Income Tax Appellate Tribunal - Panji
Suresh Pandit Borale,, Jalgaon vs Joint Commissioner Of Income-Tax,, on 23 June, 2017
आयकर अपीऱीय अधिकरण पुणे न्यायपीठ "बी" पुणे में
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
सश्र
ु ी सष
ु मा चावऱा, न्याययक सदस्य एवं श्री अयिऱ चतव
ु ेदी, ऱेखा सदस्य के समक्ष
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM
आयकर अपीऱ सं. / ITA No.2032/PUN/2013
यििाारण वषा / Assessment Year : 2009-10
Shri Suresh Pandit Borale,
Pankaj Plaza,
above Chopda Urban Bank,
Ambedkar Chowk,
Jalgaon .... अऩीऱाथी/Appellant
PAN: AASPB7418H
Vs.
The Jt. Commissioner of Income Tax,
Range 1, Jalgaon .... प्रत्यथी / Respondent
आयकर अपीऱ सं. / ITA No.2033/PUN/2013
यििाारण वषा / Assessment Year : 2009-10
Shri Suresh Pandit Borale,
Pankaj Plaza,
above Chopda Urban Bank,
Ambedkar Chow,
Jalgaon .... अऩीऱाथी/Appellant
PAN: AASPB7418H
Vs.
The Jt. Commissioner of Income Tax,
Range 1, Jalgaon .... प्रत्यथी / Respondent
अऩीऱाथी की ओर से / Appellant by : Shri Pramod Shingte
प्रत्यथी की ओर से / Respondent by : Shri P.S. Naik
सुनवाई की तारीख / घोषणा की तारीख /
Date of Hearing : 19.06.2017 Date of Pronouncement: 23.06.2017
2
ITA Nos.2032 & 2033/PUN/2013
Shri Suresh Pandit Borale
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
Both the appeals filed by the assessee are against separate orders of CIT(A)-2, Nashik, both dated 23.09.2013 relating to assessment year 2009-10 against penalty levied under sections 271(1)(c) and 271E of the Income-tax Act, 1961 (in short 'the Act') respectively.
2. Both the appeals relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. ITA No.2032/PUN/2013
3. The assessee in ITA No.2032/PUN/2013 has raised the following ground of appeal:-
"On the facts and in the circumstances of the case and in law, the lower authorities have erred in levying the penalty u/s 271(1)(c), a sum of Rs.27,39,028/- by disregarding appellants contention in this regard."
4. The appeal in ITA No.2032/PUN/2013 is against levy of penalty under section 271(1)(c) of the Act.
5. The learned Authorized Representative for the assessee at the outset pointed out that the Assessing Officer while passing the assessment order under section 143(3) of the Act has failed to record satisfaction as to the initiation of penalty proceedings. Admittedly, the Assessing Officer has initiated penalty proceedings but on which limb of section is missing from the assessment order. The learned Authorized Representative for the assessee referred to the para 6 of assessment order in respect of additional income of Rs.50 lakhs and para 6.3 of assessment order of addition of Rs.3,75,000/- 3
ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale which was added to the income of assessee and on which penalty proceedings have been initiated, but in the absence of recording of satisfaction. The learned Authorized Representative for the assessee placed reliance on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Shri Samson Perinchery in Income Tax Appeal No.1154 of 2014 with other Income Tax Appeals Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, judgment dated 05.01.2017 and the Pune Bench of Tribunal in Kanhaiyalal D. Jain Vs. ACIT in ITA Nos.1201 to 1205/PN/2014, relating to assessment years 2003-04 to 2007-08, order dated 30.11.2016.
6. The learned Departmental Representative for the Revenue referred to the penalty order passed under section 271(1)(c) of the Act and has pointed out that the Assessing Officer in para 5.3 of assessment order has held the assessee to have furnished inaccurate particulars of income and thereafter, levied penalty for such failure and hence, the penalty order needs to be upheld.
7. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against levy of penalty under section 271(1)(c) of the Act at Rs.27,39,028/-. Briefly, in the facts of the case, the assessee had filed the return of income declaring Nil income and agricultural income at Rs.6,36,716/- and also carry forward of losses, depreciation and business losses. Thereafter, revised return of income was filed by the assessee declaring total income at Nil and current year's losses at Rs.41,47,414/-. The case of assessee was picked up for scrutiny and after perusing several details, the Assessing Officer noted certain discrepancies in the books of account and also sale of the property at a price higher than the one declared by the assessee. The assessee offered additional income on account of sale of property at Rs.80 lakhs over the above sale consideration of Rs.50 lakhs and 4 ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale the same was added in the hands of assessee by the Assessing Officer vide para 6 of the assessment order. Thereafter, he fails to record any satisfaction as to which limb of section 271(1)(c) of the Act has been violated but simply initiates the penalty proceedings under section 271(1)(c) of the Act. Thereafter, other additions were made in the hands of assessee. However, only in respect of interest element on cash balances un-utilized was worked out at Rs.3,75,000/- and was added to the income of assessee and against it, penalty proceedings were initiated. However, the Assessing Officer fails to record satisfaction as to which limb of said section has been violated by the assessee. Thereafter, the Assessing Officer issues show cause notice under section 274 r.w.s. 271(1)(c) of the Act. The Assessing Officer pursuant to the said assessment order had passed order under section 271(1)(c) of the Act levying penalty upon the assessee for furnishing inaccurate particulars of income and levied penalty at Rs.27,39,028/-. However, an infirmity had occurred in the order of Assessing Officer, wherein the Assessing Officer has failed to record satisfaction while completing the assessment proceedings as to whether the assessee has concealed its income or furnished inaccurate particulars of income.
8. As per provisions of section 271(1)(c) of the Act, penalty for concealment can be levied either for concealing income or furnishing of inaccurate particulars of income. Either of limb may be satisfied for levy of penalty under section 271(1)(c) of the Act. The Assessing Officer in this regard before initiating penalty proceedings has to record satisfaction to that effect and in the absence of the same, penalty proceedings initiated against the assessee suffers from lacunae which could not be corrected by passing an order on one of the limbs of section 271(1)(c) of the Act. The two limbs are distinct as has 5 ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale been held by the Hon'ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra) and further it has been held that the satisfaction of Assessing Officer with regard to only one of two breaches mentioned under section 271(1)(c) of the Act, for initiation of penalty proceedings would not warrant / permit penalty being imposed for other breaches. It is further held It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice.
9. Applying the said ratio to the facts of present case, where the Assessing Officer has failed to record satisfaction and show cause the assessee as to which limb of section 271(1)(c) of the Act has not been satisfied by the assessee, then initiation of penalty proceedings was without any basis and consequent order passed under section 271(1)(c) of the Act needs to be quashed. Accordingly, we hold so. We further find similar proposition has been laid down by the Pune Bench of Tribunal in various other cases including the lead case in Kanhaiyalal D. Jain Vs. ACIT (supra). Accordingly, we direct the Assessing Officer to delete the penalty levied at Rs.27,39,028/-. The ground of appeal raised by the assessee is thus, allowed. ITA No.2033/PUN/2013
10. The assessee in ITA No.2033/PUN/2013 has raised the following ground of appeal:-
"On the facts and in the circumstances of the case and in law, the lower authorities have erred in levying the penalty of Rs.22,82,250/- by invoking provisions of section 271(E) for alleged contravention of the provisions of section 269T by disregarding appellants contention in this regard."6
ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale
11. The present appeal filed is against levy of penalty under section 271E of the Act. The Assessing Officer during the course of assessment proceedings had noted that the assessee had repaid certain loans / amounts to the Cooperative Societies in cash. The assessee was asked to give explanation and the assessee replied that the amount was paid on account of loan taken from the societies. The plea of assessee was that the transactions were bonafide and genuine and were made on account of urgent business necessity, since there was requirement by the credit cooperative societies to make urgent payments in the loan account of assessee, without which the credit society may stop further business operations of assessee. The assessee in view of availability of cash, claims to have paid the cash into loan account of the credit societies. The assessee claimed that it had bonafide belief that the provisions of section 269SS / 269T of the Act were not attracted. The Assessing Officer did not accept the plea of assessee, since he had violated the provisions of section 269T of the Act in making the cash payments to credit cooperative societies. In the absence of any reasonable cause, the Assessing Officer held the assessee is eligible for levy of penalty under section 271E of the Act and levied penalty at Rs.22,82,250/-.
12. The CIT(A) upheld the order of Assessing Officer rejecting the claim of reasonable cause proposed by the assessee and various reliances placed upon by the assessee. The CIT(A) noted the plea of assessee that there was requirement to pay urgent cash to the credit cooperative societies, but the assessee has failed to prove with documentary evidence and hence, the plea of assessee was rejected.
13. The assessee is in appeal against the order of CIT(A). 7
ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale
14. The learned Authorized Representative for the assessee pointed out that there was a bonafide belief that the assessee could repay the amount in cash to the cooperative societies, since the payment in cash to cooperative banks was allowed. Because of this reasonable belief and because of the urgency of cooperative societies to make the payment in cash, the assessee has bonafide case and where default is technical, then no penalty is to be levied, in view of the ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT Vs. Saini Medical Store (2005) 277 ITR 420 (P&H). He further stressed that trail of money was available and in such circumstances, there was no merit in rejecting the plea of assessee and levying penalty under section 271E of the Act. He further placed reliance on the decisions of Pune Bench of Tribunal in Gurukrupa Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. Addl. CIT in ITA No.1349/PN/2014, relating to assessment year 2010-11, order dated 20.08.2014 and in Bharat Agarwal Nagari Sah. Patsanstha Maryadit Vs. Addl. CIT in ITA No.496/PUN/2015, relating to assessment year 2010-11, order dated 08.03.2017, wherein the credit cooperative societies had accepted cash from members and the Tribunal had held the said societies not to be in default in accepting the cash and consequently, penalty levied under section 271D of the Act was deleted.
15. The learned Departmental Representative for the Revenue on the other hand, relying on the order of CIT(A) with special reference to para 7.1 pointed out that there was no reasonable cause for making payment in cash since the amount was received by way of demand draft and the repayment should have been accordingly, made. He further stated that in the absence of reasonable cause, the assessee is liable for levy of penalty under section 271E of the Act, in view of the ratio laid down by the Hon'ble Punjab & Haryana High Court in 8 ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale Charan Dass Ashok Kumar Vs. CIT (2014) 52 taxmann.com 424 (Punjab & Haryana) and the Hon'ble High Court of Madras in P. Muthukaruppan Vs. JCIT (2015) 62 taxmann.com 72 (Madras).
16. We have heard the rival contentions and perused the record. Under the provisions of section 271D of the Act, it is provided that any payment received in cash other than crossed cheque or crossed demand draft exceeding Rs.20,000/- attracts levy of penalty since the provisions of section 269SS of the Act are violated. Similarly, in case any loan or deposit is repaid in cash by an amount of Rs.20,000/- or more otherwise than crossed cheque or crossed demand draft, then such assessee has violated the provisions of section 269T of the Act and is liable for levy of penalty under section 271E of the Act.. However, under section 273B of the Act, it is provided that where the assessee has reasonable cause for not complying with the required conditions under the respective sections, then penalty levied under the respective sections can be waived. Accordingly, in case the assessee establishes his case of reasonableness, then in such circumstances, penalty levied for violation of respective sections may be cancelled. Accordingly, the factual facts of the case have to be seen in this regard.
17. The learned Departmental Representative for the Revenue has placed reliance on the decisions of Hon'ble High Court of Punjab & Haryana in Charan Dass Ashok Kumar Vs. CIT (supra) and the Hon'ble High Court of Madras in P. Muthukaruppan Vs. JCIT (supra), wherein the proposition laid down is that in case the assessee failed to establish that there existed any reasonable cause in taking or accepting the loan or deposit otherwise by an account payee cheque or bank draft, then levy of penalty is justified. So, the proposition canvassed by the assessee that there was reasonable cause in not making the 9 ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale payment by way of crossed cheque or crossed bank draft has to be considered before concluding as to whether the assessee is eligible for levy of penalty under section 269T of the Act.
18. In the facts of the present case, the assessee had taken certain loans from credit cooperative societies which were admittedly, received by the assessee through demand drafts. However, the assessee repaid the said loans in cash and hence, the case of Assessing Officer that the assessee has violated the provisions of section 269T of the Act. In reply to initiation of penalty proceedings under section 271E of the Act, the assessee has raised the issue of reasonableness, wherein it has been pointed out that first of all, the said cash was paid because of emergent conditions and the second claim of assessee was that it had bonafide belief that it could pay the said amounts in cash to the credit cooperative societies. The said plea was on the premise that the payment could be made in cash to credit cooperative banks, accordingly, confusion in the mind of assessee. In the totality of the above said facts and circumstances of the case, we find that there is a reasonable cause in not complying with the provisions of section 269T of the Act. Even otherwise, the assessee has established the trail of money, wherein the amount was received from the credit cooperative societies by way of crossed cheque / demand draft but was repaid in cash. The default, if any, is technical default. We find that Pune Bench of Tribunal in reverse facts of acceptance of loan or deposit by credit cooperative societies in cash, held that there is no merit in levy of penalty under section 271D of the Act because of reasonable belief that since it was carrying on the business of accepting or deposit from its members and extending credit facilities to them, then the provisions of Banking Regulations Act were applicable and it could accept amount in cash. The Tribunal in 10 ITA Nos.2032 & 2033/PUN/2013 Shri Suresh Pandit Borale Gurukrupa Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. Addl. CIT (supra) and in Bharat Agarwal Nagari Sah. Patsanstha Maryadit Vs. Addl. CIT (supra) had deleted the penalty under section 271D of the Act because of reasonable cause. Applying the said principle to the facts before us, we hold that the assessee had reasonable cause and because of the said reasonable belief, it had repaid the amount in cash to the credit cooperative societies. In such circumstances, the assessee is not liable to levy of penalty under section 271E of the Act. Accordingly, we direct the Assessing Officer to delete penalty under section 271E of the Act. The ground of appeal raised by the assessee is thus, allowed.
19. In the result, both the appeals of assessee are allowed.
Order pronounced on this 23rd day of June, 2017.
Sd/- Sd/-
(ANIL CHATURVEDI) (SUSHMA CHOWLA)
ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER
ऩुणे / Pune; ददनाांक Dated : 23rd June, 2017.
GCVSR
आदे श की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to :
1. अऩीऱाथी / The Appellant;
2. प्रत्यथी / The Respondent;
3. आयकर आयक् ु त(अऩीऱ) / The CIT(A)-2, Nashik;
4. आयकर आयक् ु त / The CIT-2, Nashik;
5. ववबागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩण ु े "फी" / DR 'B', ITAT, Pune;
6. गार्ड पाईऱ / Guard file.
आदे शािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// सहायक ऩांजीकार / Assistant Registrar, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune