Income Tax Appellate Tribunal - Rajkot
Income Tax Officer, Ward-2 (3) (5),, ... vs Ushaben G. Vasjaliya, L/H Sh. ... on 22 February, 2017
आयकर अपील य अ
धकरण, राजकोट यायपीठ, राजकोट ।
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
[ Conducted through E-Court at Ahmedabad ]
BEFORE SHRI RAJPAL YADAV, JUDCIAL MEMBER And
SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.68/RJT/2016
( नधा रण वष / Assessment Year : 2010-11)
The ITO बनाम/
Late Ushaben G.Vasjaliya
Ward-2(5) Vs. L/H Shri Gordhanbhai
Rajkot Vasrambhai Vasjaliya
Satyam Park-19
Nr. Sun City
Sadhu Vasvani Road
Rajkot
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No.AAXPV 6850 A
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से / Appellant by : Shri C.P. Bhatia, Sr.DR
यथ क! ओर से/Respondent by : Shri Chetan L. Agarwal, AR
ु वाई क! तार ख /
सन Date of Hearing 10/02/2017
घोषणा क! तार ख /Date of Pronounce ment 22/02/2017
आदे श / O R D E R
PER PRADIP KUMAR KEDIA, AM :
The captioned appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-2, Rajkot ['CIT(A)' in short] dated 18/12/2015 pertaining to Assessment Year (AY) 2010-11.
ITA No. 68/RJT/2016ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -2-
2. Revenue has raised the following effective ground of appeal:-
The Ld.CIT(Appeals)-2, Rajkot has erred in law and on facts of the case in directing to delete the penalty under section 271D of Rs.17,50,000/- for accepting loans more than Rs.20,000/- in cash which is in contravention to the provisions of section 269SS of the Income-tax Act, 1961.
3. Briefly stated, the assessee (deceased) was an individual. The return of income for AY 2011-12 was filed showing total income on Rs.1,85,780/-. The assessment was framed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by making an addition of Rs.961/- only. Subsequently, notice under s.274 read with section 271D of the Act was issued on the legal heir of the assessee towards alleged contravention/violation of section 269SS of the Act. It was noted by the Assessing Officer (AO) that the assessee has taken cash loans of Rs.17,50,000/- and admitted as such during the assessment proceedings. The AO observed that the assessee had taken cash loans in contravention of provisions of section 269SS and accordingly imposed penalty under se.271D of the Act which was levied at Rs.17,50,000/-.
4. In the first appeal against the penalty order, the CIT(A) however found merit in the contentions raised before it on behalf of the assessee ITA No. 68/RJT/2016 ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -3- and cancelled the penalty. The relevant operative para of the order of the CIT(A) reads as under:-
"7. Decision:
I have carefully considered the issue, gone through submission of AR and discussion made by JCT in the penalty order.
It is seen that JCIT had imposed penalty for violation of provisions of section 263SS, since appellant has obtained cash loans of Rs.17,50,000 from seven persons. The Assessing Officer Assessing Officer (AO) has contended that the facts of the instant case, a sum of Rs.17,50,000/- has been taken by way of loan by the respondent from ten different persons. Admittedly, this was by way of loan of loan in cash exceeding rupees twenty thousands and the same therefore contravenes the provisions of Section 269SS of the Act.
Contention of AR that loans were obtained in emergency to deposit in bank for obtaining VISA for appellant's son have force and needs to be appreciated. Also, loans were accepted as genuine in assessment proceedings after due verification of lenders, hence there was reasonable cause within the meaning of provisions of section 273B. Violation of provisions of section 269SS can be regarded as technical and venial breach, in view of fact that appellant being old lady not well versed with provisions of law. Considering conspicuous facts of the case decision of hon.Gujarat High Court in the case of CIT vs. Maa Khodiyar Construction 365 ITR 474 is relevant which is squarely applicable to facts of the present case. "Section 269SS of the Act at this stage requires consideration along with Sections 271D and 273B of the Act. Any loan or deposit, if, accepted by any person otherwise than by an account payee cheque or account payee bank draft from any person exceeding rupees twenty thousand rupees or more. Section ITA No. 68/RJT/2016 ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -4- 269SS of the Act prohibits the same after the 30th June 1984. Section 271D makes such person who received the amount in contravention of provision of Section 263SS liable for penalty, a sum equal to the amount of loan or deposit so accepted. Section 273B of the Act of course carves out the way in certain cases and provides that no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions which includes Section 271D if he proves that there was reasonable cause for the said failure.
What is therefore necessary to prove is the reasonable cause by the assessee on its having failed to abide by the conditions incorporated in the said provision of Section 269SS.
In response what is pleaded by the respondent was that all these persons were agriculturists and that the genuineness of the transactions at no point of time had been doubted by the Revenue. They stayed in remote areas. Both the authorities, therefore, were of the opinion that reasonable cause had been sufficiently made out and when the very transactions were never doubted by the Revenue authorities, the breach is to be treated as a mere technical or venial breach.
It is noticed that the requirement of Section 273B is for the assessee to prove that there was a reasonable cause for its having failed to abide by the provisions of Section 269SS. As emerges from te record, not only the substantiating evidence like 7/12 Extract were produced, but, also additionally, transactions were reflected in the accounts of assessee and the advancement of loan to the assessee had been reflected in the books of account of those persons from whom the loan had been received. The identify of those persons has also been well established. The assessee also had given satisfactory reason for taking such loan. His bona fide belief that such transactions would not attract provision of Section ITA No. 68/RJT/2016 ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -5- 269SS on the ground that they were agriculturists and lived in remote village also was one of the grounds which has weighed with both the authorities.
The appellant placed reliance on the decision in case of Hindustan Steel Limited v. State of Orissa [supra] also requires a specific reproduction at this stage where the Apex Court has held that,".....
"An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or act in conscious disregard to its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."
Thus, it is conclusively proved in the findings given by various High Court and by Apex court cited supra that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the provisions of section 269SS of the Income Tax Act, if there is a reasonable cause for such failure and if the assessee proves that there was a reasonable cause for failure to take a loan otherwise than by account payee cheque or ITA No. 68/RJT/2016 ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -6- account payee bank draft and in such circumstances the penalty shall not be levied. In view of the facts, it is apparent that there is a discretion left with the authority concerned whether to levy the penalty or not in the given circumstances if the assessee comes and proves a reasonable cause for not accepting the loan by account payee cheque or account payee bank draft. In the case of CIT vs. Manoj Lalwani (2003) 260 ITR 590 (Raj), Honble Rajasthan High Court held that section 273B permits the assessing authority not to impose a penalty provided under section 271D of a sum equal to the amount of loan or deposit taken or accepted in spite of the breach of the provisions of section 269SS, if the assessee or the person proves before the assessing authority that there was reasonable cause for not accepting the amount of loan or deposit by way of account payee cheque or account payee bank draft. The assessing officer has not appreciated the reasonable cause of the appellant in the given facts of the case in totality.
In view of above, discussion and following decision of jurisdictional Gujarat high court penalty of Rs.17,50,000/- imposed u/s.271D for violation of provisions of section 269SS in hereby cancelled."
5. Aggrieved, the Revenue is in appeal against the order of the CIT(A).
6. The Ld.DR for the Revenue Mr.C.P.Bhatia relied upon the order of the AO and submitted that the cash loans taken by the assessee are prohibited in law to counter bogus transactions. The assessee ought to have taken the loan by the method notified under the lawand not otherwise. He also submitted that the assessee has failed to prove 'reasonable cause' for failure to abide by the provisions of section 269SS ITA No. 68/RJT/2016 ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -7- and, therefore, the action of the CIT(A) in reversing the order of the AO was not justified.
7. The Ld.AR Mr.Chetan L.Agarwal, on the other hand, at the outset submitted that the aforesaid cash loans were taken from some of the nears and dears on account of emergency arose as the assessee's son tried to go to USA for higher studies and was also offered scholarship which would have lapsed if he could not reach in particular year and not get admission in particular time. The assessee accepted to loans due to this emergency and deposited the total amount in its bank account. However, due to non-receipt of Visa to her son, the assessee returned back total money through banking channel only. The ld.AR submitted that pursuant to summons issued under s.131 of the Act, two of the parties endorsed the transaction with assessee which proves the genuineness of the cash deposits. The ld.AR vehemently contended that the genuineness of the transactions was not impeached in the assessment proceedings. As a corollary, the loans were accepted as bonafide by the AO himself. The ld.AR pointed out that the assessee was an old lady and not well-versed with the provisions of Income Tax Act, and therefore committed mistake which requires to be condoned. The Ld.AR therefore submitted that there existed 'reasonable cause' for failure to abide section 269SS of the Act. He therefore submitted that immunity from penalty under s.271D was rightly granted by CIT(A).
ITA No. 68/RJT/2016ITO vs. Late Ushaben G.Vasjaliya Asst.Year - 2010-11 -8-
8. We have carefully considered the rival submissions and the orders of the authorities below. The short point for determination is whether imposition of penalty under s.271D of the Act is justified for contravention of section 269SS of the Act by taking cash loans. As stated on behalf of the assessee, the assessee claimed to be purportedly not familiar with the provisions of the Income Tax Act. The cash loans were taken from several parties some of whom have vouched for the transaction in pursuance of the summons issued to them. The loans were admitted as bonafide by the AO. The cash loans have been finally returned through banking channels. A copy of Visa application for her son to USA was also adverted in the course of the hearing. On conspectus of the facts narrated above, we find that mitigating circumstances do exist in the case of assessee which proves reasonable cause for committing default under s.269SS. Therefore, we do not find any error in the order of the CIT(A) in cancelling penalty.
9. In the result, appeal of the Revenue is dismissed.
Order pronounced in the Court on 22 /02/2017 at Ahmedabad.
Sd/- Sd/-
( RAJPAL YADAV) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad ; Dated 22/02/2017
ट .सी.नायर, व.,न.स./T.C. NAIR, Sr. PS
ITA No. 68/RJT/2016
ITO vs. Late Ushaben G.Vasjaliya
Asst.Year - 2010-11
-9-
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं
धत आयकर आयु.त / Concerned CIT
4. आयकर आयु.त(अपील) / The CIT(A)-2, Rajkot
5. 2वभागीय ,त,न
ध, आयकर अपील य अ
धकरण,राजोकट/DR,ITAT, Rajkot
6. गाड@ फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स या2पत ,त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील%य अ&धकरण, राजोकट / ITAT, Rajkot
1. Date of dictation .. 17.2.17 (dictation-pad 11- pages attached at the end of this File)
2. Date on which the typed draft is placed before the Dictating Member .. 17.2.17
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S....... 22.2.17
7. Date on which the file goes to the Bench Clerk..................... 22.2.17
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................