Income Tax Appellate Tribunal - Kolkata
Sohan Lal Saha, Kolkata vs Jcit, Range-44, Kolkata, Kolkata on 6 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL "C", BENCH KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA No.2360/Kol/2016 ( नधारणवष / Assessment Year:2012-13) SohanlalSaha Vs. JCIT, Range-44, Kolkata 13a/46a, Ariff Road, Kolkata-
700067 थायीले खासं . /जीआइआरसं . /PAN/GIR No.: AXBPS 6968 F (Assessee) .. (Revenue) Assessee by : Shri Mihir Bandyopadhyay, A.R. Respondent by : Shri C. J. Singh, Addl. CIT DR सुनवाईक तार ख/ Date of Hearing : 25/06/2019 घोषणाक तार ख/Date of Pronouncement : 06/09/2019 आदे श / O R D E R Per Dr. A. L. Saini:
The captioned appeal filed by the Assessee, pertaining to assessment year 2012-13, is directed against the order passed by the Commissioner of Income Tax (Appeal)-13, Kolkata, which in turn arises out of a penalty order passed by the Assessing Officer u/s 271D of the Income Tax Act, 1961 (in short the 'Act') dated 06.05.2015.
2. However, in this appeal, the assessee has raised a multiple grounds of appeal, but at the time of hearing, the solitary grievance of the assessee has been confined to the issue of penalty imposed u/s 271D of the Act in respect of loan obtained by the assessee in cash.
Sohanlal Saha ITA No.2360/Kol/2016 Assessment Year:2012-13
3. Brief facts qua the issue are that the assessee has filed his return of income for the A.Y. 2012-13 on 30.09.2012 at a total income of Rs.10,99,128/-. The assessment was completed u/s 143(3) of the Act on 30.03.2015 at a total income of Rs. 11,17,450/-. During the course of scrutiny assessment, it was observed that the assessee has accepted loans amounting to Rs. 22,20,000/- under the head 'loans from others' as shown in the balance sheet as on 31st March, 2012, otherwise than account payee cheque /bank draft. In the assessment order u/s 143(3) for A.Y. 2012-13, the Assessing Officer observed that the assessee had taken unsecured loan inter alia, by cash from three clients for amount of Rs. 10,00,000/- Rs. 10,00,000/- and Rs. 2,20,000/- aggregating upto Rs. 22,20,000/-. When asked to explain, the assessee at first accepted that the said loans were taken in cash and stated that he had to take the cash payments in order to enable him to make payment to lorries which came from 'remote places of town'. After having gone through the assessee's submission as stated above, the Assessing Officer noted that the assessee received loan by cash. The AO further observed that the assessee could easily have accepted loan through bank and paid out to lorries from the money withdrawn from the bank. Thus, the assessee's plea that he took loan by cash to pay to Lorries by cash does not hold water. Considering the failure on the part of the assessee to substantiate the claim with evidentiary proof for extreme exigencies of the business and also accepting the said cash loans of Rs. 22,20,000/- from three parties whichwere not covered under proviso of section 269SS of the I.T. Act, 1961, the Assessing Officer has imposed penalty u/s 271D at Rs. 22,20,000/-.
4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the penalty imposed by the Assessing Officer. Aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us.
5. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws Pa g e | 2 Sohanlal Saha ITA No.2360/Kol/2016 Assessment Year:2012-13 relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record.The ld. Counsel for the assessee reiterated the submissions made before the authorities below whereas the ld. D.R. for the revenue relied on the stand taken by the Assessing Officer. We note that Board's Circular No. 387 dated 6th July 1984 ( vide (1985) 152 ITR Statute 22), while explaining the necessity of bringing in Section 269SS, the Board has stated that to curb the practice of showing bogus cash loans as source of unaccounted cash found during operation u/s 132 (5), the Section 269SS has been enacted. In the assessee's case, discovery of unaccounted cash during search or survey is not involved at all. In this case, the loans, though taken in cash, have been held by the A.O. to be genuine loans and no addition in this regard was made by the assessing officer in the scrutiny assessment u/s 143 (3) finalized on 30.03.2015.
We note that assessee is an individual and engaged in the business of bulk supply of pulses. The assessee has to keep sufficient ready cash to pay to the Truck owners/drivers who arrive from distant places with cargo of pulses. The ld. Counsel stated before us that assessee was compelled to obtain the loan in cash for maintaining ready cash reserve for making payments to lorries who come to the assessee. The ld. Counsel also submitted that cash reserve has to be kept ready for meeting other business exigencies as indicated in the cash book of the assessee. Considering the nature of business and circumstances prevailing in assessee's business, as noted above, we note that assessee took the cash loans in order to meet the business exigencies to pay to the truck drivers who did not have bank account and came from distant places. The assessee took cash loan in pressing circumstances. Besides, the genuineness of the cash payment has not been disputed by the assessing officer. Therefore, penalty should not be imposed. For that we rely on the judgment of Hon'ble Madras High Court in the case of CIT vs. Deccan Designs (I) Pvt. Ltd. in [2012] 347 ITR 580 (Mad) wherein it was held as follows:
"The Assessing Officer found that the assessee had accepted and received amounts of Rs. 52,80,000 and Rs. 44,60,000 respectively, in cash, from its sister concern. He held that there was no satisfactory evidence or details to justify Pa g e | 3 Sohanlal Saha ITA No.2360/Kol/2016 Assessment Year:2012-13 reasonable cause under section 273B of the Income-tax Act, 1961, nor was a case of exigency or urgency made out. On that basis he levied penalty under sections 271D and 271E. The Commissioner (Appeals) found that the loans were for the purpose of wage distribution, factory expenses and petty cash. There was also a finding that the assessee was a sick company and had to be saved from closure. The Commissioner (Appeals) held that the transactions were genuine. He deleted the penalty and this was upheld by the Tribunal. On appeal to the High Court:
Held, dismissing the appeal, that there were enough reasons offered by the assessee to justify the cash transactions, which it made with its sister concern. The factual findings rendered by the Commissioner (Appeals) to the effect that such transactions were made by the assessee with a view to save its existence and mainly incurred for the purpose of disbursement of salary to the employees could not be disturbed in the absence of any contrary evidence placed before this court. The deletion of penalty was justified."
6. Our view is fortified by the judgment of the Hon`ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State Of Orissa (1972) 83 ITR 0026 (SC), wherein it was held as follows:
"5. Under the Act penalty may be imposed for failure to register as a dealer : s. 9(1), r/w s. 25(1) (a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi- criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out."
Therefore, respectfully following the judgment of the Hon'ble Madras High Court in the case of Deccan Designs (I) Pvt. Ltd. (supra) and Hon`ble Supreme Court in the case ofHindustan Steel Ltd.(supra) and considering the facts of the assessee`s case, as noted above, we are of the view that it is not a fit case to impose penalty u/s 271D of the Act. Therefore, we delete the penalty of Rs. 22,20,000/-.
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7. In the result, the appeal of the assesseeis allowed.
Order pronounced in the Court on 06.09.2019
Sd/- Sd/-
(A.T. VARKEY) (A.L.SAINI)
या यकसद य / JUDICIAL MEMBER लेखासद य / ACCOUNTANT MEMBER
दनांक/ Date: 06/09/2019
(SB, Sr.PS)
Copy of the order forwarded to:
1. Sohanlal Saha
2. JCIT, Range-44, Kolkata
3. C.I.T(A)- 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
6. Guard File.
True copy
By Order
Assistant Registrar
ITAT, Kolkata Benches
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