ACIT, Trichy V. Smt. C. Vanaja, Trichy

ITA 78/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7222 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ! # % & , ' ! ( BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER MISCELLANEOUS PETITION NO.157/ MDS/2014 & ITA NO.78/MDS/2014 (IN ITA.NO.78/MDS/2014 ) (ASSESSMENT YEAR: 2004-05) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, 44, WILLIAMS ROAD,TRICHY. VS SMT. C.VANAJA, C-54, FORTH STATION ROAD, NORTH EAST EXTENSION, THILLAI NAGAR, TRICHY-620 018. PAN:AABPV1842J ( PETITIONER ) (RESPONDENT) APPLICANT BY : MR. S.DAS GUPTA, JCIT RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE / DATE OF HEARING : 5 TH DECEMBER, 2014 / DATE OF PRONOUNCEMENT : 26 TH DECEMBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS MISCELLANEOUS PETITION IS FILED BY THE REVENUE STATING THAT THIS TRIBUNAL HAD PASSED COMMON ORDER DATED 10 TH APRIL, 2014 IN THE CASES OF SHRI C.RAMESH ITA NO.79/MDS/2014, SHRI C.ANAND ITA NOS. 80 & 81/MDS /2014 AND SMT. C.VANAJA- ITA NO.78/MDS/2014 FOR THE ASSES SMENT YEAR 2004-05 DISMISSING ALL THE APPEALS OF THE REVE NUE. THE REVENUE CONTENDS THAT FIRST PAGE OF THE TRIBUNALS ORDER SHOWS THAT DEPARTMENTAL APPEAL IN THE CASE OF SMT. C.VANAJA M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 2 NUMBERED AS ITA NO.78/MDS/2014, HOWEVER THE CASE HA S NOT BEEN DISCUSSED IN THE BODY OF THE ORDER OF THIS TR IBUNAL. THE REVENUE STATES THAT THE TRIBUNAL HAS NOT DEALT WITH AND ADJUDICATED THE CASE OF SMT. C.VANAJA AND HAS ADJU DICATED ONLY THE OTHER TWO APPEALS OF SHRI C.RAMESH AND SHR I C.ANAND. THEREFORE REVENUE STATES THAT THERE IS A M ISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL A ND REQUESTS TO RECTIFY THE MISTAKE. 2. ON GOING THROUGH THE IMPUGNED ORDER OF THE TRIBU NAL IN ALL THESE CASES OF THE ASSESSEES IN ITA NOS. 78 TO 81/MDS/2014 DATED 10 TH APRIL, 2014, WE FIND THAT THE TRIBUNAL THOUGH MENTIONED IN THE CAUSE TITLE THAT ITA NO.78/ MDS/2014 APPEAL RELATING TO SMT. C.VANAJA WAS MENTIONED, I N THE BODY OF THE ORDER THE SAID APPEAL WAS NOT DISCUSSED AND NOT DISPOSED OFF INADVERTENTLY. TO RECTIFY THIS MISTAK E, ITA NO. 78/MDS/2014 IN THE CASE OF SMT. C.VANAJA IS RECALLE D AND DISPOSED OFF BY THIS SEPARATE ORDER. M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 3 3. BRIEF FACTS ARE THAT SMT. C.VANAJA FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 27.10.2004 ADMI TTING TOTAL INCOME OF ` 3,67,565/-. ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 29.12.2006 ACCEPTING THE IN COME RETURNED. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT ASSESSEE DURING THE ASSESSMENT YEAR 20 04-05 REPAID LOANS IN CASH OF ` 6,90,000/- AND ` 2,35,000/- TO HER SONS SHRI C,.RAMESH AND SHRI C.ANAND RESPECTIVELY I N VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT AND PASSED ORDERS LEVYING PENALTY OF ` 9,25,000/- FOR THE VIOLATION UNDER SECTION 271E OF THE ACT. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED PENALTY AGAINST WHICH THE REV ENUE IS IN APPEAL BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY A ND HE SUBMITS THAT THERE IS VIOLATION OF PROVISIONS OF SE CTION 269SS / 269T OF THE ACT AND THEREFORE ASSESSING OFFICER IS JUSTIFIED IN LEVYING PENALTY. DEPARTMENTAL REPRESENTATIVE PLACI NG RELIANCE ON THE DECISIONS OF CO-ORDINATE BENCH OF T HIS TRIBUNAL M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 4 IN THE CASE OF THENAMAL CHHAJJER VS. JCIT (96 ITD 210) AND IN THE CASE OF KHIZARIA LEATHERS VS. DCIT (99 TTJ 6 16) SUBMITS THAT EVEN IF THE TRANSACTIONS ARE GENUINE, SUCH TRANSACTIONS ARE NOT OUTSIDE THE SCOPE OF SECTION 2 69SS / 269T OF THE ACT. 5. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND DECISIONS RELIED ON. THE COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE DECISION OF THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF C.SUBRAMANIAN, WHEREIN ONE OF CO-OWNERS WHO OBTAINED CASH LOANS FOR PURCHASING PR OPERTY. IN THAT CASE, TRIBUNAL HELD THAT THERE IS A REASONA BLE CAUSE IN ACCEPTING CASH LOANS AND THEREFORE PENALTY IS NOT A TTRACTED. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONSI DERED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. RATNA AGENCIES (SUPRA) AND DELETED PENALTI ES LEVIED OBSERVING AS UNDER:- 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 5 FOUND THAT DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y.2004- 05, THE APPELLANT HAD REPAID LOANS/DEPOSITS TO HER SONS. SHRI C.RAMESH ( ` 6,90,000) & SHRI C.ANAND ( ` 2,35,000) IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269T OF THE A CT. THE AO INITIATED PENALTY PROCEEDINGS U/S.271E R.W.S. 274 AND LEVIED PENALTY U/S.271E FOR TRANSACTION MADE IN VIOLATION OF SECTION 269T OF THE ACT. BEFORE THE AO THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT ASSESSEE MAINTAINED ONLY ROUGH CHITS FOR HER BUSINESS AND HAS NOT BEEN MAINT AINING REGULAR BOOKS OF ACCOUNT AND HENCE EXTRACTS COULD N OT BE PRODUCED. KEEPING IN VIEW OF THE EXPLANATION OFFERE D BY THE ASSESSEE, THE A.O. REJECTED THE ARGUMENTS OF THE AS SESSEE AND HELD THAT REPAYING LOAN IN CASH TO CLOSE RELATI VE AGGREGATING ` 20,000/- OR MORE IN A FINANCIAL YEAR ATTRACTS LEVY OF PENALTY AS SECTION 269T DOES NOT EXEMPT REP AYING LOAN IN CASH TO A CLOSE RELATIVE. THUS, THE AO LEVI ED AN AMOUNT OF ` 9,25,000/- AS PENALTY U/S.271E OF THE ACT. 3 . THE AUTHORISED REPRESENTATIVE SUBMITTED, THAT. S / SHRI C. SUBRAMANIAN. C .ANAND AND C. RAMESH ACQUIRED JOINTL Y A HOUSE PROPERTY AT CHENNAI( 11 TH S TREET. N ANDANAM EXTENSION, CHENNAI- 35). ALL THE THREE CO-OWNERS, CITED WERE ASSESSED U NDER THE SAME ASSESSING OFFICER, I.E. DCIT, CENTRAL CIRCLE-I, TIR UCHIRAPALLI. THEY AVAILED A TERM LOAN OF' ` 40.00.000 FOR ACQUISITION OF THE SAID PROPERTY FROM INDIAN OVERSEAS BANK. A PER THE TERM OF AGREEMENT. THEY HAD TO PAY A SUM OF' ` 1 ,30, 000 PER MONTH BESIDE INTEREST PERIODICALLY CHARGED B Y THE BANK. HOWEVER, THERE WERE OVER-DUE FOR MORE THAN 6 MONTHS TOWARD REPAYME NT OF PRINCIPAL AND INTEREST. HENCE THE BANK TREATED THE LOAN AS NON- PERFORMING ASSET AND RESORTED TO COERCIVE ACTION UN DER SECURITY FORFEITURE OR PROPERTY ACT AND CALLED UPON THE C O-OWNERS TO REPAY THE ENTIRE OUTSTANDING LOAN IMMEDIATELY. TH E CO-OWNER OF THE PROPERTY WERE FORCED TO ACCUMULATE ALL THE CASH RE S OURCE AVAILABLE W ITH THE FAMILY AND S ETTLE THE DUES TO THE BANK. THE APPELLANT HAD NO TIME TO RECEIVE THE MONEY BELONGING TO HIS FAMIL Y MEMBERS, SHRI S P CHOCKALINGAM (FATHER), S LAKSHMI (SISTER IN LAW) AND R SIVAGAMISUNDARI (WIFE), BY WAY OF CHEQUE AND FORWARD IT TO THE BANK CONCERNED IN CHENNAI. THE LOAN ACCOUNT WAS CLO SED ON 10.11.2003. THE AUTHORISED REPRESENTATIVE, SUBMITTE D THAT THE PAYMENT TO THE APPELLANT HAD BEEN ADMITTED IN THE R ESPECTI V E RETURN AND PLEADED THAT THERE WAS NO INTENTION TO A VOID OR EVADE ANY TAX BY RECEIPT OF THE PAYMENT BY CASH. 4. THE AUTHORIZED REPRESENTATIVE, PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS RATNA AGENCIES [284 ITR 609), WHERE IN IT IS HELD M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 6 ' TRIBUNAL HAVING AGREED WITH THE FINDING OF THE CIT( A) THAT THE ALLEGED CONTRAVENTION OF SEC. 269SS & 269T DID NOT RESULT IN ANY UNACCOUNTED TRANSACTION AND THAT THE SAID TRANS ACTIONS WERE MADE ONLY FOR MEETING THE SUDDEN DEMAND OF OVE RDRAFT ACCOUNT. THERE IS NO REASON TO INTERFERE WITH THE FINDINGS OF THE TRIBUNAL THAT THERE WAS REASONABLE CAUSE TOR TH E ASSESSEE NOT STRICTLY COMPLYING WI TH THE PROVISIONS OF SEC. 269SS AND THEREFORE LEVY OF PENALTY U/S 271 D AND 271 E COULD NOT BE IMPOSED': PLACING RELIANCE ON THE DECISION IN THE CASE OF C IT VS RATNA AGENCIES, CITED. THE HON 'BLE IT A T,'C' BENCH, CHE NNAI IN ITA NO. 24/MDS/2008 - AY 2004-05 IN THE CASE OF APPELLANT'S SON. SHRI C.SUBRAMANIAN, HAS HELD AS UNDER: WE NOTE THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS UTILIZED THE LOAN TAKEN FROM HIS WIFE OTHER THAN FOR REPAYMENT OF LOAN TAKEN AGAINST THE PROPER TY WHICH WAS MORTGAGED AS SECURITY. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE WAS NOT UNDER COMPELLING CIRCUMSTANCES AS THE BANK WAS TAKING A COERCIVE ACTION FOR FORFEITING THE SECURITY , FOR REALIZING THE OUTSTANDING LOAN. AS SUCH WE ARE OF THE VIEW TH AT THE ASSESSEE HAD EXPLAINED REASONABLE CAUSE FOR TAK ING A LOAN OF ` 2,50,000/- FROM HIS WIFE IN VIOLATION OF SEC. 269SS. SINCE THE TRANSACTION OF LOAN AS WELL AS THE UTILIZATION OF THE LOAN WERE GENUINE TRANSACTION AN D NOT DOUBTED BY THE ASSESSING OFFICER AND MOREOVER THE WIFE OF THE ASSESSEE IS ASSESSED TO INCOME TAX AND AS THE SAID TRANSACTION OF LOAN WAS DECLARED IN THE RETURN OF INCOME WHICH WAS ACCEPTED BY THE SAME ASSESSING OFFICER, THEN. IN OUR VIEW THE REASONS AN D CAUSE EXPLAINED BY THE ASSESSEE ARE REASONABLE FOR ACCEPTING THE CASH LOAN IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. 5. KEEPING IN VIEW OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RATNA AGENCIES (284 ITR 609) CITED AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITA T C BENCH CHENNAI IN ITA NO.24/MDS/2008 A.Y.2004-05 IN THE CA SE OF APPELLANTS SON, SHRI C.SUBRAMANIAN, THE CIRCUMSTAN CES AND CAUSE EXPLAINED BY THE ASSESSEE WAS REASONABLE CAUS E FOR THE ASSESSEE NOT STRICTLY COMPLYING WITH THE PROVIS IONS OF SECTION 269T AND THEREFORE, LEVY OF PENALTY UNDER S ECTION 271E COULD NOT BE IMPOSED. THEREFORE, THE ASSESSING OFFICER M.P.NO.157 /MDS/2014 & ITA NO.78/MDS/2014 7 IS DIRECTED TO CANCEL THE PENALTY LEVIED UNDER SECT ION 271E OF THE ACT. 7. ON GOING THROUGH THE ABOVE ORDER, WE AGREE WITH THE VIEW OF THE COMMISSIONER OF INCOME TAX (APPEALS) TH AT THERE IS A REASONABLE CAUSE IN OBTAINING / REPAYING CASH LOANS BY THE ASSESSEE AS WAS HELD BY THIS TRIBUNAL IN THE C ASE OF SHRI C.SUBRAMANIAN. THUS, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E PENALTY LEVIED UNDER SECTION 271E OF THE ACT. 8. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE REVENUE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 26 TH DAY OF DECEMBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ( # &' ( ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEND RA PRASAD ) * / ACCOUNTANT MEMBER &, * / JUDICIAL MEMBER & /CHENNAI, . /DATED, 26 TH DECEMBER, 2014 SOMU (,12 42 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. 5 () /CIT(A) 4. 5 /CIT 5. 2 (,,8 /DR 6. ; /GF .