Vijaya Kiran Biotech, Bhimavaram V. Income Tax Officer, Ward-1, Bhimavaram

SA 10/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3976 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D V SUBBA RAO
• Keywords: Application of stay; Reasonable cause; Set aside
• Section: 40A(3); 273B; 271D; 271E; 27; 6; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER S.A .NO S .1 0 &1 1 /VIZ/2018 (ARISING OUT OF I.T.A NOS. 102&103/VIZ/2018 RESPECTIVELY) ( / A SST. YEAR: 201 1 - 1 2 ) SRI VIJAYA KIRAN BIOTECH D.NO.16 - 4 - 23 P.P.ROAD, OPP.KESINENI TRAVELS BHIMAVARAM [PAN : AA XFS9979H ] VS. ADDL.COMMISSIONER OF INCOME TAX, RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO S . 1 02 & 1 03 /VIZ/2018 ( /ASST. YEAR : 201 1 - 12 ) SRI VIJAYA KIRAN BIOTECH D.NO.16 - 4 - 23 P.P.ROAD, OPP.KESINENI TRAVELS BHIMAVARAM [PAN : AA XFS9979H ] VS. THE INCOME TAX OFFICER WARD - 1 BHIMAVARAM ( / APPELLANT) ( / RESPONDENT) / ASSESSEE BY : SHRI G.V.N.HARI, AR / REVENUE BY : SHRI D.V.SUBBA RAO , DR / DATE OF HEARING : 16 .0 8 .2018 / DATE OF PRONOUNCEMENT : 05 .0 9 .2018 2 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: 1. THE SE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 12, HYDERABAD VIDE I.T.A NO.10302/2017 - 18 DATED 08.01.2018 AND I.T.A NO.477/2017 - 18 DATED 29.01.2018 RESPECTIVELY. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL THE APPEALS ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF IN COMMO N ORDER FOR THE SAKE OF CONVENIENCE. SINCE THE APPEALS HAVE BEEN TAKEN UP, STAY APPLICATIONS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 201 1 - 1 2 BEARING NO.SA 10/VIZ/2018 AND SA 11/VIZ/2018 ARE DISMISSED. ITA NO.102/VIZ/2018 : 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE PENALTY IMPOSED BY THE AO , U/S 271D OF THE INCOME TAX ACT (HEREINAFTER CALLED AS ACT) . DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011 - 12, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAD RECEIVED LOAN OF RS .5,00,000/ - EACH FROM SRI N.SIVA SANKAR AND SMT P.VENKATA LAKSHMI ON 28.01.2011 BY CASH. SINCE THE ASSESSEE HAD RECEIVED THE LOANS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269S S OF THE ACT , THE JT.COMMISSIONER OF INCOME TAX 3 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM INITIATED PENALTY U/S 271D OF THE ACT AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE POSTING THE CASE FOR HEARING ON 19.10.2015. IN RESP ONSE, THE ASSESSEE SUBMITTED ITS EXPLANATION STATING THAT IT HAS NOT RECEIVED THE LOANS IN CASH BUT THE CREDITORS HAVE DEPOSITED THE LOAN AMOUNTS DIRECTLY INTO THE BANK ACCOUNT BY THEMSELVES ON 28.02.2011 AND A CONFIRMATION LETTER FROM THE BANKER WAS ALSO FURNISHED BY THE AR EVIDENCING THE DEPOSIT IN THE BANK ACCOUNT AND ARGUED THAT THE ASSESSEE HA D ACCE PTED THE LOAN S IN CASH DUE TO BUSINESS EXIGENCIES AND HENCE REQUESTED TO DROP THE PENALTY PROCEEDINGS. THE ASSESSEE FURTHER SUBMITTED THAT THE MONEY WAS URGENTLY NEEDED FOR THE PURPOSE OF BUSINESS TO MEET THE FUNDS TO HONOUR THE CH E QUES AND THE LOANS WER E ALSO TAKEN FROM THE SISTER AND THE NEPHEW OF THE PARTNER DUE TO THE PRESSING NEEDS OF THE FIRM UNDER THE BONAFIDE IMPRESSI ON THAT THE TRANSACTIONS WOULD NOT ATTRACT THE PROVISIONS OF 269SS OF THE ACT. THE ASSESSEE SUBMITTED THAT IT WAS PURELY TECHNICAL M ISTAKE AND THE TRANSACTIONS WERE ONLY BETWEEN THE BLOOD RELATIVES OF THE PARTNERS. HE FURTHER SUBMITTED THAT THE SAID TRANSACTIONS WERE RECORDED IN THE REGULAR BOOKS OF THE ASSESSEE AND THE GENUINENESS OF THE TRANSACTIONS WAS ALSO BEYOND THE DOUBT. THE ASSESSEE ARGUED BEFORE THE AO , THAT ONCE THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNT S AND THE GENUINENESS OF THE TRANSACTION IS NOT IN DOUBT BY THE REVENUE, IT WOULD BE A REASONABLE 4 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM CAUSE FOR NON - LEVY OF PENALTY U/S 271D OF THE ACT. THE ASSES SEE ALSO RELIED ON THE FOLLOWING DECISIONS: I. OMEC ENGINEERS VS. CIT (2007) 294 ITR 599 II. BHAGWATHI PRASAD BAJORIA (HUF) VS. CIT (2003) 263 ITR 487 (GAUHATI) III. CITVS.SUNIL KUMAR GOEL (2009) 315 ITR 99 (MADRAS) IV. LAKSHMI TRUST CO., BHUJIAWALA V S. ITO (2004) 89 TTJ (JD)357 V. DILLU CINE ENTERPRISES (P) LTD. VS. ADDL.CIT(2002) 80 ITD 484 (HYD) 2.1. T HE ASSESSEE FURTHER RELIED ON THE DECISION OF BHAGAWATI PRASAD BAJORIA (HUF) SUPRA, WHEREIN IT WAS HELD THAT WHEN THERE WAS IMMEDIATE NEED OF MONEY AND THE PERSON CANNOT GET SUCH MONEY FROM THE BANK, IN THOSE CIRCUMSTANCES, NO PENALTY IS LEVIABLE . THE ASSESSEE ALSO ARGUED THAT THE AMOUNT RECEIVED FROM THE R ELATED PERSON IS OUTSIDE THE SCOPE OF SECTION 271D OF THE ACT AND FOR THIS PURPOSE, THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS : I. CIT VS. SUNIL KUMAR GOEL (2009) 315 ITR 163(DEL) II. DILLU CINE ENTERPRISES (P)LTD. VS. ADDITIONAL CIT (2002) 80 ITD 484 (HYDERABAD) 2.1. ANOTHER PROPOSITION MADE BY THE ASSESSEE BEFORE THE AO IS THAT THE AMOUNT WAS RECEIVED DUE TO PRESSING NEEDS OF THE COMPANY AND DUE TO BUSINESS EXIGENCIES. HENCE, PENALTY CANNOT BE LEVIED U/S 271D AS PER THE FOLLOWING DECISIONS : I. BUILTEC ENGINEERS AND BUILDERS VS. DCIT (2013) 256 CTR (MADRAS) 2005 5 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM II. SHREENATH BUILDERS VS. DCIT (2000) 66 TTJ (AHD) 113 III. JITU BUILDERS (P) LIMITED VS. ADDITIONAL CIT (2010) 124 ITD 134 (AND)(TM) 2.2. THE AO CONSIDERED THE ABOVE DECISIONS AND OBSERVED THAT RECORDING THE TRANSACTIONS IN THE BOOKS OF ACCOUNTS AND GENUINENESS OF THE LOAN IS NOT A CRITERIA, FOR EXEMPTION OF PENALTY U/S 271D AND RE LIED ON THE FOLLOWING DECISIONS : I. THENAMAL CHHARJJER VS. JCIT (ITAT, CHENNAI) 96 ITD 210 II. ITO VS. SUNIL M.KASLIWAL (ITAT, PUNE - TM) 94 ITD 281 III. KASI CONSULTA NT CORPORATION VS. DCIT(MAD) 311 ITR 419 IV. P.BASKAR VS. CIT(MAD) 340 ITR 560 3. THE NEXT CONTENTION OF THE ASSESSEE , THAT THE LOAN WAS ACCEPTED DUE TO BUSINESS EXIGENCIES FOR PAYMENT OF FUNDS TO M/S RALLIS INDIA LTD. , W AS ALSO EXAMINED BY THE LD.AO AND OBSERVED THAT THE ASSESSEE HAD ACCEPTED THE LOAN OF RS.10 LAKHS FROM THE CREDITORS ON 28.02.2011, WHEREAS THE CHEQUE TO M/S RALLIS INDIA LTD. WAS CLEARED ON 04.03.2011 FOR AN AMOUNT OF RS.22,94,453/ - . THEREFORE, VIEWED THAT THERE WAS NO BUSINESS EXIGENCY AND THERE WAS NO REASONABLE CAUSE IN TERMS OF SECTION 27 3B OF THE ACT , SINCE SUFFICIENT TIME IS AVAILABLE TO THE ASSESSEE TO ACCEPT THE LOANS OTHERWISE THAN IN CASH . WITH REGARD TO THE ASSESSEES CONTENTION THAT THE TRANSACTION B ETWEEN THE PERSONS INTIMATELY CONNECTED WAS NOT ACCEPTED BY THE AO , SINCE THE TRANSACTIONS WE RE BETWEEN THE FIRM AND THE CREDITORS, BUT NOT 6 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM BETWEEN THE PARTNERS AND THEIR RELATIVES. THEREFORE, THE AO OBSERVED THAT THE CASE LAWS RELIED UPO N BY THE ASSESSEE IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE ARE DISTINGUISHABLE AND DOES NOT HELP THE ASSESSEE . ACCORDINGLY, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE AND IMPOSED PENALTY OF RS.10 LAKHS U/S 271D OF THE ACT. 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE AO. THE LD.CIT(A) RELIED ON THE OBSERVATIONS MADE BY THE AO. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DUR ING THE APPEAL HEARING, THE LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE LD.AR HAS MADE THREE PROPOSITIONS FOR NON LEVYING THE PENALTY U/S 271D. FIRSTLY, THE LD.AR MADE THE PROPOSITION THA T THE LOAN WAS ACCEPTED FROM THE CLOSE AND BLOOD RELATIVE S AND THE PENALTY IS NOT LEVIABLE AND RELIED 7 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM ON THE VARIOUS CASE LAWS CITED SUPRA. IN THIS CASE, THE ASSESSEE FIRM HAD ACCEPTED THE LOANS FROM SRI N.SIVA SANKAR AND SMT. P.VENKATA LAKSHMI BUT NOT FROM THE PARTNERS. THOUGH BOTH OF THEM ARE RELATIVES OF THE ONE OF THE PARTNERS, BUT THEY CANNOT BE HELD TO BE CLOSE AND BLOOD RELATIVES OF THE FIRM , THEREFORE ON THIS REASON, THE ASSESSEE CANNOT GET ANY CONCESSION FOR NON LEVY OF PENALTY U/S 271D OF THE ACT. ACCORDINGLY THE ASSESSEES CONTENTION ON THIS GROUND IS NOT TENABLE AND ACCORDINGLY REJECTED. 6.1. THE NEXT PROPOSITION MADE BY THE ASSESSEE WA S THAT THE T RANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNTS AND THE SAME ARE GENUINE TRANSACTIONS. MERELY BECAUSE OF THE TRANSACTIONS ARE G ENUINE AND THE TRANSACTIONS WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS, THE ASSESSEE CANNOT GET AWAY FROM LEV YING THE PENALTY U/S 271D OF THE ACT AS OBSERVED BY THE LD.CIT(A), HENCE, THE CONTENTION OF THE ASSESSEE ON THIS GROUND IS ALSO NOT ACCEPTABLE AND REJECTED. 6.2. THE NEXT PROPOSITION TAKEN BY THE LD.AR BEFORE US IS THAT THERE IS REASONABLE AND SUFFICIE NT CAUSE FOR ACCEPTING THE LOANS FROM THE CREDITORS. THE LD.AR SUBMITTED THAT THE LOANS WERE DIRECTLY DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE FIRM BY THE CREDITORS IN VIEW OF THE PRESSING NEEDS 8 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM AND THE ASSESSEE HAS NOT ACCEPTED ANY CASH LOANS . THE ASSESSEE WAS IN PRESSING NEED DUE TO BUSINESS EXIGENCIES, THEREFORE, THE ASSESSEE HAD TO ACCEPT LOANS, OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE STATED THAT THE LOANS WERE ACCEPTED ON 28.02.2011 DUE TO CHEQUES WERE ISSUED AND THE TO M/S RALLIS INDIA LTD. AND THE PAYMENT WAS DUE. THE CHEQUES WERE CLEARED ON 04.03.2011 AFTER DEPOSITING THE LOANS ACCEPTED AND THERE WERE NO FUNDS AVAILABLE TO THE ASSESSEE TO MEET THE CHEQUES. . THE AO WAS OF THE VIEW THAT , SINCE THE CHEQUE WAS CLEARED ON 04. 03.2011, THERE WAS N O URGENCY TO ACCEPT THE LOANS ON 28.02.2011 AND HELD THAT THERE WAS NO REASONABLE CAUSE. THE LD.AR SUBMITTED BEFORE US THAT UNLESS THERE IS SUFFICIENT BALANCE IN THE BANK ACCOUNT, THE ASSESSEE CANNOT HONOUR THE CHEQUES . ONCE THE CHEQU E IS ISSUED TO THE CREDITOR IT IS FOR THE CREDITOR TO PRESENT THE CHEQUE FOR PAYMENT AND THE ASSESSEE IS BOUND TO HONOUR THE CHEAQUE. FAILING WHICH THE CREDITOR MAY N O T EXTEND THE CREDIT OR MAY GO ON FILING THE CHEQUE BOUNCE CASE. IN THE INSTANT CASE, THE ASSESSEE HAD ACCEPTED THE LOANS WHICH WERE DIRECTLY PAID IN THE BANK ACCOUNT ON 28.02.2011 AND THE CHEQUE ISSUED TO M /S RALLIS INDIA LTD. WAS CLEARED ON 04.03.2011 FOR AN AMOUNT OF RS.22,94,453/ - . THE AO/JCIT HAS NOT GIVEN ANY FINDING WITH REGARD TO THE A VAILABILITY OF SUFFICIENT BALANCES IN THE BANK ACCOUNT TO MEET THE CHEQUE S ISSUED TO RALLIS INDIA LTD. , DURING THE 9 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM INTERVENING PERIOD FROM 28.02.2011 TO 04.03.2011. THE ABOVE OBSERVATION ESTABLISHES THAT THE ASSESSEE HAD ACCEPTED THE LOANS, OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE TO MEET THE DUES PAYABLE TO RALLIS INDIA LTD. ON 28.02.2011 DUE TO BUSINESS EXIGENCIES. THEREFORE, THERE IS NO REASON TO SUSPECT THE BUSINESS EXIGENCY AND PRESSING NEED OF THE ASSESSEE AS EXPLAINED BY THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDINGS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAD ACCEPTED THE LOAN ON 28.02.2011 DUE TO BUSINESS EXIGENCIES. THE AO HAS NEITHER DOUBTED THE GENUINENESS OF THE TRANSACTION NOR DISPUTED THE SOURCE OF THE CREDITO RS. THEREFORE, WE HOLD THAT THERE IS SUFFICIENT AND REASONABLE CASE FOR ACCEPTING THE LOANS OF RS.10,00,000/ - OTHERWISE THAN BY C ROSSED CHEQUE . HENCE WE HOLD THAT T HE ASSESSEES CASE IS COVERED U/S 273B FOR NOT IMPOS ING PENALTY U/S 271D OF THE ACT. ACCORDINGLY, THE ORDER OF THE LOWER AUTHORITIES IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO.103/VIZ/2018 7. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE LEVY OF PENALTY U/S 271E OF THE ACT. DURING THE ASS ESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011 - 12 , THE AO FOUND THAT THE ASSESSEE HAD MADE REPAYMENT OF RS.1,20,282/ - TO SRI JAMI APPA RAO ON 20.10.2010 AND AN AMOUNT OF 10 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM RS.2,26,000/ - TO SRI JAMI DURGA PRASAD ON 24.10.2010 IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269T OF THE ACT. IN THIS CASE, THE ASSESSEE HAD ACCEPTED THE LOANS FROM SRI JAMI APPA RAO, SRI JAMI DURGA PRASAD AND THE LOANS WERE REPAID IN CASH OTHERWISE THAN ACCOUNT PAYEE CHEQUE, THEREBY CONTRAVENING THE PROVISION OF 269T OF TH E ACT, CONSEQUENTLY ATTRACTS THE PENALTY U/S 271 E OF THE ACT. ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE DIRECTING THE ASSESSEE AS TO WHY THE PENALTY SHOULD NOT BE LEVIED U/S 271 E OF THE ACT AND IN RESPONSE, THE LD.AR SUBMITTED BEFORE THE AO THAT SRI JA MI DURGA PRASAD WAS NEPHEW OF THE MANAGING PARTNER AND ON 24.10.2010, THE ASSESSEE HAD MADE THE PAYMENT OF RS.2,2 6 ,000/ - FOR MEDICAL TREATMENT OF HIS FATHER. THE ASSESSEE ALSO EXPLAINED THAT 24. 1 0.2010 HAPPENED TO BE SUNDAY AND THE BANK HOLIDAY AND THE P AYMENT IS EXEMPT U/S 40A(3) R.W. RULE 6D OF THE ACT. WITH REGARD TO PAYMENT MADE TO SRI JAMI DURGA PRASAD, WHO IS THE NEPHEW OF THE MANAGING PARTNER AND THE SON OF SHRI J.APPA RAO WAS EXPLAINED TO BE MADE FOR MEDICAL TREATMENT EXPENSES AS HE WAS IN NEED OF MONEY TO MEET THE EXPENSES . THE ASSESSEE HAS SUBMITTED THE EVIDENCE FOR MEDICAL TREATMENT UNDERGO NE BY SRI JAMI APPA RAO. THE JCIT OBSERVED THAT THERE WAS MISMATCH OF DATES OF MEDICAL TREATMENT AND THE PAYMENTS AS UNDER 4. MR JAMI APPA RAO, FATHER OF ONE OF THE PARTNERS WAS ADMITTED IN SRI RAMANAMAHARSHI HOSPITAL, BHIMAVARAM ON 02.10.2010 AND INCURRED 11 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM AN EXPENDITURE OF RS2,26,000/ - AND WAS ALSO READMITTED IN THE HOSPITAL ON 15.10.2010 AND INCURRED AN EXPENDITURE OF RS.1,20,300/ - . WHEREAS THE REPAYMENT MADE BY THE FIRM TO SRI JAMI APPARAO FATHER OF , ONE OF THE PARTNERS WAS ON 20.10.2010 AND THE REPAYMENT TO SRI JAMI DURGA PRASAD NEPHEW OF THE MANAGING PARTNER AND SON OF SRI JAMI APPARAO WAS MADE ON 24.10.2010. AS PER THE DOCTOR CERTIFICATE S, SRI JAMI APPARAO HAS ALREADY INCURRED EXPENDITURE OF RS2,28,000/ - BEFORE 15.10.2010 AND RS.1,20,300/ - ON OR AFTER 15.10.2010. THERE IS NO EXIGENCY FOR THE ASSESSEE FIRM TO REPAY THE AMOUNT OF RS 2,26,000/ - TO SRI JAMI DURGA PRASAD ON 24.10.2010 WHICH HA PPENED TO BE SUNDAY. THE AMOUNT CAN BE PAID BY WAY OF CHEQUE ON THE SAME DAY OR BY WAY OF BANK DRAFT ON THE NEXT DAY. FURTHER, THE PAYMENT OF RS . 1,20,282/ - WAS PAID IN A DAY OTHER THAN SUNDAY IN WHICH BANKS ARE WORKING. A CCORDINGLY THE JCIT REJECTED THE SUBMISSION OF THE ASSESSEE THAT THE PAYMENTS MADE TO SRI JAMI APPA RAO AND SRI JAMI DURG A PRASAD ARE NOT COVERED AS EXCEPTION U/S 273 B OF THE ACT AND THERE WAS NO REASONABLE CAUSE TO MAKE THE PAYMENT. HENCE, IMPOSED PENALTY OF RS.3,46,282/ - U/S 271E OF THE ACT. 8. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL AND CONFIRMED THE ORDER OF THE JCIT. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 9. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE REPAYMENT OF LOAN WAS MADE BY THE AS SESSEE DUE TO MEDICAL EMERGENCY, SINCE SRI JAMI APPA RAO WAS HOSPITALIZED AND HE HAD TO INCUR THE EXPENDITURE TO MEET THE 12 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM MEDICAL EXPENSES THUS THE CREDITOR HAD PRESSED FOR PAYMENT OF LOAN IN CASH TO MEET THE MEDICAL EMERGE NCY AND IN EXCEPTIONAL CIRCUMSTANCES , THE ASSESSEE HAD OBLIGED TO MAKE THE PAYMENT IN CASH. THAT TOO A SUM OF RS.2,26,000/ - WAS PAID ON SUNDAY. THE LD.AR FURTHER SUBMIT TED THAT THOUGH THE CREDITOR HAD INCURRED THE EXPENSES FROM HIS OWN SOURCES, HE HAS TO OBLIGE THE REQUEST OF CREDITOR WHEN HE PRESSES THE PAYMENT IN CAS H TO MEET THE HOSPITAL BILLS AND SUBSEQUENT POST HOSPITALIZATION EXPENSES. MERELY BECAUSE THE PATIENT HAD PAID THE BILL BE FORE DISCHARGE FROM THE HOSPITAL, IT CANNOT BE HELD THAT THE PATIENT HAD SUFFICIENT SOURCES TO MAKE THE PAYMENTS AND TO MEET THE POST HOSPITALIZATION EXPENSES . THEREFORE ARGUED THAT IN VIEW OF THE EMERGENCY EXPRESSED BY THE CREDITOR, THE PAYMENT WAS MADE OTHERWISE THAN BY CROSSED CHEQUE AND ARGUED THAT THE ASSESSEES CASE IS COVERED BY EXCEPTIONS U/S 273B OF THE ACT. SINCE THE ASSESSEE HAS DEMONSTRATED THE SUFFICIENT AND REASONABLE CAUSE FOR REPAYMENT OF LOAN, THE LD.AR REQUESTED TO SET ASIDE THE ORDER OF THE CIT(A) AND CANCEL THE PENALTY. PER CONTRA THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT SRI JAMI APPA RAO, 13 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM FATH ER OF THE CREDITOR WAS ADMITTED IN THE HOSPITAL AND INCURRED AN EXPENDITURE OF RS.2,26,000/ - AND SUBSEQUENTLY A SUM OF RS.1,20,300 ON 02.10.2010 AND 15.10.2010 RESPECTIVELY AS PER THE CERTIFICATE ISSUED BY THE HOSPITAL AUTHORITIES . THOUGH THE PAYMENTS IN CURRED B Y SRI JAMI APPA RAO WERE PAID ON EARLIER DATES IT IS UNDISPUTED FACT THAT THE PAYMENT OF RS.2,26,000/ - WAS PAID ON SUNDAY WHICH IS EXEMPT U/S 40 A(3) OF THE ACT . BOTH SRI JAMI APPA RAO AND THE PARTNERS HAVE STATED THAT THE AMOUNTS WERE USED FOR THE PURPOSE OF MEETING THE MEDICAL EMERGENCY EXPENSES. THERE IS NO REASON TO DISBELIEVE THE SUBMISSION OF THE ASSESSEE WHEN THE PERSON WAS HOSPITALIZED AND UNDERGOING THE TREATMENT. THE CONT ENTION OF THE AO THAT THE AMOUNT SHOULD HAVE BEEN PAID BY WAY OF CHEQUE ON THE SAME DAY OR BY WAY OF BANK DRAFT ON THE NEXT DAY IS FARFETCHED AND UNACCEPTABLE . THE MEDICAL EMERGENCY HAS TO BE ATTENDED KEEPING IN VIEW OF THE PREVAILING CIRCUMSTAN CES. THE S OURCES FOR MEETING THE MEDICAL EXPENSES AND POST MEDICAL EXPENSES HAVE TO CONSIDERED ON HUMANE GROUNDS AND AS PER THE REQUIREMENTS OF THE PATIENTS TO SAVE THE LIVES. THEREFORE, WE HOLD THAT THERE I S SUFFICIENT AND REASONABLE CAUSE FOR REPAYMENT OF THE LO AN OTHERWISE THAN BY CROSS ED CHEQUE AND THE CASE IS COVERED BY EXCEPTIONS PROVIDED U/S 273B OF THE ACT FOR NOT LEVYING PENALTY U/S 271E THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND CANCEL THE PENALTY. 14 S A NO S.10 &11 / VIZ/2018 AND ITA NOS. 102 & 103/VIZ/2018 M/S SRI VIJAYA KIRAN BIOTECH, BHIMAVARAM 1 1 . IN THE RESULT, STAY APPLICATIONS FILED BY THE ASSESSEE ARE DISMISSED AND THE APPEALS OF THE ASSESSEE ARE ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH SEP , 2018. SD/ - SD/ - ( . ) ( . . ) ( V. DURGA RAO) ( D.S. SUNDER SINGH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / VISAKHAPATNAM /DATED : 05 .09.2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - SRI VIJAYA KIRAN BIOTECH, D.NO.16 - 4 - 23, P.P.ROAD, OPP.KESINENI TRAVELS, BHIMAVARAM 2. / THE RESPONDENT THE INCOME TAX OFFICER , WARD - 1 , BHIMAVARAM 3. THE PR. COMMISSIONER OF INCOME TAX - 1 , RAJA MAHENDRAVARAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 2 , HYDERABAD 5. , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM