Income Tax Appellate Tribunal - Ahmedabad
Mahesh Harikrishandas Amin(Huf), ... vs Assessee on 20 September, 2011
आयकर अपीलीय अिधकरण, अहमदाबाद Ûयायपीठ 'बी', अहमदाबाद
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IN THE INCOME TAX APPELLATE TRIBUNAL : 'B' BENCH : AHMEDABAD
Before Hon'ble Shri T.K. Sharma, J.M. & Hon'ble Shri A.Mohan Alankamony, A.M.)
आयकर अपील सं. ITA No. 2451/Ahd./2009 : िनधा[रण वष[ः- 2000-2001
आयकर अपील सं. ITA No. 2452/Ahd./2009 : िनधा[रण वष[ः- 2003-2004
Mahesh Harikrishandas Amin (HUF),Baroda -Vs- Addl.CIT, Central Range,Baroda
(PAN : AAIHM 2859P)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
अपीलाथȸ कȧ ओर से/ Appellant By : Shri J.M.Trivedi
ू×यथȸ कȧ ओर से / Respondent By : Shri Samir Tekriwal, Sr.D.R.
सुनवाई कȧ तारȣख / Date of Hearing : 20/09/2011
घोषणा कȧ तारȣख / Date of Pronouncement : 27/09/2011
आदे श / Order
Per Shri T.K. Sharma, Judicial Member :
These two appeals filed by the Assessee are against two separate orders both dated 25-02-2009 of Learned Commissioner of Income Tax(Appeals)-IV, Ahmedabad confirming the penalty of Rs.18,19,871/- and Rs.8 lakhs levied by the AO under section 271E for the assessment years 2000-2001 and 2003-2004 respectively.
2. Brief facts are in respect of penalty of Rs. 18,19,871/- levied under section 271E are that in this case, search action under section 132 of the I.T. Act was carried out at the premises of Shri Mahesh Harikrishandas Amin on 19.01.2006. During the post search enquiry, on verification of SB A/c. No. 3921 with Bank of Maharashtra in the name of the assessee, it was observed that there were deposits of Rs.22,10,101/-, Rs.4,03,000/- and Rs.10,35,909/- on 12/04/1999, 07/08/2002 and 07/12/2002 respectively. The assessee was asked to explain the above credits in the bank account vide the statement recorded on 16/02/2006. It was also explained by the assessee that ITA No. 2451&2452-Ahd-09 he started business of Shroff in his HUF capacity 25 years ago. In the year 1979-80, he advanced an amount of Rs.14 lakhs to Shri Karthik Kethiwadi Bijkendra of Uttarsanda village on interest. The above person paid interest in the initial 3-4 years but it stopped payment of interest thereafter. The assessee filed a petition before the Hon'ble Court in the year 1983 to recover amount of Rs.16,37,720/- including interest from the above person. Subsequently, the Hon'ble Court awarded the following amounts to the assessee on account of the debts from Shri Karthik Kethiwadi Bijkendra.
12/05/1999 Rs.22,10,101/-
07/08/2002 Rs. 4,03,000/-
07/12/2002 Rs.10,35,929/-
25/03/2005 Rs. 13,214/-
In aggregate, the assessee received an amount of Rs.36,62,244/- till 25/03/2005 as against his total advances of Rs.16,37,720/-. In this way, the assessee in his HUF capacity, has earned interest of Rs.20,28,524/- during the period 01/04/1999 to 31/03/2005 as mentioned above.
2.1 On the basis of above facts, a notice under section 148 was issued to the assessee HUF and assessment was framed under section 147 r.w.s. 143(3) on 31.12.2007 at a total loss of Rs.13,320/- as under:
Income from Other Sources:
Interest income as shown in the statement Rs.16,80,444/- Less: Interest to the depositors as discussed above Rs.16,93,764/-
(-) Rs. 13,320/-
Less: Deduction u/s 80-L
as per statement Rs.3,773 but admissible Rs. Nil__
Total Loss (-) Rs. 13,320/-
2.2 The AO has mentioned that the assessee has violated the provisions of section
269T and attract the penal proceedings under section 271E of the IT Act, 1961 in respect of payment of Rs.18,19,870/- including interest. Subsequently, vide order dated 14.10.2008, the AO levied the penalty of Rs.18,19,870/- under section 271E for the assessment year 2000-01.2
ITA No. 2451&2452-Ahd-09
3. On appeal, in the impugned order, the ld. CIT(A) confirmed the penalty of Rs.18,19,870/- on the ground that the case of the assessee does not fall in the exceptions mentioned under Rule 6DD of the I.T. Rules, 1962.
4. Facts relating to levy of penalty of Rs.8 lakhs under section 271E for the assessment year 2003-04 are that for this assessment year, the AO framed the assessment on 31.12.2007 under section 147 r.w.s. 143(3) of the Act at a total income of Rs.1,71,366/-. In this assessment order, the AO has stated that all the facts of the case are similar as already discussed in the case of the assessee for the assessment year 2000-01. For this assessment year also, the AO observed that bank account of the assessee reveals repayment of Rs.8 lakhs to the creditors are made in cash from the amount received from Shri Karthik Kethiwadi Bijkendra. Thus, the assessee has violated the provisions of section 269T and attracts the penalty under section 271E.
For this, he made a proposal to the Additional CIT, Central Range, Baroda to initiate penalty under section 271E of the I.T. Act, 1961. Subsequently, the Additional CIT, Central Range, Baroda levied the penalty under section 271E of Rs.8 lakhs for the assessment year 2003-04.
5. On appeal, in the impugned order, the ld. CIT(A) confirmed the penalty of Rs.8 lakhs on the ground that the case of the assessee does not fall in the exceptions mentioned under Rule 6DD of the I.T. Rules, 1962. Aggrieved with the order of the ld. CIT(A) for both the assessment years, the assessee is in appeals before the Tribunal.
6. At the time of hearing before us, on behalf of the assessee, Shri J.M.Trivedi appeared and stated that the assessee started the business of Shroff in HUF status 25 years ago. In the year 1979-80, the assessee HUF advanced an amount of Rs.15 lakhs to one Shri Karthik Kethiwadi Bijkendra of Uttarsanda village on interest. As the said party failed, the assessee filed a suit to recover the amount of Rs.16,37,720/- including interest from the said party in the year 1983 and the Hon'ble Court directed to pay to the assessee Rs.36,62,244/-. This amount was received from the said party as under:
3ITA No. 2451&2452-Ahd-09 12/05/1999 Rs.22,10,101/-
07/08/2002 Rs. 4,03,000/-
07/12/2002 Rs.10,35,929/-
25/03/2005 Rs. 13,214/-
6.1 The Counsel of the assessee explained that financial position of the assessee
started worsening on account of loan of Rs.14 lakhs given to Shri Karthik Kethiwadi Bijkendra of Uttarsanda village on interest. The party could not repay the amount. After the decree was passed in favour of the assessee, it received the payment from Shri Karthik Kethiwadi Bijkendra of Uttarsanda, as stated in the assessment order. The debtors were pressing hard and insisting for cash payment. Therefore, the assessee started immediately repaying its obligation in cash for both the years. It was also contended that the assessee was carrying on the business of Shroff i.e. money lending and advancing loan, etc. The assessee was, therefore, of the bona fide belief that dealing in money, sections 269SS and 269T does not apply. It is only when the penalties in question were levied, the assessee came to know that its action is based on wrong but bona fide belief. He contended that this bona fide belief constitutes a reasonable cause within the meaning of section 273B of the I.T. Act, 1961. Therefore, penalty levied, under section 271E for both the assessment years, be cancelled. The ld. Counsel of the assessee also drew our attention to the observations of the ld. CIT(A) in the impugned orders wherein, he stated that the assessee failed to prove that his case falls in the exceptions mentioned under Rule 6DD of I.T. Rules, 1962. On the basis of this observation, he pleaded that the assessee was of the bona fide belief that cash repayment of loan, in case of a person who is doing Shroff business, is covered by section 40A(3) but since the debtors were pressing hard and for making cash payment, its case is covered under Rule 6DD of the I.T. Rules, 1962. He also pleaded that the assessee is about 80 years old. Neither in the past nor in future, penalty under section 271E was levied on it. Therefore, it was of the bona fide belief that repayment of loan, in case of a person, who is doing shroff business in cash under exceptional circumstances, can be made without violating any provisions of the I.T. Act.4
ITA No. 2451&2452-Ahd-09
7. On the other hand, Shri Samir Tekriwal, Sr.D.R., appearing on behalf of the Revenue, vehemently supported the order of the ld. CIT(A). The ld. D.R. pointed out that for both the assessment years, no voluntary returns were furnished by the assessee. For both the assessment years, the AO issued notice under section 148 as there was search action under section 132 of the I.T. Act, 1961. As per the decree of the Hon'ble Court, the assessee received payment of Rs. 36,62,244/-, which was deposited by the assessee in its bank account no. 3921 with Bank of Maharashtra. The assessee could have easily paid to its debtor either through account payee cheque or bank draft. Since there was a reasonable cause within the meaning of section 273B, penalty of Rs. 18,19,870/- and Rs.8 lakhs were rightly levied by the Additional C.I.T., Central Range, Baroda for both the assessment years and the ld. CIT(A) is legally and factually correct in confirming the same.
8. Rival submissions were considered. It is pertinent to note that income assessed for the assessment year 2000-01 is (-) Rs.13,320/- whereas for the assessment year 2003-04 it is only Rs.1,71,366/-. In both the assessment years, the AO has accepted that the assessee has refunded the loans/deposits, which the assessee took about 25 years ago, i.e. somewhere in the assessment year 1979-80 and advanced amount of Rs.14 lakhs to Shri Karthik Kethiwadi Bijkendra of Uttarsanda village on interest. The said party paid the interest for initial 2 to 3 years but stopped paying interest thereafter. The assessee filed petition before the Hon'ble Court in the year 1983 to recover the amount of Rs.16,37,720/- including interest from the above person. The Hon'ble Court directed to pay to the assessee Rs.36,62,344/-, out of which the assessee has paid Rs. 18,19,870/- in the assessment year 2000-2001 and Rs.8 lakhs in the assessment year 2003-2004 in cash. This amount was paid in each to the various debtors as they were insisting cash payment and they were visiting assessee's house everyday for the payment. Before both the lower authorities, the assessee contended that he was of the bona fide belief that doing Shroff business, he made the payment to the debtors in cash under exceptional circumstances as provided in Rule 6DD of I.T. Rules, 1962. It is true that this bonafide belief of the assessee was wrong but we are of the view that the revenue authorities ought to have taken a lenient view because there 5 ITA No. 2451&2452-Ahd-09 was a reasonable cause within the meaning of section 273B of the Act for repaying long-outstanding dues in cash. We are of the view that the plea of the assessee, that he can repay the debtors in cash, constitutes a reasonable cause within the meaning of section 273B of the I.T.Act, 1961. Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271E, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the provisions contained in section 269SS or 269T, if he proves that there was reasonable cause for the said failure. Therefore, in order to bring in application of s. 271E in the backdrop of section 273B, absence of reasonable cause, existence of which has to be established by the assessee, is the sine qua non. The initial burden is on the assessee to show that there exists reasonable cause. In the present case, looking to the facts that the assessee is of about 80 years old and after prolonged litigation, he won the case and got Rs. Rs.36,62,344/-. Debtors were pressing hard and insisting on cash payment. Under the aforesaid circumstances, the assessee repaid the debtors in cash.
8.1 In these circumstances, the bona fide belief of the assessee that it can repay the long outstanding dues to its debtors in cash constitutes a reasonable cause within the meaning of section 273B. For this reasonable cause, we cancel the penalty of Rs.18,19,870/- in the assessment year 2000-2001 and Rs.8 lakhs in the assessment year 2003-2004, levied under section 271E by the AO and confirmed by the ld. CIT(A) for both the assessment years.
9. In the result, both the appeals filed by the Assessee are allowed.
इस आदे श कȧ घोषणा Ǒदनांकः 27/09/2011 को Ûयायालय मɅ कȧ गई ।
This Order pronounced in Court on 27/09/2011.
Sd/- Sd/-
(A.Mohan Alankamony) (T.K. Sharma)
Accountant Member Judicial Member
DATED : 27/09/2011
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ITA No. 2451&2452-Ahd-09
आदे श कȧ ूितिलǒप अमेǒषतः-
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आदे श से,
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अहमदाबाद।
Talukdar/ Sr. P.S.
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