NARAYANJI SPICES & PULSES PVT. LTD., Jaipur V. JCIT, Jaipur

ITA 810/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5629 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI
• Assessee Lawyers: S K GOGRA; S S GOGRA D
• Keywords: Reasonable cause

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. 810 & 811/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 M/S. NARAYANJI SPICES & PULSES (P) LTD. 1990, RAMLALA JI KA RASTA, JOHRI BAZAR,JAIPUR CUKE VS. THE JCIT CENTRAL RANGE JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCN 2140E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SMT. POONAM RAI, DCIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI S.K. GOGRA, CA AND SHRI S.S. GOGRA, ADVOCATE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/01/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16 /01/2017 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LD. CIT(A)- 4, JAIPUR DATED 03-06-2 016 FOR THE ASSESSMENT YEAR 2005-06 REGARDING IMPOSING THE PENALTY OF RS. 55,000/- U/S 271D AND & RS. 2,36,507/- U/S 271E OF THE ACT RESPECTIV ELY. ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 2 2.1 APROPOS ASSESSEE'S SOLITARY GROUND FOR IMPOSITI ON OF PENALTY U/S 271D OF THE ACT IN ITA NO. 810/JP/2016, THE FACTS A S EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 3.3 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND ALSO CAREFULLY GONE THROUGH ASSESSMENT ORDER AN D PENALTY ORDER PASSED U/S 271D OF THE ACT FOR THE A. Y. 2005- 06. I HAVE ALSO TAKEN A NOTE OF FACTUAL MATRIX OF T HE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. ON PERUSA L OF SUBMISSION, IT IS SEEN THAT SMT. RUCHI MEENA, DIREC TOR DURING THE FINANCIAL YEAR UNDER APPEAL HAD PAID A S UM OF RS. 55,000/- IN CASH TO THE ASSESSEE. IN THIS REGARD, A SSESSEE HAS CONTENDED THAT THE TRANSACTIONS PERTAINING TO SUM O F RS. 55,000/- IS IN THE NATURE OF CURRENT ACCOUNT ON U RGENT BASIS TO MEET BUSINESS LIABILITY . EXPLANATION GIVEN IN THIS REGARD DOES NOT SAME TO BE BONA FIDE AS ASSESSEE HAS FAILE D TO EXPLAIN EXACT NATURE OF URGENT BUSINESS REQUIREMEN T. IT IS SUBMITTED THAT A/C MAINTAINED BY ASSESSEE IS A COMP OSITE A/C WHICH CONTAINS DETAILS OF ENTRIES IN CHEQUE (SPECI ALLY FOR SALARY TRANSACTION & LOAN TRANSACTIONS) AND CASH TR ANSACTIONS BUT EVEN AFTER REPEATED REQUEST, NO SUCH LEDGER A/C OR CASH BOOK OF COMPANY. THEREFORE, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, WHICH ASSESSEE HAS FAILE D TO JUSTIFY ITS CONTENTION, PENALTY LEVIED OF RS. 55,00 0/- U/S 271D OF THE ACT IS HEREBY JUSTIFIED. ASSESSEES APPEAL F AILS IN GR. NO. 1. 4. IN THE RESULT, THE APPEAL STANDS DISMISSED FOR A .Y.2005 -06. 2.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE SUBMITTED THAT THE ASSESSEE COMPANY HAD RECEIVED THE FOLLOWING FUNDS I N FORM OF CONTRIBUTION FROM ITS DIRECTOR SMT. RUCHI MEENA IN ITS REGULAR COURSE OF BUSINESS. ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 3 S.N. NAME OF DIRECTOR DATE AMOUNT TAKEN NATURE OF FUNDS 1. SMT. RUCHI MEENA 9-03-2005 15,000/- FUNDS FROM DIRECTOR IN CURRENT ACCOUNT TRANSACTION 2. SMT. RUCHI MEENA 18-03-2005 20,000/- - DO- 3. SMT. RUCHI MEENA 22-03-2005 20,000/- -DO- TOTAL 55,0 00/- THE LD. AR OF THE ASSESSEE FURTHER CONTENDED THAT T HE FUNDS TAKEN BY THE ASSESSEE FROM ITS DIRECTOR IN ITS REGULAR COURSE OF BUSINESS FROM CURRENT ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY IN ITS B OOKS OF ACCOUNT. THESE FUNDS ARE RECEIVED TO MEET URGENT NEEDS OF CO MPANY TIME TO TIME WHICH ARE IN FORM OF CONTRIBUTION INSTEAD OF DEPOSI T. THE LD. AR FURTHER SUBMITTED THAT TRANSACTIONS ARE IN BETWEEN A CLOSEL Y HELD COMPANY AND ITS DIRECTORS IMPLYING THAT ONE INDIVIDUAL MANAGING THE AFFAIRS OF THE TWO CONCERNS AND THE TRANSACTIONS DO NOT PARTAKE THE NA TURE OF DEPOSIT. ONE SINGLE PERSON SHRI RAMSWAROOP MEENS IS MANAGING ENT IRE BUSINESS AFFAIRS OF THE GROUP COMPANIES AND THE DECISION OF TO TRANSFER THE FUNDS FROM ONE CONCERN TO ANOTHER OR TO REPAY THE FUNDS C OULD HAVE BEEN SAID TO HAVE BEEN LARGELY INFLUENCED BY THE SAME INDIVIDUAL , IT CANNOT BE SAID THAT ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 4 TRANSACTION PARTAKE THE NATURE OF EITHER DEPOSIT OR LOAN. THE LD. AR OF THE ASSESSEE FILED THE COPY OF AFFIDAVIT DATED 21-1 1-2011 OF SHRI RAMSWAROOP MEENA WITH REGARD TO THE CONTENTION THAT ONE PERSON WAS MANAGING THE ENTIRE BUSINESS AFFAIRS OF ENTIRE GROU P. THE ENTIRE TRANSACTION IS UNDERTAKEN WITH BONA FIDE INTENTION. IT IS FURTHER SUBMITTED THAT NO INGENUITY IS BROUGHT IN THE ASSESSMENT ORDE R. THE RETURN INCOME IS ACCEPTED. IT IS FURTHER SUBMITTED THAT THERE IS NO CASE AGAINST ASSESSEE THAT THESE TRANSACTIONS HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. THE COPY OF CONFIRMATION OF ACCOUNTS WER E SUBMITTED TO THE LOWER AUTHORITIES BUT THE LD. CIT(A) CONFIRMED THE IMPOSITION OF PENALTY U/S 271D OF THE ACT. THE LD. AR OF THE ASSESSEE REL IED ON FOLLOWING CASE LAWS TO THIS EFFECT. 1. DILLU CINE ENTERPRISES (P) LTD. VS. ADDL. CIT (2 002) TAX PUBLISHER (DT) 733 HYDERABAD TRIBUNAL. HELD THAT THE ACTIVE DIRECTOR OF THE ASSESSEE COMPANY IS CL EARLY NOT COVERED BY THE EXPRESSION ANY OTHER PERSON OCCU RRING IN SECTION 269SS OF THE ACT. FURTHER HELD THAT MERE TECHNICAL BREACH OF PROVISIONS, WHILE TRANSACTIONS WERE HELD TO BE GENUINE DO NOT ATTRACT PROVISIONS OF SECTION 269SS, THEREFORE, WHERE ONE OF THE DIRECTORS OF ASSESSEE C OMPANY BROUGHT FUNDS FROM HIS PERSONAL ACCOUNT WHENEVER AS SESSEE WAS IN REQUIREMENT OF FUNDS WHETHER TRANSACTIONS BE TWEEN ASSESSEE AND DIRECTOR OF ASSESSEE DO NOT FALL WITHI N MISCHIEF SOUGHT TO BE REMEDIED BY THE SECTION AS THERE IS NO CASE AGAINST ASSESSEE THAT THESE TRANSACTIONS HAD ANYTHI NG TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 5 2. CIT VS. IDHAYAN PUBLICATION LTD. (2006) TAX PUBLISHER (DT) 1251-MADRAS HIGH COURT HELD THAT : AMOUNT RECEIVED BY A PRIVATE COMPANY FROM ITS DIREC TOR NEITHER LOAN NOR DEPOSIT SINCE THE TRANSACTION DI D NOT FALL WITHIN THE MEANING OF LOAN OR ADVANCE THERE WAS NO VIOLATION OF SECTION 269SS. 3. CIT VS. AJANA DYEING & PRINTING MILLS (2003) 264 ITR 505 (RAJ) HELD THAT WHILE LEVYING PENALTY U/S 271D FOR VIOLATION OF PROVISIONS OF SECTION 269SS ADJUST MENT OF RS. 20,000/- IS TO BE ALLOWED WHICH IS PERMISSIBLE U/S 269SS. 4. SUDHA AGRO & CHEMICAL INDUSTRIES VS. ADDL. CIT (2016) TAX PUBLISHER (DT) 2783 ( VISHAKHAPATNAM TRIBUNAL ) HELD THAT AFTER TAKING INTO CONSIDER ATION OF JUDGEMENT OF RAJ. HIGH COURT IN CASE OF AJANTA DYIN G & PRINTING MILLS HELD THAT PENALTY SHALL BE LEVIED AFTER EXCLUDING RS. 20,000/- IN EACH CASE AS PERMISSIBLE U/S 269SS OF THE ACT. 2.3 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE AVAILABLE RECORDS THAT THE ASSESSEE HAD RECEIVED FUNDS IN CASH FROM ITS DIRECTOR SMT. R UCHI MEENA AMOUNTING TO RS. 55,000/- FOR THE ASSESSMENT YEAR 2 005-06 FOR MEETING OUT THE URGENT BUSINESS NEEDS OF THE ASSESSEE COMPA NY FOR WHICH THE ASSESSEE HAD SUBMITTED THE CONFIRMATION OF ACCOUNTS TO THE LOWER AUTHORITIES. IT IS NOTED THAT THE RETURN OF INCOME FILED BY THE ASSESSEE IS ACCEPTED AND THERE WAS NO CASE AGAINST THE ASSESSEE THAT THESE TRANSACTIONS ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 6 HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALME NT OF INCOME. IT MAY BE NOTED THAT SECTION 271D READ WITH SECTION 26 9SS WAS INTRODUCED BY THE LEGISLATURE TO DISCOURAGE THE MENACE OF BLAC K MONEY. SINCE THESE TRANSACTIONS ARE GENUINE, THIS ELEMENT OF BLACK MON EY IS TOTALLY RULED OUT. IT IS FURTHER NOTED THAT ON SIMILAR TYPE OF ISSUE THE ITAT COORDINATE BENCH IN THE CASE OF SMT. KUSUM DHAMANI VS. ADDL. C IT VIDE ITS ORDER DATED 13-06-2014 IN ITA NO. 847/JP/2011 FOR THE ASS ESSMENT YEAR 2006- 07 HAD DELETED THE PENALTY U/S 271D OF THE ACT BY OBSERVING AS UNDER:- 4.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE REC ORD THERE IS NO SHRED OF DOUBT ABOUT THE GENUINENESS OF THE TRANSAC TIONS AND THEIR DISCLOSURE IN THE BOOKS OF ACCOUNT AND RETURNS OF B OTH THE ASSESSEE WHO HAPPEN TO BE HUSBAND AND WIFE, CARRYING ON THE BUSI NESS AS SISTER CONCERNS. SECTION 271D READ WITH SECTION 269SS WAS INTRODUCED BY THE LEGISLATURE TO DISCOURAGE THE MENACE OF BLACK MONEY . SINCE THESE TRANSACTIONS ARE GENUINE, THIS ELEMENT OF BLACK MON EY IS TOTALLY RULED OUT. THE ASSESSEE HAS GIVEN AN EXPLANATION IN OUR V IEW IS NOT UNREASONABLE AND IS BASED ON BUSINESS EXIGENCIES AL SO FOR PAYMENTS TO LABOURERS AND LENDERS. UNDER THESE CIRCUMSTANCES, W E ARE OF THE VIEW THAT THE TRANSACTIONS BEING GENUINE AND THE ASSESS EE HAVING OFFERED REASONABLE EXPLANATION JUSTIFYING THESE CASH TRANSA CTIONS, THE IMPUGNED PENALTY U/S 271D IS NOT LEVIABLE. OUR VIE W IS FORTIFIED BY THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. RAJ KUMAR SHARMA (SUPRA) AND THE JUDGEMENT OF HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAINI MED ICAL STORE (SUPRA) WHICH IS FOLLOWED BY HON'BLE P & H HIGH COURT IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA). THUS IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIONS RELIED ON ABOVE, THE PENALTY IS DELETED. RESPECTFULLY FOLLOWING THE DECISION OF ITAT COORDIN ATE BENCH IN THE CASE OF SMT. KUSUM DHAMANI VS. ADDL. CIT (SUPRA) AN D ALSO IN VIEW OF ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 7 THE FOLLOWING CASE LAWS AS RELIED UPON BY THE LD. AR OF THE ASSESSEE NAMELY :- 1. DILLU CINE ENTERPRISES (P) LTD. VS. ADDL. CIT (2002) TAX PUBLISHER (DT) 733 HYDERABAD TRIBUNAL. 2. CIT VS. IDHAYAN PUBLICATION LTD. (2006) TAX PUBLISHER (DT) 1251-MADRAS HIGH COURT 3. CIT VS. AJANA DYEING & PRINTING MILLS (2003) 264 ITR 505 (RAJ) 4. SUDHA AGRO & CHEMICAL INDUSTRIES VS. ADDL. CIT (2016) TAX PUBLISHER (DT) 2783 ( VISHAKHAPAT NAM TRIBUNAL ) I DIRECT TO DELETE THE PENALTY OF RS. 55,000/- U/S 271D OF THE ACT SUSTAINED BY THE LD. CIT(A) IN ASSESSEE'S CASE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THUS THE APPEAL OF THE ASSESSE E IS ALLOWED 3.1 APROPOS ASSESSEE'S SOLITARY GROUND FOR IMPOSITI ON OF PENALTY U/S 271E OF THE ACT IN ITA NO. 811/JP/2016, THE FACTS A S EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 3.1.2. I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND CAREFULLY GONE THROUGH THE ASSESSMEN T ORDER AND PENALTY ORDER PASSED U/S 271E OF THE ACT. ON PE RUSAL OF SUBMISSION, IT IS SEEN THAT ASSESSEE HAD PAID IN CA SH TO SMT. MANFOOLI DEVI RS. 40,100/- AND SMT. BHONRI DEVI RS. 1,96,402/- ON DIFFERENT OCCASIONS. DURING THE APPEL LATE PROCEEDINGS, IT IS SUBMITTED THAT DIRECTORS NAMELY SMT.MANFOOLI DEVI AND SMT. BHONRI DEVI ARE WORKING IN THE COMPANY ON LABOUR WORK BASIS AND THE AMOUNT WAS CRE DITED TO HER A/C AND THE BALANCE STANDING ARE OUT OF ACCU MULATED FUND IN RESPECT OF LABOUR WORK CHARGES PAID BY THE COMPANY. ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 8 THE EXPLANATION GIVEN DOES NOT SEEM TO BE JUSTIFIED . EVEN AR WAS ASKED TO FURTHER ELABORATE CONTRIBUTION OF S MT. MANFOOLI DEVI AND SMT. BHONRI DEVI AS WORKERS BUT N O FURTHER DETAILS HAVE BEEN PROVIDED TILL DATE. EVEN AFTER REPEATED REQUEST, ASSESSEE HAS NOT FILED COPY OF LE DGER A/C WHICH SHOWN THAT AMOUNT ACCUMULATED IN THE A/C REPR ESENT REMUNERATION PAYABLE TO THE DIRECTOR. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, ASSESSEE' S CONTENTION WITH REGARD TO PAYMENT IN CASH TO SMT. M ANFOOLI DEVI AND SMT. BHONRI DEVI IS WITHOUT ANY BASIS, ACC ORDINGLY PENALTY LEVIED U/S 271E OF THE ACT IS SUSTAINED. AS SESSEE'S APPEAL FAILS IN GR. NO.1. 4. IN THE RESULT, THE APPEAL STANDS DISMISSED FOR A.Y. 2005-06. 3.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY HAD PAID FOLLOWING FUNDS TO ITS DIRECTORS IN ITS REGULAR COURSE OF BUSINESS. S.N. NAME OF DIRECTOR DATE AMOUNT TAKEN NATURE OF FUNDS 1. SMT. MANFOOLI DEVI 17-01-2005 5,100 FUNDS GIVEN TO DIRECTOR ACCOUNT TRANSACTION FOR DIRECTORS REMUNERATION 2. SMT. MANFOOLI DEVI 18-01-2005 20,000 - DO- 3. SMT. MANFOOLI DEVI 19-01-2005 15,000 -DO- 4. SMT. BHONRI DEVI 30-09-2004 6,000 -DO- 5. SMT. BHONRI DEVI 1-10-2004 20,000 -DO- 6. SMT. BHONRI DEVI 18-01-2005 20,000 -DO- 7. SMT. BHONRI DEVI 19-01-2005 20,000 -DO- 8. SMT. BHONRI DEVI 28-02-2005 20,000 -DO- 9. SMT. BHONRI DEVI 5-03-2005 20,000 -DO- 10. SMT. BHONRI DEVI 9-3-2005 20,000 -DO- 11. SMT. BHONRI DEVI 18-03-2005 15,000 -DO- ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 9 12. SMT. BHONRI DEVI 18-03-2005 20,000 -DO- 13. SMT. BHONRI DEVI 22-03-2005 14,000 -DO- 14. SMT. BHONRI DEVI 23-03-2005 15,000 -DO- 15. SMT. BHONRI DEVI 30-03-2005 4,507 -DO- TOTAL 2 ,36,507 THE LD. AR OF THE ASSESSEE FURTHER CONTENDED THAT T HE FUNDS PAID BY THE ASSESSEE COMPANY TO ITS DIRECTORS IN ITS REGULAR CO URSE OF BUSINESS FORM CURRENT ACCOUNT MAINTAINED BY THE COMPANY IN ITS BO OKS OF ACCOUNT FOR PAYMENT OF ACCUMULATED FUND WHICH WAS OUT OF DIRECT ORS REMUNERATION AS REFERRED IN PAGE 3 OF AOS ORDER AT TOP PARA. TH E COPY OF CONFIRMATIONS OF ACCOUNTS WERE SUBMITTED BEFORE THE LOWER AUTHORI TIES AND THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 2,36 507/- IN THE HANDS OF THE ASSESSEE COMPANY U/S 271E OF THE ACT. THE LD. A R FURTHER CONTENDED THAT THE TERM ANY OTHER PERSON DOES NOT DENOTE DIRECTOR OF COMPANY. IN THIS CASE SINCE THE PAYMENT WAS MADE TO DIRECTOR OF ASSESSEE COMPANY, THE PROVISIONS OF SECTION 269T DOES NOT APPLY. THE LD. AR FURTHER SUBMITTED THAT THE TRANSACTIONS ARE IN BETWEEN A CL OSELY HELD COMPANY AND ITS DIRECTORS IMPLYING THAT ONE INDIVIDUAL MANAGING THE AFFAIRS OF TWO CONCERNS AND THE TRANSACTIONS DO NOT PARTAKE THE NA TURE OF DEPOSIT OR LOAN. THE LD. AR FURTHER SUBMITTED THAT ONE SINGLE PERSON SHRI RAMSWAROOP MEENA IS MANAGING ENTIRE BUSINESS AFFAIRS OF THE GR OUP COMPANIES AND THE DECISION TO TRANSFER THE FUNDS FROM ONE CONCERN TO ANOTHER OR TO REPAY THE ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 10 FUNDS COULD HAVE BEEN SAID TO HAVE BEEN LARGELY INF LUENCED BY THE SAME INDIVIDUAL, IT CANNOT BE SAID THAT THE TRANSACTION PARTAKE THE NATURE OF EITHER DEPOSIT OR LOAN. THE LD. AR OF THE ASSESSEE FILED THE COPY OF AFFIDAVIT OF SHRI RAMSWAROOP MEENA DATED 21-11-2011 WITH REGARD TO CONTENTION THAT ONE PERSON WAS MANAGING THE ENTIRE BUSINESS AFFAIRS OF ENTIRE GROUP. THE LD. AR FURTHER SUBMITTED THAT ENT IRE TRANSACTION IS UNDERTAKEN WITH BONA FIDE INTENTION AND NO INGENUIT Y IS BROUGHT IN THE ASSESSMENT ORDER FOR THE ABOVE YEAR. THE RETURN INC OME IS ACCEPTED. THE LD. AR FURTHER SUBMITTED THAT THERE IS NO CASE AGAI NST THE ASSESSEE AND THESE TRANSACTIONS HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. THE COPY OF CONFIRMATION OF ACCOUNTS WER E SUBMITTED TO THE LOWER AUTHORITIES BUT THE LD. CIT(A) CONFIRMED THE IMPOSITION OF PENALTY U/S 271E OF THE ACT. THE LD. AR OF THE ASSESSEE REL IED ON FOLLOWING CASE LAWS TO THIS EFFECT WITH THE PRAYER TO DELETE THE P ENALTY IMPOSED U/S 271E OF THE ACT. 1. M/S. SHREEPATI DEVELOPER & BUILDER LTD. VS. ADDL . CIT (2015) 65 (II) ITCL PAGE 423 (MUMBAI TRIB) HE LD THAT THE GENUINENESS OF THE TRANSACTION WAS NOT DIS PUTED. NO MALAFIDE ACT WAS ATTRIBUTED TO THE TRANSACTIONS. RE VENUE HAD NOT SUFFERED ANY LOSS AND THERE WAS NO ATTEMPT OF A NY MONEY LAUNDERING OR EVASION OF TAX AND CONCEALMENT OF INC OME. THE FINDINGS GIVEN BY THE COORDINATE BENCH OF MUMBAI TR IBUNAL IN CASE OF LODHA BUILDERS (P) LTD., 163 TTJ 778 WER E SQUARELY APPLICABLE ON THIS ISSUE ALSO. RESPECTFULL Y FOLLOWING ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 11 THE SAME, THE PENALTY LEVIED U/S 271E IN THIS CASE WAS ALSO ORDERED TO BE DELETED. 2. DILLU CINE ENTERPRISES (P) LTD. VS. ADDL. CIT (2 002) TAX PUBLISHER (DT) 733 HYDERABAD TRIBUNAL. HELD THAT THE ACTIVE DIRECTOR OF THE ASSESSEE COMPANY IS CL EARLY NOT COVERED BY THE EXPRESSION ANY OTHER PERSON OCCU RRING IN SECTION 269SS OF THE ACT. FURTHER HELD THAT MERE TECHNICAL BREACH OF PROVISIONS, WHILE TRANSACTIONS WERE HELD TO BE GENUINE DO NOT ATTRACT PROVISIONS OF SECTION 269SS, THEREFORE, WHERE ONE OF THE DIRECTORS OF ASSESSEE C OMPANY BROUGHT FUNDS FROM HIS PERSONAL ACCOUNT WHENEVER AS SESSEE WAS IN REQUIREMENT OF FUNDS WHETHER TRANSACTIONS BE TWEEN ASSESSEE AND DIRECTOR OF ASSESSEE DO NOT FALL WITHI N MISCHIEF SOUGHT TO BE REMEDIED BY THE SECTION AS THERE IS NO CASE AGAINST ASSESSEE THAT THESE TRANSACTIONS HAD ANYTHI NG TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. 3. CIT VS. IDHAYAN PUBLICATION LTD. (2006) TAX PUBL ISHER (DT) 1251-MADRAS HIGH COURT HELD THAT : AMOUNT RECEIVED BY A PRIVATE COMPANY FROM ITS DIRECTOR NEI THER LOAN NOR DEPOSIT SINCE THE TRANSACTION DID NOT FALL WI THIN THE MEANING OF LOAN OR ADVANCE THERE WAS NO VIOLATION O F SECTION 269SS. 4. S. VASUNDHARA DEVI VS. JCIT (2015) 66 (II) ITCL PAGE 578 (CHENNAI TRIBUNAL) HELD THAT TRANSACTION S BETWEEN FAMILY MEMBERS WERE GENUINE AND BONA FIDE TRANSACTIONS. THE SOURCE OF MONEY HAD ALREADY BEEN DISCLOSED IN THE RETURN OF HUF. FURTHER, IT WAS NOT THE CASE OF REVENUE THAT ASSESSEE HAD INTRODUCED UNACCOUNTED M ONEY IN THE BOOKS OF ACCOUNT AS THE VERY PURPOSE OF BRIN GING IN THE PROVISIONS OF SECTION 269SS AND 269T WAS TO CURB TH E PRACTICE OF INTRODUCING BLACK MONEY INTO BOOKS OF A CCOUNT. THE ASSESSEE HAD NO INTENTION TO EVADE TAX AND DID NOT MAKE ANY ATTEMPT TO MAKE ANY LIABILITY. THE INDIVIDUAL H AD ACCEPTED LOANS FROM HUF FOR PURCHASE OF PROPERTY IN THEIR INDIVIDUAL NAMES AND HAD REASONABLE CAUSE FOR ACCEP TING SUCH LOANS. THEREFORE, THE ORDER OF THE LD. CIT(A) SUSTAINING THE PENALTY LEVIED BY AO WAS NOT JUSTIFIED AND SAME WAS SET ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 12 ASIDE. FOLLOWED PRINCIPLE LAID DOWN IN CASE OF CIT VS. M YESODHA,(MADRAS HIGH COURT 351 ITR 265). 5. CIT VS. AJANA DYEING & PRINTING MILLS (2003) 264 ITR 505 (RAJ) HELD THAT WHILE LEVYING PENALTY U/S 271D FOR VIOLATION OF PROVISIONS OF SECTION 269SS ADJUST MENT OF RS. 20,000/- IS TO BE ALLOWED WHICH IS PERMISSIBLE U/S 269SS. 6. SUDHA AGRO & CHEMICAL INDUSTRIES VS. ADDL. CIT (2016) TAX PUBLISHER (DT) 2783 ( VISHAKHAPATNAM TRIBUNAL ) HELD THAT AFTER TAKING INTO CONSIDER ATION OF JUDGEMENT OF RAJ. HIGH COURT IN CASE OF AJANTA DYIN G & PRINTING MILLS HELD THAT PENALTY SHALL BE LEVIED AFTER EXCLUDING RS. 20,000/- IN EACH CASE AS PERMISSIBLE U/S 269SS OF THE ACT. 3.3 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 3.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE AVAILABLE RECORDS THAT THE ASSESSEE COMPANY HAD PAID FUNDS TO THE TUNE OF RS. 2,36,507/ - TO ITS DIRECTORS AS MENTIONED ABOVE IN ITS REGULAR COURSE OF BUSINESS F ROM ITS CURRENT ACCOUNT MAINTAINED BY THE COMPANY IN ITS BOOKS OF ACCOUNT F OR PAYMENT OF ACCUMULATED FUND WHICH WAS OUT OF DIRECTORS REMUNE RATION. IT IS NOTED THAT THE RETURN OF INCOME FILED BY THE ASSESSEE IS ACCEPTED AND THERE WAS NO CASE AGAINST THE ASSESSEE THAT THESE TRANSACTION S HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. IT IS ALSO NOTED FROM THE ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 13 RECORDS THAT ENTIRE TRANSACTION IS UNDERTAKEN WITH BONA FIDE INTENTION. 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 NO. 676/JP/2015 FOR THE ASSESSMENT YEAR 2008-09 VIDE OR DER DATED 21-10- 2016) HAD DELETED THE PENALTY U/S 271E OF THE ACT B Y OBSERVING AS UNDER:- 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 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 ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 14 BARUAH 133 TAXMAN 74 (MAZ) WHEREIN IT IS HELD THAT THE INTRODUCTION OF SECTION 269T AND SECTION 271E I N THE STATUTE IS TO PREVENT PROLIFERATION OF BLACK / UNAC COUNTED MONEY DEPOSITED WITH BANKS AND OTHER PERSONS BY INTRODUCING THE SYSTEM OF REPAYMENT THROUGH ACCOUNT PAYEE CHEQUES AND DRAFTS AND, THUS, TO ENSURE THAT THE ID ENTITY OF THE PAYEE IS ESTABLISHED. WHERE THE IDENTITY OF THE LEN DER TO WHOM REPAYMENT HAD BEEN MADE WAS KNOWN TO THE DEPARTMENT AND THE GENUINENESS OF THE LOAN TRANSACT ION WAS NOT IN DOUBT, IT COULD NOT BE SAID THAT THE BREACH OF LAW, IF ANY, WAS DELIBERATE AND THE DEFAULT, IF ANY, COULD BE SAID TO BE A TECHNICAL DEFAULT FOR WHICH NO PENALTY WOULD B E LEVIABLE. HENCE, IN VIEW OF THE ABOVE DELIBERATIONS AND THE CASE LAW CITED (SUPRA), I DIRECT THE AO TO DELETE T HE PENALTY OF 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 FOLLOWING CASE LAWS RELIED UPON BY THE LD. AR OF TH E ASSESSEE NAMELY:- 1. M/S. SHREEPATI DEVELOPER & BUILDER LTD. VS. ADDL . CIT (2015) 65 (II) ITCL PAGE 423 (MUMBAI TRIB) 2. DILLU CINE ENTERPRISES (P) LTD. VS. ADDL. CIT (2 002) TAX PUBLISHER (DT) 733 HYDERABAD TRIBUNAL. 3. CIT VS. IDHAYAN PUBLICATION LTD. (2006) TAX PUBL ISHER (DT) 1251-MADRAS HIGH COURT 4. S. VASUNDHARA DEVI VS. JCIT (2015) 66 (II) ITCL PAGE 578 (CHENNAI TRIBUNAL) 5. CIT VS. AJANA DYEING & PRINTING MILLS (2003) 264 ITR 505 (RAJ 6. SUDHA AGRO & CHEMICAL INDUSTRIES VS. ADDL. CIT (2016) TAX PUBLISHER (DT) 2783 ITA NO. 810/JP/2016 M/S. NARYANJI SPICES AND PULSES (P) LTD. VS. JCIT, CENTRAL RANGE, JAIPUR 15 I DIRECT TO DELETE THE PENALTY OF RS. 2,36,507/- U/ S 271E OF THE ACT SUSTAINED BY THE LD. CIT(A) IN ASSESSEE'S CASE FOR THE ASSESSMENT YEAR 2005-06. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED . 4.0 IN THE RESULT, THE BOTH THE APPEALS OF THE ASSE SSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 /0 1/2017. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 /01/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. NARAYANJI SPICES & PULSES (P) L TD. JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE JCIT, CENTRAL RANGE, 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. 810/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR