Shri Girdharlal Mohanlal Patel, Anand v. The Jt.CIT.,Range-3,, Baroda

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI G.D. AGRAWAL V.P. AND M.K. SHRAWAT JM. GIRDHARLAL MOHANLAL PATEL PROP. SHREENATH PETROLEUM NR. RAZ HOTEL SR.NO.520 TARAPUR BORSAD ANAND- 388 180. VS. THE JT. COMMISSIONER OF INCOME-TAX RANGE-3 BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE RESPONDENT BY:- SHRI O.P. BATHEJA SR.DR O R D E R PER M.K. SHRAWAT JUDICIAL MEMBER . THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF CIT(A)-I BARODA DATED 18.6.2010 AND THE ONLY GROUND IS IN RESPECT OF CONFIRMATION OF PENALTY LEVIED UND ER SECTION 271E OF RS.2 20 000/-. 2. WHILE LEVYING THE PENALTY AS PER IMPUGNED ORDER PASSED UNDER SECTION 271E DATED 30 TH JUNE 2009 IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD REPAID THE LOAN OTHERWISE THAN BY ACCO UNT PAYEE CHEQUES TO THE DEPOSITORS 11 IN NUMBER. THE TOTAL AMOUNT TO TH OSE 11 DEPOSITORS WAS ITA NO.2728/AHD/2010 ASST. YEAR 2006-07 ITA NO.2728/AHD/2010 ASST. YEAR 2006-07 2 AMOUNTING TO RS.2 20 000/- AND EACH AMOUNT WAS RS.2 0 000/- ONLY. AS PER AO SINCE THE PAYMENT TO 11 PERSONS WAS RS.20 00 0/- EACH THEREFORE THE SAID REPAYMENT OF LOAN IN CASH WAS IN CONTRAVEN TION OF THE PROVISIONS OF SECTION 269T OF THE IT ACT 1961. ACCORDINGLY A PENALTY OF RS.2 20 000/- WAS LEVIED. THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY AND IT WAS ARGUED THAT THE ASSESSEE HAPPE NED TO BE AN OWNER OF A PETROL PUMP SITUATED IN A RURAL AREA. IT HAS ALSO BEEN INFORMED THAT THE ASSESSEE CARRIED ON THE BUSINESS OF SELLING AGRICUL TURAL IMPLEMENTS TOOLS ETC. TO THE FARMERS OF THAT LOCALITY IN THE YEAR 20 03. WHEN THE ASSESSEE HAS OPENED THE PETROL PUMP HE HAD MADE A REQUEST TO THE FARMERS TO MAKE DEPOSITS WITH THE ASSESSEE. THE AMOUNT WAS TO BE RE PAID AS THE FARMERS HAVE DEMANDED THE MONEY FOR THEIR PERSONAL PURPOSES . IT WAS DEMANDED BY THE FARMERS TO REPAY THE AMOUNT IN CASH SINCE SO ME OF THEM WERE IN NEED OF CASH FOR PURCHASE OF CATTLE. IT HAS ALSO BE EN EXPLAINED THAT SOME OF THE PAYMENTS IN CASH WERE MADE ON BANK HOLIDAYS AND SOME OF THE PAYMENTS WERE MADE THROUGH BEARER CHEQUES. SINCE TH E FARMERS WERE UNEDUCATED THEREFORE THE ASSESSEE HAD TO ACCOMPAN Y THOSE FARMERS TO THE BANK TO GET THE CHEQUES ENCASHED. SINCE THOSE FARME RS HAVE HELPED THE ASSESSEE IN RAISING FUNDS TO START PETROL PUMP THE REFORE THE ASSESSEE WAS OBLIGED AND HENCE ON DEMAND THE PAYMENT WAS MADE BY BEARER CHEQUES. RELIANCE WAS ALSO PLACED ON CASE LAWS CITED AS INDU STRIAL ENTERPRISE 68 TTJ 373 (HYD) AND SAINI MEDICAL STORES 277 ITR 420 (P & H). ON ITA NO.2728/AHD/2010 ASST. YEAR 2006-07 3 HEARING THE SUBMISSIONS LD. CIT(A) HAS GRANTED PAR T RELIEF AS PER THE FOLLOWING OBSERVATIONS:- FROM THE ABOVE IT SEEMS THAT THE CIRCUMSTANCES IN WHICH THE ASSESSEE MADE THE REPAYMENT OF LOAN WAS NOT CONTEMPLATED TO BE HIT BY THE INSERTED SECTION. IN MY OPINION IT WOULD CONSTITUT E REASONABLE CAUSE FOR FAILURE ON THE PART OF THE ASSESSEE TO CONFORM TO T HE PROVISIONS OF LAW AS EMBODIED IN SECTION 269T. IT IS IMPORTANT TO NOTE T HAT THE ASSESSEE HAS TRIED TO REMAIN WITHIN THE SPIRIT OF THE LAW BY RES TRICTING THE REPAYMENTS MADE TO THE FARMERS TO RS.20 000/- IN EACH CASE. TH IS WAS UNDER THE GENUINE ALTHOUGH MISTAKEN BELIEF THAT REPAYMENTS UPTO RS.20 000/- WERE PERMITTED UNDER THE LAW OTHERWISE THAN THROUGH ACCO UNT PAYEE CHEQUE ETC. ACCORDINGLY IT IS HELD THAT REPAYMENTS OF RS. 1 80 000/- IN RESPECT OF SR.NO.1 TO 8 AND 10 OF THE TABLE AT PAGE 1 OF THE O RDER DT.30.6.2009 DID NOT WARRANT IMPOSITION OF PENALTY. HENCE PENALTY O F RS.1 80 000/- IS CANCELLED. SO FAR AS PENALTIES OF RS.20 000/- EACH IN RESPECT OF SR.NO.9 & 11 ARE CONCERNED I FIND THAT THE ASSESSEE HAS NOT BROUGHT OUT ANY CONVINCING OR URGENT REASON WHY THOSE TWO PERSONS W ERE PAID IN CASH. BOTH THESE PERSONS WERE HAVING BANK ACCOUNTS ON THE DATE WHEN REPAYMENTS WERE MADE. HENCE IT IS HELD THAT THE PE NALTY TO THE EXTENT OF RS.40 000/- WAS JUSTIFIED AND IS ACCORDINGLY CONFIR MED. THE LD. CIT(A) HAS ALSO REFERRED TO THE INTENTION O F THE STATUTE FOR INSERTION OF PENAL PROVISIONS IN RESPECT OF INFRING EMENT OF SECTION 269T WHICH WAS ELABORATED BY A CBDT CIRCULAR NO.345 DATE D 28.6.1982. 3. ON HEARING THE LD. DR AND AFTER CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW WE NOTICE THAT THE LD. CIT(A) HA S ASSIGNED CERTAIN LEGAL REASONS FOR GRANTING PART RELIEF HOWEVER THOSE VE RY REASONS COULD ALSO HAVE BEEN APPLIED IN RESPECT OF THE REST OF THE PAY MENTS MADE TO THE FARMERS. THEREFORE WE ARE OF THE VIEW THAT THE LD. CIT(A) SHOULD HAVE GRANTED FULL RELIEF ON REPAYMENT TO THE FARMERS WHI CH WERE STATED TO BE ITA NO.2728/AHD/2010 ASST. YEAR 2006-07 4 MADE THROUGH BEARER CHEQUES AND CLAIMED TO BE COVER ED BY THE CASE LAWS CITED HEREIN ABOVE. WE HOLD ACCORDINGLY AND DIRECT TO DELETE THE PENALTY. THE GROUND OF APPEAL IS ALLOWED. 4. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 20 TH MAY 2011 SD/- SD/- (G.D.AGRAWAL) (M.K. SHRAWAT) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD DATED : 20 TH MAY 2011 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER //TRUE COPY// DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 20/5/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 20/5/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 20/05/2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 20/05/2011 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..