Sri Vanamadi Satyanarayana,, Kakinada v. The Ad CIT, Range-., Guntur

ITA 189/VIZ/2008 | 2000-2001
Pronouncement Date: 07-01-2010 | Result: Allowed

Appeal Details

RSA Number 18925314 RSA 2008
Bench Visakhapatnam
Appeal Number ITA 189/VIZ/2008
Duration Of Justice 1 year(s) 9 month(s) 27 day(s)
Appellant Sri Vanamadi Satyanarayana,, Kakinada
Respondent The Ad CIT, Range-., Guntur
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 07-01-2010
Assessment Year 2000-2001
Appeal Filed On 11-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.189/VIZAG/2008 ASSESSMENT YEAR : 2000-01 VANAMADI SATYANARAYANA KAKINADA ACIT RANGE KAKINADA (APPELLANT) VS. (RESPONDENT) PAN NO.AATPV 0860C APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI G.S.S. GOPINATH DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS. BUT THEY ALL RELATE TO CONFIRMATION OF LEVY OF PENALTY U/S 271B OF THE I.T. ACT. 2. THE FACTS BORNE OUT FROM THE RECORD ARE THAT DUR ING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI VANAMADI VENKATESWARA RAO (BROTHER OF THE ASSESSEE) FOR THE ASSESSMENT YE AR 2000-01 THE A.O. NOTICED THAT THE ASSESSEE HAD ACCEPTED DURING THE R ELEVANT PREVIOUS YEAR A LOAN OF RS.1 60 000/- FROM HIS WIFE SMT. SATYAGOWRI AND RS.1 40 000/0 FROM HIS FATHER SHRI V. LOVARAJU. SINCE THE LOANS IS AB OVE RS.20 000/- THE A.O. INVOKED THE PROVISIONS OF SECTION 269SS AND INITIAT ED THE PENALTY PROCEEDINGS U/S 271D OF THE I.T. ACT. IN RESPONSE TO SHOW CAUS E NOTICE IT WAS CONTENDED INTERALIA THAT INTEREST FREE LOANS TAKEN FROM SMT. V. SATYAGOWRI AND LATE SHRI V. LOVARAJU DO NOT FIT INTO THE DEFINITION OF ANY O F THE TERMS I.E. LOAN OR DEPOSIT AS SUCH AMOUNTS REPRESENTED SOME KIND OF ADJUSTMENT OF FUNDS BETWEEN FAMILY MEMBERS AND AS SUCH THEY CLEARLY FALL OUTSIDE THE SPHERE OF THESE LOANS OR DEPOSITS. THE A.O. WAS NOT CONV INCED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE LEVIED THE PEN ALTY AT RS.3 00 000/- AGAINST THE ASSESSEES. THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE CIT(A) BUT FIND NO FAVOUR WITH HIM. 2 3. NOW THE ASSESSEE IS BEFORE US AND DURING THE COU RSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENT ION TO THE JUDGEMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SUNIL KUMAR GOEL 315 ITR 163 WITH THE SUBMISSIONS THAT IN THE CASE OF FA MILY TRANSACTIONS INVOCATION OF PROVISIONS OF SECTION 271D&E IS NOT P ROPER. BESIDES HE HAS ALSO PLACED A RELIANCE UPON THE ORDER OF THE TRIBUN AL IN THE CASE OF STAR ELECTROPLATERS VS. ITO 99 TTJ (AHA) 640 AND SHARDA EDUCATIONAL TRUST VS. ACIT 19 TTJ (AGRA) 212 IN SUPPORT OF THE CONTENTION S THAT IN THE FAMILY TRANSACTIONS THERE IS A REASONABLE CAUSE FOR TAKI NG THE LOAN IN CASH ON ACCOUNT OF COMMERCIAL EXPEDIENCIES. 4. THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEA VY RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES THE JUDGEMENTS REFE RRED TO WE FIND THAT THE ASSESSEE HAS TAKEN A LOAN WITHOUT INTEREST FROM HIS FATHER AND HIS WIFE WHEN HE WAS BURDENED WITH THE OBLIGATION OF BORROWED FUN DS OF THE OUTSIDERS. IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA) THE LO RDSHIP OF PUNJAB & HARYANA HIGH COURT HAS HELD THAT FAMILY TRANSACTION S BETWEEN TWO INDEPENDENT ASSESSEES BASED ON AN ACT OF CASUALNESS SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF IS CONTAINED IN THE CO MPILATION OF ACCOUNTS AND WHICH HAS NO TAX EFFECT ESTABLISHES REASONABLE CA USE U/S 273B FOR NOT INVOKING THE PENAL PROVISIONS OF SECTION 271D AND 2 71E. THE RELEVANT OBSERVATIONS OF THE PUNJAB & HARYANA HIGH COURTS AR E EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: THE TRIBUNAL WAS RIGHT IN RECORDING ITS CONCLUSIO N THAT A REASONABLE CAUSE HAD BEEN SHOWN BY THE ASSESSEE. THE TRIBUNAL RELIED ON THE FACT THAT THE ASSESSEE HAD PRODUCED H IS CASH BOOKS DEPICTING LOANS TAKEN BY HIM UNILATERALLY BEFORE TH E REVENUE IN THE INSTANT ACTION OF THE ASSESSEE IN AS MUCH AS THE AS SESSEE DID NOT ATTEMPT BY THE IMPUGNED ACT TO AVOID ANY TAX LIABIL ITY. FURTHERMORE THERE IS NO DISPUTE ABOUT THE FACT THA T THE INSTANT CASH TRANSACTIONS OF THE ASSESSEE WERE WITH THE SIS TER CONCERN AND THAT THESE TRANSACTIONS WERE BETWEEN THE FAMILY A ND DUE TO BUSINESS EXIGENCY. A FAMILY TRANSACTION BETWEEN T WO INDEPENDENT ASSESSEES BASED ON AN ACT OF CASUALNESS SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF IS CONTAINED IN THE COMPILAT ION OF ACCOUNTS 3 AND WHICH HAS NO TAX EFFECT ESTABLISHES REASONABL E CAUSE UNDER S. 273B. SINCE THE ASSESSEE HAD SATISFACTORILY EST ABLISHED REASONABLE CAUSE UNDER S. 273B HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIENT CAUSE FOR NOT INVOKING THE P ENAL PROVISIONS (SS. 271D AND 271E OF THE ACT) AGAINST HIM. 6. IN THE CASE OF STAR ELECTROPLATERS VS. ITO (SUPR A) THE TRIBUNAL HAS TAKEN A VIEW THAT THE ASSESSEE HAVING ACCEPTED LOAN S IN CASH MAINLY FROM THE PARTY FOR WHOM IT WAS DOING JOB WORK TO MEET ITS BU SINESS EXIGENCIES AFTER MAKING HUGE INVESTMENT IN FIXED ASSETS THERE WAS N O WILLFUL NEGLECT OF LAW ON THE PART OF ASSESSEE AND THEREFORE THE PENALTY U /S 217D WAS NOT JUSTIFIED. IN THE CASE OF SHARDA EDUCATIONAL TRUST VS. ACIT (S UPRA) THE TRIBUNAL HAS EXAMINED THE CIRCULAR NO.387 DATED 6.7.84 ISSUED BY THE CBDT AND HAS HELD THAT THE OBJECT OF INTRODUCTION FOR PROVISIONS OF S ECTION 269SS AND 269T WAS TO CURB THE TRANSACTION OF BLACK MONEY. IT SHOULD NOT BE INVOKED FOR A VENIAL BREACH OR TECHNICAL DEFAULT. 7. FROM A CAREFUL PERUSAL OF THE AFORESAID JUDGEMEN TS WE ARE OF THE VIEW THAT PROVISIONS OF SECTION 269SS AND 269T WERE INTR ODUCED WITH THE INTENTION TO CURB THE TRANSACTIONS OF THE BLACK MONEY. WHILE LEVYING A PENALTY U/S 271D ONE HAS TO EXAMINE THE SURROUNDING CIRCUMSTANC ES UNDER WHICH THE LOAN IN CASH WAS OBTAINED BY THE ASSESSEES. IN CAS E OF FAMILY TRANSACTIONS THE BONAFIDE OF THE ASSESSEES SHOULD NOT BE DOUBTED AS HELD IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA). IN THE INSTANT C ASE ASSESSEE HAS MADE OUT A CASE THAT THE FAMILY LOAN WAS OBTAINED TO CLE AR THE LOAN LIABILITIES OF THE OUTSIDERS AND REVENUE HAS NOT PLACED ANYTHING ON RE CORD TO FALSIFY THE CLAIM OF THE ASSESSEES. UNDER THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE WE ARE OF THE VIEW THAT THE INVOCATION OF PROVISIONS O F SECTION 271D IS NOT PROPER. WE THEREFORE FOLLOWING THE AFORESAID JUDG EMENTS SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 7.1.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 7 TH JANUARY 2010 4 COPY TO 1 VANAMADI SATYANARAYANA 46-13-4B JAGANNADHAPURAM KAKINADA 2 ADDL. CIT KAKINADA RANGE KAKINADA-533 002. 3 THE CIT RAJAHMUNDRY 4 THE CIT(A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM