AD.) RESPONDENT BY: SH. UMESH TAKYAR (DR.) DATE OF HEARING: 17.05.2016 DATE OF PRONOUNCEMENT:17.06.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A),JAMMU, DATED 09.12.2014 FOR ASST. YEAR:2009- 10. 2 THE ONLY ISSUE RAISED IN THIS APPEAL IS THE ACTIO N OF LEARNED CIT(A), BY WHICH HE HAD CONFIRMED THE PENALTY IMPOSED BY ASSES SING OFFICER U/S 271E OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 269 T OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE PENA LTY ORDER ARE THAT THE ASSESSEE IS A BANKING COMPANY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED CERTAIN REPAYMENTS O F FIXED DEPOSITS IN EXCESS OF RS.20,000/- WHICH WERE MADE IN CASH, THEREFORE, HE HELD THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269T AND THEREFO RE, IMPOSED THE PENALTY U/S 271E OF THE ACT AMOUNTING TO RS.3,75,189/-. ITA NO.75 (ASR)/2015 ASST. YEAR : 2009-10 2 4. AGGRIEVED WITH THE PENALTY ORDER THE ASSESSEE FI LED APPEAL BEFORE LEARNED CIT(A) AND LEARNED CIT ALSO DID NOT CONSIDER THE AR GUMENTS OF ASSESSEE AND UPHELD THE PENALTY BY HOLDING AS UNDER: SEC.271E DEALS WITH PENALTIES IMPOSED FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SEC.269 T OF THE ACT WHEREAS SE. 273 B OF THE ACT PROVIDES THAT NO PENALTY IS IMPOSABLE FOR ANY FAILURE REFERR ED TO IN THE SAID PROVISIONS, IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR SAID FAILURE. IN CASE UNDER CONSIDERATION, REASONAB LE CAUSE GIVEN BY THE APPELLANT THAT THE DEPOSITORS HAVING NO ACCOUNT WIT H ANY BANK, CANNOT BE CONSIDERED AS A REASONABLE CAUSE FOR REPAYING THE A MOUNTS IN CASE. THERE SEEMS TO BE NO BUSINESS EXIGENCY FORCING THE BRANCH MANAGER OF ISLAMIA COLLEGE, GOSHBUG & BONIYAR BRANCHES OF THE APPELLAN T BANK TO MAKE REPAYMENTS OF RS.375189/- TO 13 NUMBER OF DEPOSITOR S IN CASH ALL EXCEEDING RS.20000/-. THE REPAYMENT OF DEPOSIT IN C ONTRAVENTION OF PROVISIONS OF SEC. 269T CANNOT BE MADE MERELY BECAU SE A DEPOSITOR DOES NOT HAVE A BANK ACCOUNT OF EXPRESSED HIS/HER INABIL ITY TO OPEN THE IT SEC. 269T OF THE INCOME TAX ACT, 1961 CLEARLY PROVIDES T HAT NO BANKING COMPANY A IN SEC. 269SS EXPLANATION (I) SHALL REPAY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN THROUGH ACCOUNT PAYEE CHEQU E OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON AS WHO H AS MADE THE LOAN OR DEPOSIT IF THE AMOUNT OF LOAN OR DEPOSIT TOGETHER W ITH INTEREST, IF ANY, PAYABLE THEREON IS TWENTY THOUSAND OR MORE. THE WOR D USED HERE 'SHALL' WHICH IS MANDATORY. SINCE THE APPELLANT BANK HAS VI OLATED PROVISIONS LAID DOWN IN SEC.269T OF THE INCOME TAX ACT AS SUCH PROV ISIONS OF SEC. 271E ARE VERY MUCH ATTRACTED FOR LEVY OF PENALTY ON VIOL ATION. I, THEREFORE, HOLD THAT PENALTY U/S 271E AMOUNTING TO RS. 375189/- HAS RIGHTLY BEEN POSED BY THE A.O. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED TH AT THE BRANCH MANAGER OF ASSESSEE COMPANY ON THE REQUEST OF DEPOSITORS HAD M ADE REPAYMENTS IN CASH AS THERE WAS NO BANK ACCOUNTS OF DEPOSITORS AND DUE TO GENUINE HARDSHIPS THE REPAYMENTS WERE MADE AND THE INTENTION WAS NOT TO V IOLATE ANY PROVISIONS OF THE ACT. HE FURTHER SUBMITTED THAT GENUINENESS OF E NTRIES IS NOT IN DISPUTE AND ENTRIES ARE GENUINE REPAYMENTS OF DEPOSITORS AND TH EREFORE HE ARGUED THAT LEARNED CIT(A) SHOULD HAVE DELETED THE PENALTY. IT WAS SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCE THE HONBLE ITAT, AM RITSAR BENCH AT JAMMU CAMP IN ITA NOS. 73 TO 75(ASR)/2014 IN THE CASE OF ASSESSEE ITSELF HAD DELETED ITA NO.75 (ASR)/2015 ASST. YEAR : 2009-10 3 SIMILAR PENALTY ON REPAYMENTS BY DIFFERENT BRANCHES OF THE BANK AND IN THIS RESPECT FILED A COPY OF THE TRIBUNAL ORDER DATED 17 .12.2015. 7. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE GENUINENESS OF REPAYMENTS OF DEPOSITORS HAS NOT BEEN DOUBTED BY THE AUTHORITIES BELOW AND T HE REPAYMENTS OF DEPOSITORS IN VIEW OF HARDSHIPS OF DEPOSITORS IS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH ANY PROVISIONS OF THE ACT. THE PURPOSE OF INTRODUCTION OF THE PENAL PROVISIONS IN THE LEGISLATURE WERE TO CURB BLACK MO NEY AND BENAMI TRANSACTIONS. THE PURPOSE OF LEGISLATURE CAN NEVER BE TO IMPOSE PENALTY IN CASE OF GENUINE TRANSACTIONS. THE PENAL PROVISIONS OF SE CTION 271D AND 271E CONFER A DISCRETION ON THE AUTHORITIES TO LEVY OR NOT TO L EVY PENALTY AND SUCH DISCRETION NEEDS TO BE EXERCISED WITH WISDOM AND IN A FAIR AND JUST MANNER. EVEN IF THE RELEVANT PROVISIONS OF LAW PRESCRIBE LEVY OF A MINI MUM PENALTY, IT DOES NOT MEAN THAT PENALTY MUST NECESSARILY BE IMPOSED IN EV ERY CASE FALLING WITHIN SECTIONS 269SS AND 269T. EVEN IF THE MINIMUM PENALT Y IS PRESCRIBED THE HIGHER AUTHORITIES WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL BREACH OR VIOLATION OF THE PROVISIONS OF THE ACT. THE HONBLE ITAT, AMRITSAR BENCH IN ITA NO.73 TO 75(ASR)/2014 UNDER S IMILAR FACTS AND CIRCUMSTANCES HAS HELD AS UNDER: 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT ASSESSEE HAD MADE REPAYMENTS OF FIXED DEPOSITS IN VIOLATION OF PROVIS IONS OF SECTION 269T AND THERE IS ALSO NO DISPUTE THAT IN ASST. YEAR 2007-08 REPAYMENTS WERE MADE TO SUCH DEPOSITORS WHO HAD NO SAVING BANKS ACCOUNT AS IT APPARENT FROM THE FINDINGS OF LEARNED CIT(A) HIMSELF. IN ASST YEA R 2005-06, THE REPAYMENTS WERE MADE TO SEVEN PERSONS IN EXCESS OF RS.20,000/- ON THE BASIS OF SPECIFIC REQUEST LETTERS FROM DEPOSITORS W HO REQUIRED THE CASH FOR MARRIAGE OF CHILDREN/ REPAIRS OF HOUSE OR FOR NON M AINTENANCE OF SAVINGS BANK ACCOUNT. THE LEARNED CIT(A) HAS CONFIRMED THE PENALTY HOLDING THAT ITA NO.75 (ASR)/2015 ASST. YEAR : 2009-10 4 THERE WAS NO REASONABLE CAUSE. IN ASST. YEAR 2008-0 9, THE CIT(A) HAS CONFIRMED THE PENALTY HOLDING THAT REQUEST LETTERS BY DEPOSITORS WERE UNVERIFIED AND UNCERTIFIED AND THEREFORE CANNOT BE TREATED AS PIECE OF EVIDENCE. HE FURTHER HELD THAT REPAYMENTS IN CASH F OR MEDICAL EXPENSES/MARRIAGE EXPENSES WERE NOT A REASONABLE CA USE. IT IS AN UNDISPUTED FACT THAT THE REPAYMENTS REPRESENTED GEN UINE TRANSACTIONS AND NO CLAIM OF BOGUS TRANSACTIONS HAS BEEN MADE BY REVENUE AUTHORITIES. THE PURPOSE OF INTRODUCTION OF THESE S ECTIONS IN THE LEGISLATURE WERE TO CURB BLACK MONEY AND BENAMI TRANSACTIONS. THE PURPOSE OF LEGISLATURE WAS NEVER TO IMPOSE PENALTY IN CASE OF GENUINE TRANSACTIONS. THE PENAL PROVISIONS OF SECTION 271E CONFER DISCRET ION ON AUTHORITIES TO LEVY OR NOT TO LEVY PENALTY AND SUCH DISCRETION NEE DS TO BE EXERCISED WITH WISDOM AND IN A FARE AND JUST MANNER. EVEN IF THE R ELEVANT PROVISIONS OF LAW PRESCRIBE THE LEVY OF PENALTY, IT DOES NOT MEAN THAT PENALTY MUST NECESSARILY BE IMPOSED IN EVERY CASE FALLING WITHIN THE PROVISIONS OF SECTION 269T. EVEN IF PENALTIES ARE PRESCRIBED THE HIGHER AUTHORITIES WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL BREACH OF PROVISIONS OF THE ACT. THE HONBLE ITAT, AMRITSAR B ENCH IN THE CASE OF THE FARIDKOT BATHINDHA KSHETRIYA GRAMIN BANK VS. JCIT ( 2003) 81TTJ(ASR)705, UNDER SIMILAR FACTS AND CIRCUMSTANC ES HAS HELD AS UNDER. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSE SSEE FILED THE AFFIDAVITS AND PRODUCED EVIDENCE REGARDING IDENTITY OF THE DEPOSITORS. IT IS NOTICED THAT THE DEPARTMENT HAS N OT IMPEACHED THE TRANSACTION AS NON-GENUINE. AT THE SAME TIME, IT IS ALSO NOT HE CASE OF DEPARTMENT THAT THE DEPOSITORS WERE BENAMI. IN T HAT VIEW OF THE MATTER, IT CAN BE SAFELY HELD THAT THE BONA FIDE BE LIEF COUPLED WITH THE GENUINENESS OF THE TRANSACTIONS CONSTITUTE A RE ASONABLE CAUSE, AS PROVIDED UNDER S. 273B. THE REPAYMENTS WERE GENU INE TRANSACTIONS AND THERE WAS NO MENS REA ON THE PART OF THE ASSESSEE AT THE TIME WHEN THE REPAYMENTS WERE MADE. SIMILARLY THE PUNJAB & HARYANA HIGH COURT IN THE CA SE OF CIT VS. SAINI MEDICAL STORE 277 ITR 420 (P&H) HAS HELD AS UNDER: A COMBINED READING OF THE PROVISIONS OF SS. 271E A ND 273B MAKES IT CLEAR THAT IF THE ASSESSEE SHOWS 'REASONABLE CAU SE' FOR THE FAILURE TO COMPLY WITH ANY PROVISION REFERRED THERETO, THE PENALTY FOR ITS VIOLATION SHALL NOT BE IMPOSABLE ON THE ASSESSEE. I N THE PRESENT CASE, THE CIT(A) WHILE DELETING THE PENALTY HAD ACC EPTED THE EXPLANATION OF THE ASSESSEE THAT BREACH OF THE PROV ISIONS OF THE ACT WAS ON ACCOUNT OF BONA FIDE BELIEF OF THE ASSESSEE AND THE SAME WAS NOT WITH ANY INTENTION TO AVOID OR EVADE THE TA X. THE FINDINGS OF THE CIT(A) HAVE BEEN CONFIRMED IN APPEAL BY THE TRI BUNAL. THEREFORE, THE FINDINGS RECORDED BY THE CIT(A) AND THE TRIBUNAL THAT THE ASSESSEE HAD SHOWN REASONABLE CAUSE FOR THE FAI LURE TO COMPLY WITH THE PROVISIONS OF S. 269T IS A FINDING OF FACT BASED ON APPRECIATION OF MATERIAL ON RECORD. IT DOES NOT GIV E RISE TO ANY ITA NO.75 (ASR)/2015 ASST. YEAR : 2009-10 5 QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW. ACCORDINGLY, THE APPEAL IS DISMISSED. IN THE PRESENT CASES, THE DEPARTMENT HAS NOT DOUBTE D THE GENUINENESS OF THE TRANSACTIONS AND HAS IMPOSED & UPHELD THE PENAL TIES HOLDING THAT THE REASONS FOR REPAYMENT AS SUBMITTED BY ASSESSEE DID NOT CONSTITUTE REASONABLE CAUSE. WE FURTHER FIND THAT IN DIFFERENT YEARS THE VIOLATION HAS BEEN MADE BY DIFFERENT BRANCHES OF THE BANK & THE V IOLATION HAS NOT BEEN REPEATED. IN ASST. YEAR 2008-09, THE VIOLATION WAS BY BULBUL NOWGAM, L.D. HOSPITAL & ISLAMIA COLLEGE BRANCHES & IN ASST. YEAR 2007-08, THE VIOLATION WAS BY LAL MANDI BRANCH WHEREAS IN ASST. YEAR 2005-06, THE VIOLATION WAS BY LAL BAZAR BRANCH. WE FURTHER FIND THAT LEARNED CIT(A) HIMSELF IN ASST. YEAR 2006-07 HAS DELETED THE PENAL TY IMPOSED BY ASSESSING OFFICER UNDER SIMILAR FACTS CIRCUMSTANCES . WE FURTHER FIND THAT NO MENS REA IS INVOLVED AS THE VIOLATION IS NOT INT ENTIONAL. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VI EW OF THE LEGISLATURE INTENTION OF INTRODUCING THESE PENAL PROVISIONS & A LSO IN VIEW OF THE PRECEDENTS RELIED UPON BY LEARNED AR, WE HOLD THAT PENALTIES ARE NOT IMPOSABLE IN THESE CASES. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE JUDICIA L PRECEDENTS WE DELETE THE PENALTY IMPOSED BY ASSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A). 9. IN VIEW F THE ABOVE, THE APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 TH JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 17.06.2016. /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER