The ACIT, Circle-8,, Ahmedabad v. M/s. Trisuns Chemicals Inds. Ltd.,, Ahmedabad

ITA 2061/AHD/2009 | 2003-2004
Pronouncement Date: 21-01-2011 | Result: Dismissed

Appeal Details

RSA Number 206120514 RSA 2009
Assessee PAN AAACT7086N
Bench Ahmedabad
Appeal Number ITA 2061/AHD/2009
Duration Of Justice 1 year(s) 6 month(s) 25 day(s)
Appellant The ACIT, Circle-8,, Ahmedabad
Respondent M/s. Trisuns Chemicals Inds. Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-01-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2003-2004
Appeal Filed On 26-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON' BLE SHRI A.N. PAHUJA A.M. ) I.T.A. NOS. 2049 & 2061/AHD/2009 ASSESSMENT YEAR : 2003-2004 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- TRISUNS CHEMICAL INDUSTRY LIMITED CIRCLE-8 AHMEDABAD AHMEDA BAD (PAN : AAACT 7086 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR C IT (D.R.) RESPONDENT BY : SHRI NIMISH VAYAWALA A.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST TWO SEPARATE ORDERS BOTH DATED 13.04.2009 OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-XIV AHMEDABAD CANCELLING THE PENALTY OF RS.2 82 548/- AND RS.2 82 548/- LEVIED B Y THE ASSESSING OFFICER UNDER SECTION 271E AND 271D FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN ITA NO. 2049/AHD/2009 ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURING AND EXPORT OF CASTOR OIL AND CASTOR DE-OILED CAKE. FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 144 ON 25.08.2006 AT A TOT AL INCOME OF RS.89 14 30 777/-. SUBSEQUENTLY VIDE ORDER DATED 03.09.2008 ADDL. CIT LEVIED THE PENALTY UNDER SECTION 271D AMOUNTING TO RS.2 82 548/- FOR CONTRAVENTION OF PRO VISIONS OF SECTION 269SS OF THE ACT AS THE ASSESSEE HAD ACCEPTED LOANS/ DEPOSITS IN CASH FROM SIX PARTIES TOTALING TO RS.2 82 548/- AS NARRATED IN THE BODY OF PENALTY ORDER. IN REPLY TO THE SHOW-CAUSE NOTICE BEFORE THE ADDL. CIT THE ASSESSEE EXPLAINED THAT THE DEPOSIT HAS BEEN CONSID ERED AS NON-GENUINE AND HAS BEEN ADDED UNDER SECTION 68 OF THE INCOME TAX ACT THE PROVISI ONS OF SECTION 269SS WERE NOT APPLICABLE BECAUSE THE ASSESSING OFFICER CANNOT AT THE SAME TI ME DRAW A CONCLUSION THAT THESE ARE REAL DEPOSITS UNDER SECTION 269SS AND WAS APPLICABLE. AP ART FROM THIS IT WAS ALSO CONTENDED THAT PENALTY GOT TIME BARRED BECAUSE PENALTY SHOULD HAVE BEEN LEVIED WITHIN THE PERIOD OF SIX MONTHS FROM THE INITIATION. THE ADDL. CIT DID NOT ACCEPT T HE CONTENTION OBSERVING THAT THE ASSESSEE DID 2 ITA NOS . 2049-AHD-2009 & 2061-AHD-2009 NOT FURNISH ANY EXPLANATION IN RESPECT OF CLAIM FOR UN-SECURED LOANS/DEPOSITS INSTEAD OF GIVING NUMBER OF OPPORTUNITIES TO EXPLAIN. HE ALSO OBSERVE D THAT THERE WAS NO TIME LIMIT SPECIFIED FOR INITIATION OF PENALTY PROCEEDINGS AND IN THE ASSESS EES CASE THE LIMITATION EXPIRED IN THE MONTH OF SEPTEMBER 2008. 3. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CANCELLED THE PENALTY UNDER SECTION 271D FOR THE DETAILED REASONS GIVEN I N PARA 2.3 WHICH IS REPRODUCED HEREUNDER :- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE AR. CAREFULLY ALONG WITH THE CASE LAWS RELIED UPON THE CONTENTION OF THE APPELLANT IS THAT THE INITIATION OF PENALTY PROCEEDINGS WAS BARRED BY IMITATION AS THE A.O. REFERRED THE MATTER TO THE ADDL CIT ON 5-7-2007 BUT THE ADDL. CIT INITIATED P ROCEEDINGS ON 18-03-2003 WHICH IS AFTER INORDINATE DELAY OF 6 MONTHS. THE SAID CONTEN TION IS NOT ACCEPTED AS IT IS SEEN THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED BY THE ADD. C.I.T. AND THERE IS NO TIME LIMIT FOR INITIATING THE PROCEEDINGS U/S. 269SS AND THE A DDL. CIT HAS COMPLETED THE PENALTY WITHIN 6 MONTHS OF INITIATION OF PENALTY. FROM THE DETAILS FURNISHED BY THE A R. IT IS SEEN THAT THE TRANSACTIONS WITH THE SAID PARRIES I.E. T HE DEPOSITS ARE NOT IN THE NATURE OF LOAN OR DEPOSIT BUT THE SAME WERE COMMERCIAL TRANSACTIO NS. FURTHER THE AUDITOR IN TAX AUDIT REPORT HAS STATED THAT THERE WAS NO LOAN OR DEPOSIT TAKEN IN EXCESS OF LIMIT SPECIFIED IN SECTION 269SS OF THE ACT WHICH SHOWS THAT THE APPE LLANT HAD BONAFIDE BELIEF AND REASONABLE CAUSE. I AM IN AGREEMENT WITH THE CONTEN TION OF THE A.R. THAT AS THE DEPOSITS WERE NOT CONSIDERED AS GENUINE AND THE SAME WERE AD DED U/S 68 THE PROVISIONS OF SEC. 269SS ARE NOT APPLICABLE AS THE A.O. CANNOT DRAW A CONCLUSION THAT THESE ARE REAL DEPOSITS AND SEC. 269SS IS APPLICABLE. THIS CONTENT ION OF THE A.R. IS SUPPORTED BY DECISIONS IN THE CASE OF DCIT V/S G.S. ENTERTAINMEN T ITAT MUMBAI BENCH REPORTED IN 109 TTJ 54 AND CIT VS. STANDARD BRANDS LTD. 285 ITR 295 (DEL). AS PER THE DECISION IN THE CASE OF CIT V/S. LOKHPAT FILM EXCHANGE (CINEMA) REPORTED IN 304 ITR 172 (RAJ) THE APPELLANT HAD A BONAFIDE BELIEF THAT THE TRANSACTIO NS WITH THE RELATED PERSONS I E. DIRECTOR BABUJI WOULD NOT ATTRACT PROVISIONS OF SECTION 269S S AND 269T SUCH BONAFIDE BELIEF CONSTITUTED REASONABLE CAUSE. BY FOLLOWING THE CASE LAWS AS RELIED UPON I AM OF THE VIEW THAT THE APPELLANT HAD REASONABLE CAUSE IN NOT COMP LYING WITH PROVISIONS OF SECTION 269SS OF THE ACT AND HENCE THE PENALTY LEVIED U/S. 271D OF RS.2 82 548/- IS NOT IN ORDER AND THE SAME IS HEREBY DELETED. 4. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN ITA NO. 2061/AHD/2009 IS AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) CANCELLING THE PENALTY OF RS.2 82 548/- LEVIED BY THE ADDL. CIT FOR CONTRAVENTION OF PROVIS IONS OF SECTION 269T OF THE INCOME TAX ACT AS THE ASSESSEE HAD RE-PAID LOANS/ DEPOSITS IN CASH TO THESE PARTIES AMOUNTING TO RS.2 82 548/- AS NARRATED IN THE PENALTY ORDER. THIS PENALTY WAS ALS O CANCELLED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR THE DETAILED REASONS VIDE ORDER DATED 13.4.2009 CANCELLED THE PENALTY UNDER SECTION 271E FOR THE DETAILED REASONS GIVEN I N PARA 2.3 WHICH IS REPRODUCED HEREUNDER :- 3 ITA NOS . 2049-AHD-2009 & 2061-AHD-2009 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE AR. CAREFULLY ALONG WITH THE CASE LAWS RELIED UPON. THE CONTENTIO N OF THE APPELLANT IS THAT THE INITIATION OF PENALTY PROCEEDINGS WAS BARRED BY IMITATION AS THE A.O. REFERRED THE MATTER TO THE ADDL CIT ON 5-7-2007 BUT THE ADDL. CIT INITIATED P ROCEEDINGS ON 18-03-2003 WHICH IS AFTER INORDINATE DELAY OF 6 MONTHS. THE SAID CONTEN TION IS NOT ACCEPTED AS IT IS SEEN THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED BY THE ADD. C.I.T. AND THERE IS NO TIME LIMIT FOR INITIATING THE PROCEEDINGS U/S. 269T AND THE AD DL. CIT HAS COMPLETED THE PENALTY WITHIN 6 MONTHS OF INITIATION OF PENALTY. FROM THE DETAILS FURNISHED BY THE A R. IT IS SEEN THAT THE TRANSACTIONS WITH THE SAID PARRIES I.E. T HE DEPOSITS ARE NOT IN THE NATURE OF LOAN OR DEPOSIT BUT THE SAME WERE COMMERCIAL TRANSACTIO NS. FURTHER THE AUDITOR IN TAX AUDIT REPORT HAS STATED THAT THERE WAS NO LOAN OR DEPOSIT TAKEN IN EXCESS OF LIMIT SPECIFIED IN SECTION 269T OF THE ACT WHICH SHOWS THAT THE APPEL LANT HAD BONAFIDE BELIEF AND REASONABLE CAUSE. THE AR HAS ALSO CONTENDED THAT TH E A.O. HAS MENTIONED IN THE ASSESSMENT ORDER AS LOANS HAVE BEEN REPAID BY THE A PPELLANT SO ALSO THE AUDITED APPOINTED FOR SPECIAL AUDIT HAS REFERRED THE SAME A S LOANS AND PENALTY U/S. 271E IS NOT LEVIABLE IF LOANS ARE REPAID AS THE WORD LOAN WAS A DDED IN SECTION 271E OF THE ACT W.E.F. 1.6.2003 SO FOR YEAR ENDING 31.3.2003 NO PENALTY C AN BE LEVIED U/S. 271E. THIS CONTENTION OF THE A.R. IS FOUND SUPPORT FROM THE D ECISIONS IN THE CASE OF CIT VS.- MOTILAL SUBHODKUMAR JAIN 277 ITR 524 (M.P.) AND CIT VS.- V IKRAMJITSINGH 292 ITR 274 (DEL.). AS PER THE DECISION IN THE CASE OF CIT V/S. LOKHPAT FILM EXCHANGE (CINEMA) REPORTED IN 304 ITR 172 (RAJ) THE APPELLANT HAD A BONAFIDE BELI EF THAT THE TRANSACTIONS WITH THE RELATED PERSONS I E. DIRECTOR BABUJI WOULD NOT ATTR ACT PROVISIONS OF SECTION 269SS AND 269T SUCH BONAFIDE BELIEF CONSTITUTED REASONABLE C AUSE. BY FOLLOWING THE CASE LAWS AS RELIED UPON I AM OF THE VIEW THAT THERE IS REASONA BLE CAUSE FOR REPAYMENT OF DEPOSITS IN CASH AND IT IS NOT A CASE FIT FOR LEVY OF PENALTY U /S. 271E OF THE ACT HENCE PENALTY IS DELETED. 6. AGGRIEVED WITH THE ORDERS OF LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) FOR BOTH THE SAME ASSESSMENT YEAR CANCELLING THE PENALTY LEV IED UNDER SECTION 271E & 271D THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING BEFORE US ON BEHALF OF R EVENUE SHRI ANIL KUMAR LD. CIT(D.R.) APPEARED AND POINTED OUT THAT HE NEEDS SOMETIME TO VERIFY WHETHER THE ALLEGED LOAN AMOUNTING TO RS.2 82 548/- RECEIVED BY THE ASSESSEE-COMPANY FROM SIX PARTIES WERE ALSO TREATED AS NON- GENUINE FOR WHICH ADDITION WAS SEPARATELY MADE IN T HE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04. IN REPLY THE LD. COUNSEL OF THE ASSESSEE PRODUCED THE COPY OF THE ASSESSMENT ORDER. THE LD. COUNSEL FURTHER POINTED OUT THAT BOTH THE APPEA LS HAVE BEEN FILED BY THE DEPARTMENT ALONGWITH THE COPY OF THE ASSESSMENT ORDER. INSTEAD OF ASKIN G THE TIME THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE VERIFIED IT FROM THE ASSESSMENT ORDER. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT APART FROM THIS GRO UND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN OTHER REASONS FOR CANCELLING TH E PENALTY LEVIED BY THE ASSESSING OFFICER 4 ITA NOS . 2049-AHD-2009 & 2061-AHD-2009 UNDER SECTION 271E AND 271D OF THE ACT THEREFORE THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 8. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORDERS ONE OF THE REASONS FOR CANCELLING THE PENALTY IS THAT THE ASSESSING OFFICER IN THE ASSESS MENT ORDER HAS ADDED THE ALLEGED LOANS UNDER SECTION 68 OF THE INCOME TAX ACT THEREFORE THE PR OVISIONS OF SECTION 269SS WERE NOT APPLICABLE. IN CASE THERE WAS ANY MISREPRESENTATION OF THESE F ACTS OR INCORRECT VERIFICATION BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THAT EVENT PROPER COURSE OPENED TO THE DEPARTMENT WAS TO FILE APPLICATION UNDER SECTION 154 TO THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS). BE THAT IT MAY BE IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO STATED THAT THE ASSES SEE-COMPANY HAD A BONAFIDE BELIEF THAT TRANSACTIONS WITH THE RELATED PERSONS I.E. DIRECTO RS WOULD NOT ATTRACT PROVISIONS OF SECTION 269SS AND 269T AND SUCH BONAFIDE BELIEF CONSTITUTES REASO NABLE CAUSE. KEEPING IN VIEW THE REASONS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDERS WE ARE OF THE VIEW THAT THIS WAS NOT A FIT CASE FOR LE VYING PENALTY UNDER BOTH THESE SECTIONS AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS LEG ALLY AND FACTUALLY CORRECT IN CANCELLING THE SAME. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CANCELLING BOTH THE PENALTIES. 9. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 21.01.20 11 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21/ 01 / 2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR ITAT AHMEDABAD LAHA/SR.P.S.