Asstt.CIT,Cir.3(1), Dhule, V. Chintamani Nagari Sahakari Patpedhi, Dhule

ITA 803/PUN/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3159 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 01-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Keywords: Search and seizure; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 803/PN/07 (BLOCK PERIOD 01-04-2002 TO 17-09 -2002) ACIT, CIRCLE-3(1), DHULE .... APPELLANT VS. CHINTAMANI NAGRI SAHKARI PATPEDHI LTD, NEAR RAILWAY STATION, 80FT ROAD, DHULE-424001 PAN NO. . RESPONDENT APPELLANT BY : SHRI A.S. SINGH RESPONDENT BY : SHRI NIKHIL PATHAK ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-I NASHIK, DATED 30-03-2007 FOR BLOCK PERIOD 01-04-2002 TO 17-09 -2002. 2. THE ADMITTED FACTUAL POSITION IS THAT THE RESPOND ENT-ASSESSEE IS A CO- OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS M EMBERS. IT IS ALSO AN ADMITTED POSITION THAT THE ACCOUNTS ARE SUBJECTED TO COMPULSO RY AUDIT AS PRESCRIBED U/S 44AB OF I.T ACT. FURTHER THE ASSESSEES INCOME IS EXEMPT U/S 80P OF I.T.ACT. 3. ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE CHINTAMANI NAGARI SAHAKARI PAT. SANSTHA BEARING ITA NO . 1868/PN/05 DATED 26/02/2007 STATING THAT PENALTY U/S. 271E CANNOT BE LEVIED WHEN ASSESSEE MADE THE REPAYMENTS OF THE LOANS IN CASH UNDER THE BONA FIDE BELIEF. 4. WHEN THIS ISSUE WAS CHALLENGED BEFORE THE LD. CIT (A), THERE WAS A DISCUSSION ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KUMARI A.B. SHANTHI [2002] 225 ITR 258 (S.C), BHAGVATI PRASAD BAJORIA 183 CTR 4 84, FARUKABAD INVESTMENT LTD., 80 TTJ 82 (DEL.) AND MUSLIM URBAN CO-OP CREDIT SOCIETY LTD. V. JT.CIT (2005) 96 ITD 83 (PUNE). RELYING UPON ALL THESE DECISIONS, LD. CIT(A) HAS HELD THAT THE ITA NO.803/PN/07 BLOCK PERIOD 01-04-2002 TO 17-09-2002 PAGE 2 OF 2 PENALTY U/S 271E WAS NOT LEVIABLE BEING COVERED BY T HE CONCESSION GRANTED IN THE STATUTE IN SECTION 273B OF THE I.T. ACT. NOW THE RE VENUE IS IN APPEAL. 5. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES. ORDERS OF THE AUTHORITIES BELOW HAVE BEEN CAREFULLY PERUSED. AS IS EVIDENT FROM THE ORDER OF THE LD. CIT(A), THE ISSUE IS NOW VERY MUCH COVERED IN FAVOUR OF THE AS SESSEE ON ACCOUNT OF THE FACT THAT THE ALLEGED TRANSACTION WAS BETWEEN THE ASSESSE E AND ITS MEMBERS. IN A LATEST DECISION OF THIS VERY BENCH IN THE DECISION OF ITAT A PUNE IN THE CASE OF SHREE VARDHMAN JAIN URBAN CO-OP CREDIT SOCIETY LTD. BEARING I TA NO. 462/PN/2007 A.Y 2004-05 ORDER DATED 12.09.2008, A VIEW WAS EXPRESSED I N FAVOUR OF THE ASSESSEE VIDE PARAGRAPH 5 REPRODUCED BELOW: 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND A LSO EXAMINED THE ORDERS OF AUTHORITIES BELOW IN THE LIGHT OF CASE LAWS CITED AS WELL AS MATERIAL PLACED BEFORE US. THE ISSUE NOW STOOD COVERED IN FAVOUR OF THE ASSE SSEE BY SERIES OF DECISION OF THIS VERY TRIBUNAL. IN A DECISION OF DADASAHEB S.K. PAT IL NAGARI SAHAKARI PAT SANSTHA LTD. ITA NO. 305/PN/08 FOR A .Y 2005-06 ORD ER DATED 30.04.2008, THE ITAT B BENCH PUNE HAS HELD AS UNDER: THE ADMITTED POSITION IS THAT THE AMOUNTS WERE RE-PAI D TO THE MEMBERS OF THE SOCIETY IN ALL AMOUNTING TO RS.1,29,623 IN THE REGULAR COURSE OF ITS BUSINESS. WITH THIS FACTUAL BACKGROUND, WE HAVE EXAMINED THE PROVISI ONS OF SECTION 269T AS APPLICABLE PRIOR TO ITS AMENDMENT, ACCORDING TO WHIC H, NO FIRM SHALL RE-PAY TO ANY PERSON ANY DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR DRAFT WHERE THE AMOUNT OF DEPOSITS IS TO BE RE-PAID TOGETHER WITH ANY INTEREST IN AGGREGATE RS. 10,000/- OR MORE. SUBSEQUENTLY, THERE WAS AN AMENDMENT IN SEC. 269 T WITH EFFECT FROM 1 ST JUNE 2002 AND THE NEW SECTION PROVIDES THAT SUCH PER SON AS SPECIFIED THEREIN SHALL NOT RE-PAY ANY LOAN OR DEPOSITS OTHERWI SE THAN BY AN ACCOUNT PAYEE CHEQUE OF RS. 20,000/- OR MORE. THE AFORE-SAID AMEND MENT, THUS, MADE IT CLEAR THAT EARLIER THE SECTION WAS APPLICABLE ONLY IN RESPECT OF DEPOSIT, WHICH WAS SUBSEQUENTLY SUBSTITUTED BY LOAN OR DEPOSIT. IT IS ALS O AN ADMITTED POSITION THAT THE SAID AMOUNTS WERE TAKEN BY THE ASSESSEE. HOWEVER THE I NTENTION OF THE LEGISLATURE BY THE SAID ENACTMENT HAS BEEN CLARIFIED BY THE HONB LE SUPREME COURT IN THE CASE OF ASST. DIRECTOR OF INSPECTION (INVESTIGATION) V. KUM A.B . SHANTHI (2002)225 ITR 258 (S.C) THAT THE OBJECT OF INTRODUCING SEC.269SS IS TO ENSURE THAT THE TAX PAYER IS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY OR IF HE MAKES SOME FALSE ENTRIES, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLA NATION FOR THE SAME. THE HONBLE COURT HAS FURTHER MENTIONED THAT THE SAID SECT ION IS MEANT IN THE CASES OF SEARCH AND SEIZURE, WHERE THE UNACCOUNTED MONEY IS UNE ARTHED AND THE TAX PAYER WOULD USUALLY GIVE THE EXPLANATION THAT HE HAD BORR OWED OR RECEIVED DEPOSITS FROM HIS RELATIVES AND FRIENDS AND IT IS EASY FOR THE SO CALLE D LENDER ALSO TO MANIPULATE HIS RECORDS TO SUIT THE PLEA OF THE TAX PAYER. THE COURT HAS OBSERVED THAT THE MAIN OBJECT OF SEC.269SS WAS TO CURB THIS MENACE OF MAKING FALSE ENTRIES IN THE ACCOUNT BOOKS AND LATER GIVING AN EXPLANATION FOR T HE SAME . AS IS EVIDENT FROM THE FACTS OF THIS CASE, NO SEARCH AND SEIZURE HAD T AKEN PLACE AND NO UNACCOUNTED MONEY HAD STATED TO BE EARTHED BY THE RE VENUE DEPARTMENT. CONSIDERING THE NATURE OF DEPOSITS, WE HAVE GENERALLY FOLLOWED ONE MORE CASE LAW OF THIS BENCH NAMELY. MUSLIM URBAN CO-OP CREDIT SPCIETY LTD. V. JT.CIT (2005) 96 ITD 83 (PUNE). WE HAVE CAREFULLY EXAMINED ALL OTHER CASE LAWS CITED AND, THEREAFTER, ARRIVE AT THE CONCLUSION THAT UNDER THE GIVEN FACTS A ND CIRCUMSTANCES, THERE WAS A REASONABLE AND SUFFICIENT CAUSE AND THE EXPLANATION O FFERED BY THE ASSESSEE WAS ALSO BONAFIDE. THEREFORE, IT WAS WITHIN THE JURISDICTION OF THE A.O U/S. 273-B NOT TO IMPOSE THE PENALTY ON THE ASSESSEE. SO, FINALLY, WE HOL D, IN VIEW OF THE REASONS ASSIGNED HEREINABOVE, THAT THE PENALTY SHOULD NOT BE LEVIED. THE FINDINGS OF THE LD CIT(A) ARE HEREBY AFFIRMED AND THE GROUNDS RAISED BY THE REVENUE ARE THUS REVERSED BY AFFIRMING QUASHING OF THE PENALTY LEVIED U/S. 271 -E. ITA NO.803/PN/07 BLOCK PERIOD 01-04-2002 TO 17-09-2002 PAGE 3 OF 2 6. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE RI GORS OF THE PROVISION OF SECTION 269SS/271E ARE BROUGHT TO HIS NOTICE ONLY DURING THE P ROCEEDINGS AND HE STOPPED PLAYING WITH THE PROVISIONS THERE AFTER. SINCE THE RES PECTED CO-ORDINATE BENCH HAS TAKEN A VIEW THAT THE CIRCUMSTANCES OF THE CASE REVEA LS THAT THERE WAS A REASONABLE CAUSE FOR THE SAID DEFAULT, HENCE ENTITLED FOR THE REL IEF AS PRESCRIBED U/S 273B OF I.T. ACT. THEREFORE, WE FIND NO REASON TO DEVIATE FROM THE VIEW ALREADY TAKEN IN THIS REGARD. IN THESE CIRCUMSTANCES, THE DECISION TAKEN BY THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IN RESULT, THE GROUNDS OF THE REVENUE ARE HEREBY DISMISSED . 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 16TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 16 TH NOVEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ACIT, CIRE3(1), DHULE 2. ASSESSEE 3. CIT(A)-I, NASHIK 4. CIT-I, NASHIK 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE