Vijay Kumar Anthati, Hyderabad, Hyderabad V. DCIT, Circle-4(1), Hyderabad, Hyderabad

ITA 798/HYD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3025 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 10-12-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S ARVINDAKSHAN
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Reasonable cause
• Section: 273B; 143(3); 143(1); 271D; 113

Judgement Text

IN THE INCOME TAX A PPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 798/HYD/2017 ASSESSMENT YEAR: 2008 - 09 A. VIJAY KUMAR, HYDERABAD. PAN AEYPA90620 VS. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 4(1), HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: SHRI T. CHAITANYA KUMAR REVENUE BY: SHRI R.S. ARVINDAKSHAN DATE OF HEARING: 10/12/2019 DATE OF PRONOUNCEMENT: 05 /03/2020 O R D E R PER SHRI A. MOHAN ALANKAMONY, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 1, HYDERABAD IN APPEAL NO. 0536/CIT(A) - 1, HYDERABAD DATED 05/01/2017 FOR AY 2008 - 09. 2. THE ASSESSE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD INVOKED THE PROVISIONS OF SECTION 271D OF THE ACT IN LIEU OF THE CASH LOAN OBTAINED FROM HIS BROTHER - IN - LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNER IN M/S BHAVANI WINES, HYDERABAD, FILED HIS RETURN OF INCOME FOR THE AY 2008 - 09 ON 30/03/2009 ADMITTING THE TOTAL INCOME AT RS. 1,66,850/ - , WHICH WAS PROCESSED U/S 143(1) OF THE IT ACT ON 29/06/2009 AND A DEMAND OF RS. 910/ - WAS RAISED. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND AN ASSESSMENT U/S 143(3) OF THE ACT WAS MADE ON 29/12/2010 DETERMINING THE TOTAL INCOME AND TAX PAYABLE AT RS. 2,04,594/ - AND RS. 12 ,015/ - RESPECTIVELY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD ACCEPTED CASH LOAN FROM SRI P. SHASHIKANTH, S/O SRI P. SURYANARAYANA DURING THE FY RELEVANT TO THE AY 2008 - 09 AS DETAILED HEREINBELOW: - SL. NO. DATE AMOUNT OF LOAN (RS.) 1 04/05/2007 75,000/ - 2 08/05/2007 65,000/ - 3 31/05/2007 70,000/ - 4 05/07/2007 65,000/ - 5 27/07/2007 1,50,000/ - 6 25/09/2007 65,000/ - 7 09/01/2009 1,00,000/ - 8 25/02/2009 10,000/ - TOTAL 6,00,000/ - 5. SINCE THE CASH LOAN OBTAINED BY THE ASSESSEE WAS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT THE AO VIDE HER LETTER DATED 29/12/2010 REFERRED THE CASE TO THE JCIT, RANGE 4, HYDERABAD FOR INITIATING PENALTY PROCEEDINGS U/S 271D OF THE I T ACT. THE JCIT VIDE LETTER DATED 03/01/2012 ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE CALLING FOR HIS EXPLANATION AND POSTED THE CASE FOR HEARING ON 13/01/2012. HOWEVER, NONE APPEARED AND NO EXPLANATION WAS FILED ON THE SAID DATED. FURTHER OPPORTUNITIES WERE PROVIDED, BUT, THERE WAS NO COMPLIANCE FROM THE ASSESSEE. HOWEVER, ON 04/05/2012, ONE SHRI K. JAGADISH, APPEARED ON BEHALF OF THE ASSESSEE AND FILED AN EXPLANATION VIDE LETTER DATED 04/05/2012 DULY SIGNED BY THE ASSESSEE, WHEREIN, IT WAS STATED AS UND ER: 'WITH REFERENCE TO THE ABOVE, I WOULD LIKE TO STATE I HAVE NOT RECEIVED ANY NOTICE EARLIER TO THIS NOTICE AND DURING THE CONCERN YEAR I HAVE TAKE LOAN FROM SRI P SHASHIKANTH AS AND WHEN REQUIRED. HE HIMSELF DEPOSITED CASH IN MY ACCOUNT PERSONALLY AS A ND WHEN REQUIRED. HIS CONFIRMATION LETTER AND HIS INCOME TAX STATEMENTS I HAVE ALREADY FILED AT THE TIME OF HEARING. HENCE I REQUEST THE JOINT COMMISSIONER OF INCOME TAX TO ACCEPT THE SAME AND REMOVE THE PENALTY U/S 271D. ' 6. THE LD.AO OBSERVED THAT AS SEEN FROM THE ASSESSEE'S EXPLANATION, THE ASSESSEE HAD AFFIRMED THE ACCEPTANCE OF CASH LOAN BY WAY OF CASH DEPOSITS IN HIS BANK ACCOUNT BY SRI P SHASHIKANTH. THE LD.AO FURTHER OPINED THAT THE ASSESSEE DID NOT BRING OUT A CASE WHERE THERE IS A REASONABLE CA USE FOR ACCEPTING THE LOAN AMOUNT IN CASH. THE LD.AO THEREFORE, LEVIED PENALTY OF RS. 6,00,000/ - U/S 271D FOR CONTRAVENTION OF SECTION269SS OF THE ACT WHICH IS EQUAL TO THE AMOUNT OF LOAN TAKEN BY THE ASSESSEE. 7. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 8. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT HE HAS OBTAINED CASH FROM HIS BROTHER - IN - LAW SRI P. SHASHIKANTH FOR THE PURCHASE OF AN IMMOVABLE PROPERTY AT KAVADIGUDA FOR A CONSIDERATION OF RS. 20,00,000/ - . HE SUBMITTED THAT THE AMOUNT OF RS. 6,00,000/ - RECEIVED IN PIECEMEAL CANNOT BE CHARACTERIZED AS LOAN OR DEPOSIT FOR BUSINESS PURPOSE. 9. REJECTING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) CONFIRMED THE PENALTY LEVI ED BY THE AO U/S 271D BY OBSERVING THAT THE ASSESSEE HAS NO VALID REASONS FOR ACCEPTING THE MONEY IN CASH AND THAT TOO IN SEVERAL CONSECUTIVE TRANSACTIONS. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 10. AT THE OUTSET , THE LD. AR SUBMITTED BEFORE US, THE ASSESSEE HAD BORROWED CASH LOAN FROM HIS OWN BROTHER IN LAW DUE TO UNAVOIDABLE CIRCUMSTANCES. THE CASH LOAN WAS RECEIVED IN ORDER TO PAY ADVANCE FOR PURCHASE OF IMMOVABLE PROPERTY AND IN THE EVENT THE ASSESSEE DOES NOT COMPLY WITH THE BALANCE PAYMENT WITHIN THE STIPULATED TIME, THE PURCHASE AGREEMENT WOULD BE TREATED AS CANCELLED AND THE TRANSACTION REVERSED. THE LD. AR FURTHER SUBMITTED THAT IN THIS SITUATION, THE ASSESSEE WAS CONSTRAINED TO OBTAIN CASH FROM HIS BROTHE R - IN - LAW IN ORDER TO ACQUIRE THE IMMOVABLE PROPERTY OTHERWISE THE TRANSACTION WOULD NOT HAVE GONE THROUGH. THE LD. AR FURTHER DREW OUR ATTENTION TO THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF (I) ITO VS. TRILOKCHAND (2003) REPORTED I N 81 TTJ 1021; (II) CIT VS. JAYASAKTHI BENEFIT FUND LTD (2008) 303 ITR 29 (MAD.); (III) CIT VS. BALAJI TRADERS (2008) 303 ITR 312 (MAD) AND (IV) SHREENATH BUILDERS VS. DCIT (2000) 66 TTJ 113 (AHD. TRIB) TO SUPPORT HIS CASE. THE LD. DR ON THE OTHER HAND RE LIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES AND VEHEMENTLY ARGUED IN SUPPORT OF THE SAME. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MTERIALS ON RECORD. IT IS NOT IN DISPUTE THT THE ASSESSEE HAS OBTAINED THE CASH FROM HIS OWN BROTHER - IN - LAW. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE OBTAINED THE CASH LOAN FOR THE PURPOSE OF ACQUIRING IMMOVABLE PROPERTY WHEREIN HE WAS CONSTRAINED TO RESCIEND THE AGREEMENT IN THE EVENT THE BALANCE PURCHASE CONSIDERATION IS NOT PAID WITHIN THE STIPULATED TIME AND IN SUCH EVENT THE TRANSACTION HAS TO BE REVERSED. FURTHER, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE TRANSACTION IS NOT GENUINE AND BONA FIDE. IN THIS SITUATION, THE DECISIONS RELIED BY THE LD. AR SUPPORTS THE CASE OF THE ASSESSEE . IN THE CASE OF ITO VS. TRILOKCHAND (CITED SUPRA) IT HAS BEEN CATEGORICALLY HELD THAT WHEN THE ASSESSEE RECIEVES CASH LOAN FROM HIS WIFE FOR ACQUIRING IMMOVABLE PROPERTY IT WILL NOT RESULT IN COMMERCIAL TRANSACTION AND THERE IS NO BREACH OF PROVISIONS OF SECTION 269SS OF THE ACT AND ACCORDINGLY PENAL PROVISIONS UNDER SECTION 271D OF THE ACT CANNOT BE INVOKED. FURTHER, IN THE CASE CIT VS. BHAGWATI PRASAD BAJORIA'S (HUF) [2003] 183 CTR 484 (GAU.), THE HONBLE GAUHATI HIGH COURT HAD HELD AS UNDER: '..... THE TRANSACTION OF LOAN HAS FOUND PLACE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THE LENDER OF THE LOAN. NONE OF THE AUTHORITIES HAVE REACHED THE CONCLUSION THAT THE TRANSACTION OF THE LOAN WAS NOT GENUINE AND IT WAS A SHAM TRANSACTION TO COVER UP TH E UNACCOUNTED MONEY. IT APPEARS TO US THAT THE ASSESSEE FELT NEED OF MONEY AND THUS HE APPROACHED THE MONEY - LENDER FOR ADVANCEMENT OF THE MONEY, THE TRANSACTION IS REFLECTED IN THE PROMISSORY NOTES EXECUTED BY THE ASSESSEE IN FAVOUR OF THE LENDER. WHEN THE RE IS AN IMMEDIATE NEED OF MONEY THE PERSON CANNOT GET SUCH MONEY FROM THE NATIONALISED BANK TO SATISFY THE IMMEDIATE REQUIREMENT. .....' 15. IN THE INSTANT CASE, WE FIND THAT THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD ESTABLISHED A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISION OF SECTION 269SS OF THE ACT. THE TRIBUNAL FURTHER FOUND THAT THE LOAN GIVEN BY THE SAMAJWADI PARTY WAS A GENUINE LOAN, WHICH WAS REFLECTED IN TH E BOOKS OF ACCOUNTS ON ACCOUNT OF THE SAMAJWADI PARTY AS WELL AS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT THE CASH GIVEN BY THE PARTY WAS DEPOSITED IN THE BANK OF THE ASSESSEE AND, THEREAFTER, USED FOR THE PURPOSE OF CONVERTING THE NAZUL LAND INTO FREE HOLD. THE TRIBUNAL FOUND THAT THE GENUINENESS OF THE TRANSACTION WAS ALSO NOT DISPUTED BY THE ASSESSING OFFICER. 16. IN THE LIGHT OF THE AFORESAID, WE FIND THAT EVEN THOUGH THE ASSESSEE HAD TAKEN A LOAN IN CASH, NONETHELESS, THE LOAN TRANSACTION WAS A GENUINE TRANSACTION AND WAS ROUTED THROUGH THE BANK ACCOUNT OF THE ASSESSEE WHICH CLEARLY SHOWS THE BONA FIDES OF THE ASSESSEE. THE CASH GIVEN BY THE LENDER WAS NOT UNACCOUNTED MONEY BUT WAS DULY REFLECTED IN THEIR BOOKS OF ACCOUNT. THE ASSESSING OFFICER ALSO ACCEPTED THE EXPLANATION AND FOUND THE TRANSACTION TO BE GENUINE. THE CONTENTION OF THE LEARNED COUNSEL FOR THE APPELLANT THAT SINCE THERE WAS NO URGENCY, THE ASSESSEE COULD HAVE TAKEN THE LOAN THROUGH CHEQUE AND SHOULD HAVE PROCESSED THE MATTER THROU GH REGULAR BANKING CHANNELS IS IMMATERIAL, INASMUCH AS THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. FURTHER, WE FIND THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND THE MONEY WAS THEREAFTER, ROUTED THROUGH THE BANKING CHANNEL FOR PAYMENT TO THE GOVERNMENT FOR CONVERTING THE LAND INTO FREE HOLD PROPERTY. 17. IN THE LIGHT OF THE AFORESAID, WE ARE OF THE VIEW THAT REASONABLE CAUSE HAD BEEN SHOWN BY THE ASSESSEE AND THE PROVISIONS OF SECTION 273B OF THE ACT WAS APPLICABLE. THE APPELLATE AUTHORITIES WERE JUSTIFIED IN HOLDING THAT NO PENALTY COULD BE IMPOSED SINCE A REASONABLE CAUSE WAS SHOWN BY THE ASSESSEE'. 12. CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE AND THE DECISIONS RELIED BY THE LD. AR WHICH SUPPORTS THE CASE OF THE ASSESSEE, WE ARE SATISFIED THAT THERE EXISTED REASONABLE CAUSE FOR THE ASSESSEE FOR ACCEPTING CASH LOANS FROM HIS OWN BROTHER - IN - LAW AND SINCE THERE IS NOTHING TO SUGGEST THAT THE TRANSACTION IS A COMMERCIAL TRANSACTION AND IS NOT GENUINE, WE HEREBY DIRECT THE LD. AO TO DELETE THE PENALTY LEVIED FOR RS. 6 LAKHS INVOKING THE PROVISIONS OF SECTION 271D OF THE ACT. 13.. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCE D IN THE OPEN COURT ON 05TH MARCH, 2020 SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER HYDERABAD, DATED 05TH MARCH, 2020. KV COPY FORWARDED TO: 1. SHRI A. VIJAY KUMAR, C/O T. CHAITANYA KUMAR, ADVOCATE, FLAT NO. 102, GOURI APARTMENT, URDULANE, HIMAYATNAGAR, HYDERABAD. 2. DCIT, CIRCLE 4(1), HYDERABAD. 3. CIT(A) - 1, HYDERABAD. 4. 5. PR. CIT 1, HYDERABAD. THE DR, ITAT, HYDERABAD 6. GUARD FIL E