Income Tax Appellate Tribunal - Jodhpur
Assistant Commissioner Of Income Tax vs G.P. Taparia on 27 February, 2004
Equivalent citations: (2004)84TTJ(JODH)34
ORDER
N.K. Saini, A.M.
1. These two appeals by the Revenue are directed against the consolidated order of the learned CIT(A) dt. 23rd Sept., 1996 for the asst. yr. 1993-94.
2. The grievance of the Revenue relates to the cancellation of penalties levied under Sections 271D and 271E of the IT Act, 1961. These appeals were heard together, so, are being disposed of by a common order, for the sake of convenience.
3. The facts in brief are that while examining the books of accounts of a sister concern of the assessee, namely, M/s Maheshwari Nirman Udyog, Nokha during the course of assessment proceedings under Section 143(3) of the IT Act, 1961 for the asst. yr. 1993-94, the AO noticed that the assessee had accepted loans and deposits from M/s Maheshwari Nirman Udyog, Nokha exceeding Rs. 20,000 in cash on various dates during the financial year relevant to assessment year under consideration and since the assessee had taken/accepted loans/deposits from the aforesaid concerns in contravention of the provisions of Section 269SS, the ITO referred the case to the Dy. CIT, Bikaner Range, Bikaner. The Dy. CIT issued show-cause notice under Section 274 to the assessee which was complied with. The Dy. CIT observed that the assessee was a contractor and received total payments from Government Departments for the different works executed by it during the year relevant to assessment year under consideration. He also observed that the assessee maintained bank accounts with various banks and similarly the sister concern of the assessee viz., M/s Maheshwari Nirman Udyog, Nokha from whom it had accepted loans/deposits otherwise than by a crossed cheque or bank draft in excess of, Rs. 20,000, was also maintaining bank accounts. He pointed out that on examination of the books of the assessee and M/s Maheshwari Nirman Udyog, Nokha it was found that the assessee had accepted/taken loans/deposits in cash amounting to Rs. 11,37,700, on various dates in contravention of the provisions of Section 269SS of the IT Act, 1961. The details had been mentioned by the Dy. CIT at p. 2 of the penalty order dt. 27th Aug., 1996. Similarly, it has been mentioned in the order dt. 30th Aug., 1996, passed under Section 271E of the Act that the assessee had repaid the deposits amounting to Rs. 3,90,000 to the same concern in contravention of the provisions of Section 269T of the IT Act, 1961. The assessee submitted before the Dy. CIT that the accounts maintained with its sister concern M/s Maheshwari Nirman Udyog, Nokha was a current account which was maintained to meet the immediate requirements of the business and the assessee had taken cash from the sister concern and also had given back to the latter. The nature of the receipts and repayment thereof was not in the nature of deposit as defined in Section 269SS. It was also stated that the assessee had not paid any interest or received any interest in that account. It was further stated that the legislative intention of Section 269SS, as laid out in the Parliament by the Finance Minister while introducing the Bill was to curb the tendency of taxpayer to prove the huge cash found and seized during the course of search by making deposits in the names of fictitious persons and thereby to prove the accumulation of cash as genuine. It was submitted that the legislature never intended to initiate and levy penalty in cases where transactions were bona fide and genuine, like that of the assessee. Reliance was placed on the decision of Ahmedabad Bench of the Tribunal in the case of Vir Sales Corporation v. CIT (1994) 50 TTJ (AM) 130. The Dy. CIT did not accept the contention of the assessee for the reasons stated at pp. 4-7 of the order dt. 27th Aug., 1996 passed under Section 271D of the IT Act, 1961. It has also been pointed out that on certain dates when the loan/deposit has been received by the assessee, the cash was available with the assessee and on certain dates, although cash was short, but that shortage was not as much as the assessee received deposit. Date wise transactions had been mentioned at pp. 8-11 of the aforesaid order dt. 27th Aug., 1996. The Dy. CIT held that the assessee clearly contravened the provisions of Sections 269SS and 269T of the IT Act, 1961, as such was liable for penalty under Section 271D and Section 271E of the IT Act, 1961. Accordingly penalties of Rs. 10,63,350 and Rs. 3,90,000 were levied under Sections 271D and 271E of the IT Act, 1961 respectively.
4. The assessee carried the matter to the learned CIT(A) and reiterated the submissions made before the Dy. CIT. It was also stated that the source of the deposits had been accepted by the AO/Dy. CIT and that it was only a technical violation with no loss of the Revenue because the assessee had not concealed any particulars of its income. It was further stated that for this technical breach, no penalty could be levied. The learned CIT(A) after considering the submissions of the assessee observed that the assessee, being a contractor, had to make spot payments to the labour etc. and for that purpose needed cash, Therefore, it borrowed money from sister concern at the work site and the money was repaid later on. According to him, it was only a technical breach of law and for a mere technical breach, no penalty was exigible. He therefore, deleted the penalties.
5. Now the Department is in appeal. The learned Departmental Representative strongly supported the order of the Dy. CIT and vehemently argued that both the assessee as well as the sister concerns were having bank account and the transactions in question were in cash. Therefore, the assessee violated the provisions of Sections 269SS and 269T of the IT Act, 1961. As such the penalties were rightly levied. He further stated that the learned CIT(A) was not justified in deleting the penalties.
6. In his rival submissions, the learned counsel for the assessee reiterated the submissions made before the authorities below and argued that the books of the assessee were not examined. However, the books of sister concern were examined by the AO as well as the Dy. CIT. It was further stated that during the assessment proceedings, the AO has not given any finding as regards to the initiation of penalties, even that all facts were examined by the AO during the course of assessment proceedings. He further stated that both the concerns, i.e., the assessee as well as sister concern, were having the common partners and the transactions were carried out on a remote area for the business purpose. So there was only ignorance of law and no guilty intention. There was only a technical breach and no mala fide intention of the assessee to deceive the Revenue and for a technical breach, no penalty was leviable. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC). It was clarified that two of the persons were common partners and those persons were taking all important business decisions of both the concerns. It was stated that frequent and day to day transactions between assessee and sister concerns were on account of current transactions, for which separate running/current accounts had been maintained. It was pointed out that in the similar circumstances, the penalties were levied under Section 271D of the IT Act, 1961 in the hands of M/s Maheshwari Nirman Udyog, Nokha (sister concern of the assessee) from whom the assessee received cash and repaid the same and the learned CIT(A) deleted the penalty vide order dt. 23rd Sept., 1996, i.e., the same date, which is the date of the impugned order and the Department against the order of the learned CIT(A) came in appeal before this Bench of the Tribunal and the Tribunal vide order dt. 27th March, 2002 confirmed the order of the learned CIT(A) by dismissing the appeal of the Department in appeal No. ITA 2145/Jp/1996. In that view of the matter, it was submitted that the issue becomes a settled issue and was covered by the earlier order of the Tribunal dt. 27th March, 2002. Reliance was also placed on the following case laws:
1. Chandra Cement Ltd. v. Dy. CIT (2000) 68 TTJ (Jp) 35
2. Asstt. CIT v. Jagvijay Auto Finance (P) Ltd. (2000) 68 TTJ (Jp) 44
3. Vir Sales Corporation v. Asstt. CIT (supra)
4. Dy. CIT v. Karnataka State Small Industries Development Corporation Ltd. (1994) 50 TTJ (Bang) 158.
7. We have heard both the parties at length and also given our thoughtful consideration to the material available on record. In the instant case, it is not in dispute that there were transactions in cash in between assessee and one of its sister concern, namely M/s Maheshwari Nirman Udyog, Nokha. The claim of the assessee is that both the concerns were maintaining current account and the transactions entered therein were made considering the needs of the business, on the contrary the case of the Department is that the transactions in question were hit by the provisions of Sections 269SS and 269T. It is also not in dispute that both the firms were having common partners. In our opinion, the fault of the assessee may be considered as technical fault because there were common partners and if entries had been routed through the partners, there should have been no grievance to the Department. In that view of the matter, the assessee committed a technical breach only and for this breach, no penalty is exigible as per ratio laid down by the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. (supra) wherein it has been held that:
"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."
In the instant case, the Department also has not doubted the transactions. In other words, the transactions have been considered as genuine because both the parties, i.e., assessee as well as M/s Maheshwari Nirman Udyog, Nokha are assessed to tax and the entries were shown in the accounts of both the parties. The similar issue was the subject-matter of appeal before this Bench of the Tribunal in the case of ITO v. Maheshwari Nirman Udyog ITA No. 2145/Jp/1996 the Tribunal had decided the issue vide order dt. 27th March, 2002 [reported at (2004) 86 TTJ(Jd) 410--Ed.]. It is relevant to point out that the transactions under consideration were related to Maheshwari Nirman Udyog (supra). As such the facts of the present case are identical to the facts involved in the case of Maheshwari Nirman Udyog, Nokha and the Tribunal while deciding the controversy at para 6 of the order dt. 27th March, 2002 held as under:
"6. We have considered the rival submissions. The learned authorised representative contended that the transactions between two sister concerns are not covered by the provisions of Section 269SS. For the purpose he relied upon four judgments. In the case of Muthoot M. George Bankers v. Asstt. CIT (1993) 47 TTJ (Coch) 434 : (1993) 46 ITD 10 (Coch), it was held as under :
'In the instant case there was transfer of funds from and to the sister concerns. There was no evidence to show that money was loaned or kept deposited for a fixed period or repayable, on demand. Further, the sister concerns and the assessee were owned by the same family group of people with a common managing partner with centralised accounts under the same roof. Transfer of funds had taken place in a whimsical manner. Therefore, it was rather difficult to say that the transactions were in the nature of deposits or loans with certain conditions attached to them, either as regards the period of such deposits or loans or with regard to their repayments. From the copies of the accounts furnished all that could be gathered was that funds had been transferred from and to the sister concern as and when required and since the managing partner was common to all the sister concern, the decision to transfer the funds from one concern to another concern or to repay the funds could be said to have been largely influenced by the same individual. In other words, the decision to give and the decision to take vested with either the same group of people or with the same individual. In such circumstances of the case, the transaction inter-second between the sister concern and the assessee could not partake of the nature of either deposit 'or loan', though interest might have been paid on the same'.
Therefore, we find that the funds had been borrowed from the sister concern not at Nokha where the assessee had bank account but in Sriganganagar Dist. for engagement of fresh labourers. Therefore, we agree with the contention of the learned authorised representative on this ground. The assessee had undertaken various sites at remote area at a time where no banking facilities are available and money was urgently required and there as no bank at the sides. This is considered to be a reasonable cause."
8. It is well settled that the Tribunal should take a consistent view when the facts are identical. In that view of the matter also, no penalty was exigible in the assessee's case. We therefore, considering the totality of the facts as discussed hereinabove are of the confirmed view that the learned CIT(A) was fully justified in deleting the penalties levied by the AO under Sections 271D and 271E of the IT Act, 1961.
9. In the result both the appeals are dismissed.