Income Tax Appellate Tribunal - Ahmedabad
Smt.Nayanaben H Kotecha,, Ahmedabad vs The Jt.Commisoner Of Income Tax, Rg-6,, ... on 24 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH
Before: Shri Mahavir Prasad, Judicial Member
And Shri Amarjit Singh, Accountant Member
ITA No. 3383/Ahd/2015
Assessment Year 2011-12
Nayanaben H Kotecha The JCIT,
A/4 Florency Residenc y, Range-6,
Science City Road, Vs A-510, Pratyaksh Kar
Sola, Ahmedabad- Bhavan, Ambawadi,
380060 Ahmedabad
PAN: AEJPK0786L (Respondent)
(Appellant)
Revenue by: Shri Prasoon Kabra, Sr. D.R.
Assessee by: Shri S.N. Divetia, A.R.
Date of hearing : 07-12-2017
Date of pronouncement : 24-01-2018
आदेश /ORDER
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee's appeal for A.Y. 2011-12, arises from order of the CIT(A)-4, Ahmedabad dated 05-11-2015, in proceedings under section 271D of the Income Tax Act, 1961; in short "the Act".
2. The assessee has raised following grounds of appeals:-
I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 2Nayanaben H. Kotecha vs. JCIT "1.1 The order passed u/s.250 dated 05.11.2015 by CIT(A)-4, Abad confirming the penalty of Rs. 39,50,000 imposed u/s.271D by Jt CIT Range-6,A'bad for alleged violation of Sec 269SS of the Act is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant and passing a non-speaking and cryptic order.
2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding that there was violation of Sec 269SS by accepting the amounts aggregating to Rs. 39.50 lacs from six different parties.
2.2 That in the facts and circumstances of the case as well as in law, the Id. CIT(A) has grievously erred in upholding that there was violation of Sec 269SS by accepting the amounts aggregating to Rs. 39.50 lacs from six different parties. 3.1 The Id. CIT(A) has grievously erred in holding that any urgent business needs in accepting the impugned amounts in cash for requirements of the relatives was not a sufficient cause for accepting alleged amounts in cash.
3.2 That in the facts and circumstances of the case as well as in law, the Id.CIT(A) has grievously erred in holding that urgent business needs in accepting the impugned amounts in cash for requirements of relatives was not sufficient cause for accepting alleged amounts in cash.
4.1 The Id. CIT(A) has grievously erred in holding that though the impugned amounts were found to be genuine and accepted as bonafide during asst. proceedings; the transactions had nothing to do with evasion of tax or concealment of income as stated in Memo explaining the provision by Finance Bill 1984, yet the provision of Sec 269SS and 271D were attracted. The Id. CIT(A) has grievously erred in holding that the case law relied upon by the appellant were distinguishable on facts without discussing or narrating anything about it.
It is therefore prayed that the penalty of Rs. 39.50 lacs imposed by the AO and confirm by CIT(A) should be deleted."
3. All these grounds of appeal are interconnected, therefore, for the sake of convenience they are decided together as under.
4. In this case, return of income declaring total income of Rs. 1,51,200/- was filed on 30th July, 2011. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 2nd August, 2012. The assessing officer has completed the assessment u/s. 143(3) of the act on 19th Feb, 2014 and determined the total income at Rs. 1,52,520/-. Thereafter, the assessing officer has referred the case to the Joint CIT for initiation of penalty u/s. 271D of income tax act for accepting the loan in cash. It is noticed I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 3 Nayanaben H. Kotecha vs. JCIT that assessee has obtained cash loan of Rs. 39,50,000/- from the following persons:-
Sr. No. Name of the person from Date Total Amount whom cash received 1 Shri Subharajsinh Jadeja 04.03.2011 7,00000 2 Shri Meramanbhai Gojiya 04.03.2011 8,50,000 3 Shri Rama Lakha 05.03.2011 3,00000 Varotaria 4 Shri Firojbhai Popatia 17.03.2011 5,50,000 5 Shri Hathi Mansukhlal 20.03.2011 3,50,000 6 Shri Anirudhasinh Jadeja 26.03.2011 1,20,0000 Total 39,50,000 The assessing officer has accepted the genuineness of the aforesaid loan during the course of assessment made in the case of the assessee. Thereafter, the Joint CIT has issued show cause notice dated 24th March, 2014 to the assessee. The assessee has replied to the show cause notice regarding acceptance of loan in cash by stating as under:-
(i) The persons from whom loans were taken were not having any bank accounts.
(ii) The persons to whom the loans were given by utilizing the funds received in shape of cash loans were in urgent needs of funds.
The assessee submitted that the loans were taken in cash as there was urgent requirement of funds for M/s. J.K. Enterprises whose proprietor is Shri Jignesh Rasiklal Kotecha who happens to be her nephew. It was explained that J.K. Enterprises is engaged in the business of cotton and Shri Jignesh Rasiklal Kotecha was in urgent requirement of funds for purchase of cottons from the farmers. The I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 4 Nayanaben H. Kotecha vs. JCIT assesse has furnished the copies of her accounts in the books of M/s. J.K. Enterprises and Shri Jignesh Rasiklal Kotecha. It was further stated that the assessee has made repayment of loan on 14th March, 2011 to M/s. J.K. Enterprises to the extent of Rs. 10 lacs and also given loan of Rs. 25 lacs to M/s M/s. J.K. Enterprises on 30th March, 2011. She has also made repayment of Rs. 4,50,000/- on 30th March, towards loan taken from Shri Rasiklal Kotecha. The Joint CIT has not accepted the explanation of the assessee and stated that there was no reasonable cause that compelled her to accept loan otherwise then by account payee cheque/draft. Therefore, he levied penalty of Rs. 39,50,000/- u/s. 271D of the act.
5. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has sustained the penalty levied by the assessing officer by stating that the requirement of loan for the business of the relatives is not genuine reason and the assessee herself has no urgent requirement of funds. Ld. CIT(A) has further stated that the relatives who had requirement of funds are regular assessed to tax and they are in the same line of business for many years and fully aware about the cash requirement to purchase goods. Therefore, he held that the argument advanced by the assessee is not satisfactory. During the course of appellate proceedings before us, the ld. counsel has submitted paper book containing written submission made before the ld. CIT(A), JCIT along with copies of number of judicial pronouncements and copies of ledger account of parties. The Learned counsel has further contended that during the course of I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 5 Nayanaben H. Kotecha vs. JCIT assessment proceedings, the assessing officer has found loan to be genuine and accepted the same in the order passed under section 143 (3) of the act. The learned counsel has also brought to our notice to the fact that the Assessing officer has examined the parties who have given loans to the assessee and recorded their statements u/s. 131(1) of the act. He further contended that the lenders have given all details and information required by the assessing officer as evident from the copies of statements recorded by the assessing officer u/s. 131(1) of the act. The assessing officer has not given any adverse findings and there is no question which was not replied by the loan providing parties and no dissatisfaction has been raised by the assessing officer which is evident from the assessment order passed by the assessing officer under section 143 (3) of the act. He has further contended that there was urgent requirement of funds to the parties who were close relatives of the assessee because they were engaged in the business of purchase of cotton from the agriculturists to whom the payment used to be made in cash. He has also placed reliance on the following judicial pronouncements :-
i.Decision of ITAT Ahmedabad in the case of ITO v. Shri Luhar Bhupendra Singh Hakamsingh videITA No. 2016/Ahd/2012 for A.Y. 2008-09 dated 30/11/2015 ii Decision of Hon'ble Supreme Court in the case of PCIT Ahd. vs. Luhar Bupendra Singh Hakamsingh vide Tax Appeal no. 537 of 2016 dated 04/07/2016 iii CIT vs. Dimple Yadav 93 CCH 207 (All) iv CIT vs. Balaji Traders 303 ITR 312 (Mad) I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 6 Nayanaben H. Kotecha vs. JCIT v CIT vs. Rashi Injection Moulders 368 ITR 527 (Mad) vi CIT vs. Deccan Designs (India) P. Ltd. 347 ITR 580 (Mad) vii DCIT Rupen Das 136 TTJ 80 (Kol)
6. On the other hand, ld. departmental representative placed reliance on the orders of lower authorities and also placed reliance in the case of (2014)52taxman.com 424 (Punjab & Haryana)
7. We have heard both the sides and perused the material on record carefully. We have noticed that the assessee has claimed that the persons from whom loans were accepted in cash were not having any bank accounts and the relatives to whom the loans were given by utilizing the funds received in shape of cash loans were in urgent needs of funds. The loans in cash were accepted from six different parties who were agriculturists and her relatives. She had also explained that urgent cash was required in business by her brothers in law and her nephew who was proprietor of M/s. J.K. Enterprises, therefore, the same was taken in cash. M/s. J.K. Enterprises was in the business of trading in Kapas (by purchasing from farmer and sale to ginning mils) and the amount of Rs.25 was withdrawn on 18th March 2011 for payment to 4 different parties. It was also explained that opening cash balance of Rs. 11,94,179/- was not enough considering the nature and volume of business because the dealers in cotton are required to keep huge balance on hand during the season so as to meet the payment for the purchase made from the farmers. The lenders in their statement before the assessing officer I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 7 Nayanaben H. Kotecha vs. JCIT had stated that they were not having bank accounts. These facts demonstrate that the assessing officer had examined the lenders during the course of assessment proceedings and has not disproved the fact that the parties from whom the amount was borrowed were not having bank a/c. The assessing officer has recorded the statements of lenders u/s. 131 of the act during the course of assessment and they have confirmed to have advanced money to the assessee and had also explained their source of income. It is undisputed fact that assessing officer has accepted the genuineness of the lawn transaction and he has not brought on record any adverse findings. We have also noticed that the parties from whom the loan were taken by the assessee have admitted before the assessing officer in their statement under section 131 of the act that assessee has returned back the aforesaid amount of loan to them. We have further noticed that assessing officer has accepted these facts and neither controverted these facts while recording the statements under section 131 of the act nor in the assessment order passed by him. It is undisputed fact that assessing officer has accepted the genuineness of the transaction and he has not brought on record any adverse findings.
We have also considered the nature of business of the relative of the assessee who require huge cash and bank balance during season for purchasing of cotton for which direct payments are made to the farmers. The assessee has also prepared a fund-flow chart and the sequence of transactions carried out by each of the parties which was substantiated by copy of bank statement, ledger account, cash I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 8 Nayanaben H. Kotecha vs. JCIT book and bank book etc. We observed that whatever questions have been asked by the assessing officer to the lenders, they have explained the same in their answers to the assessing officer and it appears from the contents of the statements that assessing officer has not raised doubt about the veracity of their responses and assessing officer has not made any query which remained un- responded or proved adversely. During the course of appellate proceedings, the ld. counsel has also placed reliance on the judicial pronouncements as stated above in this order. We observe that it is demonstrated from the fund flow statement that major part of the funds provided by the assessee to her aforesaid relatives were not towards repayment of existing loans. Therefore, the facts of the case of the assessing are distinguishable from the facts of the judicial pronouncement relied upon by the ld. DR. Similar to the judicial pronouncement relied upon by the assessee, we observe that the assessee has demonstrated that there was reasonable cause existed because of which she compelled to obtain cash loan as there was urgent requirement of funds to the parties who were relatives of the assessee because they were engaged in the business of purchase of cotton from the agriculturists to whom the payment used to be made in cash. In this connection we observe that considering the nature and volume of business these dealers in cotton are required to keep huge balance on hand during the season so as to meet the payment for the purchase made from the farmers. We observe it is demonstrated from the facts that the relative of the assessee M/s J. K. Enterprises had made payment of about 27 lacs to 4 different I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 9 Nayanaben H. Kotecha vs. JCIT parties on 30/03/2011 after receiving aforesaid payment of Rs. 25 lacs from the assessee by cheque on 30-03-2011. We have also seen from the copy of ledger a/c of the assessee in the books of M/s. J.K. Enterprises as per page no. 18 that the amount of 25 lacs was repaid back to the assessee by cheque on 04-04-2011. We also observe that the lower authorities have not brought any material on the record to controvert the claim of the assessee that she was compelled to take cash loan to materialize the business exigency of the close related as elaborated in this order which leads to the conclusion of existence of reasonable cause and bona-fide belief by the assessee thus provision of section 273B was applicable. Accordingly, we are of the opinion that the Ld. CIT(A) is not justified in his findings of sustaining the impugned penalty u/s 271D of the act, therefore, the appeal of the assessee is allowed.
8. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 24-01-2018 Sd/- Sd/-
(MAHAVIR PRASAD) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad : Dated 24/01/2018
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
I.T.A No. 3383/Ahd/2015 A.Y. 2011-12 Page No 10
Nayanaben H. Kotecha vs. JCIT
By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद