Income Tax Appellate Tribunal - Chandigarh
Sh. Amar Nath, vs Assessee on 23 August, 2012
1
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCH 'B', CHANDIG ARH
BEFORE SHRI T.R. SOOD, A.M AND Ms. SUSHMA CHOWLA, JM
ITA No. 1199/Chd/2012
Assessment Year : 2008-09
A.C.I.T. Circle, Palampur V Amar Nath
Prop. M/s Amar Nath Harish
Chand,
Near Municipal Committee
Kangra
AAYPN 8879 L
Cross-objections No. 1/Chd/2013
Arising out of ITA No. 1199/Chd/2012
Assessment Year : 2008-09
Amar Nath V A.C.I.T. Circle, Palampur
Prop. M/s Amar Nath Harish
Chand,
Near Municipal Committee
Kangra
AAYPN 8879 L
(Appellant) (Respondent)
Department by Smt. J.S. Nagar
Assessee by: S/Shri P.N. Arora & Anil Vasudeva
Date of hearing 30.1.2013
Date of Pronouncement 31.1.2013
O R D E R
PER T.R.SOOD, A.M
This appeal is directed against the order passed by the ld. CIT(A), Shimla dated 23.8.2012 and the assessee has filed an Cross-objections.
ITA No. 1199/Chd/2012 - Revenue's appeal
2. In this appeal the Revenue has raised the following ground:
"1 On the facts and circumstances, the ld. CIT(A) has erred in deleting the addition of Rs. 13,15,000/- by invoking section 273B of the Income-tax Act in order to 2 give immunity to the assessee from the penalty u/s 271D for violation of section 269SS."
3 After considering the rival submissions we find that the assessee is an individual and is engaged in the business of distribution of products from Haldi ram, Nestle, Parley and W rigley on agency basis. The assessee had bank limit of Rs.30 lakhs and had accepted the cash deposit amounting to Rs. 13,15,000/- from his son Shri Rajesh Anand. The Assessing Officer was of the view that this was in contravention to Section 269SS. Thereafter a show cause notice was issued why penalty should not be levied u/s 271D of the Act. In response it was mainly submitted that the cash was received to meet the emergency fund requirement. The assessee was out of station and in his absence the amount was deposited by his daughter-in-law who was looking after the accounts of both the firms. However, the Assessing Officer did not find force in the submissions and levied penalty u/s 271D of the Act. 4 On appeal before the ld. CIT(A), the submissions made before the Assessing Officer were reiterated. It was further submitted that entire amount was returned through cheque on 13.3.2008 i.e. within short time. It was explained that the transaction was genuine and the default, if any, was of technical nature. It was further submitted that had this money not been taken, the cheque of various principles like Haldiram would have got bounced and invited trouble for the assessee u/s 138 of the Negotiable Instruments Act. This clearly shows that there were compelling circumstances and the penalty should not have been levied. Reliance was placed on various case laws. The ld. CIT(A) found force in the submissions and deleted the penalty.
35 Before us, the ld. DR for the revenue strongly supported the order of the Assessing Officer. He referred to page 63 of the paper book which is a copy of bank statement and pointed out that OD limit had only been decreased on 22.2.2008 when first deposit was accepted amounting to Rs. 1,25,000/-. Same is the situation on other dates. Therefore, it cannot be said that there was a dire need to fund and the assessee had reasonable cause to accept the cash deposit. 6 On the other hand, the ld. counsel of the assessee submitted that from 22.2.2008 to 3.3.2008 the assessee and his son were out of station. During that period certain cheques were presented by the supplier of goods who are given cheques in advance. Accounts of both the firms were being looked after by assessee's daughter-in-law. She noticed that there was cash available in the firm of assessee's son and therefore, that cash was deposited in the bank. The funds were required urgently otherwise the cheques could have got bounced. He further pleaded that a survey was conducted on the premise of the assessee on 4.3.2008 and cash was found short amounting to Rs. 13 lakhs and in reply to the question it was clearly submitted that there was a cash balance of Rs. 13 lakhs in M/s Anand Traders i.e. the firm belonging to assessee's son and there was a shortage of cash in M/s Amar Nath & Sons amounting to Rs. 13 lakh. This happened because assessee's wife Mrs. Ritika Anand who could not operate bank accounts deposited cash belonging to M/s Anand Traders in assessee's account. This fact has been accepted by eh Assessing Officer during assessment proceedings. Therefore, it is clear that cash was urgently required in the absence of assessee which was taken by the assessee's daughter-in-law and deposited in assessee's accounts. This should be construed as reasonable 4 cause. In this regard reliance was also placed on the decision of Amritsar Bench of the Tribunal in case of Shri Raman Gupta Prop. M/s Raman & Cross-objections. Jammu V. Addl CIT, Jammu in ITA No. 05/ASR/2010, CIT V. Speed ways Rubber (P) Ltd (2010) 326 ITR 31 (PH).
7 W e have heard the rival submissions carefully and find force in the submissions of the ld. counsel of the assessee. The ld. CIT(A) has adjudicated this issue vide para 4, 4.1 and 4.2 which are as under:
"4 Rival submissions have been carefully considered with reference to the facts of the case, the relevant provisions of law and the case laws relied upon. It is noted that the Assessing Officer had conducted detailed examination of the cash entries in the appellant's bank account which were on account of the cash received by the assessee from his son Shri Rajesh Anand. The explanation of the assessee was duly accepted by the Assessing Officer while calculating the cash position during the course of survey action at the assessee's premises. The submissions made by the appellant during the course of appellate proceedings were also made at length before the Assessing Officer but the Assessing Officer has not commented on the merit of the same while passing the order u/s 271D of the Act. There are also found two clerical errors in the Assessing Officer's order on page 1 where in the dates of cash deposits have been mentioned as 28.5.2008 and 29.9.2008 instead of the actual dates of 28.2.2008 and 29.2.2008.
4.1 A perusal of the relevant bank account (No. 00000055124184943) of the assessee with the State Bank of Patiala reveals that the cheques were cleared on the very same dates or shortly thereafter on which the cash was deposited by the assessee. It is also factually correct that all these cheques were issued by the assessee to the companies with which he was having business dealings as the distributor of their products. The said cash transaction have been made by the appellant with his son over a period of 11 days, from 22.2.2008 to 3.3.2008. The entire amount received in cash was returned by the assessee by a single cheque on 13.3.2008, i.e. within 10 days from the date of receipt of the last cash amount, and within less than a month from the date of the first receipt of cash. Thus the assessee did not hold the funds received in cash from his son even for a period of one month. The fact that the assessee repaid the entire amount through cheque also clearly indicates that there was no intention on the part of the assessee to either conceal the transaction in cash with his son or to conceal his income. That the funds were 5 urgently needed for business exigency is indicted from the fact that there was a simultaneous clearing of cheques by the companies from the assessee's bank account, and that the assessee was not holding that funds for his own benefit. The deposit of the cash in the bank account of the assessee clearly shows that there was no motive to conceal the transaction of loan or to de-fraud the revenue. That the loan was received for a temporary period to tide over the situational crisis also stands clearly established from the fact that the entire loan was promptly repaid by the assessee through an account payee cheque.
4.2 Section 273B of the Act envisages a non-obstante clause as against section 271D. In the exceptional situation envisaged in Section 273B of the Act, it is permissible for an assessee to substantiate "reasonable cause" for his failure to comply with the provisions of section 269SS. On the factual matrix of the case, the appellant has successfully discharged the aforesaid obligation by showing the business exigency combined with a bonafide belief on non-applicability of section 269SS to the transactions between the father and the son. The penalty imposed u/s 271D of the Act is, therefore, directed to be deleted on a consideration of reasonableness within the meaning of section 273 B of the Act."
8 Perusal of the answer to question of the statement recorded during survey on 4.3.2008 reads as under:
"Question - Please state the cash in hand in both the concerns.
Answer - In Anand Traders cash in hands is about Rs. 13 lakhs and in M/s Amar Nath Harish Chand, cash in hand (-) Rs. 13 lakhs approximately. This is because I could not operate the entries due to some problems and in my absence, my wife Smt. Ritika Anand who also look after the accounts of both the firms, deposited the cash pertaining to Anand Traders in the bank account of M/s Amar Nath Harish Chand."
The above clearly shows that during the absence of the assessee and his son, Smt. Ritika Anand wife of the assessee deposited cash in assessee's account out of cash balance available with Anand Traders which is a firm of assessee's son. No adverse inference has been taken in assessment on account of this shortage of cash during assessment proceedings. The assessee being a agent of reputed companies like Haldiram, Parle and Nestle, it is common practice that such big 6 companies take cheques on account of supplies in advance, it was found that there was deficiency in the account, therefore, cash had to be deposited. This becomes clear from the copy of the statement filed at page 62, 69 of the paper book and relevant entries for the period 22.2.2008 to 25.2.2008 as an example are being extracted below:
22.2.08 22.2.208 Cheque From 35,000 -28,64,885.71 deposit - 551138487 822 84/822 22.2.08 22.2.08 Cash 1,25,000 -27,39,885.71 Deposit 22.2.08 22.2.08 Credit by 1,18,116 -26,21,769.71 CLG 22.2.08 22.2.08 Credit by 43,173. -25,78,596.71 CLG 23.2.08 23.2.08 Cheque 332836 4,16,468 -29,95,064.71 W DL-
332836 23.2.08 23.2.08 Cheque 332819 3,47,120 -33,42,184.71 WDL 332819 23.2.08 23.2.08 Cash 4,00,000 -29,42,184.71 Deposit 23.2.08 23.2.08 Debit to 75.00 -29,42.259.71 charges for CLAIMING CH Received unpaid 23.2.08 23.2.08 Credit by 10,589 -29,31,672.71 CLG 23.2.08 23.2.08 Credit by 50,000 -28,81,672.71 CLG 25.2.08 25.2.08 Cash 50,000 -28,31,672.71 Deposit 25.2.08 25.2.08 Cheque 332763 2,21,752.08 -30,53,424.79 WDL MICR CLAIMING 332763 25.2.08 25.2.08 Credit by 36,500 -30,16,924.79 CLG 25.2.08 25.2.08 Credit by 24,000 -29.92,924.79 CLG The above clearly shows that for example cash of Rs.
1,25,000/- was deposited on 22.2.2008 and Rs. 4 lakhs was deposited on 23.2.2008. The same is the situation in the latter dates. If this cash was not deposited cheques which were cleared on 23.2.2008 would have got bounced. In the absence of the assessee and his son, Smt. Ritika Anand could not have 7 signed the cheques and the only course left was to deposit the cash so as to get the cheques cleared as the assessee had a CC limit only of Rs. 30 lakhs. We are of the opinion that this cash was really for emergency needs and needs to construed as reasonable because for accepting the cash deposit. Therefore, the ld. CIT(A) has correctly decided the issue and we decline to interfere in his order.
9 In the result, appeal of the revenue is dismissed. Cross-objections No. 1/Chd/2013 10 Various grounds taken in the Cross-objections are only in support of the order of the ld. CIT(A) which we have confirmed while adjudicating the revenue's appeal. Accordingly the Cross-objections stands allowed.
11. In the result, appeal of the revenue is dismissed and the Cross-objections of the assessee is allowed.
Order pronounced on 31.01.2013
Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD)
JUDICI AL MEMBER ACCOUNTANT MEMBER
Dated : 31.01.2013
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR