Sh. Bhupinder Singh, Ludhiana V. JCIT, Ludhiana

ITA 926/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73503 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S R CHHABRA
• Keywords: Question of law; Reasonable cause; Tax effect
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 926/CHD/2012 ASSESSMENT YEAR: 2006-07 SHRI BHUPINDER SINGH, VS THE JCIT, RANGE IV, C/O M/S BHUPINDRA INDUSTRIES, LUDHIANA LUDHIANA PAN NO. ADTPS8280Q (APPELLANT) (RESPONDENT) DATE OF HEARING : 03/03/2014 DATE OF PRONOUNCEMENT : 11/03/2014 APPELLANT BY : SHRI S.R. CHHABRA RESPONDENT BY : SHRI AKHILESH GUPTA ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 22.08.2012 OF LD. CIT(A)-II, LUDHIANA. 2. IN THIS APPEAL THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER:- 1) THAT THE LD. CIT(A)-II LUDHIANA HAS ERRED IN LAW AN D ON FACTS OF THE CASE:- A) BY ARBITRARILY AND WRONGLY SUSTAINED THE ORDER DATE D 3.8.2011 IMPOSING PENALTY U/S 271D AMOUNTING TO RS . 6,00,000/- FOR THE ALLEGED CONTRAVENTION OF THE PRO VISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT THER E WAS A SURVEY IN THE PREMISES OF THE ASSESSEE WHEREIN EXCESS STOCK OF RS . 12.50 LAKHS WAS FOUND. FURTHER, SOME EXCESS CASH WAS ALSO FOUND. ULTIMATE LY, THE ASSESSEE SURRENDERED 2 A SUM OF RS. 12.50 LAKHS ON ACCOUNT OF STOCK AND RS . 6 LAKHS CASH IN THE HANDS OF TWO SONS AT RS. 3 LAKHS EACH AND ACCORDINGLY RET URN WAS FILED. LATER ON, THE ASSESSEE RECORDED A SUM OF RS. 6 LAKHS IN THE BOOKS OF ACCOUNT AT RS. 3 LAKHS EACH AND GAVE CREDIT TO THE SONS OF THE ASSESSEE. T HIS WAS TREATED AS LOAN IN CASH IN VIOLATION OF SECTION 269SS OF THE ACT AND PENALT Y PROCEEDINGS U/S 271D WERE INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE IT WAS MAINLY STATED THAT THE AMOUNT OF RS. 12.50 LAKHS ON ACCOUNT OF CASH FOUND DURING THE SURVEY WHICH WAS SURRENDERED WAS RECORDED IN THE BOOKS OF THE AS SESSEE IN THE NAMES OF TWO SONS IN WHOSE HANDS SUCH INCOME HAS BEEN DISCLOSED, THEREFORE, THIS ACTION WAS TAKEN WITHOUT ANY MALAFIDE SINCE THERE IS NO LOSS T O THE REVENUE AND PENALTY PROCEEDINGS WERE NOT ATTRACTED. THE ASSESSING OFFI CER DID NOT FIND FORCE IN THESE SUBMISSIONS AND LEVIED A PENALTY U/S 271D OF THE ACT. THE ASSESSEE COULD NOT IMPROVE UPON HIS CASE BEFORE THE LD. CIT(A), WH O CONFIRMED THE ACTION OF ASSESSING OFFICER. 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND CIT(A). HE SUBMIT TED THAT ONCE A SUM OF RS. 6 LAKHS WAS DISCLOSED IN THE SURVEY SOME ENTRIES HAV E TO BE MADE IN THE BOOKS OF ACCOUNT. SINCE SURRENDER WAS MADE IN THE HANDS OF T WO SONS OF THE ASSESSEE, THE AMOUNT WAS RECORDED IN THE FIRM AS LOAN FROM TWO S ONS. THIS WAS DONE ON THE ADVICE OF THE COUNSEL. SINCE THE AMOUNT HAS ALREAD Y BEEN SURRENDERED AND THEREFORE, NO PENALTY SHOULD HAVE BEEN LEVIED. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- A) CIT V SUNIL KUMAR GOEL (2009) 21 DTR 43 (P&H) B) CIT VS SAINI MEDICAL STORE (2005) 276 ITR 79 (P &H) C) CIT V BHAGWATI PRASAD BAJORIA (HUF) (2003) 263 ITR 487 (GAUHATI) D) CIT VS PARMANAND 266 ITR 255 (DELHI) E) CIT V MANOJ LALWANI 260 ITR 590 (RAJ.) 3 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT ACTUALLY THE ASSESSEE HAS NOT TAKEN ANY LOAN FROM THE SONS BUT EXCESS CAS H WHICH WAS FOUND DURING THE SURVEY HAS BEEN SURRENDERED IN THE NAMES OF TWO SONS OF THE ASSESSEE. LATER ON, WHEN ENTRIES WERE REQUIRED TO BE MADE AGAINST T HE SURRENDERED INCOME THEN THE SAME WAS SHOWN AS LOANS FROM TWO SONS. THE HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V SUNIL KUMAR GOEL (S UPRA) WHEREIN THE ASSESSEE HAD ACCEPTED CASH LOANS ON VARIOUS DATES EXCEEDING RS. 20,000/- FROM RELATIVES, PENALTY WAS HELD TO BE NOT IMPOSABLE. IT WAS HELD AS UNDER:- HELD, THAT THERE WAS NO DISPUTE ABOUT THE FACT THA T THE CASH TRANSACTIONS OF THE ASSESSEE WERE WITH THE SISTER CONCERN AND THESE TRANSACTIONS WERE WITHIN THE FAMI LY AND DUE TO BUSINESS EXIGENCY. A FAMILY TRANSACTION, BET WEEN TWO INDEPENDENT ASSESSEES, BASED ON AN ACT OF CASUA LNESS, SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF WA S CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAD NO TAX EFFECT, ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT. SINCE THE ASSESSEE HAD SATISFACTORILY ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT, HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIENT CAUSE FOR NOT INVOKING THE P ENAL PROVISIONS OF SECTIONS 271D AND 271E OF THE ACT AGA INST HIM. THE DELETION OF PENALTY BY THE TRIBUNAL WAS VA LID. WHILE HOLDING THE ABOVE POSITION, THE HON'BLE PUNJ AB & HARYANA HIGH COURT HAD IN TURN RELIED ON ANOTHER DECISION O F THE SAME COURT IN THE CASE OF SAINI MEDICAL STORE (SUPRA) 277 ITR 420 AND THE FOLLOWING OBSERVATIONS HAS ALSO BEEN EXTRACTED AT PARA 16. AS POINTED OUT EARLIER, THERE IS NO DOUBT ABOUT TH E 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 AND VENIAL WHICH DID NOT PREJUDICE THE INTERESTS OF THE 4 REVENUE AS NO TAX AVOIDANCE OR TAX EVASION WAS INVO LVED. TO MY MIND, BONA FIDE BELIEF COUPLED WITH THE GENUI NENESS OF THE TRANSACTIONS WOULD CONSTITUTE REASONABLE CAU SE UNDER SECTION 273B FOR NOT INVOKING THE PROVISIONS OF SECTION 271E OF THE ACT. THE IMPUGNED ORDER OF PENA LTY IS CANCELLED. THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APP EALS) HAVE BEEN CONFIRMED IN APPEAL BY THE TRIBUNAL. THEREFORE, THE FINDINGS RECORDED BY THE COMMISSIONE R OF INCOME-TAX (APPEALS) AND THE TRIBUNAL THAT THE ASSE SSEE HAD SHOWN REASONABLE CAUSE FOR THE FAILURE TO COMPL Y WITH THE PROVISIONS OF SECTION 269T OF THE ACT IS A FIND ING OF FACT BASED ON APPRECIATION OF MATERIAL ON RECORD. IT DOE S NOT GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS SUBSTAN TIAL QUESTION OF LAW. ACCORDINGLY, THE APPEAL IS DISMISS ED. 7. THUS, IT IS CLEAR FROM THE ABOVE TWO DECISIONS T HAT IF THE TRANSACTIONS ARE BETWEEN RELATIVES AND WITHOUT ANY MALAFIDE INTENTIO N, THEN PENALTY IS NOT LEVIABLE. 8. IN THIS CASE BEFORE US, IT IS MERELY A TECHNICAL BREACH OF LAW BECAUSE ASSESSEE MIGHT NOT HAVE TAKEN ANY LOAN BUT TO RECOR D THE SURRENDER INCOME, THE SAME HAS BEEN SHOWN IN THE NAMES OF THE SONS. IN O UR OPINION, THIS IS NOT A FIT CASE OF LEVY OF PENALTY AND ACCORDINGLY WE DELETE T HE PENALTY. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 11 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5