M/S MAHALAXMI CONSULTANCY, MUMBAI V. ITO 25(3)(1), MUMBAI

MA 167/MUM/2021

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 2113 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-07-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AMIT JHAVERI
• Keywords: Reasonable cause
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 273B; 92; 2(22)(e); 271D; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM M. A. N o. 1 6 7/ M u m/2 0 21 (A r is in g o u t of I T A No . 17 58 /M u m/ 2 0 19 ) ( A s se ss m e nt Y e a r : 20 13- 1 4 ) Mahalaxmi Consultancy 3, Gujarat Industrial Estate 1 st Floor,Vishweshwar Nagar Road, Goregaon(E) Mumbai-400 063 Vs . ITO-25(3)(1) Room No.605, 6 th Floor C-10, Pratyakshkar Bhavan, BKC, Bandra(E) Mumbai-400 051 PA N / GI R N o . AAM F M3 6 8 6J (Appellant) : (Respondent) Appellant by : Shri Amit Jhaveri Respondent by : Shri Bharat Andhale D at e o f H e a ri n g : 08.10.2021 Da t e o f P r o no un c e me nt : 03.01.2022 Per Shamim Yahya, A. M.: This miscellaneous application by the assessee is directed against order of this Tribunal in ITA No.1758/M u m /2 0 19 v i de o r d er dated 25.03.2021. 2. In the aforesaid order, ITAT had reversed the order of Ld.CIT(A) and allowed the revenues appeal. The issue was levy of penalty u/s. 271D for an amount of Rs. 1,80,75,754/-. 3. The assessee in the said miscellaneous application has made following submissions. This Miscellaneous Application is being made out of the aforesaid order of the Hon ITAT in which, the Assessee feels there are certain vital mistakes crept while drafting such order & the same needs to be rectified so as enable the Assessee to get natural justice, which otherwise the Assessee would be deprived of the justice. 2 M A N o s . 1 6 7 / M / 2 1 The Assessee Firm had accepted Unsecured Loans from CVS infrastructure Pvt Ltd for a short period of time with the foremost condition to repay the same within mutually agreed time but due to financial crunches, the A could not fulfill the Repayment schedule as promised at the time of accepting such Loans. On the other hand, the Lender insisted on immediate payment or in the extreme situation, demanded some personal Guarantee/Undertaking to take over the outstanding amount from the person to whom the Lender knew most. Eventually, Mr Shreepal Shah, who was a Partner in the said Firm and also a Share Holder 8.20%, the fact which is made known at all the levels and also part of the Written Submissions filed even before the ITAT at the time of Hearing ( Not a major ShareHolder as against the alleged in the ITAT Order), who undertook to guarantee the Lender through his own HUF, i.e. Karta of Shreepal Shah HUF finally undertook and Guaranteed for such takeover of the remaining outstanding balance of Rs. 1,80,75,754/-which is the subject matter of levy of Penalty u/s 271D of the Income Tax Act, 1961. The aforesaid amount i.e. a sum of Rs. l,80,75,754/-was eventually repaid to the said HUF through proper Banking Channels on 23.11.2013 which is also established fact and already been mentioned in the ITAT Order. In so far as the Arguments in Para 12 of the ITAT Order vide Page 9, that in the HC Decision which the A Firm had relied upon, it was same person where the amount owed and paid. In the instant case, there existed REASONABLE REASON as specified u/s 273B of the Act is concerned, as the Outstanding Balance had compulsorily transferred through JV because of non-fulfillment of Repayment of Unsecured Loans availed by the A Firm. The main intention i.e. REASONABLE CAUSE of the Provisions of Sec 273B must be followed instead of following plainly the case of High Court Order, that recovery and payment by cheque of the same amount to the same party would be empty formality. THE Ld CIT(A) also, in his Order last Para on page no. 11, has categorically accepted the fact that there was reasonable cause shown by the Assessee " ....was on account of the fact that the Assessee was liable to pay the sum because of Business exigencies..Neither the genuineness of the receipt of Loan/Deposit nor the transaction of Repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment...." As regards the statement of the Hon Members in Para 12, Page 9 of such Order that-" there is no explanation of payment required due to CVS Infra Pvt Ltd is met with transfer of the dues to Shreepal Shah HUF" is concerned, it is many times reiterated that the Lender Company wanted its meney back as per the promise of the A Firm urgently, or alternatively wanted Guarantee/Undertaking from any of Lender Company's known parties, which is Shreepal Shah HUF and who finally fulfilled and performed his Guarantee/Undertaking and ultimately the Lender Company approved of such transaction to be reversed through adjustment entry in the books of all the concerned parties, which is the REASONABLE CAUSE. Such explanation that, the Lender Company did not wanted to continue its Advances with the A Firm even for a single more day amounts to REASONABLE CAUSE. 3 M A N o s . 1 6 7 / M / 2 1 The Department must prove the malafide intention of the A Firm. All the receipts of such Advances were accepted through Banking Channels, all the Repayment were made through Banking Channels. All such I interrelated Individuals/Firm/Company's ITR/Financials/Ledger Confirmations etc were all submitted at ' all the time including that of Original Assessment Proceedings along with all necessary evidentiary proofs such as Bank Statements, Financials, etc. there is no leakage of any Revenue, nor a single Rupee / Cash Transactions were done by any of such interrelated concerns. Finally, one interesting and fully relevant question which is posed hereunder- IF THE ASSESSEE WOULD NOT HAVE PASSED SUCH JV IN its BOOKS, WOULD ASSESSEE FIRM'S LIFE HAVE BEEN MUCH EASIER? IF YES, THEN IT IS MOST RESPECTFULLY SUBMITTED THAT, INSPITE OF KNOWING THE HARSHER/STRINGENT ACTIONS UNDER INCOME TAX ACT ALSO, THE A FIRM PASSED SUCH ENTRY WHICH ITSELF SHOWS THE REASONABLE CAUSE. IF THE ANSWER IS NO, THERE ARE 3 POSSIBILITIES AS UNDER: 1) Provisions of Sec 68 would have been applied, which was in any case would have been applied even without passing of such adjustment entry and finally may or may not be any addition possible u/s 68 of the Act. 2) Provisions of Sec 2(22)(e) would also not have been possible, as the individual Shreepal Shah's( Who is a Partner in the Assessee Firm and also Share Holder/Director in the Lender Company i.e. CVS Infra Pvt Ltd) Share Holding in the Lender Company was 8.20 % only, as against the Hon Members Remarks everywhere in the Order that Mr Shreepal Shah was a Major Share Holder, which is totally misleading. 3) In this scenario, again Provisions of Sec 269SS/269T/271D/271E would not have been possible, as there would not have any Journal Entry under this scenario. Hence it proves the reasonable Cause and no malafide intention of the Assessee Firm as envisaged in the High Court's Decisions. 4. Further, assessee’s counsel has filed following written submissions:- A) STATEMENT OF FACTS : PARTICULARS PENALTY ORDER BY ITO APPEAL ORDER ITAT ORDER Penalty u/s 271(l)(d) Rs. 1,80,75,7557- NIL Rs. 1,80,75,755/- 4 M A N o s . 1 6 7 / M / 2 1 > The assesse has submitted the Miscellaneous Application against the ITAT order. B) FACTUAL POSITION OF THE CASE : > The assesse has taken loan from M/s CVS Infrastructure Pvt Ltd of Rs 1,80,75,7557- through account payee cheque. > The assesse has passed a journal entry in the books of account on 31/03/2013 by debiting M/s CVS Infrastructure Pvt Ltd and crediting Shripal C Shah HUF. > The assesse has repaid the Shripal C Shah HUF the said amount on 23/11/2013 through account payee cheque only. > Shri Shripal C Shah is holding 8.20% shares of M7s CVS Infrastructure Pvt Ltd in his individual capacity and is the Karta of Shripal C Shah HUF. > Neither any cash loan has been taken nor repaid in the present case. > The Intention of the journal entry is not to evade the taxes but to meet the business commitment. > In the instant case i) The transaction was by account payee cheque. ii) No payment on account by was made in cash either by the assesse or on its behalf. iii) No loan was accepted by the assesse in cash. iv) The payment of Rs 1,80,75,754/- made by the assesse through Shripal C Shah HUF by journal entry in the books of assesse by crediting the account of Shripal C Shah HUF. C) ARGUMENT FOR NON LEVY OF PENALTY U/S 271(l)(d) : > Section 269ss is reproduced hereunder for ready reference : "269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account ~[or through such other electronic mode as may be prescribed^], if,— > (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or > (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or ^ (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), > is twenty thousand rupees or more: > Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,— > (a) the Government; > (b) any banking company, post office savings bank or co-operative bank; > (c) any corporation established by a Central, State or Provincial Act; 5 M A N o s . 1 6 7 / M / 2 1 (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); > (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: > Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. > Explanation,—For the purposes of this section,— > (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; > (ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; ^ (iii) "loan or deposit" means loan or deposit of money; > (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place ". > We relied on the following judgment of the higher forum : * The Hon'ble High Court Delhi are in complete agreement with the tribunal that provision of section 269ss were not attracted by way of Journal Entries in Loan Account - CIT vs Worldwide Township Projects (Delhi High Court) - ITA 232/2014. dt 21/05/2014. * Section 269ss not applicable to transaction between relatives in the case of Smt Snehalata Sitlani Vs JCIT (ITAT Kolkata). * Section 26ss not applicable to transaction between close family members for giving support and help in the case of Shri Nikhil Baulk Mazumdar Vs. JCIT (ITAT Kolkata). * CIT V/s Noida Troll Bridge Co. Ltd. * Triumph Int. Finance (I) Ltd. 345 ITR 270 (Bombay High Court) * Goldstar Electricals Pvt Ltd V/s ACIT 8(3) (ITAT G bench) 5. Ld. Departmental Representative in connection with the above submitted that assessee is seeking a review of the order, which is not permissible u/s. 254(2) of the I.T.Act under which this MA has been preferred. He submitted that ITAT has passed a proper and speaking order and by way of this MA assessee seeks to make submissions for review under the garb of rectification of mistake apparent from record. 6 M A N o s . 1 6 7 / M / 2 1 6. Upon careful consideration, we agree with the submission of Ld. DR. In the entire submission of the assessee, there is no mention as to what is the apparent mistake, which the assessee seeks rectification u/s. 254(2) of the I.T. Act, by way of this MA. The various submissions and arguments and case laws mentioned by the Ld. Counsel of the assessee are with regard to review of the order passed by the Tribunal. It is settled law that under section 254(2) only mistakes apparent from record can be rectified. The Tribunal is not permitted to review its order under section 254(2) of the I.T. Act. In this regard, we draw support from the following exposition by Hon’ble Apex Court in the case of CIT vs. Reliance Communication Ltd. In Writ appeal No. 7110/2021 vide order dated 03/12/2021. “In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view of rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.” 7. Hence, this miscellaneous application by the assessee stands dismissed. Order pronounced in the open court on 03 .01.2022 Sd/- Sd/- (Amarjit Singh) (Shamim Yahya) Judicial Member Accountant Member Mumbai; Dated :03.01.2022 Thirumalesh , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File