Prakash P.Bharani,(HUF), Amaravati V. Additional Commissioner of Income Tax(Central)Range-2, Nagpur

ITSSA 9/NAG/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0743 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Peak credit; Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

1 IT(SS)A NO. 09/NAG/20 11 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. IT(SS)A. NO.09/NAG/2011 ASSESSMENT YEAR : 2005-06. PRAKASH P. BHARANI (HUF), JT. COMMISSIONER OF INCOME-TAX PRAKASH SAREES, V/S. (CENTRAL), RANGE-2, NAGPUR. RALLIES PLOT, AMRAVATI. PAN AAAHP7349R APPELLANT RESPONDENT. APPELLANT BY : S HRI K.P. DEWANI. RESPONDENT BY : SH RI A.R. NINAWE. DATE OF HEARING : 13-05-2015 DATE OF PRONOUNCEMENT : 22 ND MAY, 2015 O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-I, NAGPUR DATED 17-09-2011 WHEREIN THE LEARNED CIT(APPEALS) HAD CONFIRMED THE PENALTY OF ` .10,00,000/- LEVIED UNDER SECTION 271(1)(C) OF THE I.T. ACT. 2 IT(SS)A NO. 09/NAG/20 11 2. IN THIS CASE THERE WAS A SEARCH ON 5 TH JULY, 2007 ON THE BHARANI GROUP. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND. AMONGST THESE WERE THE DUPLICATE CASH BOOK/DIARY. ON THE BASIS OF ENTRY IN THIS CASH BOOK/DIARY THE ASSESSING OFFICER INFERRED THAT THE ASSESSEE HAD TAKEN CASH LOAN OF ` .10 LAKHS ON 09-07-2004 FROM GROUP ENTITY NANDLAL B HARANI AND GOPICHAND BHARANI AND REPAID THE SAME ON 16-08-2004 IN VIOLATION OF PROVISION OF SECTION 269T. THE ASSESSEE HAD CONTENDED THAT THESE AMOUNTS WERE NOT RECORDED IN THE ASSESSEES REGULAR BOOKS OF ACCOUNTS. THE RE GULAR BOOKS OF ACCOUNTS WERE AUDITED AND NO SUCH TRANSACTION OF LOAN WAS REFLECT ED OR POINTED OUT BY THE AUDITOR. IT WAS FURTHER SUBMITTED THAT THESE AMOUNT S HAVE BEEN CONSIDERED BY THE ASSESSEES BROTHER SHRI PREMCHAND BHARANI IN HI S WORKING OF THE PEAK CREDIT WHICH WAS CONSIDERED BY THE ASSESSING OFFICER IN HI S ASSESSMENT. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION REPORTED IN 204 CTR 48. HOWEVER, THE ASSESSING OFFICER WAS NOT INCLINED TO ACCEPT THIS SUBMISSION. HE IMPOSED A PENALTY OF ` .10 LAKHS. 3. UPON THE ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONFIRMED THE LEVY OF PENALTY. AGAINST THE ABOVE ORDER, THE ASSESSEE IS I N APPEAL BEFORE US. 4. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE CONCERNED AMOUNT WAS NOT FOUND IN THE REGULAR BOOKS OF ACCOUNT OF TH E ASSESSEE. IT WAS NOT SO REPORTED BY THE TAX AUDITOR OF THE ASSESSEE. THE AM OUNTS WERE FOUND IN A FAMILY DIARY WHICH CONTAINED VARIOUS CREDITS AND DEBIT ENT RIES. HE SUBMITTED THAT WHEN ALL THE CREDITS HAVE BEEN CONSIDERED IN THE ASSESSM ENT OF THE PERSONS OF THE GROUP, IT IS NOT AT ALL PERMISSIBLE TO AGAIN PENALI ZED ON THE BASIS OF DEBITS IN THE SAME DIARY. HE FURTHER SUBMITTED THAT THESE AMOUNTS HAVE ALREADY BEEN 3 IT(SS)A NO. 09/NAG/20 11 CONSIDERED BY THE ASSESSEES BROTHERS GROUP IN CO MPUTATION OF UNDISCLOSED INCOME BY WAY OF PEAK CREDIT AND THE SAME HAS ALSO BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSMENT. HENCE THE LEAR NED COUNSEL CLAIMED THAT THIS AMOUNT CANNOT AGAIN BE CONSIDERED FOR LEVYING PENAL TY. FOR THIS PROPOSITION, LEARNED COUNSEL PLACED RELIANCE UPON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S. STANDARD BRANDS LTD. 285 ITR 0 295. LEARNED COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE SHOULD ALSO BE GRANTED RELIEF ON THE ANVIL OF PROVISIONS OF SECTION 273B AS THE ASSESSEE WAS UNDE R A BONAFIDE BELIEF THAT THE TRANSACTIONS BETWEEN CLOSE RELATIVES DO NOT COME U NDER THE KEN OF PROVISIONS OF SECTION 269SS AND 269T. 5. PER CONTRA, LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. UPON CAREFUL CONSIDERATION WE FIND THAT IN THE F AMILY DIARY SEIZED, SEVERAL CREDIT AND DEBIT ENTRIES WERE FOUND NOTED. THE RECE IPT OF ` .10 LAKHS AND REPAYMENT THEREOF WAS CONSIDERED IN THE HANDS OF TH E ASSESSEE AS VIOLATION OF PROVISIONS OF SECTION 269SS AND SECTION 269T. LEVY OF PENALTY UNDER SECTION 271D FOR ACCEPTING LOAN OF ` .10 LAKHS IN CASH WAS DELETED BY THE LEARNED CIT(AP PEALS) ON THE GROUND THAT THERE WAS REASONABLE CAUSE SUPPO RTED BY THE URGENCY OF REQUIREMENT OF FUNDS TO MEET THE IMMEDIATE PAYMENTS TO BE MADE TO CREDITORS WHOSE CHEQUES WERE REQUIRED TO BE HONOURED. HOWEVER , LEVY OF PENALTY UNDER SECTION 271E FOR REPAYMENT OF THIS LOAN WAS CONFIR MED BY THE CIT(APPEALS). 7. WE FIND CONSIDERABLE COGENCY IN THE ASSESSEES P LEA THAT ONCE THESE AMOUNTS HAVE BEEN CONSIDERED IN COMPUTING THE UNDIS CLOSED INCOME OF THE ASSESSEES BROTHER GROUP BY WAY OF PEAK CREDIT, TH ESE TRANSACTIONS SHOULD AGAIN NOT BE TAKEN AS THE BASIS OF LEVY OF PENALTY UNDER SECTION 271E IN THE HANDS OF 4 IT(SS)A NO. 09/NAG/20 11 THE ASSESSEE. THIS PROPOSITION GETS SUPPORT FROM TH E HONBLE DELHI HIGH COURT DECISION IN CIT V/S. STANDARD BRANDS LTD. (SUPRA). IN THIS CASE IT WAS HELD THAT THE REVENUE TAKEN THE STAND THAT THE ALLEGED DEPOSIT WA S UNDISCLOSED INCOME OF THE ASSESSEE, IT COULD NOT RESORT TO PENALTY PROCEEDIN GS UNDER SECTION 271D. WE DO NOT FIND ANY REASON WHY THE RATIO FROM THIS DECISIO N SHOULD NOT BE APPLIED IN THE PRESENT CASE. AS THE IMPUGNED AMOUNT HAS ALREADY BE EN CONSIDERED IN THE COMPUTATION OF UNDISCLOSED INCOME OF ANOTHER PERSON OF ASSESSEES GROUP ON THE BASIS OF THE SAME DIARY AND SAME TRANSACTION, HENCE IN THE LIGHT OF ABOVE HONBLE DELHI HIGH COURT DECISION, THE LEVY OF PENALTY UNDE R SECTION 271E IN THE HANDS OF THE ASSESSEE IS NOT SUSTAINABLE. 8. THE PENALTY IS ALSO NOT LEVIABLE ON THE ANVIL OF PROVISIONS OF SECTION 273B OF THE I.T. ACT. THIS SECTION, INTER ALIA, PROVIDES TH AT LEVY OF PENALTY UNDER THESE SECTIONS CAN BE FORGONE IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE ASSESSEES FAILURE. NOW IN THIS CASE IT IS ASSESSEES PLEA THAT SINCE THE TRANSACTION WAS WITHIN CLOSE RELATIVES, THE ASSESSE E WAS UNDER A BONAFIDE BELIEF THAT THE SAID TRANSACTION DID NOT COME UNDER THE K EN OF PROVISIONS OF SECTION 269D OF THE I.T. ACT. ITAT, CHENNAI IN THE CASE OF ACIT V/S. C VANAJA (42 CCH 94 CHEN TRIB) HAS UPHELD THE PROPOSITION THAT IT CAN B E CONSTRUED AS REASONABLE CAUSE IF THERE IS A BONAFIDE BELIEF THAT CASH PAYME NTS TO CLOSE RELATIVES DID NOT INVITE THE RIGOURS OF PROVISIONS OF SECTION 269T. W E FIND THAT IT IS UNDISPUTED IN THIS CASE ALSO THAT THE TRANSACTION WAS BETWEEN SIS TER CONCERNS OF BROTHERS AND THEIR HUF, HENCE IN OUR CONSIDERED OPINION, THE RAT IO FROM THIS TRIBUNAL DECISION ALSO COMES TO THE RESCUE OF THE ASSESSEE. 5 IT(SS)A NO. 09/NAG/20 11 9. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCU SSION AND PRECEDENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE LEVY OF PENALTY. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2015. SD/- SD/- (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER. ACCOUNTANT MEMBER NAGPUR, DATED: 22 ND MAY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTANT REGISTRAR, I TAT, NAGPUR WAKODE