Income Tax Appellate Tribunal - Mumbai
Indian Lead Ltd, Thane vs Assessee on 5 October, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES, 'I', MUMBAI
BEFORE S/SHRI D.K. AGARWAL (JM) AND RAJENDR A SINGH(A.M )
ITA No.362/Mum/2009
(Assessment Year : 2004-05)
M/s Indian Lead Limited, Incom e Tax Officer
Gokul Nagar, 3(2)(1),
L.B.S.Marg, Aayakar Bhavan,
Majiwada, V/s M.K.Road,
Thane-400601 Mumbai-400020.
P AN:AAACI0379K
APPELLAN T RESPONDENT
Date of Hearing : 5.10.2011
Date of Pronouncem ent : 14.10.2011
Appellant by : Shri Pravin D.Khona
Respondent by : Shri Sunil Kumar Singh
O R D E R
PER D.K. AGAR WAL (JM) This appeal preferred b y the assessee is directed against the order dated 8.10.2008 passed by the ld.CIT(A) for the assessm ent year 2004-05.
2. Briefly stated facts of the case are that the assessee company filed return declaring loss of Rs.2,12,74,916/-. However, the assessment was completed at an income of Rs.1,00,000/- vi de order dated 19.12.2006 passed u/s 143(3) of the Income Tax Act, 1961 (in short the Act). During the course of assessment proceedings, the AO noted that the assessee has accepted loan of Rs.29,75,000/- from 2 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 M/s Genesis Impex India Ltd. in cash i.e. otherwise than account payee cheque /demand draft in contravention of the provisions of section 269SS of the Act. The AO after accepting the same as genuine initiated penalty proceedings u/s 271D of the Act vide notice dated 18.5.2006. In response, to show cause notice as to why the penalty u/s 271D shoul d not be imposed, the assessee requested for adjournment for three weeks. However, as the proceedings were getting time barred by limitation, the AO did not accept the assessee's request. Subsequently, the assessee has filed written submissions along with the copy of cash book. The AO interalia observed that the copy of the cash book clearl y shows that the assessee received cash am ounting to Rs.29,75,000/- and deposited Rs.23,53,000/- only and the balance cash had been used to meet pett y cash expenses, conveyance, welfare expenses, postage, Xerox, advances to transporters etc. According to the AO since the same has already been considered in the assessment proceedings and it has been held that the assessee has accepted the deposits of Rs.29,75,000/- in cash and not by account payee cheques or account payee demand draft without reasonable cause, therefore the assessee is liable to pay penalty of Rs.29,75,000/- and accordingly, the AO imposed the 3 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 penalty vide order dated 27.6.2007 passed u/s 271D of the Act.
3. On appeal, the ld. CIT(A) while observi ng that no contingency necessitating the appellant to borrow money in cash has been brought on record, confirmed the penalty imposed by the AO and dismissed the appeal.
4. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal bef ore us taking following grounds of appeal:
"1) The ld. CIT (A) erred in confirming the penalty of Rs.29,75,000/- u/s 271D of the Income Tax Act,1961 levied by the Addl. CIT, Rg.3(2), Mumbai.
2) The Id. CIT (A) erred in not appreciating the circumstances which forced the appellant to receive the funds in cash.
3) The Id. CIT (A) erred in not appreciating the order of BIFR requiring the promoters -co. promoters to finance the company, which is a Sick Industrial Unit.
4) The Id. CIT (A) erred in not appreciating that the funds were provided by the promoters - co.promoters as share application m oney.
5) The Id. CIT (A) erred in not appreciating that the advances received even if not treated as share application money, are interest-free and therefore, they are not loans or deposits withi n u/s. 269SS of the Income Tax Act, 1961.
6) The ld. CIT (A) ought to have deleted the penalty."
5. At the time of hearing, the learned counsel for the assessee submits that the paper book filed by the assessee 4 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 contains the additional evidence appearing at pages 44 to 63 of the assessee's paper book. The learned counsel for the assessee further submits that the assessee has already filed an application for admission of additional evidence dated 21.6.2011 wherein it has been interalia stated that the appellant company has been declared as a sick company b y BIFR. Vide order dated 4.4.2002, the com pany was under
lock out for a considerable time for financial probl ems. Since it could not pay the bills of the security services, the concerned security service company locked the gates of the company and did not allow any one to enter t he prem ises. The security guards not only ref used to receive inward tapals on behalf of the appellant company, but also did not bother to inform the appellant company about the said tapals not accepted by them. After a long struggle, the appellant regained possession of the premises. After the matter was settled with the security service com pany, possession of the premises was forcibly taken over by the financer who also did not allow the staff and management to enter the premises. After a long struggle, the appellant regained possession of the premises. Due to above adverse circumstances, even notice for the hearing of the present appeal was not received by the appellant, and an ex-parte order was passed dismissing he appeal. Thereafter, the 5 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 Tribunal recalled the appeal after taking into consideration the above adverse circumstances of the appellant. Due to lack of access to various records under above circumstances, the following additional evidences were filed:
Paper Book Item No. "(6) Statement of Cash Deposits in Bank & Cash retained out of cash amounts received from Genesi s lmpex (India) Ltd. mostl y for wages and other cash expenses. The said statement is merely analysis of cash receipts from the said Co. Out of cash receipts of Rs.
29,75,000, Rs.23,53,000/- were directly deposited by the said Co. (sister concern and co-promoter) in appellants' Bank a/c, and only balance of Rs6,22,000/- was given in cash for some cash expenses, out of which Rs.3,94,005/- were spent for pa ying wages and stamp charges, etc. at W ada where the company does not have any bank account. Hence, cash receipts out of necessity. The matters were orally explained to the A.O, at the time of assessment and penalty proceeding, and the facts have been duly noted by him. The statement is now prepared and presented f or better grasping. The information is vital to the issue of penalty levied.
(7) Copies of relevant Bank Statements: Out of Rs.29,75,000, Rs.23,53,000/- were directly deposited by Genesis in appellants' Bank a/c. Bank statements were duly presented for verification at assessment stage. The Addl. CIT in penal ty order has clearly noted on 2 n d page of his order that out of Rs.29,75,000, Rs.23,53,000/- were deposited (in bank), and balance was received in cash. The Bank statem ents are very vital to establish that Rs.23,53,000/- were directly deposited in bank a/c. (8) Details of wages and stamp charges, etc. paid at W ada, out of cash retained. It is in conti nuation of Item No. 6. The m atter was orally explained to the A.O. The cash was retained to defray some expenses, m ainl y wages, at W ada. The statement of details is submitte d at this stage to substantiate the point. It is very vital to the issue.
6 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05
9) Appellant's account in Books of Genesis Impex (India) Ltd. The A.O. verified the facts from alternate evidences and information given by the Assessee, Hence production of assessee's account in the Books of Genesis was not insisted up on by the A.O. The account statem ent shows that out of Rs.6,34,26,500/- received from Genesis, Rs.6,04,51,500/- were received by cheques, cash Rs.23,53,000/- was deposited in assessee's bank a/c, and balance cash paid was Rs.6,22,000 for cash expenses. This copy of account is very m uch vital for the issue.
10) Affidavit; This is for the purposes of reiterating the situation. It was not submitted at earlier stages. However, the Affidavit is for the purpose of supporting the facts of the case."
He therefore, submits that in view of the above, the additional evidence filed by the assessee be admitted. On merits, he submits that the out of Rs.29,75,000/-, Rs.23,53,000/- were deposited i n bank and the balance was received in cash for some cash expenses out of which Rs.3,94,005/- were spent for paying wages and stam p charges etc at W ada where the com pany does not have any bank account hence cash received was out of necessity. He, further submits that it was also orally explained to the AO at the time of assessment proceedings. He, therefore, submits that under these circumstances, the penalty imposed by the AO and sustained by the ld. CIT(A) be deleted. In alternative, 7 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 he submits that in view of the aforesaid additional evidence, the issue may be restored to the file of the AO.
6. On the other hand, the ld. DR supports the order of the AO and the ld. CIT(A).
7. W e have carefully considered the rival submissions of the parties and perused the material available on record. W e find that there is no dispute that the assessee has filed copy of cash book showing the cash of Rs.29,75,000/- receipts received from M/s Genesis Impex (India) Ltd. out of which Rs.23,53,000/- was deposited with the Bank. It was f urther stated by the assessee that the balance amount has been used to meet petty cash expenses, conveyance, wel fare expenses, postage, Xerox, advances to transporters etc. However, the AO without verif ying the same from the cash book with the bank account has held that the assessee's explanation is without any reasonable cause and liable to penalty. Since aforesaid additional evidence is in support of the assessee's explanation filed before the AO, we are of the view that the said additional evidences go to the root of the matt er, therefore, in the i nterest of justice we admit the same. Since the additional evidence has not been examined by the AO, therefore, we consider it fair and 8 IT A No . 36 2/Mum /2009 ( Assessm ent Year : 20 04- 05 reasonable that the matter should go back to the file of the AO and accordingly we set aside the orders passed by the revenue authorities and send back the matter to the file of the AO to examine the same in the l ight of our observations hereinabove and according to law after providing reasonable opportunity of being heard to the assessee. Accordingl y, grounds taken by the assessee are partly all owed for statistical purposes.
8. In the result, the assessee's appeal stands partl y allowed for statistical purposes.
Order pronounced in the open court on 14th October,2011.
Sd sd
(R AJENDR A SINGH) (D.K. AGAR WAL)
ACCOUNTAN T M EMBER JUDICI AL MEMBER
Mumbai, Dated 14th October, 2011
SRL:
Cop y to:
1. Appellant
2. Respondent
3. CIT Concerned
4. CIT(A) concerned
5. DR concerned Bench
6. Guard file.
BY ORDER
True copy
ASSTT. REGISTRAR, ITAT,
MUMBAI