PARAS BUILDHOME P LTD, Jaipur V. ACIT, Jaipur

ITA 803/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1999 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DHK
• Assessee Lawyers: SURESH CHAND KHINCHA
• Keywords: Gift; Search and seizure; Question of law; Initiation of penalty proceedings; Reasonable cause
• Section: 273B; 143(3); 68; 15

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 HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 803/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 M/S PARAS BUILDHOME P. LTD., E 52A, LAL BAHADUR NAGAR, JLN MARG, JAIPUR-302017. CUKE VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAECP 1391 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SURESH CHAND KHINCHA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM RAI, (DCIT). LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/06/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/07/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 21/06/2016 FOR THE A .Y. 2013-14, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED / HAVE ERRED IN LAW AND FACTS IN IMPOSING / CONFIRMING THE PENALTY FOR UNDER SECTION 271D OF INCOME TAX ACT 1961 FOR RS 576000.00. 2. THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED / HAVE ERRED IN LAW AND FACTS IN IMPOSING / CONFIRMING THE PENALTY FOR UNDER SECTION 271D OF INCOME TAX ACT 1961 FOR RS 576000.00 WITHOU T CONSIDERING ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 2 THE CONTENTION OF THE ASSESSEE THAT THE LOANS WERE RECEIVED FROM DIRECTORS AND THEIR CLOSE RELATIVES IN CASH IN URGE NT AND EXTREME SITUATION AND WITHOUT PROVING MENS REA WHICH IS ESS ENTIAL IN ALL CASE WHERE THE PENALTY IS IMPOSABLE. 3. THAT THE AUTHORITIES BELOW HAVE ERRED IN CONFIR MING THE PENALTY UNDER SECTION 271D OF I T ACT 1961 BY NOT CONSIDERI NG THE SETTLED LEGAL PRONOUNCEMENT WHICH WAS BEFORE THEM EVEN WITH OUT DISCUSSING THE SAME IN HER ORDER THAT HOW THE FACTS OF THE CASE IS DIFFERENT FROM THE FACT OF THE CASE OF THE ASSESSEE . 2. IN THIS APPEAL, THE ONLY ISSUE INVOLVED IS AGAIN ST SUSTAINING THE PENALTY LEVIED U/S 271D OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) OF RS. 5,76,000/-. THE ADDL. CIT, RANGE-6, JAIPUR HAD L EVIED THE PENALTY OF RS. 5,76,000/- LACS BY VIOLATING THE PROVISIONS OF SECTION 269SS OF THE ACT. 3. IN FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE PEN ALTY OF RS. 5,76,000/- BY HOLDING AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE PENA LTY ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE FIRST SUBMISSION MADE BY THE AUTHORIZED REPRESENTATIVE ON THE ISSUE IS THAT THE LOANS WERE TAKEN IN CASH IN EXTREME AND URGENT SITUATION. IT WAS SATED THAT THE ACCOUNTS WERE USED TO FUND SHORTAGE OF PART PAYMENT TO HONOU R THE CHEQUES ISSUED TO RAJASTHAN FINANCIAL CORPORATION INSTALLME NTS SO THAT FINANCIAL OFFENCES AGAINST THE COMPANY MAY NOT BE LODGED BY T HEM. HOWEVER, AS DISCUSSED IN PAGES 2 & 3 OF THE PENALT Y ORDER OF THE ADDL. CIT, RANGE-6, JAIPUR, THE FACTS ARE OTHERWISE. PART Y WISE DETAILS HAVE BEEN REPRODUCED TO SHOW THAT LOANS TAKEN WERE NOT U TILIZED ONLY FOR THE PURPOSE OF MAKING PAYMENTS TO FINANCIAL INSTITUTION EXCEPT ON ONE OCCASION WHEN A PART PAYMENT OF RS.70,000/- TAKEN F ROM SHRI AMIT GOYAL ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 3 IS USED FOR ISSUE OF CHEQUE TO RFC, THE OTHERS ARE USED FOR ISSUING CHEQUES TO INDIVIDUALS AND ARE REGULAR BUSINESS TRANSACTION S. THEREFORE, THIS SUBMISSION OF THE AR IS NOT BORNE OUT BY FACTS. THE NEXT SUBMISSION MADE IS THAT PERSONS FROM WHOM LOANS WERE ACCEPTED WERE EITHER DIRECTORS OF THE COMPANY OR CL OSE RELATIVES AND FILING THEIR RETURNS REGULARLY. FURTHER, TDS WAS AL SO DEDUCTED ON INTEREST PAID AND SO NO MALAFIDE INTENTION TO VIOLATE THE IN COME TAX PROVISIONS WAS THERE AND HENCE, PENALTY IS NOT IMPOSABLE. IT H AS BEEN HELD IN THE CASE OF CIT VS. SAMORA HOTELS PVT. LTD. 19 TAXMAN.C OM 285, DELHI (HC) IT HAS BEEN HELD THAT THE EXPRESSION ANY OTHER PERSON IN SECTION 269SS DOES NOT EXCLUDE DIRECTORS OR MEMBERS OF COMPANY WH ICH HAS RECEIVED OR ACCEPTED LOANS. SECTION 271D IN THE STATUTE IS FOR A SPECIFIC PURP OSE AND OBLIGATES CERTAIN SPECIFIC MODES IN WHICH LOANS CAN BE TAKEN WHEN EXC EEDING A CERTAIN AMOUNT. THE ASSESSEE AS PER RECORDS, IS SEEN INDULG ING IN VIOLATION OF PROVISIONS IN THE CASE OF 5 PERSONS AND ON DIFFEREN T OCCASION. IT HAS BEEN HELD THAT IN 27 TAXMANN.COM 307 (HYD.). RIGOUR OF PENALTY EXONERATED EXISTENCE OF REASON ABLE CAUSE THE ASSESSEE MAY BE EXONERATED FROM THE RIGOUR OF PENALTY UNDER THE PROVISION OF SECTION 27 ID PROVIDED IT IS ESTABLISH ED THAT THERE EXISTED A REASONABLE CAUSE FOR NOT COMPLYING WITH THE PRESCRI PTION OF SECTION 269SS. IT IS CLEARLY LAID DOWN IN SECTION 271D THAT NO PE RSON SHALL AFTER 30-06- 1984 TAKEN OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAT BY ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE DD, IF THE AMOUNT OR LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUCH LOAN OR DEPOSIT IS RS. 20,000 OR MORE. THIS PROVISIONS OF THE ACT WAS BROUGHT ON THE STATUTE BOOK TO COUNTER TAX EVASION. THEREFORE, IT IS NOT SUFFICIEN T TO SAY THAT SIMPLY THE TRANSACTION WAS GENUINE, SO PROVISIONS OF SECTION 2 69SS OF THE ACT, ARE NOT APPLICABLE. ONCE CANNOT ACCEPT SUCH PROPOSITION OF LAW. THEREFORE, SUBJECT TO THE EXISTENCE OF MITIGATING CIRCUMSTANCES PENALTY CANNOT BE DELETED. THE ASSESSEE MUST PROVE BEYOND T HE SHADOW OF THE DOUBT THAT THERE EXISTED A REASONABLE CAUSE FOR NOT COMPLYING WITH THE CONDITIONS CONTAINED IN SECTION 269SS. CIRCUMSTANCE S UNDER WHICH CASH WAS ACCEPTED MUST BE EXPLAINED. CONCLUSION ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 4 THE MAJESTY OF LAW IS TO BE MAINTAINED. THE COMMIS SIONER (APPEALS) IS NOT JUSTIFIED IN ACCEPTING THE ORAL EXPLANATION OFFERED BY THE ASSESSEE WITHOUT ANY COGENT MATERIAL BROUGHT ON RECORD TO DELETE THE PENALTY. IN THE PRESENT CASE, THE ASSESSEE COULD NOT PROVE T HAT A REASONABLE CAUSE EXISTED FOR THE ABOVE VIOLATION. PAYMENTS OF INSTAL LMENTS OF THE FINANCIAL INSTITUTION WAS IN THE KNOWLEDGE OF THE ASSESSEE, W ELL IN TIME AND IT WAS NOT A LIABILITY WHICH SUDDENLY CROPPED OUT. FURTHER , THE REASONABLENESS CAN BE ACCEPTED FOR ONE OCCASION BUT THE ASSESSEE H AS TAKEN CASH LOANS IN DIFFERENT MONTHS VIOLATING THE PROVISIONS OF THE SECTION. AS ALREADY DISCUSSED ABOVE, IT IS NOT THAT EVERY LOAN HAS BEEN TAKEN FOR THE LIABILITY OF THE FINANCIAL INSTITUTION, AS DISCUSSED LARGELY THE CASH LOANS HAVE BEEN TAKEN FROM ROUTINE PAYMENTS. AS ALREADY QUOTED ABOVE, IT HAS BEEN CONSISTENTLY HELD THAT IT IS NOT SUFFICIENT TO SAY THAT THE TRANSACTION WAS GENUINE AND HENCE THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT, 1961 A RE NOT APPLICABLE. FURTHER, RELIANCE IS PLACED ON THE CASE OF CHARAN D ASS ASHOK KUMAR 52 TAXMAN.COM 424 (PUNJAB & HARYANA). IN VIEW OF THE D ISCUSSION AS ABOVE AND THE CASE LAWS RELIED ON THE PENALTY LEVIED UNDE R SECTION 271D, IS CONFIRMED. GROUND OF APPEAL IS DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE ME. WHILE PL EADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED AS UNDER:- 1. THE ASSESSEE M/S PARAS BUILDHOME PVT. LTD. HAS TAKEN LOANS IN CASH FROM THE UNDER MENTIONED PERSON IN EXTREME AND URGENT SI TUATION WHICH WAS GENUINE FOR A BUSINESS ENTITY IN THAT CIRCUMSTANCES . OUR REQUEST FOR NON IMPOSITION OF PENALTY FOR VIOL ATION OF SECTION 269SS OF INCOME TAX ACT 1961 WAS THAT IT WAS NOT INTENTIO NAL BUT WAS ESSENTIAL FOR THE EXISTENCE OF THE ENTITY. WE HAVE GIVEN SEQU ENTIALLY ALL THE CASH TAKEN BY DIFFERENT PERSONS IN SUCH EXTREMELY ESSENT IAL SITUATION THAT FOR THE SAKE OF SAVING GOODWILL OF THE COMPANY AND HONO URING OF CHEQUES ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 5 PRESENTED BY THE PERSONS TO WHOM THE CHEQUES ISSUED BY THE COMPANY FOR THE SATISFACTION OF DUES . MOST OF THE AMOUNT W AS ACCEPTED BY THE COMPANY TO FUND THE SHORTAGE OF PART AMOUNT WHICH C OULD NOT ARRANGED TO HONOUR THE CHEQUES ISSUED TO RAJASTHAN FINANCIAL CORPORATION INSTALLMENTS OF SECURED LOANS TAKEN BY THE COMPANY. ON PERUSAL OF ALL INSTANCE AND THE CHEQUES ISSUED THEREON TO FINANCIAL INSTITUTION WHICH ON NON ISSUE OF CHEQUE MAY LODGED ANY FINANCIAL OFFENCE AGAINST THE COMPANY. FURTHER ALL THE MONEY RECEIVED WAS DULY DEPOSITED IN BANK ACCOUNT. WE ARE GIVING HEREBY ALL THE EVENTS OF CASH DEPOSI T AND AGAINST THEM THE CHEQUE HONOURED IN CHRONOLOGICAL MANNER. 1. SH. AMIT GOVAL (SON OF DIRECRTOR SMT REKHA GOYA L) A. 28/7/2009 CASH DEPOSITED RS. 40000/- RAJASTHAN BANK CHEQUE OF RS. 50000/- ISSUED TO ARCHANA AND BALANCE IN BANK O N 28/7/2009 WAS RS. 10731/- HENCE TO FULFIL THE SHORTAGE OF FUND TO HON OUR CHEQUES. B. 4/3/2010 CASH DEPOSITED 70000/- AMOUNT DEPOSIT ED IN HDFC BANK CHEQUE ISSUED TO RAJASTHAN FINANCIAL CORPORATI ON OF RS. 2202000/- AND BALANCE IN BANK WAS ONLY RS.2137644/-( SHORTAGE OF RS. 64356.00). 2. SMT. GUNJA AGARWAL (WIFE OF DIRECRTOR RAHUL GO YAL) A) 3/9/2009 85000/- CASH DEPOSITED IN HDFC BANK 15000/- CASH DEPOSITED IN HDFC BANK PAYMENT TO RFC 2202000/- AND BALANCE IN BANK WAS R S.2121242=00 3. REKHA GOYAL (DIRECTOR) A) 22/6/2009 100000/- CASH DEPOSITED IN HDFC BANK I. BALANCE WAS SHORT IN BANK. CHEQUE OF RS. 40000 0/- ISSUED TO DISHA CONSTRUCTION CO., CHEQUE WAS ALREADY ONCE RET URNED AND WAS RE ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 6 LODGED HENCE IT WAS NECESSARY TO DEPOSIT THE CASH T O GET THE CHEQUE HONOUR OTHERWISE SERIOUS LEGAL CONSEQUENCES MAY HAP PEN AGAINST THE COMPANY. II. 200000/- CASH DEPOSITED ON 1/7/2009 IN BOR CHE QUE ISSUED TO MRS. RAGINI OF RS.200000/- AND THE BALANCE IN BANK WAS RS.1007/- AS ON 30/6/2009 4. SHOBHIT GOYAL (COUSIN OF DIRECTOR RAHUL GOYAL (A) 33500/- CASH DEPOSITED ON 10/8/2009 IN THE BA NK OF RAJASTHAN LTD. COMPANY HAS TO ISSUE CHEQUES OF INTEREST TO TH E PERSONS FROM WHOM LOAN WERE TAKEN BY THE COMPANY THESE PARTIES ARE:- PREMCHANDKESHWANI RS. 6600/- ARTI KESHWANI RS. 8800/- GODAWANI DEVI RS. 8800/- KANTESH KUMAR KESHWANI RS. 8800/- RS. 33000/- 5. SHRI ANIL KUAMR GOYAL (A.K.GOYAL) (HUSBAND OF D IRECRTOR SMT REKHA GOYAL) (A) RS. 8000/- CASH DEPOSITED ON 24/6/2009 ON THA T BALANCE AS PER BANK ACCOUNT WAS RS. 393143/- AND CHEQUE ISSUED TO PARTY WAS OF RS. 400000/- FOR HONOURING OF THAT CHEQUE THE COMPANY H AS TAKEN CASH FROM A.K GOYAL IN URGENCY.SHRI A.K.GOYAL IS THE HUSBAND OF THE DIRECTOR SMT. REKHA GOYAL. (B) RS. 25000/- CASH DEPOSITED ON 26/2/2010 IN TH IS QUARTER CHEQUE OF RS.2202000/- WAS ISSUED TO RFC AND DUE TO SHORT BAL ANCE IN BANK, CASH DEPOSITED IN THAT DATE. THUS ON WORKING AT ALL THE TRANSACTION IT HAS BEEN SEEN THAT CASH ARE DEPOSITED ONLY DUE TO HONOURING OF CHEQUES OF FINAN CIAL INSTITUTION OF RS ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 7 2202000/- IN EVERY QUARTER WHICH WAS ESSENTIAL FOR THE ASSESSEE OTHERWISE THEY WOULD HAVE BEEN DECLARED AS DEFAULTE RS AND PENAL INTEREST COULD BE IMPOSED .FURTHER THE PERSONS FROM WHOM THE LOANS WERE ACCEPTED ARE INCOME TAX ASSESSEE'S AND WAS EIT HER THE DIRECTORS OF THE COMPANY OR CLOSED RELATIVES OF THE DIRECTORS OF THE COMPANY AND FILING THEIR RETURNS REGULARLY. COPIES OF THE RETUR NS FILED WAS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS U/S 143(3) OF INCOME TAX ACT 1961.FUTHER THE TDS WAS ALSO DEDUCTE D ON THE AMOUNT PAID AS INTEREST. THUS THERE WAS NO MALAFIDE INTENTION TO VIOLATE TH E INCOME TAX PROVISIONS BUT IT WAS HAPPENED DUE TO FINANCIAL CRI SIS MANAGEMENT OF THE COMPANY HENCE THE NO PENALTY IS IMPOSABLE. HENCE THE ASSESSEE HAS REASONABLE CAUSE FOR ACCEPT ING THE LOANS IN CASH U/S 273B OF INCOME TAX ACT 1961. SECTION 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF CLAUSE (B) OF SECTION 271, SE CTION 271A, SECTION 271AA, SECTION 271B, SECTION 271BA, SECTION 271BB, SECTION 271C,SECTION 271CA, SECTION 271D, SECTION 271E, SECTION 271F, SE CTION 271FA, SECTION 271FAB, SECTION 271FB, SECTION 271G, SECTION 271GA, SECTION 271H, SECTION 271-1, CLAUSE (C) OR CLAUSE (D) OF SUB-SECT ION (1) OR SUB-SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SECTION 272AA, OR SECTION 272B OR SUB- SECTION (1) OR SUBSECTION (1A) OF SECTION 272BB OR CLAUSE (B) OF SUBSECTION (1) OF SECTION OR CLAUSE (B) OR CLAUSE (C) OF SUB-S ECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PRO VISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE.' ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 8 THE OBJECT OF INTRODUCING SECTION 269SS OF THE ACT WAS TO ENSURE THAT A TAX PAYER WAS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY OR IF THE TAX PAYER MADE SOME FALSE ENTRIES, HE WOULD NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. IT WAS FO UND THAT DURING THE SEARCH AND SEIZURE, UNACCOUNTED MONEY WAS FOUND AND THE TAX PAYER USUALLY GAVE AN EXPLANATION THAT HE HAD BORROWED OR RECEIVED DEPOSITS FROM HIS RELATIVES OR FRIENDS AND, CONSEQUENTLY, IT BECAME EASY FOR THE SO CALLED LENDER : MANIPULATE HIS RECORD TO SUIT THE P LEA OF THE TAX PAYER. IN ORDER TO CURB THIS MENACE, SECTION 269SS OF THE ACT WAS INTRODUCED TO DO AWAY WITH THE MENACE OF MAKING FALSE ENTRIES IN THE ACCOUNT BOOKS AND LATER GIVE AN EXPLANATION FOR THE SAME. SECTION 269 SS OF THE ACT CONSEQUENTLY, REQUIRED THAT NO PERSON SHALL TAKE OR ACCEPT ANY LOAN OR DEPOSIT, IF IT EXCEEDS MORE THAN RS.20,000/- IN CAS H. SECTION 271D OF THE ACT PROVIDED THAT A PERSON WHO TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISION O F SECTION 269SS OF THE ACT, HE WOULD BE LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. SECTION 271D OF THE ACT CAUSED UNDUE HARDSHIP TO THE TAX PAYERS WHERE T HEY TOOK A LOAN OR DEPOSIT IN CASH EXCEEDING RS.20,000/- EVEN WHERE TH ERE WAS A GENUINE OR BONAFIDE TRANSACTION. THE LEGISLATURE ACCORDINGLY, INTRODUCED SECTION 273B OF THE ACT, WHICH PROVIDED THAT IF THERE WAS A GENUINE AND BONAFIDE TRANSACTION AND THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT BY AN ACCOUNT PAYEE CHEQUE OR DEMAND TRANSACTION FOR SOME BONAFIDE REASON, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENAL TY HAD A DISCRETION NOT TO LEVY THE PENALTY. AS PER FOLLOWING CASE LAWS NO PENALTY U/S 271D IS IMPOSABLE WHEN THE ASSESSEE HAS REASONABLE CAUSE AND TRANSACTIONS WERE DONE TO MEET ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 9 EXIGENCIES OF THE BUSINESS .IT CAN BE SAID OT HAVE CONSTITUTED 'REASONABLE CAUSE AND NO PENALTY IS LEVIABLE UNDER SECTION 271D OF INCOME TAX ACT. IN CHAMUNDI GRANITES (SUPRA) THE SUPREME COURT CONSIDERED THE PROVISION OF SECTION 271D AND 273B OF THE ACT AND HELD:- LT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION, NAM ELY SECTION 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDI NG ANYTHING CONTAINED IN THE PROVISIONS OF SECTION 271D, NO PEN ALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CAS E MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IS HE PRO VES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE AND IF THE ASSESS EE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO TAKE A LOAN OTH ERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT- PAYEE DEMAND DRAFT , THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VER Y MUCH MITIGATED BY THE INCLUSION OF SECTION 213B IN THE ACT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY REASON THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONAFIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMP OSE PENALTY HAS GOT DISCRETIONARY POWER.' IN BHAGZVATI PRASAD BAJORIA'S (SUPRA) THE GAUHATI HIGH COURT HELD: 'THE TRANSACTION OF LOAN HAS FOUND PLACE IN THE BO OKS 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 THE UNACC OUNTED 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 EX ECUTED BY THE ASSESSEE IN FAVOUR OF THE LENDER. WHEN THERE IS AN IMMEDIATE NEED OF MONEY THE PERSON CANNOT GET SUCH MONEY FROM THE NATIONALISED BANK TO SATISFY THE IMMEDIATE REQUIREMENT.....' IN THE INSTANT CASE, WE FIND THAT THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD ESTABLISHED A REASONA BLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISION OF SECTION 269SS OF TH E ACT. THE TRIBUNAL FURTHER FOUND THAT THE LOAN GIVEN BY THE SAMAJWADI PARTY WAS A GENUINE LOAN, WHICH WAS REFLECTED IN THE BOOKS OF ACCOUNTS ON ACCOUNT OF THE ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 10 SAMAJWADI PARTY AS WELL AS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT THE CASH GIVEN BY THE PARTY WAS DEPOSITED IN T HE BANK OF THE ASSESSEE AND, THEREAFTER, USED FOR THE PURPOSE OF C ONVERTING THE NAZUL LAND INTO FREE HOLD. THE TRIBUNAL FOUND THAT THE GENUINENESS OF THE TRA NSACTION WAS ALSO NOT DISPUTED BY THE ASSESSING OFFICER. IN THE LIGHT OF THE AFORESAID, WE FIND THAT EVEN T HOUGH THE ASSESSEE HAD TAKEN A LOAN IN CASH, NONETHELESS, THE LOAN TRANSAC TION WAS A GENUINE TRANSACTION AND WAS ROUTED THROUGH THE BANK ACCOUNT OF THE ASSESSEE WHICH CLEARLY SHOWS THE BONAFIDES OF THE ASSESSEE. THE CASH GIVEN BY THE LENDER WAS NOT UNACCOUNTED MONEY BUT WAS DULY REFLE CTED 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 APPE LLANT THAT SINCE THERE WAS NO URGENCY, THE ASSESSEE COULD HAVE TAKEN THE L OAN THROUGH CHEQUE AND SHOULD HAVE PROCESSED THE MATTER THROUGH REGULA R BANKING CHANNELS IS IMMATERIAL, INASMUCH AS THE GENUINENESS OF THE T RANSACTION HAS NOT BEEN DISPUTED BY THE ASS ESSING OFFICER. FURTHER, W E FIND THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE A ND THE MONEY WAS THEREAFTER, ROUTED THROUGH THE BANKING CHANNEL FOR PAYMENT TO THE GOVERNMENT FOR CONVERTING THE LAND INTO FREE HOLD P ROPERTY. IN THE LIGHT OF THE AFORESAID, WE ARE OF THE VIEW THAT REASONABLE CAUSE HAD BEEN SHOWN BY THE ASSESSEE AND THE PROVISIONS O F SECTION 273B OF THE ACT WAS APPLICABLE. THE APPELLATE AUTHORITIES WERE JUSTIFIED IN HOLDIN G THAT NO PENALTY COULD BE IMPOSED SINCE A REASONABLE CAUSE WAS SHOWN BY TH E ASSESSEE IN VIEW ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 11 OF THE AFORESAID, WE ARE OF THE OPINION THAT NO SUB STANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. ' DILLU CINE ENTERPRISES(P) LTD V CIT (2002180ITD 484 (HYD) NO PENALTY IS COULD BE LEVIED WHERE THE INTER SE T RANSACTIONS BETWEEN THE ASSESSEE AND ITS PARTNERS EVEN IF THERE IS VIOLATIO N OF SECTION 269SS AND 269TT CIT V/S MANOT LALWANI ( 20031 130 CTR 2 ( 2003) 26 0 ITR 590 RAT HIGH COURT IN THE PRESENT CASE THE TRIBUNAL FOUND THAT THE AS SESSEE IS AN EXPORTER AND WAS IN THE URGENT NEED OF THE MONEY FOR COMPLYI NG WITH THE TIME BOUND SUPPLIES AND THEREFORE TOOK A LOAN OF RS 2500 00.00 FROM HIS BROTHER IN LAW. THE TRIBUNAL WAS JUSTIFIED IN ARRIV ING AT A CONCLUSION THAT THE CASH LOAN WAS TAKEN UNDER THE EXCEPTIONAL CIRCU MSTANCES AND THAT THERE WAS A REASONABLE CAUSE IN TERMS OF SECTION 27 3B AND THE PENALTY IMPOSED U/S 271D WAS RIGHTLY SET ASIDE. IN THE RECENT DECISION OF ALLAHABAD HIGH COURT IN CASE OF SMT. DIMALE YADAV AND SHRI AKHILESH KUMAR YADAV DATED 21.08.201 5 IT WAS HELD THAT IF THE TRANSACTION IS GENUINE THEN NO PENALTY IS LE VIABLE. IN CASE OF RIDHI SIDHI INFRAPROTECTS P LTD ITAT JO DHPUR BENCH A ALSO HELD THAT IF THE TRANSACTIONS ARE BETWEEN THE SISTER CONCERN NO PENALTY U/S 271D IS LEVIABLE. LOOKING TO THE JUDICIAL PRONOUNCEMENTS MENTIONED A BOVE AND EXTREME AND URGENT CIRCUMSTANCES MENTIONED ABOVE UNDER WHIC H THE COMPANY WAS FORCED TO ACCEPTED THE LOANS IN CASH AND TRANSA CTIONS WITH DIRECTOR OR THEIR RELATIVES WHICH ARE ASSESSED TO TAX. ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 12 FURTHER THE AMOUNT WAS TAKEN DURING THE YEAR THROU GH CHEQUES AND CASH BOTH IN CASE IF EXIGENCY. LOANS WERE HELD TO B E GENUINE BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. AS SESS HAS REASONABLE CAUSE U/S 273B .HENCE NO PENALTY IS LEVIABLE U/S 27 1D. THE LD AR ALSO RELIED ON THE FOLLOWING DECISIONS OF T HE HONBLE ITAT JAIPUR BENCHES, JAIPUR. (I) ITA NO. 847/JP/2011 ORDER DATED 13/06/2014. (II) ITA NO. 41/JP/2016 ORDER DATED 01/11/2016. (III) ITA NO. 36/JP/2013 ORDER DATED 31/01/2017. 5. ON THE CONTRARY, THE LD DR HAS VEHEMENTLY SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. FROM PERUSAL OF THE RECORD, IT TRANSPIRES THAT THE ASSESSEE IS A PRIVATE LIMITED C OMPANY ENGAGED IN THE BUSINESS OF BUILDERS. IT IS NOT IN DISPUTE THAT DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD TAKEN LOAN OF RS. 5 ,76,000/- FROM FIVE PERSONS. ALL THESE PERSONS ARE EITHER DIRECTOR OF T HE COMPANY OR CLOSE RELATIVES OF THE DIRECTOR OF THE COMPANY. THEY ARE F ILING THEIR INCOME TAX RETURN REGULARLY AND ASSESSED TO TAX. IT IS VERY PE RTINENT TO NOTE THAT THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SEC TION 269SS OF THE ACT TREATING THE AMOUNT AS CASH LOANS RECEIVED FROM MAN Y PERSONS. THE AR 0 ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 13 HAS SUBMITTED THAT THE LOANS WERE TAKEN IN CASH IN E XTREME AND URGENT SITUATION. IT WAS DUE TO ACCOUNTS WERE USED TO FUND S HORTAGE OF PART PAYMENT TO HONOUR THE CHEQUES ISSUED TO RAJASTHAN F INANCIAL CORPORATIONS INSTALLMENTS. THEREFORE, CONSIDERING T HE VARIOUS CASE LAWS ON THIS ISSUE, NO PENALTY SHOULD BE IMPOSED ON THE ASSESSEE FOR CONTRAVENTION OF SECTION 271D OF THE ACT. IN THE SI MILAR CASE, THIS BENCH OF THE ITAT IN THE CASE OF VIJESH DEVI VS ADDL.CIT HA S GRANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 9. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS VERY PE RTINENT TO NOTE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS TAKEN TWO VIEWS REGARDING THESE AMOUNTS. HE HAS MADE ADDITION BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT TREATING TH E AMOUNT AS BOGUS CASH CREDITS AND HOLDING THE AMOUNT AS ASSESS EES OWN. ON THE OTHER HAND, THE ASSESSING OFFICER HAS ALSO INVO KED THE PROVISIONS OF SECTION 269SS OF THE ACT TREATING THE AMOUNT AS CASH LOANS RECEIVED. THE RELEVANT PARA IN RESPECT OF SHR I RAMNIWAS CHOPRA IS AS UNDER:- FURTHER, ASSESSEE HAS TAKEN LOAN OF RS. 2,50,000/- IN CASH, HENCE VIOLATED THE NORMS AS PER SECTION 269SS OF I.T. ACT , 1961. FURTHER, AS CLEAR FROM STATEMENT OF SH. RAM NIWAS CHOPRA THA T LOAN WAS ALSO RETURNED BACK IN CASH, HENCE ASSESSEE HAS VIOL ATED PROVISIONS OF SECTION 269T I.T. ACT, 1961. THEREFORE, MATTER I S BEING REFERRED TO ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-2, FOR INITIATION OF PENALTY PROCEEDINGS U/S 271D AND 271E OF THE IT ACT , 1961. SIMILAR FINDINGS HAVE BEEN ALSO RECORDED IN THE CAS E OF SHR. BHERU RAM CHOUDHARY AND SHRI RAJVEER SINGH. THUS, THE ASS ESSING OFFICER HIMSELF WAS NOT IN BELIEF WHETHER THE AMOUN T WAS A BOGUS ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 14 CASH CREDIT OR IT WAS A LOAN RECEIVED IN CASH IN VI OLATION OF SECTION 269SS OF THE ACT. THE LD AR OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS HAS STATED THAT ASSESSEES HUSBAND WAS AN ARMY OFFICER, WHO WAS DECLARED MARTYR DURING THE KARGIL WAR AND THE GOVERNMENT OF INDIA AWARDED HIM GALLANTRY AWARD POSTHUMOUSLY AND ALLOTTED A PETROL PUMP FOR HER LIV ELIHOOD AND HER CHILDREN IN THE YEAR 2001. BUT SHE FACED LOTS OF PR OBLEMS IN RUNNING OF PETROL PUMP DUE TO PAUCITY OF FUNDS. THE REFORE, HER RELATIVES HELPED HER. IN SECTION 269SS OF THE ACT, IT IS HELD THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON A NY LOAN OR DEPOSIT OR ANY SPECIFIED SUM, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTR ONIC CLEARINGS SYSTEM THROUGH A BANK ACCOUNT, BUT IN THE PRESENT C ASE, THE PERSONS, WHO HELPED HER, ARE HER RELATIVES OR NEIGH BOURS, WHO WERE ALSO AGRICULTURISTS HAVING NO BANK ACCOUNTS AT THE TIME OF FUNDS GIVEN. THE ASSESSEE HAS FILED AN AFFIDAVIT BY STATING THAT SHE HAS RECEIVED THE AMOUNTS AS GIFTS AND ADVANCES. THE ASSESSEE IS A WIDOW OF AN ARMY OFFICER AND SHE WAS NOT EDUCATED. THE ALLOTMENT OF THE PETROL PUMP WAS GIVEN BY THE GOVER NMENT OF INDIA BUT SHE WAS NOT PERFECT IN CONDUCTING THE BUS INESS DUE TO ILLITERACY. ALL THESE FACTS MAKE A REASONABLE CAUSE WHERE THE ASSESSEE SHOULD NOT BE VISITED BY THE PENALTY U/S 2 71D OF THE ACT TOWARDS THE LOANS AND DEPOSITS ACCEPTED FROM THE KN OWN PERSONS AND CLOSE RELATIVES IN THE HOURS OF DISTRESS. FURTH ER IT IS ALSO CLEAR FROM THE DWELL STAND TAKEN BY THE ASSESSING OFFICER AND FURTHER RELIEF GRANTED IN THE QUANTUM APPEAL BY THE HIGHER AUTHORITIES THAT THE ASSESSEE HAS NOT ADOPTED THIS PROCEDURE TO AVOI D OR EVADE THE TAX. THEREFORE, CONSIDERING THE VARIOUS CASE LAWS O N THIS ISSUE, NO PENALTY SHOULD BE IMPOSED ON THE ASSESSEE FOR CONTR AVENTION OF ITA 803/JP/2016_ M/S PARAS BUILDHOME P LTD. VS. ADDL.CIT 15 SECTION 271D OF THE ACT. THE ABOVE VIEW ALSO GET SU PPORTS FROM THE VARIOUS CASE LAWS RELIED BY THE LD AR OF THE AS SESSEE INCLUDING DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. RAJ KUMAR SHARMA (2007) 294 ITR 131 (RAJ) AND DECISION OF ITAT, JAIPUR BENCH IN THE CASE OF SMT. KUSUM DHAMANI VS A DDL.CIT IN ITA NO. 847/JP/2011. THEREFORE, BY CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DELETE THE P ENALTY SUSTAINED BY THE LD. CIT(A). THEREFORE, BY CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DELETE THE PENALTY SUSTAINED BY THE LD. CIT( A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH JULY, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S PARAS BUILDHOME P. LTD., JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- ADDL. CIT, RANGE-6, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 803/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR