Income Tax Appellate Tribunal - Pune
New Phaltan Sugar Works Ltd., Satara vs Assessee on 1 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member
and Shri R.K. Panda, Accountant Member
ITA No. 1641/PN/2012
(Assessment Year 2007-08)
New Phaltan Sugar Works Ltd.
At Post : Sakharwadi,
Tal : Phaltan, Dist : Satara
PAN No.AAACN9008Q .. Appellant
Vs.
Addl.CIT, Satara Range, Satara .. Respondent
Appellant by : Shri M.K. Kulkarni
Respondent by : Smt. Shailja Rai
Date of Hearing : 01-10-2013
Date of Pronouncement : 08-10-2013
ORDER
PER SHAILENDRA KUMAR YADAV, JM :
This appeal has been filed by the assessee on following grounds :
"1) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified while confirming the penalty u/s.271D in not appreciating the ratio decidendi of the judgment of the Hon'ble Supreme Court in A. B. Shanthi's case and other Verdicts about genuinity of loans/deposits not coming under the purview of S. 271D of the Act. The Ld. CIT(A) erred in confirming the penalty levied. It be quashed.
2) On the facts and circumstances of the case and in law the Ld. CIT(A) erred in not considering properly the ground of appeal raised before him that penalty proceedings were barred by limitation. The Ld. CIT(A) ought to have quashed the penalty proceedings as barred by limitation. The penalty levied be quashed.
3) On the facts and circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the Reasonable cause pleaded before him within the meaning 2 of S. 273B of the Act. The Hon'ble Bombay High Court in the case of CIT v. Triumph International Finance (I) Ltd. (2012) 345 ITR 270 (Bom) held "that in the absence of any finding recorded in the assessment order or in the penalty order to the effect that repayment/acceptance of deposit was not a bona fide transaction and was made with a view to evade tax, the cause shown was a reasonable cause and therefore, in view of S. 273B of the Act, no penalty could be imposed for contravening the provisions of S. 269T" the proposition equally applies to S. 271-D of the Act. In the absence of such finding recorded the penalty levied be quashed."
2. During assessment proceedings u/s.143(3) in case of assessee for A.Y 2007-08 Assessing Officer noticed that assessee has accepted deposit in cash of Rs.2 lakhs from Sri P.G. Salunkhe and Rs.50,000/- from Shetkari Kamgar Gramin Bigarsheti Patsanstha Ltd. in contravention of the provisions of section 269SS. Consequently, on a proposal by Assessing Officer, penalty proceedings u/s.271D of the Income Tax Act were initiated by the Range Addl.CIT. The penalty levied by the Assessing Officer under provisions of Section 271D was confirmed by CIT(A). Same has been opposed before us. On other hand, Ld. Departmental Representative supported the same.
3. Ld. Authorised Representative for assessee heavily relied on the decision of ITAT, Pune in the case of Salary Earner's Coop. Credit Society, Sangli and submitted that Assessing Officer was not justified in holding that assessee could not prove expenses of reasonable cause for accepting such deposits in violation of provisions of section 269SS. Accordingly, penalty of Rs.2,50,000/- equal to the sum 3 accepted in violation of provisions of section 269SS was imposed on assessee under the provisions of section 271D of the Income Tax Act which was confirmed by the CIT(A).
4. A plain reading of section 269SS makes it clear that there is no such phrase occurring in section 269SS as to indicate that provisions will not apply to genuine transactions as pleaded by the assessee. The provisions will apply when loan or deposits accepted or otherwise by an account payee cheque or account payee draft and the amount of such loan or deposit or aggregate amount of such loan or deposit is Rs.20,000/- or more. Only safety is provided under the provisions of section 273B wherein it has been mentioned that penalty is not to be imposed on the persons where any failure referred to in that provision if he proves that there was a reasonable cause for said failure. If deposits are proved to be not genuine the same could be considered for addition u/s.68 or 69 of the Act as deemed income of the assessee from other sources and cannot be regarded as loan or deposit within the meaning of section 269SS and 269T. Simply transaction could be proved genuine. It could not be said that provisions of section 269SS are not applicable. There is no dispute that assessee has accepted the amount in cash from loan and the same was deposited in bank account of assessee in contravention of provisions of section 269SS of the Act. CIT(A) has examined whether there was any reasonable cause on part of assessee not to comply with the provisions of section 269SS. While dealing with the penalty 4 provisions, the 'reasonable cause' would mean a cause which is beyond the control of assessee. Reasonable cause which prevents the reasonable man or man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fide explanation. Assessee has stated that it was declared as 'sick industrial unit' in terms of section 3(1)(e) of SICA and it was claimed to be in dire need of funds to run the affairs of the company smoothly which led to acceptance of deposits in cash. But assessee has not discharged the burden cast upon him to accept the amount through banking channel. He has not brought on record any circumstances which prevented him to violate the provisions of section 269SS by bye-passing banking channel while accepting above amount. Even if the same has been obtained from the Managing Director Sri P.G. Salunkhe as discussed above who has lent Rs.2 lakhs and similarly other amount of Rs.50,000/- lent by Shetkari Kamgar Gramin Bigarsheti Patsanstha which is a cooperative society engaged in the business at par with the banking activity. The assessee could not justify the bye- passing of banking channels. Being 'sick industrial unit' is not sufficient for deviating from banking channel. In absence of reasonable cause, assessee cannot take benefit of the provisions of section 273B of the Act. In view of the above, CIT(A) was justified in upholding the penalty levied u/s.271D of Rs.2,50,000/ -. Same is confirmed.
5
5. In the result, the appeal filed by the assessee is dismissed.
Pronounced in the Open Court on this the 8th day of October, 2013.
Sd/- Sd/-
(R.K. PANDA) (SHAILENDRA KUMAR YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune Dated: 8th October 2013
Satish
Copy of the order forwarded to :
1. Assessee
2. Department
3. CIT(A)-III, Pune
4 CIT-III, Pune
5. The D.R, "A" Pune Bench
6. Guard File
By order
// True Copy //
Senior Private Secretary
ITAT, Pune Benches, Pune