Rifa Shoes Pvt. Ltd., CHENNAI V. JCIT, CHENNAI

ITA 983/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8757 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2016
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: K RAVI
• Keywords: Question of law; Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , J UDICIAL MEMBER ./ I.T.A.NO. 983 /MDS/2016 / ASSESSMENT YEAR :20 1 0 - 11 M/S. RIFAH SHOES PVT. LTD., FLAT A BSR ELYSIUM, NO. 221/865, POONAMALEE HIGH ROAD, KILPAUK, CHENNAI 600 0 1 0 . [PAN: A A BCR3805J ] VS. THE JOINT COMMISSIONER OF INCO ME TAX COMPANY RANGE V, CHENNAI 600 0 34 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. RAVI, ADVOCATE / RESPONDENT BY : SHRI P. RADHAKRISHNAN , J CIT / DATE OF HE ARING : 05 . 0 5 .201 6 / DATE OF P RONOUNCEMENT : 20 . 0 7 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , CHENNAI , DATED 28 . 0 1 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 0 - 11 PASSED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY IN WHICH PUB L IC ARE NOT SUBSTANTIALLY INTERESTED. THE ASSESSEE FILED I TS RETURN OF INCOME FOR THE I.T.A. NO . 983 /M/ 16 2 ASSESSMENT YEAR 2010 - 11 ON 15.10.2010 DECLARING TOTAL INCOME OF .49,17, 3 43/ - . THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) OF THE ACT ON 28.01.2013 DETERMINING THE TOTAL INCOME AT .1,31,09,561/ - . DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS RECEIVED LOANS FROM THE DIRECTORS ON VARIOUS DATE; IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. SINCE THE AMOUNTS OF LOANS RECEIVED IN CASH WERE IN EXCESS OF . 20,000/ - , THE A SSESSING O FFICER REFERRED THE CASE TO THE JCI T FOR INITIATION OF PENALTY PROCEEDINGS U NDER SECTION 271D OF THE ACT, SINCE PENAL PROVISION U NDER SECTION 269 SS OF THE ACT WOULD BE ATTRACTED. BASED ON THE ABOVE INFORMATION, A NOTICE U NDER SECTION 274 R.W. SEC TION 271D OF THE ACT WAS ISSUED TO THE ASSESS EE ON 5.09.2013 AND IN RESPONSE THERETO, THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY CONSIDERING THE RATIO LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. SAMORA HOTELS (P) LTD. [2012] 211 TAXMANN 189, THE JCIT HAS LEVIED PENALTY UNDER SECTION 271D OF THE ACT. 3. ON APPEAL, AFTER CONSIDERING VARIOUS DECISIONS, THE LD. CIT(A) SUSTAINED THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT. I.T.A. NO . 983 /M/ 16 3 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271D OF THE ACT AND SUBMITTED THAT THE CASH TRANSACTION BETWEEN THE ASSESSEE AND THE MANAGING DIRECTOR WAS NOT A LOAN OR DEPO SIT AS PER RULE 2(B)(IX) OF THE COMPANIES (ACCEPTANCE OF DEPOSITS ) RULES, 1975. BY RELYING ON THE DECISION IN THE CASE OF CIT V. IDHAYAM PUBLICATIONS LTD. 285 ITR 221, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE PENALTY LEVIED UNDER SECTION 271D OF TH E ACT SHOULD BE DELETED. 5. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE SUBMITS THAT THE CASH BOOK ENTRIES REVEALS THAT THE ASSESSEE HAS RECOGNIZED THE RECEIPTS AS LOANS AND THIS FACT WAS REITERATED BY THE SUBMISS IONS MADE DURING ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS MADE ENTRIES IN THE CASH BOOK THAT SOME OF THE LOANS EXCEEDING .20,000/ - HAVE BEEN RECEIVED IN CASH, WHICH ATTRACTS THE PROVISIONS OF SECTION 269SS OF THE ACT AND THEREFORE, PENALTY UNDER SECTION 271D OF THE ACT HAS BEEN LEVIED. WE HAVE ALSO PERUSED THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT I.T.A. NO . 983 /M/ 16 4 IN THE CASE OF CIT V. IDHAYAM PUBLICATIONS LTD. (SUPRA), WHEREIN THE HON BLE HIGH COURT HAS OBSERVED AND HELD AS UNDER: 4. WE HEARD THE ARGUMENTS OF LEARNED COUNSEL FOR THE REVENUE. WE HAVE PERUSED THE MATERIALS AVAILABLE IN RECORD. ADMITTEDLY MR. S. V. S. MANIAN WAS ONE OF THE DIRECTORS. THEREFORE THE ORDER OF THE LOWER AUTHORITY CLEARLY SHOWS THAT THERE WAS A RUNNING CURRENT ACCOUNT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF MR. S. V. S. MANIAN. MR. S. V. S. MANIAN USED TO PAY THE MONEY IN THE CURRENT ACC OUNT AND USED TO WITHDRAW THE MONEY ALSO FROM THE CURRENT ACCOUNT. THE REVENUE SHOULD ESTABLISH THAT WHAT WAS RECEIVED BY THE ASSESSEE IS A LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269SS. THE DEPOSIT AND THE WITHDRAWAL OF THE MONEY FROM THE CURRENT AC COUNT COULD NOT BE CONSIDERED AS A LOAN OR ADVANCE. FURTHER IT WAS ALSO FOUND THAT THE ASSESSEE FILED A LETTER DATED SEPTEMBER 29, 1997, AND IN THAT LETTER HE EXPLAINED THAT THE AMOUNT RECEIVED FROM MR. S. V. S. MANIAN HAD BEEN SHOWN AS 'UNSECURED LOAN FRO M DIRECTORS' IN THE BALANCE - SHEET. AS PER THE COMPANIES ACT, UNDER THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULES, 1975, UNDER RULE 2(B) (IX) , DEPOSIT DOES NOT INCLUDE ANY AMOUNT RECEIVED FROM A DIRECTOR OR A SHAREHOLDER OF A PRIVATE LIMITED COMPANY. THEREF ORE THE TRANSACTION BETWEEN THE APPELLANT AND THE DIRECTOR CUM SHAREHOLDER IS NOT A LOAN OR DEPOSIT AND IT IS ONLY A CURRENT ACCOUNT IN NATURE AND NO INTEREST IS BEING CHARGED FOR THE ABOVE TRANSACTION. 5. IN THE FOREGOING CONCLUSIONS, WE ARE OF THE VIE W THAT SINCE THE SAID TRANSACTION DOES NOT FALL WITHIN THE MEANING OF LOAN OR ADVANCE, THERE IS NO VIOLATION OF SECTION 269SS OF THE INCOME - TAX ACT. WE FIND NO ERROR IN THE ORDER OF THE TRIBUNAL AND THE SAME REQUIRES NO INTERFERENCE. HENCE, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION OF THIS COURT. ACCORDINGLY, WE DISMISS THE ABOVE TAX CASE. NO COSTS. I.T.A. NO . 983 /M/ 16 5 7. THE LD. DR COULD NOT CONTROVERT THE ABOVE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT OR FILED ANY HIGHER COURT S DECISION HAVING MODI FIED OR REVERSED THE ABOVE ORDER. RESPECTFULLY FOLLOWING THE ABOVE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT , WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 20 TH JULY , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 20 . 0 7 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.