Income Tax Appellate Tribunal - Ahmedabad
Income Tax Officer vs Akik Tiles (P) Ltd. on 16 August, 2004
Equivalent citations: (2005)96TTJ(AHD)670
ORDER
Rajpal Yadav, J.M.
1. The Revenue is in appeal before us against the order of the CIT(A) dt. 14th Nov., 2004, passed for asst. yr. 2000-01. The grievance of the Revenue relates to permission of leading additional evidence in contravention of Rule 46A of the IT Rules and thereby deleting the penalty of Rs. 2 lakhs levied under Section 27 ID of the IT Act, by the learned CIT(A).
2. The brief facts of the case are that during the assessment proceedings, the learned AO noticed cash deposits of Rs. 2 lakhs in the name of Praful C. Acharya, HUF and individual. In the opinion of the AO, the above amount was accepted in contravention of Section 269SS of the Act. Therefore, he issued a show-cause notice to the assessee inviting its explanation as to why penalty under Section 271D be not imposed upon it. In reply to the show-cause notice, assessee has contended as under:
"We have received two account payee only, cheque No. 108641, dt. 13th July, 1999 of Rs. 1,50,000 from Praful C. Acharya, HUF and another No. 16233, dt. 13th July, 1999 of Rs. 50,000 from Praful C. Acharya (individual) (copy of both cheques are enclosed herewith) and same were deposited in our bank, The Mehsana Urban Co-op. Bank Ltd. But by some reason both cheques were returned unpaid. However, we had already issued cheques to our parties against those cheques. Therefore, we requested to the parties to arrange cash for non-return of our cheques which were issued by us to our parties. After our request, party paid cash to us, which was deposited by us in our bank account.
On telephone talk with our above two parties, parties have explained to us that they have deposited some cheques as transfer in their bank accounts on 15th July, 1999 but by some mistake, bank has not given credit to them on the same day. After our cheque returned, party has informed to their bank for transfer given by them in those accounts. Thereafter, bank had given credit to them on 16th July, 1999 and party had withdrawn the same cash vide cheque No. 108642 and 016234, respectively, and given to us. It is important to mention that these two cheques are not to those issued to us earlier."
2.1 The AO was not satisfied with the explanation of the assessee and levied a penalty of Rs. 2 lakhs.
3. On appeal, the learned CIT(A) deleted the penalty by observing that assessee has a reasonable cause in accepting Rs. 2 lakhs in cash. Before us, the learned Departmental Representative has pointed out that the learned CIT(A) has entertained certain documents afresh without affording an opportunity of hearing to the AO. He further relied upon the orders of AO.
3.1 On the other hand, the learned counsel for the assessee relied upon the order of learned CIT(A).
4. We have duly considered the rival contentions. The assessee has elaborately explained in its reply before the AO that Rs. 2 lakhs were given to it by the partner, Shri Praful C. Acharya in the capacity of Karta HUF as well as in his individual capacity. Due to some computer problem, these cheques could not be cleared by AMCO Bank from where the depositors had given their cheques. In the meanwhile, assessee had already issued a cheque for Rs. 5 lakhs to one of its parties on 17th July, 1999. Under these compelling circumstances, both the cheques dt. 13th July, 1999 are not likely to be cleared in its accounts. The assessee requested the depositors to arrange the money and the partners made cash deposit, so that assessee could avoid consequences of Section 138 of the Negotiable Instruments Act likely to be followed on account of dishonour of its cheques issued to one of its party. In our opinion, the learned CIT(A) has rightly considered it as a reasonable cause for deleting penalty and has permitted the assessee to produce the bank certificate only to the above effect. We do not see good reason to interfere in his order. Therefore, the appeal of the Revenue is dismissed.