M/s. P.R. Associates, Pune V. Additional Commissioner of Income-tax,

ITA 914/PUN/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7755 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-11-2018
• Assessment Year: 1999-2000
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.914/PUN/14 / ASSESSMENT YEARS : 1999-2000 M/S.P.R. ASSOCIATES, C/O. M.K. RATHI (PARTNER), 316, NARAYAN PETH, OPP. PRABHAT PRESS, VIKAY TALKIES LANE, PUNE 411 030 PAN : AABFP4863F VS. ACIT, RANGE-3, PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-II, PUNE ON 12-12-2013 IN RELATION TO THE ASSESSMENT YEAR 1999-2000 CONFIRMING PENALTY UNDER SECTIO N 271D OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D `THE ACT). 2. IT IS A SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUN AL. IN THE FIRST ROUND, THE TRIBUNAL REMITTED THE MATTER TO THE FILE OF APPELLANT BY SHRI SUNIL GANOO RESPONDENT BY SHRI SANJEEV GHEI DATE OF HEARING 14-01-2019 DATE OF PRONOUNCEMENT 15 -01-2019 ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 2 LD. CIT(A) FOR DISPOSAL OF THE ASSESSEES GROUND OF LIMITA TION AS WELL AS THE MERITS. IN THE SECOND ROUND OF PROCEEDING S, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AGAINST WHIC H THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 3. THE FACTS OF THE CASE ARE THAT, ON VERIFICATION OF CASH BOOK, IT WAS OBSERVED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE ACCE PTED CERTAIN LOANS IN CASH ON VARIOUS DATES FROM SHAH GROUP AMOUNTING TO RS.79,18,000/-. THE AO INITIATED PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER PASSED U/S.143(3) R. W.S. 147 ON 08-12-2006. IN THE COURSE OF PENALTY PROCEEDING S, THE AO OPINED THAT THERE WAS A VIOLATION OF THE PROVISIONS OF SECTION 269SS IN RESPECT OF CASH LOANS RECEIVED BY THE ASS ESSEE AMOUNTING TO RS.79,18,000/-. ON BEING SHOW CAUSED AS TO WHY PENALTY U/S.271D OF THE ACT BE NOT IMPOSED IN THIS REGAR D, THE ASSESSEE SUBMITTED THAT ITS BUSINESS ACTIVITIES WERE CLOSE AND INOPERATIVE FOR ABOUT LAST 7 YEARS AND THE ASSESSEE FI RM HAD BORROWED MONEY FROM MANY PRIVATE MONEY LENDERS AND SH REE SUVARNA SAHAKARI BANK LTD. SINCE LAST 10 YEARS. TO MEET TH E FINANCIAL CRUNCH OF THE FIRM, THE ASSESSEE RAISED CERTAIN LOANS ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 3 IN CASH FROM UNORGANIZED FINANCE SECTOR FOR DISPOSING OFF ITS EXISTING LIABILITIES. THE AO IMPOSED PENALTY OF THE EQUAL SUM OF RS.79,18,000/-. THE ASSESSEE APPROACHED THE LD. CIT(A) WHO NOTICED THAT THE CORRECT AMOUNT OF LOANS WAS TO THE TUN E OF RS.88,18,000/- AND NOT RS.79,18,000/- FOR WHICH THE P ENALTY WAS IMPOSED BY THE AO. AFTER ENTERTAINING OBJECTIONS FROM THE ASSESSEE, THE LD. CIT(A) ENHANCED THE PENALTY TO RS.88,18,000/-. THE TRIBUNAL REMITTED THE MATTER TO THE LD. CIT(A). IN THE FRESH ROUND OF PROCEEDINGS BEFORE THE LD . CIT(A), NO RELIEF WAS ALLOWED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THERE IS NO DENIAL OF FACT THAT THE ASSESSEE, IN FACT, RAISED LOANS IN CASH AMOUNTING TO RS.88,18,000/- WHICH IS IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. ONCE THERE IS VIOLATION OF THE PROVISIONS OF SECTION 269SS, PENALTY IS TRIGGERED U/S.271D OF THE ACT. HOWEVER, IT IS RELEVANT TO NOTE THAT SECTION 273B DEALS WITH CERTAIN PENAL PROVISIONS, INCLUDING SECTION 271D, AND PROVIDES THAT NO PENALTY SHALL BE IMPOSED IF THE ASSESSE E SUCCEEDS IN PROVING THAT THE FAILURE RESULTING IN IMPOSITION OF ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 4 PENALTY WAS FOR A REASONABLE CAUSE. THUS, IT IS EVIDENT THA T ESCAPE FROM THE CLUTCHES OF PENALTY U/S 271D FOR VIOLATION O F THE PROVISIONS OF SECTION 269SS IS POSSIBLE WHEN THE ASSESSEE SUCCEEDS IN PROVING THAT A REASONABLE CAUSE EXISTED IN TERMS OF SECTION 273B FOR VIOLATION OF SECTION 269SS. 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE SPECIFICALLY SUBMITTED BEFORE THE AO DURING THE COURSE OF PENALTY PROCEEDINGS, WHICH FACT HAS ALSO BEEN CAPTURED IN THE PENALTY ORDER, THAT ITS BUSINESS WAS INOPERATI VE FOR THE LAST 7 YEARS AND IT HAD ALREADY BORROWED LOANS FR OM SHREE SUVARNA SAHAKARI BANK LTD. AND MANY PRIVATE MONEY LENDERS SINCE LAST 10 YEARS. TO MEET THE FINANCIAL REQUIRE MENTS OF REPAYMENT, FOR WHICH THE LENDERS WERE HARD PRESSING, THE ASSESSEE HAD TO BORROW MONEY FROM UNORGANIZED FINANCE SECTOR IN CASH, WHICH LED TO THE IMPOSITION OF THE INSTANT PENALTY. FURTHER, THE ASSESSEE HAD A BANK LIABILITY OF ABOUT RS.50 CRORE AGAINST MORTGAGE OF ASSETS OF ABOUT RS.5 CRO RE ONLY, WHICH FACT HAS NOT BEEN FALSIFIED. THE SUBMISSIONS MA DE BY THE ASSESSEE IN THIS REGARD HAVE NOT BEEN CONTROVERTED BY THE AO OR THE LD. CIT(A) IN ANY MANNER. WHEN THIS FACT IS ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 5 SEEN IN THE LIGHT OF RETURN FILED BY THE ASSESSEE DECLARING LOSS OF RS.4.35 LAKHS, IT CLEARLY EMERGES THAT THE LOANS WERE TA KEN BY THE ASSESSEE IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269SS TO MEET THE FINANCIAL LIABILITIES. THIS IN OUR CONSIDERED OPINION CONSTITUTES A REASONABLE CAUSE WARRANTING NON- IMPOSITION OF PENALTY U/S.271D OF THE ACT IN TERMS OF SECTION 273B OF THE ACT. WE, THEREFORE, ORDER TO DELETE THE PENA LTY OF RS.88,18,000/- IMPOSED/ENHANCED BY THE AO/LD. CIT(A). 6. IN VIEW OF OUR DECISION ON THE DELETION OF PENALTY ON MERITS, THERE IS NO NEED TO ESPOUSE AND ADJUDICATE THE LIMITATION ISSUE TAKEN UP BY THE ASSESSEE IN ITS APPEAL. 7. IN THE RESULT, THE APPEAL IS ALLOWED TO THIS EXTENT. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 15 TH JANUARY, 2019 ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-II, PUNE 4. 5. THE CIT-II, PUNE , , A / DR A, ITAT, PUNE; 6. ' / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.914/PUN/2014 M/S. P.R. ASSOCIATES 7 DATE 1. DRAFT DICTATED ON 14-01-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14-01-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *