Sri. Boregowda, Mysore V. Addl.C.I.T., Mysore

ITA 825/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8663 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI SHANKAR DR P K SRIH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

ITA.825/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER I.T.A NO.825/BANG/2015 (ASSESSMENT YEAR : 2008-09) SHRI. BOREGOWDA, BYRAWESHWARA ENGINEERS, NO.546, BASAVANGUDI STREET, BELAVADI POST, MYSORE 570 018 .. APPELLANT PAN : AKJPB4725C V. ADDL. COMMISSIONER OF INCOME-TAX, RANGE -1, MYSORE .. RESPONDENT ASSESSEE BY : SHRI. RAVI SHANKAR, ADVOCATE REVENUE BY : DR. P. K. SRIHARI, ADDL. CIT HEARD ON : 12.01.2016 PRONOUNCED ON : 02.02.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL ASSESSEE ASSAILS PENALTY LEVIED U/S .271D OF THE INCOME- TAX ACT, 1961 (THE ACT IN SHORT) WHICH WAS CONFIR MED BY THE CIT (A). 02. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN THE BUSINESS OF DOING JOB WORK IN ENGINEERING HAD FILED RETURN OF INCOME DECL ARING INCOME OF RS.1,96,900/-. TOTAL TURNOVER OF THE ASSESSEE WAS RS.16,58,098/-. DURING ITA.825/BANG/2015 PAGE - 2 THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED B Y THE AO THAT ASSESSEE HAD TAKEN CASH LOAN OF RS.2 LAKHS. RS.1.25 LAKHS F ROM ONE SHRI. PANCHALINGA AND RS.75,000/- FROM SHRI. T. V. NARASI MHA MURTHY. ASSESSEE FURNISHED CONFIRMATION LETTERS AND EVIDENC ES SUPPORTING THE AGRICULTURAL INCOME OF THE CREDITORS. AO ACCEPTED THE LOANS AND COMPLETED THE ASSESSMENTS. HOWEVER, HE CHOSE TO PROCEED U/S. 271D OF THE ACT FOR, ACCORDING TO HIM, THERE WAS CONTRAVENTION OF SECTIO N 269SS OF THE ACT. IN REPLY TO THE NOTICE ISSUED BY THE AO, ASSESSEE SUBM ITTED THAT CASH WAS URGENTLY REQUIRED BY HIM TO MAKE PAYMENTS FOR ENTER ING INTO A LEASE. AS PER THE ASSESSEE, LOANS WERE TAKEN ON A SUNDAY AND LEASE AGREEMENT WAS ENTERED ON MONDAY. HOWEVER, THE AO FOUND THAT THE MORTGAGE PAPER SUBMITTED BY THE ASSESSEE DID NOT SPECIFY THE NATUR E OF THE LEASE. ACCORDING TO THE AO ASSESSEE HIMSELF WAS NOT AN AGR ICULTURIST, BUT ONLY THE CREDITORS WERE AGRICULTURISTS. HE WAS OF THE OPINI ON THAT NONE OF THE EXCEPTIONS TO SECTION 269SS OF THE ACT WAS APPLICAB LE. HE LEVIED A PENALTY OF RS.2 LAKHS. 03. APPEAL BEFORE THE CIT (A) WAS NOT SUCCESSFUL. 04. NOW BEFORE US, LD. AR SUBMITTED A COPY OF THE L EASE DEED DT.06.08.2007, FOR ARGUING THAT ASSESSEE HAD TO PAY A SUM OF RS.2 LAKHS TO ITA.825/BANG/2015 PAGE - 3 ONE SMT. MAHALAKSHMI FOR LETTING OUT A PROPERTY BY HER. AS PER THE LD. AR LEASE DEED WAS ENTERED ON 06.08.2007. SINCE ASSESS EE HAD URGENTLY NEEDED THE MONEY, HE WAS CONSTRAINED TO TAKE LOANS FROM SH RI. PANCHALINGA AND SHRI.T. V. NARASIMHA MURTHY IN CASH ON 05.08.2007. THUS ACCORDING TO HIM, EXCEPTIONAL CIRCUMSTANCES WERE THERE FOR THE A SSESSEE TO TAKE LOAN IN CASH. 05. PER CONTRA, LD. DR SUBMITTED THAT THE LEASE DEE D WAS A DOCUMENT WHICH COULD NOT BE BELIEVED SINCE IT DID NOT SPECIF Y THE RENT NOR THE DETAILS OF THE PROPERTY WHICH WAS RENTED. ACCORDING TO HIM , ASSESSEE COULD NOT SHOW ANY REASONABLE CAUSE FOR NOT COMPLYING WITH SE CTION 269SS OF THE ACT. 06. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WHAT WE FIND IS THAT THE AO IN THE ASSESSMENT ORDER DT.1 5.12.2010 HAD ACCEPTED THE LOANS AS GENUINE. ASSESSEE HAD FILED CONFIRMAT ION LETTERS FROM THE CREDITORS AND ALSO EVIDENCE IN SUPPORT OF THEIR AGR ICULTURAL INCOME. IT IS NOT DISPUTED BY THE REVENUE THAT LOANS WERE RECEIVED BY THE ASSESSEE ON 05.08.2007 WHICH HAPPENED TO BE A SUNDAY. CASE OF THE ASSESSEE IS THAT THERE WAS AN URGENT REQUIREMENT OF FUNDS ON 06.08.2 007 FOR TAKING A PROPERTY ON LEASE, AND HE HAD THEREFORE TAKEN THE L OANS IN CASH. ASSESSEE ITA.825/BANG/2015 PAGE - 4 WAS A SMALL TIME BUSINESSMAN WITH TURNOVER OF RS.16 .58 LAKHS. SO THE PREPONDERANCE OF PROBABILITY WAS THAT ASSESSEE WAS NOT HAVING CASH WITH HIM TO MEET THE URGENT REQUIREMENT ON 06.08.2007. IN OUR OPINION ASSESSEE HAD A REASONABLE CAUSE FOR FAILING TO COMPLY WITH S ECTION 269SS OF THE ACT. VIDE SECTION 273B OF THE ACT, NO PENALTY CAN BE IMP OSED U/S.271D OF THE ACT, IF THE FAILURE WAS DUE TO A REASONABLE CAUSE. IN OUR OPINION, THIS IS THE RIGHT CASE WHERE ALLEVIATING SECTION U/S.273B COULD BE APPLIED. PENALTY LEVIED U/S.271D OF THE ACT IS QUASHED. 07. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 2ND DAY OF FEBRUARY, 2016. SD/- SD/- (VIJAYPAL RAO) (ABRAH AM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR