M/s. Madan Lal, Prop., Rohtak v. ADdl. CIT, Rohtak

ITA 4068/DEL/2011 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 406820114 RSA 2011
Assessee PAN ABCPL7401K
Bench Delhi
Appeal Number ITA 4068/DEL/2011
Duration Of Justice 6 month(s) 23 day(s)
Appellant M/s. Madan Lal, Prop., Rohtak
Respondent ADdl. CIT, Rohtak
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 30-03-2012
Date Of Final Hearing 26-03-2012
Next Hearing Date 26-03-2012
Assessment Year 2007-2008
Appeal Filed On 07-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NO.4068/DEL/2011 ASSESSMENT YEAR : 2007-08 MADAN LAL PROP. M/S TARUN SALES 18/473 MAL GADAM ROAD ROHTAK. PAN : ABCPL7401K VS. ADDL. CIT ROHTAK. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.L. GUGLANI ADVOCATE REVENUE BY : SHRI R.S. NEGI SR.DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (APPEALS) DATED 12 TH JULY 2011 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS U NDER:- 1. ON FACTS & IN LAW THE LEARNED CIT (A) ERRED IN CO NFIRMING PENALTY OF RS.97500/- IMPOSED U/S 271E WITHOUT ANY VA LID REASON. 2. ON FACTS & IN LAW THE LEARNED ADDL. CIT/CIT (A) E RRED IN FAILING TO APPRECIATE THE FACT THAT PAYMENTS HAD BEEN MADE GENUINE LY TO SISTER CONCERN WITHOUT ANY INTENTION TO DEFRAUD REVENU E AND THUS THE APPELLANT COULD BE GIVEN THE BENEFIT CONTEMPLATED U/S 273B OF IT ACT. 3. ON FACTS & IN LAW THE LEARNED ADDL. CIT/CIT (A) H AVE BOTH ERRED IN IGNORING RATIO OF SEVERAL JUDGMENTS CITED BEF ORE THEM WHICH LAY DOWN THAT NO PENALTY BE LEVIED IN SUCH CASES . ITA NO.4068/DEL/2011 2 4. THAT THE APPELLANT CRAVES LEAVE TO ADD DELETE MODIFY O R ABRIDGE ANY GROUND BEFORE THE ORDER ON THIS APPEAL IS PASSED. 2. IN THE PENALTY ORDER PASSED U/S 271E IT HAS BEEN MEN TIONED THAT DURING THE COURSE OF ASSESSMENT FOR ASSESSMENT YEAR 2007-08 IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD DURI NG THE YEAR REPAID LOANS TAKEN FROM M/S DAWRA FINANCE CO. IN CASH ON FIVE DIFFERENT DATES AND EACH OF THESE REPAYMENTS WERE A SUM OF ` 19 5 00/-. SINCE M/S DAWRA FINANCE CO. HAD AN OUTSTANDING BALANCE OF ` 2 06 300/- AS LOAN IN THE ACCOUNT OF THE ASSESSEE THEREFORE REPAYME NT OF THE LOAN IN CASH WAS CONSIDERED TO BE IN VIOLATION OF SECTION 2 69T OF THE ACT. ACCORDINGLY PENALTY U/S 271E WAS INVOKED. IN RESPONSE TO SHOW CAUSE NOTICE IT WAS SUBMITTED THAT M/S DAWRA FINANCE CO. IS A SISTER CONCERN OF THE ASSESSEE AND THE ASSESSEE IS MAINTAINING A RUNNING CU RRENT ACCOUNT WITH THAT CONCERN. THE PAYMENT WAS NOT REPA YMENT OF LOAN BUT RETURN OF ADVANCE MADE BY THE SAID CONCERN TO TH E ASSESSEE FOR SOME JOINT VENTURE. THE ASSESSEE WAS IGNORANT ABOUT THE PROVISIONS OF LAW DEBARRING REPAYMENT OF LOAN IN CASH EVEN TO SISTER CONCERN AND THAT TOO FOR AN AMOUNT EACH OF WHICH WAS LESS THAN ` 2 0 000/-. M/S DAWRA FINANCE CO. WAS IN DIRE NEED OF MONEY SO THEY COULD NOT WAIT TILL ENCASHMENT OF CHEQUE. HOWEVER THE ASSESSING OFFIC ER REJECTED SUCH CONTENTION OF THE ASSESSEE AND LEVIED PENALTY OF TH E EQUAL AMOUNT I.E. A SUM OF ` 97 500/-. THE SAID PENALTY H AS BEEN SUSTAINED BY LEARNED CIT (A). THE ASSESSEE IS AGGRIEVED HENCE I N APPEAL. THE CASE WAS INITIALLY HEARD ON 22 ND MARCH 2012 AND DURING THE COURSE OF HEARING IT WAS FOUND THAT THE ASSESSEE WAS A PARTNER IN T HE FIRM M/S DAWRA FINANCE CO. THE LEARNED AR OF THE ASSESSEE WAS DI RECTED TO CONFIRM WHETHER OR NOT THE ASSESSEE IS A PARTNER IN THE SAID FIRM DURING THE YEAR UNDER CONSIDERATION AND THIS MATTER WAS ADJOU RNED TO 26 TH MARCH 2012. ON 26 TH MARCH 2012 LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THE FOLLOWING:- ITA NO.4068/DEL/2011 3 THE ABOVE NOTED APPEAL WAS HEARD BY YOUR HONOURS O N 22.03.2012 WHEN THE UNDERSIGNED WAS DIRECTED TO ASCERTA IN INFORM AS TO WHETHER THE APPELLANT (SHRI MADAN LAL) WAS A PARTNER IN THE FIRM M/S DAWRA FINANCE CO. TO WHOM PAY MENTS OF RS.97 500/- WERE MADE IN CASH WHICH ATTRACTED PENALTY PROCEEDINGS U/S 271E. 2. AS DIRECTED REQUISITE INFORMATION HAS BEEN OBTAIN ED FROM APPELLANTS LOCAL COUNSEL WHO HAS INTIMATED THAT SHRI MA DAN LAL WAS A PARTNER IN FIRM M/S DAWRA FINANCE CO. DURING TH E PREVIOUS YEAR RELEVANT TO ASSTT. YEAR 2007-08. THE FIRM IS ASSE SSED TO TAX IN THE SAME WARD UNDER PAN NO.AAAFD5679G. COPIES OF DOCUMENTARY EVIDENCE TO THIS EFFECT ARE ENCLOSED. 3. YOUR KIND ATTENTION IS INVITED TO JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. R.M. CHIDAMBARAM PILLAI (1977) 106 ITR 292 (SC) AND THAT OF RAJASTHAN H.C. IN CIT VS. LOKHPAT FILM EXCHANGE (CINEMA) (2008) 304 ITR 172 (R AJ) WHICH INFER THAT NON-COMPLIANCE WITH PROVISIONS OF SECTION 26 9T IN SUCH CASES CAN BE IGNORED AND EXPLANATION TENDERED C AN BE ACCEPTED AS BONA FIDE. 3. IN FURTHERANCE TO THE REPLY THE ASSESSEE HAS ALSO FI LED A CERTIFICATE SIGNED BY SHRI RAMESH KUMAR BEING ANOTHER PARTNER OF DAWRA FINANCE CO. IN WHICH THE CONSTITUTION OF THE F IRM FOR FINANCIAL YEAR 2006-07 (ASSESSMENT YEAR 2007-08) HAS BEEN STATED TO BE AS UNDER:- 1. SHRI MADAN LAL - 30% 2. SHRI LACHHMAN DAS - 30% 3. SHRI NAND LAL - 10% 4. SHRI RAMESH KUMAR - 30% 4. FROM THE AFOREMENTIONED DOCUMENTS IT IS CLEAR THAT THE ASSESSEE IS A PARTNER OF THE CONCERN NAMELY M/S DAWRA FINANCE CO. IN RESPECT OF WHOSE PAYMENTS THE ASSESSEE HAS BEEN TREATED TO BE IN DEFA ULT FOR VIOLATION OF PROVISIONS OF SECTION 269T. NOW THE LE GAL QUESTION WHICH IS INVOLVED IN THE PRESENT CASE IS THAT WHETHER PENALTY U/S 271E COULD BE LEVIED UPON THE PAYMENTS MADE BY A PARTNER TO HIS FIRM. THE LAW ITA NO.4068/DEL/2011 4 REGARDING PARTNER AND PARTNERSHIP FIRM UNDER INCOME- TAX ACT IS WELL ESTABLISHED. PARTNERSHIP FIRM IS SYNONYM OF PARTNERS. T HIS POSITION OF LAW HAS BEEN DESCRIBED IN THE AFOREMENTIONED DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. LOKHPAT FI LM EXCHANGE (CINEMA) (2008) 304 ITR 172 (RAJ) WHEREIN THE CONTE NTION OF THE ASSESSEE THAT IN VIEW OF THE FACT THAT PARTNER AND FIRM ARE NOT INDEPENDENT OF EACH OTHER AND THE FIRM IS NOT JURISTI C PERSON THUS TRANSACTION COULD NOT BE CONSIDERED AS INTRA PERSONAL BUT WERE ONLY FOR THE PURPOSES OF CARRYING ON PARTNERS OWN BUSINESS AND TH US TRANSACTIONS ARE NOT GOVERNED BY THE PROVISIONS OF SECT ION 269SS AND 269T WAS ACCEPTED ON THE GROUND THAT THE ASSESSEE HAD AC TED BONA FIDE AND HIS PLEA WAS BONA FIDE AND REASONABLE GROUND EXISTED ON WHICH IT HAD NOT ADHERED TO THE REQUIREMENT OF COND UCTING THE TRANSACTION THROUGH BANK ONLY. THEREFORE WE FIND N O JUSTIFICATION IN THE LEVY OF PENALTY AND THE SAME IS DELETED. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.20 12. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30.03.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITAT DELHI BENCHES