New Phaltan Sugar Works Ltd., Satara v. Addl C.I T, Satara

ITA 1641/PUN/2012 | 2007-2008
Pronouncement Date: 08-10-2013 | Result: Dismissed

Appeal Details

RSA Number 164124514 RSA 2012
Assessee PAN AAACN9008Q
Bench Pune
Appeal Number ITA 1641/PUN/2012
Duration Of Justice 1 year(s) 2 month(s) 5 day(s)
Appellant New Phaltan Sugar Works Ltd., Satara
Respondent Addl C.I T, Satara
Appeal Type Income Tax Appeal
Pronouncement Date 08-10-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-10-2013
Assessment Year 2007-2008
Appeal Filed On 02-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1641/PN/2012 (ASSESSMENT YEAR 2007-08) NEW PHALTAN SUGAR WORKS LTD. AT POST : SAKHARWADI TAL : PHALTAN DIST : SATARA PAN NO.AAACN9008Q .. APPELLANT VS. ADDL.CIT SATARA RANGE SATARA .. RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : SMT. SHAILJA RAI DATE OF HEARING : 01-10-2013 DATE OF PRONOUNCEMENT : 08-10-2013 ORDER PER SHAILENDRA KUMAR YADAV JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE ON FOLLO WING GROUNDS : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED WHILE CONFIRMI NG THE PENALTY U/S.271D IN NOT APPRECIATING THE RATIO DECI DENDI OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN A. B. SHANTHI'S CASE AND OTHER VERDICTS ABOUT GENUINITY O F LOANS/DEPOSITS NOT COMING UNDER THE PURVIEW OF S. 2 71D OF THE ACT. THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED. IT BE QUASHED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING PROPERL Y THE GROUND OF APPEAL RAISED BEFORE HIM THAT PENALTY PROCEEDINGS WERE BARRED BY LIMITATION. THE LD. CIT( A) OUGHT TO HAVE QUASHED THE PENALTY PROCEEDI NGS AS BARRED BY LIMITATION. THE PENALTY LEVIED BE QUASHE D. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE REASONABLE CAUSE PLEADED BEFORE HIM WITHIN THE MEAN ING 2 OF S. 273B OF THE ACT. THE HON'BLE BOMBAY HIGH COUR T IN THE CASE OF CIT V. TRIUMPH INTERNATIONAL FINANCE (I ) LTD. (2012) 345 ITR 270 (BOM) HELD 'THAT IN THE ABSENCE OF ANY FINDING RECORDED IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER TO THE EFFECT THAT REPAYMENT/ACCEPTANCE OF DE POSIT WAS NOT A BONA FIDE TRANSACTION AND WAS MADE WITH A VIEW TO EVADE TAX THE CAUSE SHOWN WAS A REASONABLE CAUS E AND THEREFORE IN VIEW OF S. 273B OF THE ACT NO PENALT Y COULD BE IMPOSED FOR CONTRAVENING THE PROVISIONS OF S. 26 9T' THE PROPOSITION EQUALLY APPLIES TO S. 271-D OF THE ACT. IN THE ABSENCE OF SUCH FINDING RECORDED THE PENALTY LEVIED BE QUASHED. 2. DURING ASSESSMENT PROCEEDINGS U/S.143(3) IN CASE OF ASSESSEE FOR A.Y 2007-08 ASSESSING OFFICER NOTICED THAT ASSESSEE HAS ACCEPTED DEPOSIT IN CASH OF RS.2 LAKHS FROM SRI P.G. SALUNKHE AND RS.50 000/- FROM SHETKARI KAMGAR GRAMIN BIGARSHETI PATSANSTHA LTD. IN CONTRAVENTION OF TH E PROVISIONS OF SECTION 269SS. CONSEQUENTLY ON A PROPOSAL BY A SSESSING OFFICER PENALTY PROCEEDINGS U/S.271D OF THE INCOME TAX ACT WERE INITIATED BY THE RANGE ADDL.CIT. THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER PROVISIONS OF SECTION 271D WAS CONFIRMED BY CIT(A). SAME HAS BEEN OPPOSED BEFORE US. ON OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE SAME. 3. LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE HEAVI LY RELIED ON THE DECISION OF ITAT PUNE IN THE CASE OF SALARY EARNERS COOP. CREDIT SOCIETY SANGLI AND SUBMITTED THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT ASSESSEE COULD NOT PROVE EXPENSES OF REASONABLE CAUSE FOR AC CEPTING SUCH DEPOSITS IN VIOLATION OF PROVISIONS OF SECTION 269SS. ACCORDINGLY PENALTY OF RS.2 50 000/- EQUAL TO THE SUM 3 ACCEPTED IN VIOLATION OF PROVISIONS OF SECTION 269S S WAS IMPOSED ON ASSESSEE UNDER THE PROVISIONS OF SECTION 271D OF THE INCOME TAX ACT WHICH WAS CONFIRMED BY THE CIT(A ). 4. A PLAIN READING OF SECTION 269SS MAKES IT CLEAR THAT THERE IS NO SUCH PHRASE OCCURRING IN SECTION 269SS AS TO INDICATE THAT PROVISIONS WILL NOT APPLY TO GENUINE TRANSACTI ONS AS PLEADED BY THE ASSESSEE. THE PROVISIONS WILL APPLY WHEN LOAN OR DEPOSITS ACCEPTED OR OTHERWISE BY AN ACCOUNT PAY EE CHEQUE OR ACCOUNT PAYEE DRAFT AND THE AMOUNT OF SUCH LOAN OR DEPOSIT OR AGGREGATE AMOUNT OF SUCH LOAN OR DEPOSIT IS RS.2 0 000/- OR MORE. ONLY SAFETY IS PROVIDED UNDER THE PROVISIONS OF SECTION 273B WHEREIN IT HAS BEEN MENTIONED THAT PENALTY IS NOT TO BE IMPOSED ON THE PERSONS WHERE ANY FAILURE REFERRED T O IN THAT PROVISION IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR SAID FAILURE. IF DEPOSITS ARE PROVED TO BE NOT GEN UINE THE SAME COULD BE CONSIDERED FOR ADDITION U/S.68 OR 69 OF T HE ACT AS DEEMED INCOME OF THE ASSESSEE FROM OTHER SOURCES AN D CANNOT BE REGARDED AS LOAN OR DEPOSIT WITHIN THE MEANING O F SECTION 269SS AND 269T. SIMPLY TRANSACTION COULD BE PROVED GENUINE. IT COULD NOT BE SAID THAT PROVISIONS OF SECTION 26 9SS ARE NOT APPLICABLE. THERE IS NO DISPUTE THAT ASSESSEE HAS ACCEPTED THE AMOUNT IN CASH FROM LOAN AND THE SAME WAS DEPOSITED IN BANK ACCOUNT OF ASSESSEE IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE ACT. CIT(A) HAS EXAMINED WHETHER THERE WAS ANY REASONABLE CAUSE ON PART OF ASSESSEE NOT TO COMPLY WITH THE PROVISIONS OF SECTION 269SS. WHILE DEALING WITH TH E PENALTY 4 PROVISIONS THE REASONABLE CAUSE WOULD MEAN A CAU SE WHICH IS BEYOND THE CONTROL OF ASSESSEE. REASONABLE CAUSE W HICH PREVENTS THE REASONABLE MAN OR MAN OF ORDINARY PRUD ENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGEN CE OR INACTION OR WANT OF BONA FIDE EXPLANATION. ASSESSE E HAS STATED THAT IT WAS DECLARED AS SICK INDUSTRIAL UNIT IN T ERMS OF SECTION 3(1)(E) OF SICA AND IT WAS CLAIMED TO BE IN DIRE NE ED OF FUNDS TO RUN THE AFFAIRS OF THE COMPANY SMOOTHLY WHICH LED T O ACCEPTANCE OF DEPOSITS IN CASH. BUT ASSESSEE HAS N OT DISCHARGED THE BURDEN CAST UPON HIM TO ACCEPT THE A MOUNT THROUGH BANKING CHANNEL. HE HAS NOT BROUGHT ON REC ORD ANY CIRCUMSTANCES WHICH PREVENTED HIM TO VIOLATE THE PR OVISIONS OF SECTION 269SS BY BYE-PASSING BANKING CHANNEL WHILE ACCEPTING ABOVE AMOUNT. EVEN IF THE SAME HAS BEEN OBTAINED F ROM THE MANAGING DIRECTOR SRI P.G. SALUNKHE AS DISCUSSED AB OVE WHO HAS LENT RS.2 LAKHS AND SIMILARLY OTHER AMOUNT OF R S.50 000/- LENT BY SHETKARI KAMGAR GRAMIN BIGARSHETI PATSANSTH A WHICH IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS AT PAR WITH THE BANKING ACTIVITY. THE ASSESSEE COULD NOT JUSTIFY T HE BYE- PASSING OF BANKING CHANNELS. BEING SICK INDUSTRIA L UNIT IS NOT SUFFICIENT FOR DEVIATING FROM BANKING CHANNEL. IN ABSENCE OF REASONABLE CAUSE ASSESSEE CANNOT TAKE BENEFIT OF T HE PROVISIONS OF SECTION 273B OF THE ACT. IN VIEW OF THE ABOVE CIT(A) WAS JUSTIFIED IN UPHOLDING THE PENALTY LEVIE D U/S.271D OF RS.2 50 000/ -. SAME IS CONFIRMED. 5 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 8 TH DAY OF OCTOBER 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMA R YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R PUNE DATED: 8 TH OCTOBER 2013 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III PUNE 4 CIT-III PUNE 5. THE D.R A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES PUNE