SUSHIL KUMAR MEENA, Jaipur v. ADD. CIT, Jaipur

ITA 283/JPR/2016 | 2008-2009
Pronouncement Date: 05-10-2016 | Result: Allowed

Appeal Details

RSA Number 28323114 RSA 2016
Assessee PAN AHKPM1304J
Bench Jaipur
Appeal Number ITA 283/JPR/2016
Duration Of Justice 6 month(s) 6 day(s)
Appellant SUSHIL KUMAR MEENA, Jaipur
Respondent ADD. CIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 05-10-2016
Assessment Year 2008-2009
Appeal Filed On 29-03-2016
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES (SMC) JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 283/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI SUSHIL KUMAR MEENA C-29 SARASWATI NAGAR GAITOR ROAD MALVIYA NAGAR JAIPUR CUKE VS. THE ADDL. CIT RANGE-6 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AHKPM 1304 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJ MEHRA JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/09/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 5/10/2016 VKNS'K@ ORDER PER BHAGCHAND AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-5 JAIPUR DATED 18-01-2016 FOR THE ASSESS MENT YEAR 2008-09 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE PENA LTY OF RS. 5.00 LAC LEVIED BY AO U/S 271E OF THE I.T. ACT 1961 ARB ITRARY WITHOUT CONSIDERING THE FACTS OF THE CASE. HENCE THE PENAL TY SO LEVIED DESERVES TO BE DELETED. ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 2 1.1 THAT THE LD. CIT(A) AS WELL AS AO HAVE ERRED IN NOT APPRECIATING THE SUBMISSION MADE TO THE EFFECT THAT THE AMOUNT WAS REPAID BY THE ASSESSEE TO HIS GRANDFATHER WHO BEIN G AN OLD AND IGNORANT/ ILLITERATE MAN HAD NO BANK ACCOUNT THE REFORE THE AMOUNT HAD TO BE PAID IN CASH WHICH AMOUNTS TO A RE ASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE I.T. ACT. THEREFORE THE PENALTY SO LEVIED DESERVES TO BE DELETED. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE TRANSACTION BETWEEN ASSESSEE AND HIS GRANDFATHER WAS PURELY A FAMILY TRANSACTION AND NOT RELATED IN ANY MANNER TO HIS BUSINESS THEREFORE THE SAME CANNOT BE TREATED AS A TRANSACTION OF LOAN/ DEPOSIT. THEREFORE THE PENALTY UU272E OF RS. 5 LAC DESERVES TO BE DELETED. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1 07 500/- FOR THE A.Y. 2008-09. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY THE ASSESSMENT U/S 143(3) WAS COMPLETED BY THE AO AT AN INCOME OF RS. 6 68 000/- ON 18-11-2010. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD TAKEN A LOAN OF RS . 5.00 LACS FROM HIS GRANDFATHER SHRI RAGHUNATH PRASAD MEENA ON 25-02-20 07 WHICH WAS RETURNED BY THE ASSESSEE ON 02-08-2008. THE AO ASK ED THE ASSESSEE TO EXPLAIN THE SOURCE OF RS. 5.00 LACS IN THE HANDS OF SHRI RAGHUNATH PRASAD MEENA AND ALSO EXPLAIN THE SOURCE OF REPAYMENT. THE ASSESSEE FURNISHED AN AFFIDAVIT DATED 20-11-2010 OF HIS GRANDFATHER SH RI RAGHUNATH PRASAD ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 3 MEENA CONFIRMING THE ABOVE TRANSACTION OF LOAN CLAI MED BY THE ASSESSEE. THE AO OBSERVED THAT SINCE THE ASSESSEE HAD ACCEPTE D AND REPAID THE LOAN IN VIOLATION OF THE PROVISIONS OF SECTION 269SS AND 269T THE AO REFERRED THE MATTER TO THE ADDL. CIT RANGE 6 JAIPUR FOR CO NSIDERING PENAL PROCEEDINGS U/S 271D AND 271E OF THE ACT. THE ADDL. CIT RANGE6 JAIPUR TAKING INTO CONSIDERATION ALL THE FACTS RELATING TO LOAN OF RS. 5.00 LACS AND REPAYMENT THEREOF CONSIDERED IT THAT THE ASSESSEE H AD CLEARLY VIOLATED THE PROVISIONS OF SECTION 269T WHICH RESULTANTLY ATTRA CT THE PENALTY PROVISIONS OF SECTION 271E OF THE ACT IN RESPECT O F REPAYMENT OF LOAN OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT P AYEE BANK DRAFT TO SHRI RAGHUNATH PRASAD MEENA IN CONTRAVENTION TO PRO VISIONS OF SECTION 269T OF THE I.T. ACT 1961. THUS THE ADDL. CIT RANG E-6 JAIPUR OBSERVED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271E FOR REPAYMENT OF LOAN IN CASH IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269T WITHOUT ANY REASONABLE AND JUSTIFIED CAUSE AND THUS IMPOSED A P ENALTY OF RS. 5.00 LACS U/S 271E OF THE ACT WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A) BY OBSERVING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE THE PE NALTY ORDER AND SUBMISSIONS OF THE APPELLANT. THE APPELLA NT HAS CONTENDED THAT THE AMOUNT OF RS. 5.00 LACS WAS REPA ID IN CASH TO HIS GRANDFATHER ON 02-02-2008 SINCE HIS GRANDFATHER DID NOT HAVE ANY BANK ACCOUNT. IT IS FURTHER CONTENDED THAT THE SAID TRANSACTION WAS A ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 4 FAMILY TRANSACTION IN URGENCY WITHOUT BEING AWARE O F THE IMPLICATIONS. IT IS ALSO CONTENDED THAT THE TRANSAC TION WAS NOT IN THE NATURE OF LOAN OR DEPOSIT BUT IT WAS A CURRENT ACCO UNT. SEVERAL CASE LAWS HAVE BEEN CITED BY THE APPELLANT IN SUPPORT OF HIS CONTENTIONS. HOWEVER I FIND THAT THE CASE LAWS CITED ARE DISTIN GUISHABLE ON FACTS OF THE CASES SINCE THE APPELLANT HAS NOT BEEN ABLE TO SHOW THAT THERE WAS A REASONABLE CAUSE FOR SUCH REPAYMENT IN CASH. HE HAS NOT SUBMITTED ANY EVIDENCE TO SHOW THAT HIS GRANDFATHER LIVED IN AN UNBANKED AREA. FURTHER THE PLEA OF IGNORANCE OF LAW IS ALSO NOT A VALID EXCUSE. MOREOVER JUST BECAUSE THE TRANSACTIO N IS BETWEEN FAMILY MEMBERS IT DOES NOT SPARE THE APPELLANT FRO M THE RIGOURS OF THE PROVISIONS OF SECTION 269T AND SECTION 269E. TH E OTHER CONTENTION THAT THE NATURE OF TRANSACTION WAS NOT T HAT OF LOAN OR DEPOSIT IS ALSO NOT ACCEPTABLE. THERE IS NO DOUBT T HAT THE APPELLANT WAS UNDER OBLIGATION TO REPAY THE AMOUNT TO HIS GRA NDFATHER AND INDEED PAID BACK THE SAID AMOUNT WITHIN A YEAR. THE RE ARE NO FURTHER TRANSACTIONS BETWEEN THEM. IN THESE CIRCUMS TANCES THE AMOUNT OF RS. 5 00 000 INDEED REPRESENTED LOAN OR D EPOSIT WHICH WAS ULTIMATELY REPAID. THUS PROVISIONS OF SECTION 2 71E ARE APPLICABLE CONSIDERING THE NATURE OF THE TRANSACTIO N. THE APPELLANT HAS ALSO NOT SUBMITTED ANY EVIDENCE REGARDING URGEN CY IN REPAYING THE AMOUNT IN CASH. THE APPELLANT HAS THUS CONTRAVE NED THE PROVISIONS OF SECTION 269T BY REPAYING THE LOAN/ DE POSIT IN CASH WITHOUT ANY REASONABLE CAUSE. ACCORDINGLY PENALTY OF RS. 5 00 000/- LEVIED U/S 271E IS UPHELD.. 2.2 AGGRIEVED THE ASSESSEE IS IN APPEAL AND THE L D. AR OF THE ASSESSEE PRAYED FOR DELETION OF THE PENALTY OF RS. 5.00 LACS CONFIRMED BY THE LD. CIT(A) FOR WHICH THE LD. AR OF THE ASSESSEE FILED T HE FOLLOWING WRITTEN SUBMISSION . THE ASSESSEE BELONGS TO A RURAL AGRICULTURE FAMI LY. DURING THE F.Y. 2006-07 THE ASSESSEE RECEIVED A SUM OF RS. 5 00 000/- FROM HIS GRANDFATHER ON 25.02.2007. HIS GRANDFATHER IS VERY OLD AGE PERSON AGED ABOUT 89 YEARS DURING T HE RELEVANT YEAR. HIS ONLY SOURCE OF INCOME WAS FROM AGRICULTURE ACTIVITY AND WAS NOT MAINTAINI NG ANY BANK ACCOUNT. THE ASSESSEE HAS ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 5 RECEIVED THE SAID AMOUNT FROM HIS GRANDFATHER FOR P URCHASE OF A PIECE OF LAND FOR RESIDENTIAL PURPOSES AND AS THE ASSESSEE COULD NOT FIND A SUITA BLE PIECE OF LAND THEREFORE HE RETURNED THE AMOUNT BACK TO HIS GRANDFATHER ON 02.02.2008 IN CAS H AS HIS GRANDFATHER WAS NOT HAVING ANY BANK ACCOUNT. THE SAID AMOUNT WAS RECEIVED FROM TH E GRANDFATHER OF THE ASSESSEE WITHOUT CHARGING ANY INTEREST WHICH FACT IS FURTHER FORTIFI ED FROM THE AFFIDAVIT OF GRANDFATHER OF THE ASSESSEE FILED DURING THE COURSE OF ASSESSMENT PROC EEDINGS THUS GENUINENESS OF TRANSACTION IS PROVED BY THE ASSESSEE BEYOND DOUBT. THE LD. AO HAD NOT DOUBTED THE GENUINENESS OF TRANSACTIONS AND WITHOUT CONSIDERING REASON FOR REP AYING AMOUNT IN CASH DUE TO FACT THAT NO BANK ACCOUNT WAS MAINTAINED BY THE GRANDFATHER OF A SSESSEE AS THE SAME CONSTITUTE THE REASONABLE CAUSE IN TERMS OF PROVISIONS OF SECTIO N 273B READ WITH SECTION 271E AND GROSSLY REJECTED THE PLEA OF THE ASSESSEE WITHOUT CONSIDERI NG THE REASONABLE CAUSE AS EXPLAINED BY THE ASSESSEE WHICH WAS FURTHER CONFIRMED BY LD. CIT(A) . IT IS PERTINENT TO NOTE HERE THAT WHILE IMPOSING PENALTY LD. AO NEITHER ESTABLISHED THAT T HERE WAS MALAFIDE INTENTION OF THE ASSESSEE IN RECEIVING AMOUNT IN CASH NOR BROUGHT ON RECORD A NY MATERIAL TO PROVE THAT TRANSACTION WAS FALSE WITH THE INTENTION TO EVADE TAX. THE AMOUNT W AS RECEIVED BY THE ASSESSEE UNDER PERSONAL URGENCY FROM HIS FAMILY MEMBER UNDER BONAFIDE BELIE F WITHOUT KNOWING THE IMPLICATIONS OF VIOLATION OF SECTION 269T AS THE ASSESSEE CANNOT BE PRESUMED TO KNOW COMPLEXITIES OF LAWS. SINCE DEFAULT WAS TECHNICAL AND VENIAL IN NATURE WH ICH CONSTITUTES THE REASONABLE CAUSE U/S 273B BECAUSE IN PRESENT CIRCUMSTANCE THE TRANSACTIO N ENTERED BY THE ASSESSEE CANNOT BE SAID AS FAKE TRANSACTION WHICH ATTRACTS THE PENALTY U/S 271 E AS PER INTENTION OF LAW. IN THIS REGARD RELIANCE IS PLACED ON DECISION OF HONBLE PUNJAB AN D HARYANA HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. SUNIL KUMAR GOEL REPO RTED IN [2009] 315 ITR 0163- WHEREIN HONBLE COURT HAS HELD AS UNDER: PENALTY ACCEPTANCE AND RETURN OF LOANS EXCEEDING SPECIFIED LIMIT IN CASH PENALTY UNDER SECTION 271D AND 271E NOT MANDATORY CASH TRANSACT IONS WITH SISTER CONCERN FINDING THAT THERE WAS NO ATTEMPT TO EVADE TAX DELETION OF PEN ALTY VALID INCOME TAX ACT 1961 SS. 269SS 271D 271E 273B. THE HONBLE COURT HAS FURTHER OBSERVED THAT: SECTION 273B OF THE INCOME-TAX ACT 1961 ENVISAGES A NON OBSTANTE CLAUSE AS AGAINST SECTIONS 271D AND 271E OF THE ACT. IN THE EXCEPTION AL SITUATION ENVISAGED IN SECTION 273B OF THE ACT IT IS PERMISSIBLE FOR AN ASSESSEE TO SUBST ANTIATE 'REASONABLE CAUSE' FOR HIS FAILURE TO COMPLY WITH THE PROVISIONS ON THE BASIS WHEREOF PEN ALTY IS SOUGHT TO BE IMPOSED UPON HIM. IF AN ASSESSEE SUCCESSFULLY DISCHARGES THIS OBLIGAT ION IT IS OPEN TO HIM TO RAISE A CLAIM THAT HE SHOULD BE EXCUSED FROM THE CONSEQUENTIAL PENAL E FFECT. HELD THAT THERE WAS NO DISPUTE ABOUT THE FACT THAT THE CASH TRANSACTIONS OF THE ASSESSEE WERE WITH THE SISTER CONCERN AND THESE TRANSACTIONS WERE WITHIN THE FAMILY AND DUE TO BUSINESS EXIGENCY. A FAMILY TRANSACTION BETWEEN TW O INDEPENDENT ASSESSEES BASED ON AN ACT OF CASUALNESS SPECIALLY IN A CASE WHERE THE DI SCLOSURE THEREOF WAS CONTAINED IN THE COMPILATION OF ACCOUNTS AND WHICH HAD NO TAX EFFEC T ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT. SINCE THE ASSESSEE H AD SATISFACTORILY ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT H E MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIENT CAUSE FOR NOT INVOKING THE PENAL PROVISI ONS OF SECTIONS 271D AND 271E OF THE ACT AGAINST HIM. THE DELETION OF PENALTY BY THE TRIBUNA L WAS VALID. IT IS FURTHER SUBMITTED THAT THE CONTENTION OF THE ASSESSEE REGARDING REASONABLE CAUSE UNDER SECTION 273B OF THE ACT REMAINED UNCONTROVERT ED AND THE AMOUNT WAS RECEIVED IN CASH DUE TO URGENT FAMILY NEEDS OF FUNDS. THE TRANSACTIO N BETWEEN THE ASSESSEE AND HIS GRANDFATHER SHOULD BE VIEWED AS FINANCIAL HELP IN THE FAMILY AN D THE ASSESSEE COULD NOT BE PRESUMED TO HAVE KNOWLEDGE OF THE INTRICACIES OF THE TAX LAWS THUS T HE PENALTY U/S 271E OF THE ACT CANNOT BE LEVIED FOR TECHNICAL BREACH OF THE PROVISIONS OF THE ACT. IT IS FURTHER SUBMITTED THAT THE TRANSACTION BETWEE N THE ASSESSEE AND HIS GRANDFATHER WAS NOT THE LOAN OR DEPOSIT AND IT WAS ONLY A CURRE NT ACCOUNT IN NATURE AND NO INTEREST WAS ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 6 BEING CHARGED FOR THE ABOVE TRANSACTION. FURTHER TH E REASON FOR RECEIVING AMOUNT IN CASH HAS BEEN MENTIONED ABOVE IS UNDER BONAFIDE BELIEF AND N OT A DELIBERATE ACT AGAINST ANY SPECIFIC PROVISION OF LAW. IT IS FURTHER SUBMITTED THAT THE PENALTY UNDER SECT ION 271D AND 271E ARE OF COMPENSATORY IN NATURE AND LEVIABLE AS EQUAL TO THE AMOUNT OF LOAN OR DEPOSIT TAKEN / REPAID IN CASH. THE PROVISIONS OF SECTION 269SS AND 269T WERE BROUG HT ON STATUTE BOOK TO COUNTER EVASION OF TAX IN CERTAIN CASES AS CLEARLY STATED IN THE HEADING OF CHAPTER XXB WHICH READS 'REQUIREMENT AS TO MODE OF ACCEPTANCE PAYMENT OR R EPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX.' LEGISLATIVE INTENTION IN BRINGING SECTION 269SS AND 269TWAS TO AVOID CERTAIN CIRCUMSTANCES OF TAX EVASION WHEREBY HUGE TRANSACT IONS ARE MADE OUTSIDE THE BOOKS OF ACCOUNT BY WAY OF CASH. THE INTENTION IS ALSO CLEAR FROM CBDT CIRCULAR NO. 387 THAT ONLY IF SOME UNACCOUNTED MONEY WAS INVOLVED THEN THE SECTIO N BECOMES APPLICABLE AND IN THE CASE OF THE ASSESSEE THERE IS NO DISPUTE WHATSOEVER ABOUT THE SOURCE OF MONEY IN THE HANDS OF THE ASSESSEE AND GENUINENESS OF TRANSACTION. IN SUCH A CASE THEREFORE IT WILL BE HIGHLY TECHNICAL TO HOLD THAT THERE IS ANY DEFAULT AS CONTEMPLATED UNDE R SECTION 271E. IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA REPORTED IN [1972] 083 ITR 0026 (SC) WHEREIN IT HA S BEEN HELD THAT PENALTY IS NOT TO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO AND TH AT IT SHOULD NOT BE IMPOSED IF THERE IS ONLY A TECHNICAL OR VENIAL BREACH OF LAW. THE HONBLE GAUHATI BENCH OF ITAT IN THE CASE OF AD DL. CIT VS. SMT. PRAHATI BARUAH REPORTED IN (2003) 133 TAXMAN 74 HAS ALSO OF THE SAME VIEW AND HELD AS UNDER:- IT WAS HELD THAT THE INTRODUCTION OF SECTION 269T A ND SECTION 271E IN THE STATUTE IS TO PREVENT PROLIFERATION OF BLACK / UNACCOUNTED MONEY DEPOSITED WITH BANKS AND OTHER PERSONS BY INTRODUCING THE SYSTEM OF REPAYMENT THROUGH ACCOUNT PAYEE CHEQUES AND DRAFTS AND THUS TO ENSURE THAT THE IDENTITY OF THE PAYEE IS ESTABLISHE D. WHERE THE IDENTITY OF THE LENDER TO WHOM REPAYMENT HAD BEEN MADE WAS KNOWN TO THE DEPARTMENT AND THE GENUINENESS OF THE LOAN TRANSACTION WAS NOT IN DOUBT IT COULD NOT BE SAID THAT THE BREACH OF LAW IF ANY WAS DELIBERATE AND THE DEFAULT IF ANY COULD BE SAID TO BE A TECH NICAL DEFAULT FOR WHICH NO PENALTY WOULD BE LEVIABLE. THE PRE-REQUISITE CONDITION FOR THE LEVY OF THE AFO RESAID PENALTIES IS THAT THE CASH TRANSACTION MUST RESULT IN A LOAN OR DEPOSIT. TRANS ACTIONS BETWEEN FAMILY MEMBERS WHEREIN THERE IS NO OBLIGATION TO REPAY OR WHEREIN THE AMOU NT IS HELD IN TRUST DUE TO CLOSE PROXIMITY BETWEEN THE PARTIES PAYMENT BY PARTNER TO A FIRM O R REPAYMENT OF CAPITAL AMOUNT BY FIRM TO PARTNER TEMPORARY ADVANCES AND WITHDRAWALS FROM JO INT ACCOUNT DO NOT RESULT IN LOAN / DEPOSIT AND ARE THEREFORE OUTSIDE THE PURVIEW OF THE AFORES AID PROVISIONS. IT IS FURTHER SUBMITTED THAT THESE TRANSACTIONS WER E NOT MADE WITH THE INTENTION TO EVADE TAX OR CONCEALMENT OF INCOME. AT THE MOST IT IS A CASE OF NEGLIGENCE BUT A NEGLIGENT PERSON DOES NOT HAVE ANY INTENTION OR MENSREA TO PURPOSELY VIOLATE ANY PROVISION OF LAW SO AS TO BE VISITED WITH STRINGENT PUNISHMENT OF HEAVY PE NALTY. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. J.H. GOTLA (1985) 156 ITR 323 (SC) THE HON'BLE SUPREME COURT HAS HELD THAT WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUTO RY PROVISION PRODUCES A MANIFESTLY UNJUST RESULT WHICH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE THE COURT MIGHT MODIFY THE LANGUAGE USED BY THE LEGISLATURE SO AS TO ACHIEVE T HE INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL RESULT. ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 7 RELIANCE IS ALSO PLACED ON DELHI ITAT DECISION IN T HE CASE OF ENVOGUE WOOD WORKING PVT. LTD. VS ACIT WHEREIN HONBLE ITAT HAS HELD AS UNDER:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE ENTIRE FACTUAL MA TRIX AND THE JUDICIAL PRECEDENT THEREON IN THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT THERE WAS BONAFIDE BELIEF ON THE PART OF THE ASSESSEE THAT THE TRANSAC TION WITH THE DIRECTORS AND THE SHAREHOLDERS FOR MEETING URGENT CASH REQUIREMENTS F OR RUNNING THE BUSINESS WOULD NOT RESULT IN ANY VIOLATIONS. CONSIDERING THE PECUL IAR FACTS AND CIRCUMSTANCES OF THE CASE AND THE PLEADINGS OF THE PARTIES BEFORE THE BE NCH AND THE MANDATE OF SECTION 273B OF THE ACT WE HOLD THAT THE EXPLANATION OFFER ED BY THE ASSESSEE COMPANY BEING BONAFIDE CONSTITUTES A REASONABLE CAUSE AND BEING S ATISFIED BY THE SAME CONSIDERING THE JUDICIAL PRECEDENT CITED WE ACCEPT THE SAME. A CCORDINGLY THE IMPUGNED ORDERS ARE I.T.A .NO.-293 & 294/DEL/2012 SET ASIDE IN BOTH THE APPEALS AND THE PENALTY IMPOSED U/S 271D AND 271E ACCORDINGLY IS QUASHED. T HE SAID ORDER WAS ANNOUNCED IN THE OPEN COURT IN THE PRESENT OF THE PARTIES. IT IS WORTHWHILE TO MENTION THAT A HARMONIOUS CONST RUCTION OF THE RELEVANT PROVISIONS OF SECTIONS 271B 271E AND 273B CLEARLY REVEAL THAT THE USE OF THE EXPRESSION 'SHALL BE LIABLE TO PAY' IN SECTIONS 271 D AND 271E AND THE PROVISIONS OF SECTION 273B PROVIDING THAT NO PENALTY WOULD BE LEV IABLE IF THE PERSON CONCERNED PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE CLEARLY INDICATE THAT THESE PROVISIONS GIVE A DISCRETION TO THE AUTHORITIES TO IMPOSE THE PENALTY OR NOT TO IMPOSE THE PENALTY. SUCH DISCRETION HAS TO BE EXERCISED WI TH WISDOM AND IN A JUST AND FAIR MANNER HAVING REGARD TO THE ENTIRE RELEVANT FACTS A ND MATERIAL EXISTING ON RECORDS. IT IS FURTHER SUBMITTED THAT THE PROVISIONS DEALING WITH PENALTY MUST BE STRICTLY CONSTRUED. AN ORDER IMPOSING PENALTY FOR F AILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DING AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY EITHER ACTED DELIBERATE LY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN C ONSCIOUS DISREGARD OF HIS OBLIGATION. PENALTY WILL ALSO NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHOR ITY COMPETENT TO IMPOSE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BR EACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNE R PRESCRIBED BY THE STATUTE. SECTION 269T LAYS DOWN THE MODE OF REPAYMENT OF CER TAIN LOANS AND DEPOSITS. SECTION 271EDEALS WITH IMPOSITION OF PENA LTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269T. SECTION 273B PROVIDES T HAT NO PENALTY SHALL BE IMPOSED IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THE WORDS REASONABLE CAUSE HAS NOT BEEN DEFINED UNDER THE A CT BUT THEY COULD RECEIVE THE SAME INTERPRETATION WHICH IS GIVEN TO THE EXPRESSIO N SUFFICIENT CAUSE. THEREFORE IN THE CONTEXT OF THE PENALTY PROVISIONS THE WORDS R EASONABLE CAUSE WOULD MEAN A CAUSE WHICH IS BEYOND THE CONTROL OF THE ASSESSEE. REASONABLE CAUSE OBVIOUSLY MEANS A CAUSE WHICH PREVENTS A REASONABLE MAN OF OR DINARY PRUDENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE OR INACTIO N OR WANT OF BONA FIDES. BEFORE IMPOSITION OF PENALTY UNDER SECTION 271D THE ASSES SING OFFICER MUST BE SATISFIED NOT ARBITRARILY BUT JUDICIOUSLY THAT THE ASSESSEE HAS WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH THE PROVISIONS. THUS IN THE CIRCUMSTANCES OF THE CASE AND ALSO ON T HE FACTS IT IS SUBMITTED THAT THERE WAS NEITHER ANY MALAFIDE INTENTION ON TH E PART OF THE ASSESSEE IN REPAYING ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 8 CASH TO HIS GRANDFATHER NOR GENUINENESS OF TRANSACT ION WAS DOUBTED BY THE AUTHORITIES THE PENALTY AS IMPOSED U/S 271E MERELY ON TECHNICAL MISTAKE COMMITTED BY THE ASSESSEE WHICH HAD NOT RESULTED IN ANY LOSS OF REV ENUE WAS HARSH AND COULD NOT BE SUSTAINED IN LAW THUS THE SAME BE KINDLY DIRECTED T O BE DELETED. 2.3 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE ASSESSMEN T ORDER THAT THE ASSESSEE HAD TAKEN A LOAN OF RS. 5.00 LACS FORM HIS GRANDFAT HER SHRI RAGHUNATH PRASAD MEENA ON 25-02-2007 WHICH WAS RETURNED BY TH E ASSESSEE ON 02-02-2008. THE AO ASKED FROM THE ASSESSEE ABOUT TH E SOURCE OF LOAN OF RS. 5.00 LACS IN THE HANDS OF SHRI RAGHUNATH PRASAD MEENA FOR WHICH THE ASSESSEE SUBMITTED THE AFFIDAVIT DATED 20-10-11 OF HIS GRANDFATHER SHRI RAGHUNATH PRASAD MEENA WHO CONFIRMED ABOUT THE TRAN SACTION OF LOAN AS CLAIMED BY THE ASSESSEE. THE AO OBSERVED THAT SINCE THE ASSESSEE HAD ACCEPTED AND REPAID THE LOAN IN VIOLATION OF THE PR OVISIONS OF SECTION 269SS AND 269T THEREFORE HE AO REFERRED THE MATT ER TO THE ADDL. CIT RANGE-6 JAIPUR FOR CONSIDERING THE PENAL PROCEEDIN GS U/S 271D AND 271E OF THE I.T. ACT. THE ADDL. CIT RANGE-6 JAIPUR DID NOT FIND THE CONVINCING REPLY OF THE ASSESSEE AND HE TAKING INT O CONSIDERATION FACTS OF THE CASE OBSERVED THAT IT IS A FIT CASE FOR LEVY O F PENALTY U/S 271E FOR REPAYMENT OF LOAN IN CASH IN CONTRAVENTION TO THE P ROVISIONS OF SECTION ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 9 269T WITHOUT ANY REASONABLE AND JUSTIFIABLE CAUSE IMPOSED A PENALTY OF RS. 5.00 LACS U/S 271E OF THE ACT WHICH HAD BEEN CO NFIRMED BY THE LD. CIT(A). IT IS NOTED FROM THE ENTIRE FACTS THAT THE SAID AMOUNT WAS RECEIVED BY THE ASSESSEE FROM HIS FATHER WITHOUT CH ARGING OF ANY INTEREST WHICH HAD BEEN CONFIRMED BY THE GRANDFATHER FROM HI S AFFIDAVIT. HENCE THE TRANSACTION IS PROVED BY THE ASSESSEE BEYOND DO UBT. IT IS ALSO NOTED THAT THE AO HAD NOT DOUBTED THE GENUINENESS OF TRAN SACTIONS. IT IS ALSO OBSERVED FROM THE RECORDS THAT THE AMOUNT WAS RECEI VED BY THE ASSESSEE UNDER PERSONAL URGENCY FROM HIS FAMILY MEMBER UNDER BONA FIDE BELIEF WITHOUT KNOWING THE IMPLICATIONS OF VIOLATION OF SE CTION 269T AS THE ASSESSEE COULD NOT BE PRESUME TO KNOW THE COMPLEXIT IES OF LAW. SINCE DEFAULT WAS TECHNICAL AND VENIAL IN NATURE WHICH CO NSTITUTES THE REASONABLE CAUSE U/S 273B BECAUSE IN PRESENT CIRCUM STANCES THE TRANSACTION ENTERED BY THE ASSESSEE CANNOT BE SAID AS FAKE TRANSACTION WHICH ATTRACTS PENALTY U/S 271E OF THE ACT. IT APPE ARS FROM THE CONSPECTUS OF THE CASE THAT IT WAS A FINANCIAL HELP IN THE FAM ILY I.E. BETWEEN THE ASSESSEE AND HIS GRANDFATHER. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAINI MEDICAL STORE (2005) 277 ITR 420 HELD THAT BONA FIDES AND GENUINENESS OF THE TRANSACTION WOULD CONSTITUTE A REASONABLE CAUSE FOR NOT INVOKING THE PROVISION S OF SECTION 271D AND ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 10 271E OF THE ACT. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. LAKSHMI TRUST CO. (2008) 303 ITR 0099 OBSERVED THAT IF THERE WERE GENUS AND BONA FIDE TRANSACTIONS AND THE TAXPAYER C OULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASON THE AUTHORITY VESTED WITH THE POWER TO IMPO SE PENALTY HAS A DISCRETION NOT TO LEVY PENALTY. THE ITAT GAUHATI BE NCH IN THE CASE OF ADDL. CIT VS. SMT. PRAHATI BARUAH(2003) 133 TAXMAN 74 HAS HELD THAT THE INTRODUCTION OF SECTION 269T AND SECTION 271E I N THE STATUTE IS TO PREVENT PROLIFERATION OF BLACK / UNACCOUNTED MONEY DEPOSITED WITH BANKS AND OTHER PERSONS BY INTRODUCING THE SYSTEM OF REPA YMENT THROUGH ACCOUNT PAYEE CHEQUES AND DRAFTS AND THUS TO ENSU RE THAT THE IDENTITY OF THE PAYEE IS ESTABLISHED. WHERE THE IDENTITY OF THE LENDER TO WHOM REPAYMENT HAD BEEN MADE WAS KNOWN TO THE DEPARTMENT AND THE GENUINENESS OF THE LOAN TRANSACTION WAS NOT IN DOUB T IT COULD NOT BE SAID THAT THE BREACH OF LAW IF ANY WAS DELIBERATE AND THE DEFAULT IF ANY COULD BE SAID TO BE A TECHNICAL DEFAULT FOR WHICH NO PENA LTY WOULD BE LEVIABLE. IN VIEW OF THE ABOVE DELIBERATIONS AND THE CASE LAW S CITED (SUPRA) I DIRECT THE AO TO DELETE THE PENALTY OF RS. 5.00 LACS IMPOS ED U/S 271E OF THE ACT. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 283/JP/2016 SHRI SUSHIL KUMAR MEENA VS. ADDL. CIT RANGE-6 JA IPUR . 11 3.0 IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 5/10/2 016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SUSHIL KUMAR MEENA JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ADDL. CIT RANGE-6 JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 283/JP/2016) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ @ ASSISTANT. REGISTRAR