Assistant Commissioner of Income-tax, V. Nitin Mohan Wadikar, Kolhapur

ITA 925/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0988 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Reasonable cause

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NOS.924 & 925/PN/2014 % % / ASSESSMENT YEARS : 2008-09 & 2009-10 ACIT, CIRCLE - 1, KOLHAPUR . / APPELLANT V/S NITIN MOHAN WADIKAR, PROP. OF MAHARASHTRA ENTERPRISES, E-1325/20, PLOT NO.36, Y.P. POWAR NAGAR, KOLHAPUR PAN : AABPW5392A . / RESPONDENT . / ITA NOS.926 & 927/PN/2014 % % / ASSESSMENT YEARS : 2008-09 & 2009-10 ACIT, CIRCLE - 1, KOLHAPUR . / APPELLANT V/S MRS. MANISHA NITIN WADIKAR, PROP. OF MAHARASHTRA ENTERPRISES, E-1325/20, PLOT NO.36, Y.P. POWAR NAGAR, KOLHAPUR PAN : AABPW2024M . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER R.K. PANDA, AM : THE ABOVE 4 APPEALS FILED BY THE REVENUE ARE DIRECTED AG AINST THE SEPARATE ORDERS DATED 20-02-2014 OF THE CIT(A) KOLH APUR RELATING TO ASSESSMENT YEARS 2008-09 & 2009-10 RESPECTIVELY. SINCE / DATE OF HEARING :24.08.2016 / DATE OF PRONOUNCEMENT: 31.08.2016 2 ITA NOS.924 TO 927/PN/2014 COMMON GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN ALL T HESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE B EING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO.924/PN/2014 IN THE CASE O F SHRI NITIN MOHAN WADIKAR FOR A.Y. 2008-09 AS THE LEAD CASE. GROU NDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE AMOUNT OF RS.28,00,000/- RECEIVED BY THE ASSESSEE IN CASH IS NOTHING BUT DEPOSITS/LOAN ACCEPTED IN CONTRAVENTION OF THE PROVISI ONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. 2. THE ORDER OF THE LD.CIT(A), KOLHAPUR BE VACATED AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, ALTER, AMEN D OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT IN THE COURSE OF APP ELLATE PROCEEDINGS REMAND REPORTS WERE CALLED FOR BY THE CIT(A) , KOLHAPUR FROM THE AO. IN THE COURSE OF SENDING THE REMAND REPOR T, THE AO MENTIONED THAT THERE WAS VIOLATION U/S. 269SS BY THE AS SESSEE IN RESPECT OF CERTAIN TRANSACTIONS. DURING THE YEAR, THE ASS ESSEE HAD ACCEPTED CASH LOANS/DEPOSITS OF RS. 28 , 00,000/- FROM FIVE PERSONS . THE CASE OF VIOLATION U/S. 269SS WAS REFERRED TO THE AD DL . CIT, RANGE-I, KOLHAPUR BY THE AO . SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 01-03-2013 TO SHOW CAUSE AS TO WHY PENA LTY U/S. 271D SHOULD NOT BE IMPOSED AS HE HAS STATED BEFORE CIT(A) TH AT CASH LOANS WERE RECEIVED WHICH WERE USED FOR PURCHASES AS THERE W AS NO OTHER OPTION WITH THE ASSESSEE. THE ASSESSEE FILED HIS SUBMISSION ON 21- 05-2013 WHEREIN IT WAS SUBMITTED THAT ASSESSEE WAS IN N EED OF CASH FOR CERTAIN PURCHASES DUE TO WHICH LOANS WERE TO BE TAK EN FROM FRIENDS . ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF SPECIAL 3 ITA NOS.924 TO 927/PN/2014 PURPOSE MACHINE FOR WHICH SPECIAL TYPE OF RAW MATERIAL IS RE QUIRED WHICH IS PURCHASED FROM OPEN MARKET. ASSESSEE HAD ALREA DY UTILIZED WORKING CAPITAL LIMIT SANCTIONED BY BANKS AND HE HAD NO MO NEY AVAILABLE . DUE TO THIS REASON, THERE WAS NO OPTION OF RAISING MONEY BUT TO RECEIVE CASH LOANS FROM FRIENDS . GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF LOAN WERE DULY EXPLAINED AT THE T IME OF ASSESSMENT AND ALSO BEFORE THE CIT(A) , KOLHAPUR . DCIT, CIRCLE-I, KOLHAPUR HAS SUMMONED ONE OF THE LOAN CREDITOR FARMER AN D GIVING OF THE LOAN WAS CONFIRMED BEFORE THE AO. THE ADDL . CIT DID NOT ACCEPT THIS EXPLANATION . AS PER THE ADDL . CIT, THERE WAS NO DOUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS WHICH THE ASSESSEE WAS ABLE TO PROVE BEFORE THE AO DURING THE COURSE OF SENDING THE REMAND REPORT, THOUGH THE ASSESSEE NEVER PROVIDED SUCH EXPLANATION D URING THE COURSE OF ASSESSMENT PROCEEDINGS . HOWEVER, THE ASSESSEE COULD NOT ESTABLISH THE EXISTENCE OF ANY BUSINESS EXIGENCY TO RECEIV E LUMPSUM AMOUNTS BY A MODE OTHER THAN BY ACCOUNT PAYEE CHEQU ES OR ACCOUNT PAYEE DRAFTS . THE ADDL . CIT FURTHER OBSERVED THAT UNLESS THE ASSESSEE PROVES BEYOND DOUBT THAT FOR SOME BONAFIDE REASONS THE ASSESSEE COULD NOT GET LOAN B Y ACCOUNT PAYEE CHEQUE, PROVISIONS OF SECTION 271D WILL BE ATTRACTED . THEREFORE, THE ADDL . CIT IMPOSED PENALTY OF RS.28,00,000/- U/S. 271D FOR A.Y. 2008-09. SIMILARLY, PENALTY O F RS.12,00,000/- HAS BEEN LEVIED BY THE ADD.CIT FOR A.Y. 2009-10. 4. BEFORE CIT(A) IT WAS ARGUED THAT DURING QUANTUM APPEA L PROCEEDINGS THE GENUINENESS OF PERSONAL / HAND LOANS ACCEPTED IN CASH FROM FARMER FRIENDS OF THE ASSESSEE WAS ACCEPTED IN THE REMAND REPORT BY THE AO . THE ASSESSEE IS A MANUFACTURER OF SPECIAL PURPOSE MACHINES AND FOR PURCHASE OF RAW MATERIALS THERE WAS URG ENT NEED OF MONEY. AS ASSESSEE IS FULLY UTILIZING HIS WORKING CAPITAL I.E. C ASH 4 ITA NOS.924 TO 927/PN/2014 CREDIT LIMIT SANCTIONED BY BANKS AND ALSO DUE TO THE FACT THAT HE HAS TO MAKE THE PURCHASES FROM OPEN MARKET, HE HAD TO REC EIVE THE MONEY IN CASH FROM HIS FRIENDS FOR THIS PURPOSE. IT WAS SUB MITTED THAT HIS FARMER FRIENDS WERE NOT MUCH CONVERSANT WITH B ANKING FACILITIES AND IN SMALL VILLAGES THERE ARE NO LATEST BANKING FACILIT IES SUCH AS RTGS WITH SMALL CO-OPERATIVE BANKS AND ASSESSEE 'S FRIENDS HAVE CASH AVAILABLE WITH THEM FROM SALE OF AGRICULTURAL PRODU CE MAINLY GRAPES AND RAISINS. DUE TO THESE CIRCUMSTANCES HE HAD NO OPTION BUT TO ACCEPT THE LOANS. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY LEVIED BY THE ADDL.CIT U/S.271D BY HOLDING THAT THERE WAS EXIGENCY OF BUSINESS REQUIREMENTS FOR RECEIVING THE CASH. SINCE THERE WAS A REASONABLE CAUSE FOR FAILURE OF PROVISIONS OF SECTION 269SS HE DELETED THE PENALTY LEVIED B Y THE ADDL.CIT U/S.271D OF THE ACT. THE RELEVANT OBSERVATION OF THE CIT(A) READS AS UNDER : 5. HAVING GONE THROUGH THE PENALTY ORDER AND CONSID ERED APPELLANT'S SUBMISSION, I FIND THAT AS PER SECTION 269SS PENALTY IS LEVIABLE IN CASE OF ANY LOAN/ DEPOSIT IN EXCESS OF RS. 20,000/ - IF ACCEPTED BY A PERSON OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE. PENALTY IS LE VIABLE UNDER SECTION 2710 WHICH IS EQUAL TO THE AMOUNT OF SUCH LOAN / DEPOSIT . FURTHER, AS PER SECTION 273B, NO PENALTY SHALL BE IMPO SABLE IF IT IS PROVED BY THE PERSON THAT THERE WAS REASONABLE CAUSE FO R THE VIOLATION UNDER SECTION 269SS . FROM THE FACTS AS BROUGHT OUT IN THE PREVIOUS PARAGRAPHS, ASSESSEE WAS IN URGENT NEED OF CASH . HE HAS EXHAUSTED THE OTHER AVENUES AVAILABLE TO HIM I.E . FROM CASH CREDIT LIMIT FROM BANK . HE HAD NO OTHER OPTION BUT ACCEPT MONEY FROM HIS FRIENDS WHO HAD THE MONEY AVAILABLE IN CASH FROM SALE OF THEIR AGRICULTURAL PRODUCE. ON THESE FACTS IF POSITION OF L AW AS INTERPRETED BY VARIOUS AUTHORITIES IS EXAMINED, THE ITAT, BENCH 'A ', HYDERABAD IN THE CASE OF ANDHRA BOMBAY CARRIERS VS CIT ITA 425/HYD /2009 HAS OBSERVED THAT THE OBJECT OF INTRODUCING SECTION 269SS IS TO ENSURE THAT THE TAX PAYER IS NOT ALLOWED TO GIVE FALSE EXPLANATI ON OR IF HE MAKES SOME FALSE ENTRIES, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME . DURING THE SEARCH AND SEIZURE OPERATIONS UNACCOUNTED MONEY IS UNEARTHED AND TAX PAYER USUALLY GIVE THE EXP LANATION THAT HE HAD BORROWED DEPOSITS FROM FRIENDS AND IT IS EACH FROM THE SO C A LLED 5 ITA NOS.924 TO 927/PN/2014 LENDERS ALSO TO MANIPULATE HIS RECORDS TO SUIT THE PLEA OF THE TA X PAYER . TH E M A IN OBJECTIVE OF SECTION 269SS IS TO CURB THIS MENACE OF M A KING F A LSE ENTRIES IN ACCOUNT BOOKS. THEREFORE, IF THERE IS A GENUINE A ND BON A FIDE TR A NSACTION , THE AUTHORIT Y IS V ESTED W ITH THE POWER TO IMPOSE PEN A LT Y AS P E R DIS C RETION. IN THE CASE OF CIT VS MAH E SHWARI M VANNI E R HONOUR A BLE HIGH COURT BOMBAY H A S H E LD TH A T IN C AS E O F AN A SS E SSE E OBT A ININ G LO AN O F RS. 25 , 22 , 000/- FROM C LO S E RELATIV E S IN C A SH FOR PURCHASE OF HOUSE , TH E TRIBUN A L W A S RIGHT IN HOLDING THAT TH E RE WA S R E ASONABLE CAUSE AND , THEREFORE , IT WAS NOT A FIT C A SE FOR IMPOSITION OF P E N A LT Y AS THE PERSONS GI V ING LO A N H A D I NCOM E FROM A GR I CULTUR A L OPER A TIONS AND THE LOAN WAS A DVANCED OUT OF THEIR A GRI C ULTUR A L INCOME. IN THE CASE OF CIT VS VOLPAK SECURITI E S LTD. , HONOUR A BL E GUJARAT HIGH COURT H A S H E LD THAT IN C A SE W HERE THE ASSESSE E H A D A C C E PTED THE LO A N TO MEET C E RTAIN EXIG E NCIES, TH E TRIBUNAL WAS RIGHT IN DEL E TING TH E PEN A LT Y UNDER SECTION 271D BY HOLDING THAT TH E RE W A S E XIGEN CY OF BUSIN E SS R E QUIREMENTS FOR RECEI V ING C A SH LOAN . I FIND TH A T T HE FA CT S OF THE CA S E A R E SIM I L A R TO TH E CASES REFERRED ABO V E A ND THE A SS E SS E E W AS C OMP E LL E D TO REC E IVE C A SH LOAN . TH E REFORE, THERE WAS REASONABLE C A US E FOR VIOLATION OF P R OVISIONS OF SECTION 269SS. THER E FORE , THE P E N A LT Y IMP O S E D B Y TH E ADDL . CIT IS HER E B Y DELETED . 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE ADDL.CIT. HE SUBMITTED THAT THE ASSESSEE HAS NOT CREDITED THE ABOVE LOANS/DEPOSITS IN HIS BOOKS OF ACCOUNT DURING THE RELEVANT ASSESSMENT YEAR. ONLY DURING THE COURSE OF AP PELLATE PROCEEDINGS WHILE EXPLAINING THE SOURCES FOR THE PURCHASE OF RAW MATERIALS FROM OPEN/GREY MARKET THESE SOURCES OF HAND LO ANS FROM FARMER FRIENDS WERE EXPLAINED. HE SUBMITTED THAT THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS NEVER INFOR MED THE AO THAT SUCH SUBSTANTIAL CASH LOANS/DEPOSITS WERE TAKEN BY THE ASSESSEE FROM THE FARMER FRIENDS FOR THE PURPOSE OF ASSE SSEES BUSINESS IN GENERAL AND PARTICULARLY FOR THE PURCHASE OF R AW MATERIALS FROM OPEN/GREY MARKET. IT WAS ONLY DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE BROUGHT INTO SUCH AR GUMENTS TO EXPLAIN HIS UNEXPLAINED CREDITS IN THE BOOKS OF ACCOUNT IN T HE NAME OF OTHERS. WHILE DISPOSING THE APPEAL AGAINST ADDITIONS MADE IN THE 6 ITA NOS.924 TO 927/PN/2014 ASSESSMENT, THE FACTS RELATING TO GENUINENESS OF TRANSACT IONS OF CASH LOANS WERE ACCEPTED ON THE BASIS OF AOS REMAND REPORT . THE ASSESSEE HOWEVER HAD ADMITTED AND MAINTAINED THAT THE MONEY SO RAISED WERE UTILIZED IN MAKING CASH PURCHASES FOR THE PURP OSE OF PRODUCTION. NO EVIDENCE COULD BE GIVEN BECAUSE THE SAME WAS MADE FROM GREY MARKET IN CASH. FURTHER, THE BUSINESS EXIGENCY FOR USAGE OF THE SAME FOR THE PURPOSE OF PURCHASE OF MATERIALS FROM GREY/OPEN MARKET COULD NEITHER BE ESTABLISHED NOR PROVED WITH SUPP ORTING EVIDENCES. HE SUBMITTED THAT THE SUBSEQUENT EXPLANATION OF THE ASSESSEE THAT SUCH HUGE LOANS/DEPOSITS IN CASH WERE TA KEN BY THE ASSESSEE AND NOT ENTERED INTO THE REGULAR BOOKS OF ACC OUNT AND THAT THE ASSESSEE HAS STARTED REPAYING SUCH LOANS RAISED FRO M FARMER FRIENDS BY CROSSED DEMAND DRAFTS/ RTGS/NEFT DOES NOT AFFE CT THE APPLICATION OF PROVISIONS OF SECTION 269SS OF THE ACT AT ALL. T HE ASSESSEE IN THE INSTANT CASE HAS SHOWN THE BOGUS ENTR Y OF LIABILITY IN THE NAMES OF 3 CONCERNS DURING THE RELEVANT ASSESSMENT YEAR INSTEAD OF SHOWING SUCH LIABILITY OF GENUINELY ACCEPTING/TAKING CASH FROM THE ASSESSEES FARMER FRIENDS AS DEPICTED ABOVE. FURTHER IN THE AUDIT REPORT ALSO THE AUDITORS HAVE NOT MENTIONED ABOUT THE ACCEPTANCE OF SUCH CASH LOANS IN VIOLATION OF PROVISIONS OF SECTION 269SS. HE SUBMITTED THAT WHEN THE ASSESSEE HAS MANIPULATED HIS AC COUNTS BY NOT SHOWING THE CASH LOANS IN VIOLATION OF PROVISIONS OF SECT ION 269SS, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S.271D OF THE ACT. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ADDL.CIT. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ADDL.CIT BE RESTORED. 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT IT IS A N ADMITTED 7 ITA NOS.924 TO 927/PN/2014 FACT THAT INITIALLY THE ASSESSEE HAD NOT DISCLOSED THE ABO VE AMOUNTS RECEIVED IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269SS. ONLY DURING THE QUANTUM APPEAL PROCEEDINGS BEFORE THE CIT(A) T HE ASSESSEE VOLUNTARILY CAME FORWARD AND DISCLOSED THE HAND LOANS FROM FARMER FRIENDS TAKEN IN CASH IN EXCESS OF RS.20,000/-. THE GENUINENESS OF THE PURCHASES HAVE NOT BEEN DOUBTED. S INCE THE ASSESSEE WAS IN URGENT NEED OF CASH AND HE HAD EXHAUS TED THE OTHER AVENUES AVAILABLE TO HIM, I.E. CASH CREDIT LIMIT FROM BANK ETC. HE HAD NO OTHER OPTION BUT TO ACCEPT THE MONEY FROM HIS FRIENDS WHO HAD T HE MONEY AVAILABLE IN CASH FROM SALE OF THEIR AGRICULTURAL PRODU CE. THEREFORE, THERE WAS A REASONABLE CAUSE AS PER THE PRO VISIONS OF SECTION 273B. THEREFORE, THE CIT(A) WAS FULLY JUSTIFIED IN DELE TING THE PENALTY LEVIED BY THE ADD.CIT. 9. REFERRING TO THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. LAKSHMI TRUST COMPANY REPORTED IN 303 I TR 99 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISIO N HAS DISMISSED THE APPEAL FILED BY THE REVENUE WHERE THE TRIBUN AL HAS CONFIRMED THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED U/S.271D/271E ON THE GROUND THAT THE TRANSACTIONS OF C ASH LOANS AND ITS REPAYMENTS WERE GENUINE AND THERE WAS NO INTEN TION TO EVADE TAX. REFERRING TO THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF KAMEN JASWANTLAL SHAH VS. ITO REPO RTED IN 52 SOT 79 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DEC ISION HAS HELD THAT NO PENALTY WOULD BE IMPOSABLE ON A PERSON OR AN ASSESSEE FOR ANY FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269 SS AND SECTION 269T IF THE ASSESSEE PROVES THAT THERE WAS A RE ASONABLE CAUSE FOR SUCH FAILURE. HE ACCORDINGLY SUBMITTED THAT TH E ORDER PASSED BY THE CIT(A) BEING IN ACCORDANCE WITH LAW THE SA ME SHOULD 8 ITA NOS.924 TO 927/PN/2014 BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INST ANT CASE IS AN INDIVIDUAL HAD ENGAGED IN THE BUSINESS OF MANUFACTURE OF SPECIAL PURPOSE MACHINES, JIGS & FIXTURES, MACHINE TOOLS ETC. IN T HIS CASE, THE AO WHILE COMPLETING THE ASSESSMENT U/S.143(3) OF THE I .T. ACT AND MADE ADDITION OF RS.1,76,61,989/- ON ACCOUNT OF FICTITIOU S LIABILITY SHOWN IN THE BOOKS UNDER SUNDRY CREDITORS. WHILE EXPLAINING THE CASE BEFORE THE CIT(A) THE ASSESSEE FILED CER TAIN DETAILS BASED ON WHICH THE LD.CIT(A) CALLED FOR A REMAND RE PORT FROM THE AO. DURING THE COURSE OF SENDING SUCH REMAND REPOR T THE AO NOTED THAT THERE IS VIOLATION UNDER THE PROVISIONS OF SECT ION 269SS FOR WHICH HE REFERRED THE MATTER TO THE ADDL.CIT, RANGE-I , KOLHAPUR. ON BEING CONFRONTED BY THE ADDL.CIT, IT WAS SUBMITTED BY T HE ASSESSEE THAT HE WAS IN NEED OF CASH FOR CERTAIN PURCHA SES DUE TO WHICH LOANS WERE TAKEN FROM HIS FRIENDS IN CASH. IT WAS ALS O EXPLAINED THAT THERE WAS NO LATEST BANKING FACILITIES AVAILA BLE IN THE VILLAGES WHERE HIS AGRICULTURAL FRIENDS ARE STAYING AND FROM W HOM THE CASH LOAN WAS TAKEN. IT WAS EXPLAINED THAT THERE W AS REASONABLE CAUSE FOR ACCEPTING THE CASH LOANS. HOWEVER, WE FIND THE ADDL.CIT WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESS EE AND LEVIED PENALTY OF RS.28 LAKHS U/S.271D OF THE I.T. ACT. WE FIND IN APPEAL THE LD.CIT(A) DELETED THE SAME ON THE GROUND THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR VIOLA TION OF THE PROVISIONS OF SECTION 269SS. ACCORDING TO HIM, SINCE THE AS SESSEE 9 ITA NOS.924 TO 927/PN/2014 WAS IN URGENT NEED OF CASH AND HAS EXHAUSTED ALL OTHER AVENUES AVAILABLE WITH HIM, THEREFORE, HE HAD NO OTHER OPTION BUT TO ACCEPT THE MONEY FROM HIS FRIENDS IN VIOLATION OF PROVISIONS OF SEC TION 269SS. 11. WE DO NOT FIND ANY MERIT IN THE REASONINGS GIVEN BY T HE LD.CIT(A) WHILE DELETING THE PENALTY LEVIED BY THE AO U/S.2 71D. ADMITTEDLY IN THE INSTANT CASE THE ASSESSEE HAS MANIPU LATED HIS ACCOUNTS, AND HAS NOT SHOWN SUCH LOANS IN THE BOOKS OF ACCOUNT. THE AUDITORS IN THE REPORT IN FORM 3CD AT CLAUSE 24 HAV E CATEGORICALLY STATED THAT NO NEW LOANS OR DEPOSITS WERE ACCEPTED DURING THE CURRENT PREVIOUS YEAR. THE RELEVANT COLUMN O F THE AUDITORS REPORT READ AS UNDER : 24 (A) PARTICULARS OF EACH LOAN OR DEPOSIT IN AN AMOUNT EXCEEDING THE LIMIT SPECIFIED IN SECTION 269SS TAKEN OR ACCEPTED DURING THE PREVIOUS YEAR AS IT APPEARS FROM THE BOOKS OF ACCOUNT & AS STATED BY THE ASSESSEE NO NEW LOAN OR DEPOSITS WERE ACCEPTED DURING CURRENT PREVIOUS YEAR 12. THE ASSESSEE HAS NOT STATED ANYTHING ON THIS ISSUE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ONLY D URING APPEAL PROCEEDINGS WHILE EXPLAINING THE SUNDRY CREDITORS T HAT THE ASSESSEE STATED THAT HE HAD ACCEPTED CASH LOANS FROM HIS FARMER FRIENDS AND THERE WAS BUSINESS EXIGENCY FOR ACCEPTING SU CH CASH LOANS IN VIOLATION OF PROVISIONS OF SECTION 269SS. WHEN THE A CCOUNTS ARE MANIPULATED AND ASSESSEE HAD NOT DISCLOSED SUCH CAS H LOANS DURING THE ASSESSMENT PROCEEDINGS AND THE AUDIT REPORT ALSO IS SILENT ON THIS ISSUE, THEREFORE, THE QUESTION OF REASONABLE CAUSE IN OUR OPINION DOES NOT ARISE. 10 ITA NOS.924 TO 927/PN/2014 13. THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL RELIED ON BY THE CIT(A) WHICH HAS ALREADY BEEN REPRODUCED IN THE P RECEDING PARAGRAPHS IS COMPLETELY MISPLACED. IN THAT CASE, THE TRIB UNAL HAD CATEGORICALLY OBSERVED THAT THE OBJECT OF INTRODUC ING SECTION 269SS IS TO ENSURE THAT THE TAX PAYER IS NOT ALLOWED TO GIVE FALSE EXPLANATION OR IF HE MAKES SOME FALSE ENTRIES HE SHALL NOT E SCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. THE FACTS OF THE INST ANT CASE ARE IDENTICAL TO THE ABOVE OBSERVATIONS. THE ASSESSEE IN THE INITIAL STAGE HAD NOT DISCLOSED SUCH TYPE OF CASH LOANS RECEIVED . ONLY WHEN HUGE ADDITION WAS MADE BY THE AO ON ACCOUNT OF FICTITIOUS LIABILITY UNDER THE HEAD SUNDRY CREDITORS THAT THE ASSESSEE CA ME FORWARD WITH THE EXPLANATION OF ACCEPTING CASH LOANS FROM FARMER FRIE NDS TO MEET THE PURCHASE REQUIREMENTS. IT IS A SEPARATE THIN G THAT IN QUANTUM PROCEEDINGS SUCH PURCHASES WERE ACCEPTED AS GENUINE. HOWEVER, FOR PENALTY PROCEEDINGS THE TOTALITY OF THE FACTS ARE TO BE LOOKED INTO. 14. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO V S. SUNIL M. KASLIWAL REPORTED IN 94 ITD 281 (TM) (PUNE TRIBUNAL) HAS HELD THAT IT IS NOT SUFFICIENT TO SAY SIMPLY THAT TRANSACTION WA S GENUINE OR SECTION 269SS IS NOT APPLICABLE. CIRCUMSTANCES UNDER WHICH CASH WAS ACCEPTED ARE TO BE EXPLAINED WHERE THE ASSESSEE T OOK CASH LOANS FROM TWO LADIES FOR PURCHASING MACHINERY, SINCE URGENT REQU IREMENT OF CASH WAS NOT KNOWN AND MACHINERY WAS NOT PURCHASED ONLY AFTER TAKING LOAN FROM THE LADIES. IT INDICATED THAT THE ASSESSE E COULD HAVE COMPLIED WITH THE REQUIREMENT OF SECTION 269SS WITHOU T MUCH DIFFICULTY AND AS SUCH PENALTY IN RESPECT OF LOAN WAS JUSTIFIED. 11 ITA NOS.924 TO 927/PN/2014 15. NOW COMING TO THE FACTS OF THE PRESENT CASE WE FIND THE ASSESSEE HAS NOT GIVEN THE DATES ON WHICH HE HAS ACCE PTED THE LOANS AND THE DATE OF PURCHASE OF SUCH MATERIALS FROM THE GR EY MARKET AND WHETHER CASH WAS AVAILABLE IN THE BOOKS OR THE URGENCY OF PURCHASE OF SUCH MATERIALS BY TAKING CASH LOAN. MERELY BECAUSE IN QUANTUM PROCEEDINGS THE PURCHASES WERE ACCEPTED AS GENUINE TH AT WILL NOT ABSOLVE THE ASSESSEE FROM THE CLUTCHES OF PROVISIONS OF SE CTION 271D FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS. SINCE IN THE INSTANT CASE THE CONDUCT OF THE ASSESSEE FROM THE VERY BEGINNIN G IS SUSPICIOUS AND THE ASSESSEE HAS INDULGED IN MANIPULATION OF ITS ACCOUNTS, THEREFORE, THE VARIOUS DECISIONS RELIED ON BY TH E LD. COUNSEL FOR THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE US ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE COU RTS HAVE SYMPATHY FOR PERSONS WHO ARE INNOCENT OR WHERE THE DE FAULT IS ONLY MERELY A TECHNICAL ONE. HOWEVER, IN THE INSTANT CASE, THE VERY CONDUCT OF THE ASSESSEE APPEARS TO BE SUSPICIOUS SINCE THE ACCOUNTS ARE MANIPULATED AS NO SUCH LOANS WERE SHOWN IN THE AUDIT ED ACCOUNTS OR AUDIT REPORT. THEREFORE, THE OBSERVATION O F THE CIT(A) IN THE INSTANT CASE THAT THERE WAS A REASONABLE CAUSE IS MISPLACED. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND REST ORE THE ORDER OF THE ADDL.CIT. THUS, THE PENALTY LEVIED BY THE ADDL.CIT IS CONFIRMED. THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED. ITA NO.925/PN/2014 -SHRI NITIN MOHAN WADIKAR (A.Y. 2 009-10): 16. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE AMOUNT OF RS.12,00,000/- RECEIVED BY THE ASSESSEE IN CASH IS NOTHING BUT DEPOSITS/LOAN ACCEPTED IN CONTRAVENTION OF THE PROVISI ONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. 12 ITA NOS.924 TO 927/PN/2014 2. THE ORDER OF THE LD.CIT(A), KOLHAPUR BE VACATED AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, ALTER, AMEN D OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 17. AFTER HEARING BOTH THE SIDES, WE FIND THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE FACTS IN ITA NO.924/PN/2014. WE HAVE ALREADY DECIDED THE ISSUE AND HELD THAT THE ORDER OF THE CIT(A) DELETING THE PENALTY LEVIED U/S.271D FOR VIOLATION OF PROVISIONS OF SECTION 269SS IS NOT CORRECT AND ACCORDINGLY WE HAVE R EVERSED THE SAME AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN ALLOWED. FOLLOWING THE SAME REASONINGS THE ABOVE GROUNDS RAISED B Y THE REVENUE ARE ALLOWED. 18. GROUNDS RAISED BY THE REVENUE IN ITA NOS.926 & 927/PN/2014 IN THE CASE OF MRS. MANISHA NITIN WADIKAR FO R A.YRS. 2008-09 AND 2009-10 ARE AS UNDER: GROUNDS FOR A.Y. 2008-09 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE AMOUNT OF RS.30,50,000/- RECEIVED BY THE ASSESSEE IN CASH IS NOTHING BUT DEPOSITS/LOAN ACCEPTED IN CONTRAVENTION OF THE PROVISI ONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. 2. THE ORDER OF THE LD.CIT(A), KOLHAPUR BE VACATED AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, ALTER, AMEN D OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUNDS FOR A.Y. 2009-10 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE AMOUNT OF RS.14,50,000/- RECEIVED BY THE ASSESSEE IN CASH IS NOTHING BUT DEPOSITS/LOAN ACCEPTED IN CONTRAVENTION OF THE PROVISI ONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. 2. THE ORDER OF THE LD.CIT(A), KOLHAPUR BE VACATED AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, ALTER, AMEN D OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 13 ITA NOS.924 TO 927/PN/2014 19. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUN DS BY THE REVENUE ARE IDENTICAL TO THE GROUNDS IN ITA NO.924/PN/2 014. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED B Y THE REVENUE HAVE BEEN ALLOWED. FOLLOWING THE SAME REASONINGS , THE GROUNDS RAISED BY THE REVENUE IN THE ABOVE APPEALS ARE ALSO ALLOWED. 20. IN THE RESULT, ALL THE 4 APPEALS FILED BY THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 31 ST AUGUST, 2016. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT-(A), KOLHAPUR 4. % S / THE CIT, KOLHAPUR 5. ( ++, , , , IQ.KS / DR, ITAT, A PUNE; 6. 0 / GUARD FILE. / BY ORDER , ( + //TRUE COPY // 23 + , / SR. PRIVATE SECRETARY ,, IQ.KS / ITAT, PUNE