SMT. KUSUM DHAMANI, Jaipur V. ADDL. CIT, Jaipur

ITA 847/JPR/2011

• Counselvise Citation: 84723114 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: RAJESH GUPTA
• Keywords: Bonafide belief; Question of law; Reasonable cause; Tax effect; Ignorance of law
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 847/JP/2011 ASSESSMENT YEAR : 2006-07 PAN : AAUPD 1073 A SMT. KUSUM DHAMANI VS. THE ADDL. CIT PROP. M/S. KUSUM INDUSTRIES RANGE-5 25,SHOPPING CENTRE, JANTA COLONY, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH GUPTA DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 11-06-2014 DATE OF PRONOUNCEMENT: 13-06-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST OR DER OF THE LD. CIT(A)- II, JAIPUR DATED 11-07-2011 FOR THE ASSESSMENT YEA R 2006-07 PERTAINING TO IMPOSITION OF PENALTY U/S 271D OF THE INCOME TAX AC T, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL. THAT THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING LEVY OF PENALTY BY LD. AO WITHOUT TAKING INTO CONSIDERATION THAT :- (A) THAT THE TRANSACTION OF RECEIPT OF FUNDS IS GEN UINE AND THERE STANDS NO TAX EVASION EVEN IF THE TRANSAC TION IS MADE IN CASH. 2 (B) THAT THERE IS ONLY TECHNICAL AND VENIAL BREACH OF LAW FOR A BONAFIDE TRANSACTION. THAT THE APPELLANT WAS UNDER BONAFIDE BELIEF THAT THE TRANSACTION BELOW RS. 20,000/- IN CASH IS NOT A GAINST THE LAW. (D) THAT THERE IS TRANSFER OF FUNDS BETWEEN SISTER CONCERN FOR BUSINESS EXIGENCY, WHICH CANNOT BE CONS TRUED AS LOAN OR DEPOSIT. (E) THAT THE ASSESSEE HAS TAKEN FUNDS DUE TO BUSINE SS EXIGENCY. (F) THAT THE PENALTY WAS LEVIED ON THE BASIS OF SUR MISES AND CONJECTURE ONLY WITHOUT REFERRING TO FACTS OF T HE MATTER. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE CARRIES ON PROPRIETOR BUSINESS UNDER THE NAME OF M/S. KUSUM INDUSTRIES. HER HUSBAND SHRI MOHAN LAL DHAMAI IS ALSO A PROPRIETOR OF ANOTHER CO NCERN M/S. DHAMANI TRADERS. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO FOUND THAT THE ASSESSEE HAS RECEIVED CASH LOANS FROM HER HUSBAND A S UNDER:- S.N. DATE AMOUNT RECEIVED 1. 20-03-2006 16,000/- 2. 22-03-2006 19,000/- 3. 24-03-2006 19,000/- 4. 27-03-2006 19,000/- 5 29-03-2006 13,000/- 6. 30-03-2006 10,000/- 7. 31-03-2006 19,000/- TOTAL 1,15,000/- 3 THE AO INITIATED PENALTY PROCEEDINGS U/S 271D ASKIN G THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED AS TH E CASH DEPOSITS WITH IN CONTRAVENTION OF SECTION 269SS OF THE ACT. . THE AS SESSEE REPLIED TO THE FOLLOWING EFFECT AS ASKED BY THE AO. (I) SHRI MOHAN LAL DHAMANI HER HUSBAND IS ASSESSED TO INCOME TAX AND HAVING A VALID PAN. THE ABOVE CASH A MOUNTS WERE GIVEN FROM HIS PROPRIETARY. HIS CONFIRMATION OF PAN AND COPY OF RETURN ALONGWITH COPY OF ACCOUNTS WAS FILED . (II) THE IMPUGNED TRANSACTIONS BETWEEN ASSOCIATED BUSINESS CONCERNS OF HUSBAND AND WIFE WERE GENUINE AND ENTER ED DURING THE COURSE OF ASSESSEE'S REGULAR BUSINESS WHICH IN FACT WAS SUPERVISED AND CONTROLLED BY HER HUSBAND. (III) NONE OF THE INDIVIDUAL CASH DEPOSIT EXCEEDED RS. 20,000/- . THE ASSESSEE AND HER HUSBAND WERE UNDER BONA FIDE BELIEF THAT SUCH CASH TRANSACTIONS OF LESS THAN RS. 20,000/- CAN BE TAKEN. THE LIST DEMONSTRATED THAT EACH AMOUNT WA S LESS THAN RS. 20,000/-. (IV) THE AMOUNTS WERE TRANSACTED BETWEEN SISTER CONCERN DUE TO BUSINESS EXIGENCIES. 4 (IV) THE ALLEGED VIOLATION AMOUNTED TO TECHNICAL AN D VENIAL BREACH OF REGULATORY PROVISION WHICH SHOULD NOT BE HELD LIABLE FOR PENALTY IN THE GIVEN FACTS AND CIRCUMSTANCES. THE AO WAS HOWEVER, NOT SATISFIED WITH THE EXPLANA TION AND IMPOSED THE PENALTY U/S 271D OF THE ACT HOLDING THAT THE ASSE SSEE HAD NO REASONABLE CAUSE. THE EXPLANATION WAS BASED ON A BALD STATEMEN T THAT THE HUSBAND WAS MANAGING THE AFFAIRS OF ASSESSEE'S BUSINESS. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE ASSESSEE REITERATED ITS EXPLANATION AND RELIED ON THE FOLLOW ING CASE LAWS. (I) MUTHOOT M GEORGE BANKERS VS. ACIT (1993) 46 ITD 10 (COCHIN). (II) JAGVIJAY AUTO FINANCE (P) LTD. VS. ACIT (JAIPUR BE NCH). (III) CIT VS. BAZPUR COOPERATIVE SUGAR FACTORY LTD., 172 ITR 321 ( SC). (IV) KARNATAKA GINNING & PRESSING FACTORY VS. JCIT, 77 I TD 478. (V) HINDUSTAN STEEL LTD. VS. STATE OF ORISA (1969) 1970 AIR 253 (SC). (VI) CIT VS. SUNIL KUMAR GOEL, 315 ITR 163 (P&H) 2.3 THE LD. CIT(A) HELD THAT SMT. ASHA DHIAMANI WA S CONTROLLING THE FINANCIAL MANAGEMENT AND OVERALL AFFAIRS OF HER CON CERN AND HER HUSBAND WAS LOOKING AFTER ONLY AFTER TENDER WORK, THEREFOR E, THE ASSESSEE EXPLANATION 5 OF THE ASSESSEE WAS NOT PROPER. NO PROOF OF ANY BUS INESS EXIGENCY HAS BEEN FILED. THE STATEMENT OF THE HUSBAND THAT THERE WAS NO OPTION BUT TO MAKE PAYMENT IN CASH TO THE LABOURERS AND LENDERS ON BEH ALF OF HIS WIFE AND THAT THE ASSESSEE AND HER HUSBAND WERE NOT WELL EDUCATED PERSONS WAS HELD TO BE NON-SATISFACTORY AND CANNOT BE REASON FOR NON-LEVY OF PENALTY. NO EXCEPTIONAL CIRCUMSTANCES OR EXIGENCIES OF THE BUSI NESS COULD BE SUBSTANTIATED BY THE ASSESSEE AND THE ASSESSEE'S CA SE DOES NOT FALL IN THE EXEMPTED CATEGORY PRESCRIBED IN FIRST PROVISO TO SE CTION 269SS OF THE ACT. THUS THE PENALTY WAS CONFIRMED ON THE ASSESSEE. 2.4 THE AGGRIEVED ASSESSEE IS BEFORE US IN APPEAL. 3.0 THE LD. COUNSEL FOR THE ASSESSEE SHRI RAJESH G UPTA REITERATED THE FACTS AND BY RELYING ON THE PAPER BOOK CONTENDS THA T IT HAS NOT BEEN DISPUTED THAT PAYMENTS / LOAN TRANSACTIONS WERE GENUINE AND DULY REFLECTED IN THE BOOKS OF BOTH I.E. ASSESSEE AND HER HUSBAND. NO MA LAFIDE ABOUT THE TRANSACTION IS ATTRIBUTED OR PROVED BY THE LOWER AU THORITIES AND ASSESSEE'S FACTUAL EXPLANATION HAS BEEN REJECTED WITHOUT COGEN T REASONS. 3.1 RELIANCE IS PLACED BY THE HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR SHARMA, 294 ITR 131 WHERE THE HON'BLE HIGH COURT REJECTED THE CONTENTION OF REVENUE AND DELETED PENA LTY U/S 271D AFTER OBSERVING AS UNDER:- 6 WE ARE NOT PERSUADED BY THE SUBMISSION OF COUNSEL FOR THE REVENUE . SECTION 271D OF THE INCOME TAX ACT PROVIDES FOR PEN ALTY FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 26 9SS OF THE INCOME-TAX ACT. ACCORDING TO THIS PROVISION, IF A P ERSON, INTER ALIA, ACCEPTS ANY LOAN IN CONTRAVENTION OF THE PROV ISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, HE SHALL BE LI ABLE TO PAY, BY WAY OF PENALTY, A SUM OF EQUAL TO THE AMOUNT OF LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. SECTION 273B IS AN OV ERRIDING PROVISION. ACCORDING TO THE SAID PROVISION, NO PENA LTY SHALL BE IMPOSABLE ON A PERSON OR ASSESSEE FOR ANY FAILURE, INTER ALIA, REFERRED TO SECTION 271D IF HE PROVES THAT THERE WA S REASONABLE CAUSE FOR THE SAID FAILURE. THE TRIBUNAL IN ITS ORDER HAS FOUND THAT THE GENUIN ENESS OF THE DEPOSITS MADE BY THE ASSESSEE'S BROTHER PANKAJ SHARMA WAS NOT IN DOUBT BY THE ASSESSING OFFICER. THE TRIBUNAL NOTICED THAT EXPLANATION GIVEN BY THE ASSESSEE THAT THE DEPOSITS WERE OBTAINED BY HIM TO SATISFY THE IMMEDIATE BUSINESS R EQUIREMENT BUT FOUND THAT THIS HAS NOT BEEN ESTABLISHED. HOWEV ER, THE TRIBUNAL WAS THUS OF THE VIEW THAT THERE WAS A REAS ONABLE CAUSE TO ACCEPT THE DEPOSIT OTHERWISE THROUGH BANK DRAFT OR THROUGH CHEQUE BECAUSE THE ASSESSEE BONA FIDE BELIEVED THAT THE CASH TRANSACTIONS BELOW RS. 20,000/- WAS PERMISSIBLE. IT IS TRUE THAT THE IGNORANCE OF LAW IS NO EXCUSE, BUT THE QUESTION HERE IS WHETHER THE ASSESSEE WAS ABLE TO E STABLISH REASONABLE CAUSE U/S 273B JUSTIFYING THAT NO PENALT Y SHOULD BE IMPOSED IN CONTRAVENTION OF SECTION 271D OF THE INC OME-TAX ACT. NONE OF THE TRANSACTIONS EXCEEDS, AS NOTICED A BOVE, RS. 20,000/-. THE TRIBUNAL ACCEPTED THAT THE ASSESSEE B ONA FIDE BELIEVED THAT THE CASH TRANSACTION BELOW RS. 20,00 0/- WAS PERMISSIBLE AND THE CAUSE SHOWN BY THE ASSESSEE CON STITUTED REASONABLE CAUSE. THE FINDING OF THE TRIBUNAL CANNO T BE SAID TO BE GROSSLY PERVERSE OR UNSUSTAINABLE IN LAW. IN OUR CONSIDERED VIEW, THE APPEAL DOES NOT GIVE RI SE TO ANY SUBSTANTIAL QUESTION OF LAW. IT IS DISMISSED IN LIMINE. 7 3.2 FURTHER RELIANCE IS PLACED IN THE CASE OF CIT V S. SAINI MEDICAL STORE, 277 ITR 420 (P&H) WHERE HON'BLE HIGH COURT IN THE N EARLY SIMILAR FACTS AND CIRCUMSTANCES AND RELYING ON HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (S UPRA) DELETED THE PENALTY AFTER FOLLOWING OBSERVATIONS. 6.2 AS POINTED OUT EARLIER, THERE IS NO DOUBT ABOU T THE GENUINENESS OF THE TRANSACTIONS WHICH HAVE BEEN FUL LY ACCEPTED IN THE ASSESSMENT MADE FOR THE YEAR UNDER CONSIDERATION. EVEN IF, THERE IS ANY IGNORANCE, WHI CH RESULTED IN THE INFRACTION OF LAW, THE DEFAULT IS T ECHNICAL OR VENIAL WHICH DID NOT PREJUDICE THE INTERESTS OF THE REVENUE AS NO TAX AVOIDANCE OR TAX EVASION WAS INVOLVED. TO MY MIND, BONA FIDE BELIEF COUPLED WITH THE GENUINENESS OF THE TRANSACTIONS WOULD CONSTITUTE REASONABLE CAUSE U/S 273B FOR NOT INVOKING THE PROVISIONS OF SECTION 271E OF THE ACT. THE IMPUGNED ORDER OF PENALTY IS CANCELLED.. 3.3 FURTHER RELIANCE IS PLACED IN THE CASE OF CIT V S. SUNIL KUMAR GOEL, 315 ITR 163 (P&H) WHERE HON'BLE HIGH COURT DELETED THE PENALTY BY FOLLOWING OBSERVATIONS. THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN RECORDING ITS CONCLUSION THAT A REASONABLE CAUSE HAD BEEN SHOWN BY THE RESPONDENT- ASSESSEE. THE INCOME- TAX APPELLATE TRIBUNAL RELIED ON THE FACT THAT THE RES PONDENT- ASSESSEE HAD PRODUCED HIS CASH BOOKS, DEPICTING LOA NS TAKEN BY HIM UNILATERALLY BEFORE THE REVENUE. ANOTH ER FACT TAKEN INTO CONSIDERATION WAS THAT NO PREJUDIC E WAS CAUSED TO THE REVENUE IN THE INSTANT ACTION OF THE RESPONDENT ASSESSEE INASMUCH AS THE RESPONDENT- ASSESSEE DID NOT ATTEMPT BY THE IMPUGNED ACT TO AVO ID 8 ANY TAX LIABILITY. FURTHERMORE, THERE IS NO DISPUTE ABOUT THE FACT THAT THE INSTANT CASH TRANSACTIONS OF THE RESPONDENT-ASSESSEE WERE WITH THE SISTER CONCERN AN D THAT THESE TRANSACTIONS WERE BETWEEN THE FAMILY AND DUE TO BUSINESS EXIGENCY. A FAMILY TRANSACTION, BETWEEN TW O INDEPENDENT ASSESSEES, BASED ON AN ACT OF CASUALNE SS, SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF IS CONTAINED IN THE COMPILATION OF ACCOUNTS AND WHICH HAS NO TAX EFFECT, IN OUR VIEW ESTABLISHES REASONABLE CAUSE U/S 273B OF THE ACT. SINCE THE RESPONDENT ASSESSE E HAD SATISFACTORILY ESTABLISHED REASONABLE CAUSE U 273B OF THE ACT HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFI CIENT CAUSE FOR NOT INVOKING THE PENAL PROVISIONS (SECTIO N 271D AND 271E OF THE ACT) AGAINST HIM. FOR THE REASONS RECORDED HEREINABOVE, WE FIND NO MERIT IN EITHER OF THE AFORESAID TWO APPEALS I.E. , ITA NOS. 777 AND 778 OF 2008 AND ACCORDINGLY, THE SAID APPEA LS ARE HEREBY DISMISSED. 3.4 THE LD. COUNSEL FOR THE ASSESSEE THUS CONTENDS THAT THE FACTS OF THE CASE CLEARLY DEMONSTRATE THAT THE ASSESSEE BEING A LADY, CARRIED OUT HER BUSINESS. THE FINANCIAL AFFAIRS AND CASES OF EXIGE NCY ARE HANDLED BY HER HUSBAND INCLUDING THE PAYMENT OF WAGES TO LABOURER S AND LENDERS. THE EXIGENCIES OF GENUINE TRANSACTIONS ENTERED INTO BET WEEN THE SISTER CONCERNS CANNOT BE HELD TO BE A DEVICE FOR TAX EVASION. IT I S NOT DISPUTED THAT BOTH THE ASSESSEES ARE ASSESSED TO TAX AND IMPUGNED TRANSAC TIONS ARE REFLECTED IN THEIR BOOKS AND GENUINENESS OF THE SAME HAS NOT BEE N CHALLENGED. IN THESE FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENT, TH E IMPOSITION OF PENALTY U/S 271D IS UNJUSTIFIED. 9 3.5 THE LD. DR SHRI D.C. SHARMA SUPPORTED THE ORDER S OF THE AO AND THE LD. CIT(A) AND CONTENDS THAT THE ASSESSEES STATEME NT HAS NOT BEEN FOUND TO BE CORRECT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. 4.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE RECORD THERE IS NO S HRED OF DOUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS AND THEIR DISCLOSUR E IN THE BOOKS OF ACCOUNT AND RETURNS OF BOTH THE ASSESSEE WHO HAPPEN TO BE H USBAND AND WIFE, CARRYING ON THE BUSINESS AS SISTER CONCERNS. SECTIO N 271D READ WITH SECTION 269SS WAS INTRODUCED BY THE LEGISLATURE TO DISCOURA GE THE MENACE OF BLACK MONEY. SINCE THESE TRANSACTIONS ARE GENUINE, THIS ELEMENT OF BLACK MONEY IS TOTALLY RULED OUT. THE ASSESSEE HAS GIVEN AN EXP LANATION IN OUR VIEW 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 ASSESSEE HA VING OFFERED REASONABLE EXPLANATION JUSTIFYING THESE CASH TRANSACTIONS, THE IMPUGNED PENALTY U/S 271D IS NOT LEVIABLE. OUR VIEW IS FORTIFIED BY THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RA J KUMAR SHARMA (SUPRA) AND THE JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAINI MEDICAL STORE (SUPRA) WHICH IS FOLLOW ED BY HON'BLE P & H HIGH COURT IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA). THUS IN VIEW 10 OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIONS RELIED ON ABOVE, THE PENALTY IS DELETED. 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. THE ORDER PRONOUNCED IN OPEN COURT ON 13 TH JUNE, 2014. SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 13 TH JUNE, 2014 *MISHRA COPY FORWARDED TO:- 1. SMT. KUSUM DHAMANI, JAIPUR 2. THE ADDL. CIT, RANGE-5, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR 5..THE LD. DR 6.THE GUARD FILE (IT NO. 847/JP/2011) BY ORDER AR ITAT, JAIPUR 11