ITO, Jaipur V. SITA RAM KHANDEWAL, Jaipur

ITA 76/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5611 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 25-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI; DCIT
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 271E; 274

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. 76/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE ITO WARD- 4(3) JAIPUR CUKE VS. SHRI SITA RAM KHANDELWAL PROP. M/S. SHYAM SURGICAL E-465, MURLIPURA SCHEEME, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AFSPK1050 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY :SMT. POONAM RAI, DCIT-. DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI VIJAY GOYAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/01/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31 /01/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD. CIT(A)-2, JAIPUR DATED 26-11-2015 FOR THE ASSESSMEN T YEAR 2008-09 RAISING THEREIN FOLLOWING GROUNDS:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 12,45,400/- U/S 271E OF THE I.T. ACT, 1961. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ITA NO. 76/JP/2016 ITO WARD- 4(3), JAIPUR VS. SHRI SITA RAM KHAND ELWAL, JAIPUR . . 2 APPRECIATING THE FACT THAT JCIT HAS CLEARLY STATED IN THE PENALTY ORDER THAT ASSESSEE HAS PAID CASH LOAN AND THUS THERE IS A VIOLATION OF PROVISION OF SECTION 269T. 2.1 APROPOS GROUND NO. 1 AND 2 OF THE REVENUE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE PEN ALTY ORDER AND THE SUBMISSIONS OF THE APPELLANT. IN THIS CASE, THE ASSESSING OFFICER RECEIVED INFORMATION THAT THE ASS ESSEE HAD RECEIVED INFORMATION THAT THE ASSESSEE HAD PAID LOA NS TO SHRI PHOOL CHAND KHANDELWAL IN CASH EXCEEDING THE LIMIT PRESCRIBED UNDER SECTION 269T OF THE I.T. ACT, 1961 . SHRI PHOOL CHAND KHANDELWAL IS THE FATHER OF THE ASSESSE E. IT WAS FOUND THAT THE ASSESSEE HAD PAID VARIOUS AMOUNTS ON DIFFERENT DATES AND HENCE THE JCIT HELD THAT THE PA YMENT WAS NOT MADE IN URGENT CIRCUMSTANCES BUT SUCH TYPE OF P AYMENTS WEE MADE ON REGULAR BASIS. HE CONSIDERED IT A VIOLA TION OF SECTION 269T AND LEVIED PENALTY UNDER SECTION 271E OF THE I.T. ACT. IN THE PENALTY PROCEEDINGS BEFORE ME, THE A.R. IN H IS WRITTEN SUBMISSION HAS CONTENDED THAT PENALTY UNDER SECTION 271E CAN BE LEVIED ONLY IF THE ASSESSEE HAS MADE RE PAYMENT OF LOANS ON DEPOSITS IN CASH EXCEEDING RS. 20,000/- . HE FURTHER SUBMITTED THAT THERE IS NO SUCH FINDING OF THE OFFICER, WHO HAS IMPOSED THE PENALTY. FURTHER, THE ASSESSMENT ORDER OF SHRI PHOOL CHAND UNDER SECTION143(3) FOR THE ASSESSMENT YEAR 2008-09 HAS BEEN FILED WHERE ASSESSMENT HAS BEEN MADE ACCEPTING THE RETURNED INCOME. SINCE, IN THIS CASE MONEY HAS BEEN ADVANCED AND NOT ACCEPTED OR REPAID, THE CONTENTION OF THE A.R. APPEARS TO BE CORRECT. THE PENALTY UNDER SECTI ON 271E IS ATTRACTED FOR VIOLATION OF PROVISIONS OF SECTION 269T WHICH SPEAKS OF MODE OF PAYMENT OF CERTAIN LOANS OR DEPO SITS. IN ITA NO. 76/JP/2016 ITO WARD- 4(3), JAIPUR VS. SHRI SITA RAM KHAND ELWAL, JAIPUR . . 3 VIEW OF THE ABOVE DISCUSSION, THE PENALTY IS DELETE D. THIS GROUND OF APPEAL IS ALLOWED. 2.2 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO AND PRAYED THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 12,45,400/- U/S 271E OF THE ACT. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE ASSESSEE CA SE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. DURING THE ASSESSMENT YEAR UNDER CON SIDERATION, THE ASSESSEE HAD PAID LOANS OF RS. 12,45,400/- ON DIFFE RENT DATES TO SHRI PHOOL CHAND KHANDELWAL BEARING PAN AGHPK 9415 M. IT IS NO TED THAT JCIT HAD OBSERVED THAT THE ASSESSEE HAD VIOLATED THE PRO VISIONS OF SECTION 269T OF I.T. ACT THEREFORE, HE IMPOSED THE PENALTY OF RS. 12,45,400/- U/S 271 R.W.S. 274 OF THE ACT. BEING AGGRIEVED, THE ASS ESSEE FILED THE APPEAL BEFORE THE LD. CIT(A) WHO CANCELLED THE PENALTY BY OBSERVING AS UNDER:- . FURTHER, THE ASSESSMENT ORDER OF SHRI PHOOL CHAND UNDER SECTION143(3) FOR THE ASSESSMENT YEAR 2008-09 HAS BEEN FILED WHERE ASSESSMENT HAS BEEN MADE ACCEPTING THE RETURNED INCOME. SINCE, IN THIS CASE MONEY HAS BEEN ADVANCED AND NOT ACCEPTED OR REPAID, THE CONTENTION OF THE A.R. APPEARS TO BE CORRECT. THE PENALTY UNDER SECTION 271E IS ATTRACTE D ITA NO. 76/JP/2016 ITO WARD- 4(3), JAIPUR VS. SHRI SITA RAM KHAND ELWAL, JAIPUR . . 4 FOR VIOLATION OF PROVISIONS OF SECTION 269T WHICH SPEAKS OF MODE OF PAYMENT OF CERTAIN LOANS OR DEPOSITS. IN VIEW OF THE ABOVE DISCUSSION, THE PEN ALTY IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. IT MAY BE NOTED THAT PENALTY U/S 271E CAN BE LEVIED ONLY IF THE ASSESSEE HAS MADE REPAYMENT OF LOANS OR DEPOSITS IN CASH EXC EEDING RS. 20,000/-. IT IS ALSO NOTABLE THAT FOR REPAYMENT OF LOAN, THE ASSESSEE FIRSTLY MUST HAVE ACCEPTED THE LOAN AND THEN HE SHOULD HAVE MADE PAYM ENT OF THESE LOANS IN CASH. IT IS NOTED FROM THE PENALTY ORDER THAT TH E ASSESSEE HAS MADE THE LOANS AND NOT REPAYMENT OF LOANS. THERE IS NO FINDI NG OF THE JCIT THAT THE ASSESSEE HAS MADE REPAYMENT OF LOANS IN CASH EXCEED ING RS. 20,000/-. IT IS ALSO NOTEABLE THAT THE LAW PROHIBITS THE ACCEPTA NCE OF DEPOSITS OR LOANS IN CASH EXCEEDING RS. 20,000/- BY SECTION 269SS AND REPAYMENT OF DEPOSITS AND LOANS IN CASH EXCEEDING RS. 20,000/- B Y SECTION 269T OF THE ACT. IT IS ALSO NOTED THAT ON SIMILAR TYPE OF ISSUE THE ITAT (SMC) JAIPUR BENCH IN THE CASE OF LALLU RAM SAINI VS. ITO (ITA N O. 676/JP/2015 FOR THE ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 21-10- 2016) HAD DELETED THE PENALTY U/S 271E OF THE ACT BY OBSERVING AS UND ER:- 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORDS THAT THE ASSESSEE HAD MADE REPAYMENTS OF LOANS OF RS. 4,59,560/- I.E. RS. 3,28,260/- TO M/S. MAGMA SHRAC HI FINANCE LTD. AND RS. 1,31,330/- TO M/S. SHRI RAM ST ONE ITA NO. 76/JP/2016 ITO WARD- 4(3), JAIPUR VS. SHRI SITA RAM KHAND ELWAL, JAIPUR . . 5 CUTTING INDUSTRIES FOR WHICH THE ADDL. CIT OBSERVED THAT IT IS A VIOLATION OF PROVISIONS OF SECTION 269T OF THE AC T AND THUS HE IMPOSED A PENALTY OF RS. 4,59,560/- IN FIRST AP PEAL, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS. 3,28,260/- ONL Y IN THE CASE OF M/S. MAGMA SHRACHI FINANCE LTD. ON ACCOUNT OF TRANSACTIONS OF PAYMENT BY CASH BY THE ASSESSEE. IT IS NOTED FROM THE LEDGER ACCOUNT OF THE ASSESSEE (PAGE 1 OF THE PAPER BOOK OF THE ASSESSEE) THAT THE ASSESSEE HAD RAISED A LOAN OF RS. 5.00 LACS FROM M/S. MAGMA SHRACHI FINANCE LTD. ON 7- 04-2007 AND SUBSEQUENTLY THE ASSESSEE USED TO PAY T HE INSTALMENTS EVERY MONTH IN CASH TO THE REPRESENTATI VE OF THE FINANCE COMPANY WHO ISSUED THE 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 OU TSTATION CHEQUE. IT IS ALSO NOTED THAT THE ASSESSEE HAS FILE D THE COPIES OF THE CASH RECEIPTS ISSUED BY THE REPRESENTATIVE O F M/S. MAGMA SHRACHI FINANCE LTD. WHICH IS FILED AT PAGES 2 TO 8 OF THE PAPER BOOK. THE ASSESSEE HAD SUBMITTED THE BIFU RCATION OF THE TOTAL AMOUNT OF RS. 3,28,260/- PAID 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 OF REPAYMENT OF LOAN AMOUNT. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF I TAT GAUHATI BENCH IN THE CASE OF ADDL.CIT VS. SMT. PRA HATI BARUAH 133 TAXMAN 74 (MAZ) WHEREIN IT IS HELD THAT THE INTRODUCTION OF SECTION 269T AND SECTION 271E IN TH E STATUTE IS TO PREVENT PROLIFERATION OF BLACK / UNACCOUNTED MONEY DEPOSITED WITH BANKS AND OTHER PERSONS BY INTRODUCI NG THE SYSTEM OF REPAYMENT THROUGH ACCOUNT PAYEE CHEQUES A ND DRAFTS AND, THUS, TO ENSURE THAT THE IDENTITY OF TH E PAYEE IS ESTABLISHED. WHERE THE IDENTITY OF THE LENDER TO WH OM REPAYMENT HAD BEEN MADE WAS KNOWN TO THE DEPARTMENT AND THE GENUINENESS OF THE LOAN TRANSACTION WAS NOT IN DOUBT, IT COULD NOT BE SAID THAT THE BREACH OF LAW, IF ANY, W AS DELIBERATE AND THE DEFAULT, IF ANY, COULD BE SAID T O BE A TECHNICAL DEFAULT FOR WHICH NO PENALTY WOULD BE LEV IABLE. HENCE, IN VIEW OF THE ABOVE DELIBERATIONS AND THE C ASE LAW CITED (SUPRA), I DIRECT THE AO TO DELETE THE PENALT Y OF ITA NO. 76/JP/2016 ITO WARD- 4(3), JAIPUR VS. SHRI SITA RAM KHAND ELWAL, JAIPUR . . 6 RS.3,28,260/- IMPOSED U/S 271E OF THE ACT. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF ITAT (SMC), JAIPUR BENCH IN THE CASE OF LALLU RAM SAINI VS. JCIT (SUPRA) AND ALSO I N VIEW OF THE OBSERVATIONS OF THE LD. CIT(A) ON THE ISSUE IN QUES TION, I FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE PENALTY OF RS. 12,45,400/- U/S 271E OF THE ACT. THUS THE APPEA L OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/20 17. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 /01/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WED 4(3), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHRI SITA RAM KHANDELWAL, JAIPUR 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. 76/JP/2016 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR