ITO 9(2)3, MUMBAI v. MADHVI HOTELS P. LTD, MUMBAI

ITA 4116/MUM/2009 | 2005-2006
Pronouncement Date: 25-01-2011 | Result: Dismissed

Appeal Details

RSA Number 411619914 RSA 2009
Bench Mumbai
Appeal Number ITA 4116/MUM/2009
Duration Of Justice 1 year(s) 6 month(s) 22 day(s)
Appellant ITO 9(2)3, MUMBAI
Respondent MADHVI HOTELS P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 25-01-2011
Date Of Final Hearing 17-01-2011
Next Hearing Date 17-01-2011
Assessment Year 2005-2006
Appeal Filed On 03-07-2009
Judgment Text
I.T.A NO.4116/ MUM/2009 MADHVI HOTELS P. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI. [ BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ] I.T.A NO.4116/ MUM/2009 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER WARD 9(2)(3) .. APPELLANT AAYAKAR BHAVAN M.K. ROAD MUMBAI. VS MADHVI HOTELS P. LTD. . RESPONDEN T 301 GOLDEN SQUARE SUNDER NAGAR CST ROAD KALINA SANTACRUZ(E) MUMBAI. PA NO.AADCM8544 K APPEARANCES: MALTHI R SRIDHARAN FOR THE APPELLANT NONE FOR THE RESPONDENT O R D E R 1. BY WAY OF THIS APPEAL THE ASSESSING OFFICER HAS CHAL LENGED CORRECTNESS OF CIT(A)S ORDER DATED 17 TH APRIL 2009 IN THE MATTER OF ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2005-06. 2. GRIEVANCE RAISED BY THE ASSESSING OFFICER IS AS FOLLOWS: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN L AW THE LD CIT (A) ERRED IN DELETING THE PENALTY OF ` .9 67 950 U/S.271E OF THE INCOME TAX ACT 1961 WITHOUT APPRECIATING THAT THERE WAS NO REASONABLE CAU SE FOR THE ASSESSEE TO REPAY THE LOAN IN CASH IN CONTRAVENTION OF THE PROVI SIONS OF SECTION 269T. 3. BRIEFLY THE MATERIAL FACTS OF THE CASE ARE LIKE T HIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BOARDING AND LODGING IN DARBHANGA BI HAR. DURING THE RELEVANT I.T.A NO.4116/ MUM/2009 MADHVI HOTELS P. LTD. 2 PREVIOUS YEAR THE ASSESSEE REPAID A LOAN OF ` .9 67 950 TO DIRECTOR IN CASH. IT WAS IN THIS BACKDROP THAT PENALTY PROCEEDINGS U/S.271E WERE I NITIATED AGAINST THE ASSESSEE. THE ASSESSEES MAIN DEFENCE WAS THAT THE LOAN WAS PAID B ACK TO SHRI BAL KRISHAN JHA A DIRECTOR OF ASSESSEE COMPANY AS THE ASSSSEE WAS DOING BUSIN ESS IN A RATHER REMOTE AREA IN BIHAR WHERE SUPPLIES OF VARIOUS MATERIALS AND SERVICES ARE UNWILLING TO ACCEPT CHEQUE PAYMENTS. THE ASSESSING OFFICER REJECTED THIS PLEA AND ALSO NOTED THAT SIMILAR OFFENCE WAS ALSO COMMITTED IN THE ASSESSMENT YEAR 2003-04 WHICH SHOWS THAT THE ASSESSEE IS A HABITUAL DEFAULTER AND THE LAPSE IS COMMITTED IN CONSCIOUS DEFIANCE OF LAW. ACCORDINGLY THE ASSESSING OFFICER IMP OSED A PENALTY OF ` .9 67 950 UNDER SECTION 271E OF THE ACT. AGGRIEVED ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE CIT (A) WHO DELETED THE PENALTY BY OBSERV ING AS FOLLOWS:- I HAVE CONSIDERED THE APPELLANTS SUBMISSION AS WELL AS THE AOS CONTENTION. THE FACTS IN THIS CASE WERE THAT THE ASSESSE E WAS RUNNING A HOTEL IN THE REMOTE AREA OF BIHAR. DURING THE YEAR UNDER CONSIDERATION OUT OF THE TOTAL LOAN A SUM OF ` .9 67 950 WAS REPAID BACK IN CASH TO DIRECTOR OF THE COMPANY FOR WHICH CONFIRMATION WAS A LSO FILED. THE AO WHILE PASSING THE ORDER U/S.143(3) HAD ACCEPTED THE LO AN TRANSACTION AS GENUINE AND BONAFIDE TRANSACTION AND ALL THE TRANSA CTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THE MONEY WAS WITHDRAWN FROM THE COMPANY ACCOUNT AND WAS PAID TO THE DIRECTO R SOURCE OF CASH IS GENUINE AS SUCH THERE IS NO DOUBT OF GENUINENESS OF TRANSACTION. I FIND MERITS IN THE APPELLANTS CONTENTION THAT THE AD VANCE WAS REPAID IN CASH TO THE DIRECTOR DUE TO THE BUSINESS EXIGENCIES AND SMOOTH FUNCTIONING OF THE BUSINESS ACTIVITY. THE ADVANCE WAS TAKEN TO PAY VARIOUS SUPPLIERS LABOURS SERVICE PROVIDERS OF HOTELS M OST OF THEM WERE LIVING IN RURAL AND SUBURBAN AREA WHERE BANKING FACILITY WEE VERY FEW AND TO HONOUR COMMITMENT CASH WERE REPAID BACK F ROM COMPANY TO DIRECTORS WHENEVER THEY NEEDED. IT WAS BASICALLY A CURRENT ACCOUNT/SHORT TERM ADVANCE. THE TRANSACTION WAS IN BE TWEEN THE COMPANY AND THE DIRECTOR AND BOTH THE PARTIES ARE ID ENTIFIABLE. THE ASSESSEE HAVE ALSO FURNISHED THE CONFIRMATION IN RESPECT O F THE ENTIRE LOAN AMOUNT AND THERE IS NO DOUBT ABOUT THE TRANSACT ION OF ADVANCES MADE BY THE DIRECTORS. ON CAREFUL CONSIDERATION OF T HE FACTS I OBSERVE THAT THERE WAS NO FINDING OF THE AO THAT THE TRANSACT ION ENTERED INTO BY THE ASSESSEE IN BREACH OF THE PROVISIONS OF SECTION 269T WAS NOT A GENUINE TRANSACTION OR THE TRANSACTION IN BREACH OF T HE PROVISIONS MADE BY THE ASSESSEE WAS MALAFIDE AND WITH THE SOLE OBJEC T TO CONCEAL MONEY. THEREFORE I HOLD THAT PENALTY IMPOSED U/S.27 1E WAS MERELY A TECHNICAL MISTAKE COMMITTED BY THE ASSESSEE WHICH HAD N OT RESULTED WITH ANY LOSS OF REVENUE AND THEREFORE IT COULD NOT B E SUSTAINED IN LAW. I.T.A NO.4116/ MUM/2009 MADHVI HOTELS P. LTD. 3 4. AGGRIEVED BY THE RELIEF SO GRANTED BY THE CIT(A) THE ASSESSING OFFICER IS IN APPEAL BEFORE ME. 5. HAVING PERUSED THE MATERIAL ON RECORD AND HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE I AM NOT INCLINED TO IN TERFERE IN WELL REASONED CONCLUSIONS ARRIVED AT BY THE CIT (A). IN ANY EVENT AS HELD BY A DIVISION BENCH IN THE CASE OF DILU CINE ENTERPRISES V ACIT (80 ITD 484) THE CONNOTATION OF ANY OTHER PERSON APPEARING IN SECTION 269SS WILL NOT COVER A DIRECTOR OF THE ASSESSEE COMPANY AND FOR THIS REASON ALSO IMPUGNED PENALTY DESE RVES TO BE DELETED. LEARNED DEPARTMENTAL REPRESENTATIVES RELIANCE OF TRIBUNAL DECISIONS IN THE CASES OF ITO V. SUNIL M. KASLIWAL (94 ITD TM 281) AND THENAMAL CHHA JJR V JCIT (96 ITD 210) ALSO DO NOT HELP THE REVENUES CAUSE FOR THE REASON THAT THESE DECISIONS DO NOT DEAL WITH A SITUATION IN WHICH DEALINGS ARE BETWEEN DIRECTOR AND THE COMPANY AS ARE THE FACTS OF THIS CASE. 6. FOR THE REASONS SET OUT ABOVE I UPHOLD THE ORDER OF THE CIT (A) AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT THE APPEAL STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY 2011 SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI DATED 25 TH JANUARY 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS) IX MUMBAI 4. COMMISSIONER OF INCOME TAX IX MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH SMC MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI I.T.A NO.4116/ MUM/2009 MADHVI HOTELS P. LTD. 4 I.T.A NO.4116/ MUM/2009 MADHVI HOTELS P. LTD. 5