Rajasthan High Court - Jodhpur
Pr. Commissioner Of Income Tax Central, ... vs Daksha Jain on 30 October, 2018
Author: Dinesh Mehta
Bench: Sangeet Lodha, Dinesh Mehta
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Income Tax Appeal No. 148/2018
Pr. Commissioner Of Income Tax Central, Jaipur, Jaipur
----Appellant
Versus
Daksha Jain W/o Shri Virendra Modi, Adarsh Nagar, Sirohi
----Respondent
For Appellant(s) : Mr. K.K. Bissa
HON'BLE MR. JUSTICE SANGEET LODHA
HON'BLE MR. JUSTICE DINESH MEHTA Judgment Per Hon'ble Dinesh Mehta, J 30/10/2018 The appellant has preferred the present appeal under Section 260A of the Income Tax Act, 1961, (hereinafter referred to as "the Act of 1961"), laying challenge to the order dated 21.02.2018 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur, dismissing Department's appeal against the order dated 16.06.2017 passed by the Commissioner Income Tax (Appeals-2), Udaipur.
The appellants have sought setting aside of the appellate orders, consequent to favorable adjudication of the following questions of law, which according to them are substantial questions of law:
"1. "Whether the learned ITAT is justified in deleting the penalty u/s 271E without considering that the repayment of deposits of Rs. 54,93,095/- in cash made by the assessee to her related persons and which are self-evident from the cash book submitted (2 of 7) [ITA-148/2018] by the assessee herself are squarely covered by the provisions of Section 269T?"
2. "Whether the learned ITAT is justified in treating the "repayments of deposits in cash" to a related person as reflected from the assessee's cash book as not covered under the definition of "loans and deposits" under the provisions of Sec. 269T?"
3. "Whether the learned ITAT is justified in treating the regular account of the assessee with the related society as exempt within the meaning of both the proviso u/s section 269T?"
The facts relevant for the purpose of deciding the present appeal so also to ascertain as to whether the questions of law as proposed by the appellant do arise; are set out briefly hereunder.
A search and seizure was carried out in the assessee's group, comprising of Adarsh Credit Cooperative Society Limited and Adarsh Cooperative Bank Limited, its Director and other related persons. During the course of assessment proceedings, the Assessing Officer summoned the books of accounts of the assessee, which revealed cash transaction to the tune of Rs. 54,93,095/- in the assessee's books in the account of Adarsh Credit Cooperative Society Limited. The Assessing Officer treated the said deposit of Rs.54,93,095/-, spread on various dates to be in violation of Section 269T of the Act of 1961 and thus proposed a penalty under Section 271E of the Act of 1961. The Joint Commissioner, Income Tax issued a show cause notice during the penalty proceedings.
Pursuant to the notice issued by the Joint Commissioner, Income Tax, the respondent - assessee filed a reply and contended that the amount has been deposited in M/s Adarsh (3 of 7) [ITA-148/2018] Credit Cooperative Society (hereinafter referred to as ACCS), against the her contribution and the same was not repayment of loan or deposit attracting penalty under Section 271E of the Act of 1961.
The Joint Commissioner, Income Tax, however, held that there was no occasion for the assessee to make huge payment in cash and such cash payment was a violation of provisions of Section 269T of the Act of 1961, calling for imposition of penalty under Section 271E of the Act of 1961. He thus inflicted a penalty of Rs. 54,93,095/-, vide its order dated 28.08.2015.
Feeling aggrieved with the said imposition of penalty, the respondent preferred an appeal under Section 250 of the Act of 1961, which came to be allowed by the commissioner of Income Tax (Appeals-2), Udaipur vide his order dated 16.06.2017. The learned appellate authority observed that it is true that cash deposits have been made in the accounts of ACCS, but there was nothing on record to conclude that the appellant had taken any loan or deposit from the said ACCS and the amount so paid in cash was a repayment of such loan or advance.
Having gone through the record and after recording the above finding, the appellate authority held that the explanation furnished by the assessee that the amount deposited in ACCS's account was correct and acceptable and thus deleted the penalty as the payment/ deposit so made by the assessee was not against any loan or deposit attracting provisions of Section 269T of the Act. It will not be out of place to reproduce the relevant excerpt from the order of the appellate authority, which reads thus:-
"3.4.1 From the perusal of the cash book and submissions of the Appellant and order of the JCIT, it is (4 of 7) [ITA-148/2018] seen that transactions under consideration are related to 'cash deposit' as mentioned in the narration of the cash book and with account head 'ACCSST 170'. From these narration, it was concluded by the JCIT that it is the transaction of repayment of deposits to Adarsh Society. However, after perusal of the records, it is seen that the said conclusion of the JCIT is without giving any finding of fact that Appellant taken any deposit from the Adarsh Society, which was repaid in cash. It is clear from the bare perusal of the section 269T of the Act that it prohibits repayment of deposits or loan to any person otherwise than by way of account payee cheque or draft. Thus, following are the necessary ingredients for application of section 269T a. There is transaction of loan or deposits b. There is repayment of such loan or deposits c. Repayment is made otherwise than way of specified modes d. Repayment is made to any person 3.4.2 It is well settled judicial principle that burden of proof in relation to penalty proceedings is on the revenue, however, in the instant case, the JCIT has failed to establish with a finding as to whether (i) there is transaction of loan or deposit, (ii), there is repayment of such loan or deposit and (iii) there is repayment made otherwise than by way of specified mode. In the instant case, it has not been established whether deposit was taken, when was deposit taken and of how much amount of deposit was taken. This burden has not been discharged, therefore, bare allegation upon the Appellant without establishing aforesaid requirements, do not justify levy of penalty u/s 271E of the Act.
3.4.3. The Appellant in its submissions has explained that these transactions are transaction of amount being deposited in the account of the Adarsh (5 of 7) [ITA-148/2018] Society, which seems reasonable explanation as evident from the bare perusal of the cash book, wherein the source as well as utilization of cash is being reflected. Therefore, in my view, there is no repayment of deposits with Adarsh Society in the instant case, therefore, the provisions of section 269T doesn't get attracted. Further no case has been made out as to whether there is any repayment of loans made otherwise by than by way of account payee cheque or demand draft, therefore, levy of penalty is also not justified on this ground also."
Feeling aggrieved with the said order of the appellate authority, the Department preferred an appeal before the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur, which came to be rejected by the Tribunal, vide its order dated 21.2.2018.
Learned Members of the Tribunal while rejecting the appeal filed by the Department observed that the amount in question had been deposited in regular accounts maintained with said ACCS in which the assessee was a member. The Tribunal also held that the burden of proof in relation to the penalty proceedings was on the Revenue and that the Assessing Officer has failed to establish that the amount of Rs.54,93,075/- in ACCS's account was towards a repayment of loan/ deposit, which by no stretch of imagination can be termed as her contribution towards Society.
Mr. Bissa, learned counsel for the appellant contended that the learned Members of the Tribunal have erred in holding that the burden of proof in cases of penalty proceedings is on the Revenue. He argued that the onus lay upon the assessee to establish that the payment in cash, which has been made in the account of ACCS was not in violation of the provisions of Section 269T of the Act of 1961.
(6 of 7) [ITA-148/2018] We have considered the arguments advanced by Mr. Bissa and perused the material available on record including the provisions of Section 269T of the Act of 1961.
If the facts of the present case are considered carefully, it transpires that the respondent assessee had made payment of Rs.54,93,095/- in cash in the account of ACCS Limited. Pursuant to the notice for levy of penalty, the assessee furnished her explanation and asserted that the said payment has been made towards her contribution in the Society, by pointing out that the assessee was a member of the Society.
A perusal of Section 269T of the Act of 1961 reveals that it prohibits a person from making repayment of loan or deposit, otherwise than by way of an account payee cheque or account payee draft. A bare look at the aforesaid provision leaves no room for ambiguity that the rigours of the said provision is attracted only in the event when the assessee makes repayment of loan or advance. In other words, existence of loan or advance is a sine qua non or foundational fact for the applicability of the provisions of Section 269T of the Act of 1961. In the extant facts, the assessee had stated that the amount of Rs.54,93,095/- was paid in the account of ACCS towards her membership contribution. The assessing officer was having books of accounts of the assessee, including the cash book evincing the contentious payment. It was thus incumbent upon him to have recorded the finding that there existed a loan or deposit or advance by the said recipient viz. Adarsh Credit Cooperative Society. In absence of any loan or advance by the ACCS, the cash payment made to it does not fall foul to Section 269T of the Act of 1961.
(7 of 7) [ITA-148/2018] There is nothing on record to show that there existed a loan or advance by said ACCS, repayment whereof has been made in cash. Argument of Mr. Bissa that the burden was on assessee to show that the payment was not in violation to Section 269T is misconceived and ex-facie contrary to settled canon of burden of proof. It is a settled proposition that the burden to prove lies upon a person who asserts a fact. In the facts of the present case assessee put forth her explanation and took a stand that there existed no loan or advance from ACCS and the amount was paid towards her contribution in the society.
As such the burden entirely lay upon the assessing officer first to establish that there existed a loan or advance and the contentious payment in repayment of such loan. That being the factual and legal position, we are of the considered opinion that the learned Commissioner (Appeals-2), Udaipur was perfectly justified in holding that there is no violation of the provisions of Section 269T of the Act of 1961 and consequently, levy of penalty under Section 271E of the Act of 1961 was uncalled for.
While concurring with the views of the appellate authority and the Income Tax Appellate Tribunal, we neither find any infirmity in their order nor do we find any substantial question of law involved herein.
The appeal is therefore, dismissed.
(DINESH MEHTA),J (SANGEET LODHA),J
Arun/PS (36)
Powered by TCPDF (www.tcpdf.org)