Income Tax Appellate Tribunal - Jodhpur
Income Tax Officer vs Shree Mahaveer Industries on 4 December, 2003
Equivalent citations: (2004)82TTJ(JODH)549
ORDER
I.S. Verma, J.M.
1. In these two appeals, the Revenue has objected to the consolidated order of the CIT(A) dt. 20th Oct., 1995 by way of the following grounds :
ITA 2379: On the facts and in the circumstances of the case the learned CIT(A) has erred in cancelling the penalty of Rs. 33,000 imposed under Section 271D of the IT Act, 1961.
ITA 2380: On the facts and in the circumstances of the case the learned CIT(A) has erred in cancelling the penalty of Rs. 47,500 imposed under Section 271E of the IT Act, 1961.
2. I have heard the learned Departmental Representative as well as the counsel for the assessee.
3. The facts relating to the issue involved in these appeals are that AO noticed that the assessee had received cash deposits and had also repaid out of those deposits in cash which were in contravention of the provision of Section 269SS and 269T, respectively, The assessee had received cash from father of one Shri Gulabchand on various dates totalling to Rs. 33,000 and had pleaded that father of Shri Gulabchand was an agriculturist and had kept this amount with the assessee for giving to Shri Gulabchand to meet his education expenses. The AO, however, considered the same as deposits and in contravention of the provisions of Section 269SS of the Act. So far as the contravention of provisions of Section 269T is concerned, the AO was of the opinion that the repayment of cash amounting to Rs. 27,000 to Smt. Sunder Devi, repayment of Rs. 3,000 to Smt. Pushpa Salecha and repayment of Rs. 17,500 to Shri Gulabchand were in contravention of the provisions of Section 269T.
3.1 In view of the above, AO levied penalty under Sections 271D and 271E of the Act.
4. On appeal by the assessee, the CIT(A) cancelled the penalty by observing as under:
After careful consideration of the matter, I find that the appellant has no doubt accepted/repaid cash exceeding Rs. 20,000. However, the default is only technical. There is nothing otherwise wrong with the transactions. Further, Smt. Sunder Devi was ex-partner and Shri Gulabchand is an agriculturist. Both of them are having running accounts with the appellant and the transactions are being made for the last so many years. Moreover, the AO has imposed two penalties under Sections 271E and 271D for the same default. Therefore, it will not be justified to levy the penalty for technical defaults in such circumstances. The penalties are cancelled and the appeals are allowed.
5. The learned Departmental Representative supported the order of the AO whereas the counsel for the assessee, so far as contravention of provisions of Section 269SS is concerned, submitted that the assessee was under bona fide belief that the amount received from father of Shri Gulabchand was trust money and not deposit. He, therefore, submitted that there was no question of contravention of provisions of Section 269SS. In support of this, the counsel relied upon the decision of Tribunal, Jaipur Bench, Jaipur in the case of Vivek Agencies v. Dy. CYT 22 Tax World 593 (Jp) where such default was considered only a technical and venial breach of the provisions of law and penalty under Section 271D was cancelled. So far as penalty under Section 271E is concerned the counsel submitted that repayment to Smt. Sunder Devi was out of capital remaining with the assessee-firm after she left the firm and was paid for her household expenses. So far as the repayment to Smt. Pushpa Salecha was concerned the counsel submitted that the lady was to get urgent treatment and, therefore, payment had to be made in cash which was a reasonable cause. Coming to the case of Shri Gulabchand, the counsel submitted that the repayments of trust money given by his father for his education expenses could not be said to be repayment of deposits. In view of these facts, the counsel submitted that the repayments were under bona fide belief and as a result of urgency which amounted to reasonable cause for which no penalty was exigible. In support of his submission, the counsel relied upon the following decisions:
(i) Karnataka Ginning and Pressing Factory v. Jt, CIT (2001) 72 TTJ (Mumbai) 307: (2001) 77 ITD 478 (Mumbai)
(ii) Dillu Cine Enterprises (P) Ltd. v. Add. CIT (2002) 80 ITD 484 (Hyd)
(iii) Farwkhabad Investment (I) Ltd. v. Jt. CIT (2003) 80 TTJ (Del) 82 : (2003) 85 ITD 230 (Del)
(iv) Shreenath Builders v. Dy. CIT (2000). 66 TTJ (Ahd) 113
(v) Dr. Deepak Muchala v. Dy. CIT (1997) 58 TTJ (Mumbai) 524.
Decision of Tribunal, Jodhpur Bench, in ITA No. 1423/Jp/1993 dt. 24th Jan., 2000, where it was held that if the loans were found to be genuine and there was urgency of taking the loan, the penalty under Section 271D, cannot be imposed.
6. Having considered the rival submissions, facts and circumstances of the case and various decisions relied upon by the counsel for the assessee, I am of the opinion that so far as the deposit of money in the name of Shri Gulabchand is concerned, the same being given to the assessee by his father for meeting his education expenses cannot be considered as deposit, rather it was trust money to be repaid as and when required by Shri Gulabchand, and, therefore, I am of the opinion that there was no contravention of provisions under Section 269SS of the Act and consequently CIT(A) was quite justified in cancelling the penalty under Section 271D of the Act.
7. So far as repayment is concerned, I am of the opinion that repayment to Smt. Sunder Devi being out of capital remaining with the assessee-firm could not be said to be repayment out of loan or deposits and, therefore, was not covered the provisions of Section 269T of the Act. So far as repayment to Smt. Pushpa Salecha is concerned, the same being made for meeting treatment due to emergency of the matter, no penalty can be imposed as has been held by the Hon'ble Tribunal in various cases relied upon by the counsel for the assessee. So far as repayment to Gulabchand is concerned, I am again of the opinion that repayment of trust money could not be in contravention of the provisions of Section 269T of the Act.
8. In view of the above facts and circumstances of the case, I am of the opinion that CIT(A) was guite justified in cancelling the penalty. Order of the CIT(A) is, therefore, confirmed.
9. In the result, the Revenue's appeals are dismissed.