Income Tax Appellate Tribunal - Ahmedabad
Shri Rakesh Bhailalbhai Patel,, ... vs The Jt. Cit, Central Range-1,, ... on 11 June, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'एस. एम. सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD सम ी वसीम अहमद, लेखा सद य एवं स ु ी मधु मता रॉय, या यक सद य ।
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER
1. आयकर अपील सं./I.T.A. No.3334/Ahd/2016
2. आयकर अपील सं./I.T.A. No.3335/Ahd/2016 ( नधा रण वष / Assessment Year : 2008-09) 1-2. Rakesh Bhailalbhai Patel 1-2. The Jt.CIT 15, Sthanakvasi Jai Society Vs. Central Range-1 Near Naranpura Railway Ahmedabad Crossing Naranpura, Ahmedabad थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : ABRPP 6848 D (अपीलाथ% /Appellant) .. (&'यथ% / Respondent) अपीलाथ% ओर से /Appellant by : Shri D.K. Parikh, AR &'यथ% क) ओर से/Respondent by : Shri Rajesh Meena, Sr.DR ु वाई क) तार,ख / सन Date of Hearing 06/06/2018 घोषणा क) तार,ख /Date of Pronouncement 11/ 06 /2018 आदे श / O R D E R PER Ms. MADHUMITA ROY - JM:
The captioned appeals filed by the Assessee are directed against the orders of the Commissioner of Income Tax(Appeals)-11, Ahmedabad [CIT(A) in short] identically dated 15/09/2016 for the Assessment Year (AY) 2008-09 wherein the CIT(A) confirmed the levy of penalty made by the Jt.CIT, Central Range-1, Ahmedabad under s.271-D and 271-E of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for alleged violation of provisions under s.269-SS and ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -2- 269-T of the Act which seeks to prohibit certain cash transactions received and paid in cash.
2. Common and inter-connected issues involved in both the appeals for the same assessment year for the same assessee. Accordingly, both the appeals are disposed of by this common order.
3. Brief facts of the case is this that the assessee on 28.05.2007 taken a loan of Rs.1,00,000/- in cash from his father Bhailalbhai B.Patel as the assessee had to pay advance of Rs.2,50,000/- for acquiring Banakhat Rights of a land which was paid on the very next day i.e. 29.05.2007. The assessee had in urgent need of money and therefore, the said amount was borrowed from his father as a financial support.
The assessee's case is that since there was reasonable cause for taking such amount, he was not under obligation to repay and, therefore, provisions of section 269SS is not attracted. However, in the month of August-2007 he returned the said amount to his father from the surplus cash. Thus, provisions of section of 269T is also not applicable to the case of the assessee.
4. The Ld.Jt.CIT did not consider the following submission made by the assessee in the proceeding u/s.271D of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
"Also the assessee has earned almost Rs.1 crore out of this transaction of land deal for which such advance was given and the said receipt of profit was brought to the tax by the assessee in A.Y. 2008-09, which can be verified from the record of assessment of the said year.
As assessee was having a reasonable cause for taking such amount which was not under an obligation to repay, the provision of section 269SS is not attracted ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -3- and also having found the surplus cash by assessee subsequent in the month of August, 2007 had returned such amount to his father. So similarly provision of Section 269T is also not attracted in case of the assessee."
4.1. The Jt.CIT held that there is a violation of the provisions of section 269-SS and section 269-T warranting levy of penalty under s.271-D and 271-E respectively. Accordingly, penalty of Rs.1 lakh each was imposed under s.271-D and 271-E of the Act separately.
5. The assessee approached the CIT(A) for relief against the aforesaid orders of the Jt.CIT. The CIT(A) examined the submissions of the assessee but however did not find it convincing. He accordingly denied relief sought in tandem. The relevant para of the order of the CIT(A) in respect of penalty imposed under s.271- D of the Act (which is broadly the same as per imposition of penalty made under s.271-E of the Act) are reproduced hereunder:
"5. The AR of the appellant submitted that the assessee borrowed sum of Rs.1 lakh in cash from his father on 28th May, 2007 as he had to give advance of Rs.2.5 lakh for acquiring banakhat rights of property being land The assessee was having reasonable cause for taking such amount for which he was not under an obligation to repay. Therefore, the provisions of section 269SS were not attracted. The provisions of section 269D are also not attracted in the case of the assessee. The cash was received from his father who is always under an obligation to help his son in need without any contra obligation on part of his son. Therefore, it was proved that there was reasonable cause for the said failure. The assessee was in urgent need of money to make payment of banakhat amount for purchase of land which resulted in huge profit in the subsequent period. He relied on some tribunals decisions.
6. The ratio of the decisions relied by the appellant have been gone through and it was noticed that in the case of K.K. Enterprise (2014) 41 Taxman.com 235 (Mum.Trib) the assessee firm received a sum of Rs.4.35 lakhs in cash from ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -4- its sister concern and later on a sum of Rs.1 lakh was repaid in cash. The tribunal held that this was a transaction between two business concerns constituted by the family members and both the firms were having a common partner, therefore, transfer of cash by one firm to another would operate as a reasonable cause.
In the instant case the assessee was not able to show of being prevented by any reasonable cause in not accepting the advance through account payee cheque or bank draft and there was no contention to that effect. Therefore, after considering the totality of the facts and circumstances of the case, in my considered opinion, the assessee was not able to establish any genuine and reasonable cause for violation of the relevant provisions of the Act. Accordingly, the appeal of the assessee is dismissed."
6. Aggrieved, the assessee preferred appeals before the ITAT.
7. At the time of hearing of the appeal, the Ld.AR reiterated the submission as was made by the assessee before the lower authorities. He further relied upon the judgement of Hon'ble Jurisdictional High Court in the case of CIT, Ahmedabad- IV, vs. Maa Khodiyar Construction (2014) 45 taxmann.com 566 (Gujarat) as well as the order passed by the Ld.ITAT Kolkata Bench in ITA Nos.331 & 332/Kol/2010 passed on 25/11/201.
8. No serious objection has been raised by the Ld.DR in this respect.
9. We have heard the Ld.representatives of the respective parties. We have perused relevant materials on record. We find that bonafide and/or genuineness of the transactions have not been question by the lower authorities while imposing penalty. Identity of the parties has also been well established by the assessee which was accepted by the authorities below. The cash book submitted by the Ld.AR ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -5- reflects the cash flow in regard to the said amount of Rs.1,00,000/- it was borrowed from the father of the assessee and repaid subsequently. Once finding as to the genuineness of the transactions was arrived at by the authorities below which was not proper for them to impose penalty. Neither there was any finding that the assessee intended to evade tax. The facts of the case in ITA Nos.331 & 332/Kol/2010 is similar to the case in hand. While allowing the assessee's appeals, the following was observed by the said Bench.
"Going through the facts of case before us, we are of the view that the transaction between son in law and father in law for giving a support and help as contended by Ld. Counsel and not denied by revenue, in law was not a loan or deposit in stricter sense of section 269SS of the Act and it was only a financial support. Even it is not the allegation that the father in law of assessee has charged any interest on the above loan and hence, this is merely a financial support to son in law by his father in law. Once this is the position, the transaction does not fall in the ambit of section 269SS of the Act. Accordingly, these appeals of the assessee are allowed."
9.1. The moot points required to be considered by the Hon'ble Gujarat High Court were as follows:-
"(A) "Whether in the facts and circumstances of the case, the ITAT has erred in law in rejecting the Revenue's appeal against the decision of CIT (A) in dealing the penalty levied u/s. 271D of the Income-tax Act, even though the assessee is not covered by the exception to Section 269SS of the Act provided in second proviso to the said Section 269SS, as the assessee had taxable income under the Act and accepted cash exceeding the limit provided under the said Section 269SS ?"
(B) "Whether 'genuineness of the loan/deposit' or 'bona fide nature of the loan/deposit transaction' is the criteria for examining the contravention of the provisions of Section 269SS of the Income Tax Act, 1961 for levying penalty u/s. 271D of the Income Tax Act, 1961 ?"' ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -6- Following were further observed by the said Hon'ble High Court:
12. For not inviting the rigour of penalty u/s. 271D of the Act as consequence, on the part of the assessee, the reasonable cause needs to be shown. What is pleaded by the respondent was that all these persons were agriculturists and that the genuineness of the transactions at no point of time had been doubted by the Revenue. They stayed in remote areas. Both the authorities, therefore, were of the opinion that reasonable cause had been sufficiently made out and when the very transactions were never doubted by the Revenue authorities, the breach is to be treated as a mere technical or venial breach.
13. We notice that the requirement of Section 273B is for the assessee to prove that there was a reasonable cause for its having failed to abide by the provisions of Section 269SS. As emerges from the record, not only the substantiating evidence like 7/12 Extracts were produced, but, also additionally, transactions were reflected in the accounts of assessee and the advancement of loan to the assessee had been reflected in the books of account of those persons from whom the loan had been received. The identity of those persons has also been well established. The assessee also had given satisfactory reason for taking such loan. His bona fide belief that such transactions would not attract provision of Section 269SS on the ground that they were agriculturists and lived in remote villages also was one of the grounds which has weighed with both the authorities.
14. In view of forgoing discussion, we are of the opinion that no error has been committed by both the authorities below in deleting the penalty. It is true that the respondent has income from other business and these transactions were not between agriculturists having only agriculture income, not liable to tax which have been exempted from such rigor of law and yet, the cause advanced is when found to be sufficiently reasonable, no interference would be desirable.
15. Reliance placed on the decision in case of Hindustan Steel Ltd. (supra) also requires a specific reproduction at this stage where the Apex Court has held that, "...An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or act in ITA Nos.3334 & 3335/Ahd/2016 Rakesh Bhailalbhai Patel vs. Jt.CIT Asst.Year - 2008-09 -7- conscious disregard to its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances.
Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."
16. We find that both the authorities have rightly construed the provisions and applied the law to the facts and the surrounding circumstances aptly. Tax Appeal, resultantly, deserves no further consideration and hence, the same is dismissed."
10. Taking into consideration of the entire facts of the matter, we find that the ratio laid down in the said judement is squarely applicable to the instant case and we find that when the genuineness of the transaction has not been doubted by the lower authorities as also the importance of urgency of raising cash loan, the penalty u/s.271D & 271E of the Act ought not to have been levied. We thus delete the order of penalty passed u/s.271D & 271E of the Act.
11. In the result, both the appeals of the assessee are allowed.
T This Order pronounced in Open Court on 11 / 06 /2018
Sd/- Sd/-
(वसीम अहमद) (स
ु ी मधु मता रॉय)
लेखा सद य या यक सद य
( WASEEM AHMED ) ( Ms. MADHUMITA ROY )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 11/ 06 /2018
ट,.सी.नायर, व. न.स./T.C. NAIR, Sr. PS
ITA Nos.3334 & 3335/Ahd/2016
Rakesh Bhailalbhai Patel vs. Jt.CIT
Asst.Year - 2008-09
-8-
आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent.
3. संबं4धत आयकर आयु5त / Concerned CIT
4. आयकर आयु5त(अपील) / The CIT(A)-11, Ahmedabad
5. 8वभागीय & त न4ध, आयकर अपील,य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड< फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या8पत & त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 6.6.18 (dictation-pad 13- pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member ...7.6.18
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......11.6.18
7. Date on which the file goes to the Bench Clerk.....................11.6.18
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................