Income Tax Appellate Tribunal - Pune
Om Trading Co.,, Jalgaon vs Assessee on 21 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV,
JUDICIAL MEMBER, AND
SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA No.937/PN/2011
A.Y. 2006-07
Om Trading Company,
8, Market Yard, Parola,
Jalgaon - 425111
PAN:AABFO1070F Appellant
Vs.
Jt. Commissioner of Income Tax,
Jalgaon Respondent
Appellant by : Shri S.N. Kalbhande
Respondent by : Shri A.K. Modi
Date of Hearing: 21.10.2013
Date of order : 23.10.2013
ORDER
PER SHAILENDRA KUMAR YADAV, JM
This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-II [(in short CIT(A)- II], Nashik dated 19-05-2011 for A.Y. 2006-07 on the following grounds.
(1) From the facts & circumstances, the CIT(A) erred in confirming the penalty u/s.271D of I.T. Act.
(2) The CIT(A) gave unnecessary important on the payments which were not made on the day or next day of which the deposit in cash was received.
2(3) The CIT(A) did not discuss the provision of Sec273B, which contemplates that the penalty u/s. 271D is not mandatory.
(4) The CIT(A) did not discuss the case law cited & the copies of which were filed, which gives importance to the backgrounds of provisions of 269SS of I.T. Act. The discussion in the case law regarding the introduction & purpose of sec. 269SS was not at all discussed by CIT(A).
The fundamental thing that the purpose of sec.269SS was to stop the menace of accounted money. When the genuineness of deposit was established & accepted by the Income Tax Officer, it was not necessary to technically levy the penalty.
2. The assessee is engaged in business of brokerage in Grains and they were licencee of the APMC, Parola. During the course of assessment proceedings, Assessing Officer noticed that Rs.10,00,000/- was accepted by assessee by way of loan from Shri Namdeo Bandu Wani in cash, in violation of provisions of section 269SS of the I.T. Act, 1961. A show cause notice u/s.274 r.w.s. 271D was issued on 01-09-2009 requesting the assessee firm to state as to why penalty u/s. 271D should not be levied for accepting loan as above in contravention of provisions of section 269SS of I.T. Act, 1961. In response to the above notice, assessee submitted as under;
"That the nature of business is such that it needs cash. As we were in need of cash, we asked Shri Namdeo Bandu Wanu, a respected person to help us. He took the loan of Rs.10,00,000/- from the Premdeep Nagari Sah. Patsantha, Dhule. As we requested him to bring cash form Dhule, he withdrew the cash from the credit society and deposited with us. A cheque would have taken at least 4-5 days to clear & we would have been in difficulties. We had a cash balance of Rs.22,883/-. The deposits are genuine & accepted by the I.T.O and no addition has been made to total income, on this issue."3
3. The Assessing Officer did not accept the contentions raised on behalf of assessee and levied penalty of Rs.10,00,000/- u/s.271D of I.T. Act which was confirmed by CIT(A). The same has been opposed before us. Authorized Representative submitted that business of assessee is such that it needs cash. In such need, the assessee claimed to have asked Shri Namdeo Bandu Wani and he extended cash loan of Rs.10,00,000/- by withdrew the cash from the credit society and deposited with the assessee. A cheque would have taken at least 4-5 days to clear and assessee would have been in difficulty, because assessee had cash balance of Rs.22,883/-. Accordingly, the assessee accepted the cash of Rs.10,00,000/-. According to assessee deposits are genuine and accepted by Assessing Officer and no addition has been made to total income in this account. Accordingly, for taking cash loan penalty u/s. 271D should not be imposed because he was prevented by reasonable cause to accept cash loan as contemplated under provision of section 271D of the I.T. Act. Accordingly, penalty should be cancelled. On other hand, learned Departmental Representative supported the order of authorities below and supported penalty levied u/s. 271D for violating section 269SS of the I.T. Act.
4. After going through the rival submissions and material record, it is not in dispute that assessee has accepted Rs.10,00,000/- from Shri Namdeo Bandu Wani in cash in contravention of provisions of section 269SS of the I.T. Act. According to assessee transactions under reference are genuine. As he was having only Rs.20,883/- cash in hand as on 27-10- 2006. The assessee has made payment to agriculturists as under;
4 ₹ 1,69,076/- 28/10/2005
₹1,89,050/- 29/10/2005
₹1,76,128/- 20/10/2005
₹1,19,924/- 04/11/2005
₹2,00,745/- 04/11/2005
From the above, the assessee has tried to justify the circumstances under which said loan / deposit in cash were accepted. According to assessee there was a reasonable cause for accepting cash loans and there was no malafide intention or evasion of the tax by assessee. We find that provisions of section 269SS has been brought on statute by legislation for putting a ban on acceptance / introduction of cash of Rs.20,000/- and above into the books of accounts in the form of loan or deposit in the business. The assessee has not brought on record any convincing reason to accept the cash loan / deposit so as to bring reasonable cause mentioned in section 273B. The assessee has not made out the case of exception stipulated in section 269SS. The assessee is a commission agent and deals in agricultural commodities. As per the trade practice cash payments are made to farmers on a regular basis. There is nothing on record to suggest unusual or any compelling circumstances for accepting loan of Rs.10,00,000/- in cash. The payments to farmers in cash is a normal business transactions but he has not made out the case for accepting cash loan in contravention of provisions of section 269SS of the I.T Act. The assessee has also not established immediate need of cash. In these facts and circumstances, CIT(A) was justified in upholding the penalty levied by Assessing Officer by invoking the provisions of section 271D of I.T Act and the same is upheld.
5. In the result, the appeal filed by assessee is dismissed.
5Pronounced in the open Court on the day of 23rd October 2013.
Sd/- Sd/-
(R.K. PANDA) (SHAILENDRA KUMAR YADAV)
Accountant Member Judicial Member
Pune, Dated: 23rd October 2013
GCVSR
Copy to:-
1) Assessee
2) Department
3) The CIT(A)-II, Nashik
4) The CIT-II, Nashik
5) The DR, "B" Bench, I.T.A.T., Pune.
6) Guard File
//True copy//
By Order
Senior Private Secretary,
I.T.A.T., Pune