M/S MILIND KUMAR RANA, Dhamtari(C.G) V. THE JOINT COMMISSIONER OF INCOME TAX, RAIPUR (CG)

ITA 97/BIL/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9683 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 29-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Reassessment proceedings
• Section: 273B; 143(3); 27; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.97/RPR/2016 ASSESSMENT YEAR : 2011-12 MILIND KUMAR RANA, D-1, AMALTASPURAM, RUDRI ROAD, DHAMTARI (CG). VS. JCIT, RANGE-II, RAIPUR (CG). PAN : AAOFM5148D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL KR. AGRAWAL, CA. MS. LAXMI SHARMA, CA DEPARTMENT BY : SHRI SANJAY KUMAR, DR DATE OF HEARING : 17-08-2018 DATE OF PRONOUNCEMENT : 25-09-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.02.2016 OF THE LD. CIT(A)- 1, RAIPUR (CG) RELATI NG TO ASSESSMENT YEAR 2011-12. 2. REVISED/AMENDED GROUND OF APPEAL BY THE ASSESSEE READS AS UNDER :- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN SUSTAINING THE PENALTY U/S 271E OF RS.17,31,403 WHILE THERE WAS REASONABLE CAUSE U/S 273B TO REPAY THE ALLEGED HIRE PURCHASE INSTAL LMENT IN CASH AND THE ASSESSEE HAVING A BONA FIDE BELIEF THAT SUCH PAYMENTS WOUL D NOT COME WITHIN THE MISCHIEF OF SEC.269T. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WHICH INCLUDES ROAD CONSTRUCTION 2 ITA NO.97/RPR/2016 AND BUILDING WORK. IT FILED ITS RETURN OF INCOME O N 27.02.2012 DECLARING TOTAL INCOME OF RS.26,15,450/-. THE ASSESSING OFFICER CO MPLETED THE ASSESSMENT U/S 143(3) OF THE I.T. ACT, 1961 ON 24.02.2014 DETERMIN ING THE TOTAL INCOME AT RS.34,54,183/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE REPAYME NT OF LOAN IN CASH OF RS.17,31,408/- TO VARIOUS NON-BANKING FINANCIAL COM PANIES (NBFC) IN CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE I.T. ACT, THE DETAILS OF WHICH ARE AS UNDER :- NAME OF THE FINANCIAL INSTITUTIONS/COMPANIES AMOUN T OF REPAYMENT IN CASH (RS.) MAGMA FIN. CORP. LTD. (SOIL & COM) RS.7,18,720/- MAGMA SHARCHI FINANCE LTD. DHAMTARI (PAVER FINSHER) RS.1,16,570/- MAGMA SHARCHI FINANCE (OPTRA) RS.1,59,368/- MAGMA SHARCHI FINANCE LTD. (HOT MIX PLANT) RS.3,25, 590/- MAGMA FINANCE LTD. (INNOVA) RS.4,10,160/- TOTAL RS.17,31,408/- 4. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESS EE INCLUDING THE LEDGER ACCOUNT OF THE SAID CONCERNS, THE ASSESSING OFFICER OBSERVED THAT THE PAYMENTS EXCEEDING TO RS.20,000/- HAVE BEEN MADE BY THE ASSE SSEE IN THE SHAPE OF CASH. HE, THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 27 1E AND ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE PENALTY U/S 271E SHOULD NOT B E LEVIED. IT WAS SUBMITTED BY THE ASSESSEE THAT THE TRANSACTION CONSISTING OF REPAYMENT OF HIRE CHARGES TO M/S MAGMA FINANCE LTD. ON ACCOUNT OF HIRE PURCHASE INSTALLMENT PAID TOWARDS VEHICLE AND EQUIPMENT ACQUIRED ON HIRE PURCHASE AGR EEMENT COULD NOT BE CONSIDERED AS TRANSACTION OF MONEY LENDING OR ADVAN CING OF LOAN. HOWEVER, THE 3 ITA NO.97/RPR/2016 ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION GIVEN BY THE ASSESSEE AND HE LEVIED PENALTY OF RS.17,31,408/- U/S 271E OF THE I.T. ACT. 5. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER BY OBSERVING AS UNDER :- ON GOING THROUGH SEC. 269T, I FIND THAT THE SECTIO N DOES NOT DIFFERENTIATE CASH PAYMENT TO A HIRE PURCHASE COMPANY FROM CASH PAYMEN T TO OTHER PERSONS. IT IS NOT DENIED THAT THE APPELLANT HAD AVAILED LOAN FROM M/S MAGMA FIN CORPORATE LTD. (SOIL AND COM) AND FOUR OTHER COMPANIES AS LISTED A S PAGE-1 OF THE PENALTY ORDER AND THESE LOANS HAVE BEEN REPAID IN CASH ON VARIOUS DATES AS LISTED IN SUBSEQUENT PARAS OF THE PENALTY ORDER. THERE ARE CERTAIN ENTI TIES PRESCRIBED IN THE SAID SECTION PAYMENT TO WHICH IS EXEMPT FROM THE PURVIEW OF THE SECTION. THE RECIPIENTS ARE NOT THE UNDERTAKING/BODIES SPECIFIED IN THE 2 ND PROVISO TO SEC. 269T THE PAYMENT TO WHICH IS EXEMPT FROM THE SAID SECTION. THEREFORE, THE AP PELLANT HAS VIOLATED PROVISIONS OF SEC. 269T FOR WHICH THE ACTION OF THE ASSESSING OFF ICER IMPOSING THE PENALTY IS HEREBY SUSTAINED AND THE GROUNDS TAKEN BY THE APPELLANT AR E REJECTED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID HIRE PURCHASE INSTALLMENTS TO M/S MAGMA FIN CORPORATE LT D.. SUCH TYPE OF PAYMENTS WERE MADE IN THE PAST YEARS ALSO AND NO AC TION U/S 271E WAS INITIATED BY THE DEPARTMENT. AFTER ISSUANCE OF NOTICE BY THE JCIT THE ASSESSEE STARTED MAKING THE PAYMENTS BY CHEQUE. HE SUBMITTED THAT T HERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR SUCH NON-PAYM ENT SINCE IN THE SCRUTINY ASSESSMENTS IN THE PAST, SUCH TYPE OF PAYMENTS WERE ACCEPTED AND NO PENALTY PROCEEDINGS U/S 271E WERE INITIATED. FURTHER, THE ASSESSEE WAS UNDER A BONA- FIDE BELIEF THAT THE GENUINE TRANSACTIONS ARE BEYON D THE AMBIT OF PROVISIONS OF SECTION 269T AND SECTION 271E OF THE I.T. ACT, WHIC H ARE BASICALLY MEANT FOR 4 ITA NO.97/RPR/2016 COUNTERING TAX EVASION TACTICS. REFERRING TO THE D ECISION OF BILASPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S GDR EDUCAT ION SOCIETY DURG VIDE ITA NO.62/BLPR/2009 ORDER DATED 03.06.2010, HE SUBM ITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THE TECHNICALITI ES OF ANY PROVISION OR LAW OR ACT SHOULD NOT BE APPLIED IN A ROUTINE MANNER WHEN THE SOURCE HAS BEEN ESTABLISHED, THE PERSON HAS BEEN IDENTIFIED AND THE RE IS NO ATTEMPT TO CAMOUFLAGE OR SIPHON OFF ANY AMOUNT. REFERRING TO VARIOUS OTH ER DECISIONS FILED IN THE PAPER BOOK, HE SUBMITTED THAT UNDER SOMEWHAT IDENTI CAL CIRCUMSTANCES PENALTY LEVIED U/S 271E HAS BEEN DELETED. HE ACCORDINGLY S UBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY TH E LD. CIT(A) SHOULD BE DELETED. 8. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE LD. CIT(A) AND THE ASSESSING OFFICER. HE SUBMITTED THAT THE A SSESSEE IN THE INSTANT CASE HAS VIOLATED THE PROVISIONS OF SECTION 269T BY REPAYING THE LOAN IN CASH WHERE SUCH AMOUNT IN EACH CASE IS MORE THAN RS.20,000/-. SINC E THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T, THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN SUSTAINING THE PENALTY LEVIED BY THE ASSESSING OFFI CER. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING O FFICER, IN THE INSTANT CASE, LEVIED PENALTY U/S 271E AMOUNTING TO RS.17,31,408/- ON THE GROUND THAT THE 5 ITA NO.97/RPR/2016 ASSESSEE, IN VIOLATION OF PROVISIONS OF SECTION 269 T, HAD REPAID THE LOAN TO M/S MAGMA FIN CORPORATE LTD. WHICH IS IN EXCESS OF RS.2 0,000/- IN CASH. WE FIND THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING O FFICER, THE REASON OF WHICH HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGR APH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD A BONA-FIDE BELIEF THAT THE REPAYMENT OF HIRE PURCHASE INSTALLMENT WOULD NOT CO ME WITHIN THE MISCHIEF OF SECTION 269T SINCE THERE WAS NO ACTION BY THE REVEN UE IN THE PAST IN SCRUTINY ASSESSMENTS WHEREIN SUCH TYPE OF PAYMENTS WERE ACCE PTED AND NO PENALTY PROCEEDINGS U/S 271E WERE INITIATED. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 273B, THERE WAS A REASONABLE CAUSE ON THE P ART OF THE ASSESSEE TO REPAY SUCH LOAN IN CASH. WE FIND MERIT IN THE ABOVE ARGU MENT ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT T HAT IN THE PAST ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11 SCRUTINY ASSESSMENTS W ERE MADE IN THE CASE OF THE ASSESSEE U/S 143(3) AND, THEREAFTER, REASSESSME NTS WERE ALSO MADE FOR ASSESSMENT YEARS 2008-09 AND 2009-10 AND ALTHOUGH S IMILAR PAYMENTS WERE MADE IN CASH, HOWEVER, NO PENALTY PROCEEDINGS U/S 2 71E WERE INITIATED FOR VIOLATION OF PROVISIONS OF SECTION 269T OF THE I.T. ACT. FURTHER, THE PAYEES ARE IDENTIFIABLE PERSONS AND THE GENUINENESS OF THE PAY MENT IS NOT DISPUTED BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, WE A RE OF THE CONSIDERED OPINION THAT THERE WAS A BONA-FIDE BELIEF ON THE PART OF TH E ASSESSEE THAT THE REPAYMENT OF HIRE PURCHASE INSTALLMENT WOULD NOT COME WITHIN THE MISCHIEF OF SECTION 6 ITA NO.97/RPR/2016 269T OF THE I.T. ACT. THERE IS NO ALLEGATION BY TH E REVENUE AUTHORITIES THAT SUCH PAYMENTS WERE MADE TO THE ABOVE PERSONS WITH A VIEW TO EVADE TAX. SINCE THE GENUINENESS OF THE PAYMENTS ARE NOT DOUBTED AND THERE IS NO ALLEGATION BY THE REVENUE THAT SUCH PAYMENTS WERE MADE WITH A VIE W TO EVADE TAX AND CONSIDERING THE FACTS THAT IN THE SCRUTINY ASSESSME NTS AND REASSESSMENT PROCEEDINGS IN THE PRECEDING YEARS, NO PENALTY PROC EEDINGS WERE INITIATED U/S 271E, THEREFORE, WE ARE OF THE CONSIDERED OPINION T HAT THERE WAS A BONA-FIDE BELIEF ON THE PART OF THE ASSESSEE FOR MAKING SUCH PAYMENTS IN CASH. WE, THEREFORE, HOLD THAT THE PENALTY LEVIED BY THE ASSE SSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IN THE INSTANT CASE IS NOT JUSTIFIED . THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH SEPTEMBER, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25-09-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR