KANUGO FERROMET P.LTD, MUMBAI v. DCIT 5(2), MUMBAI

ITA 995/MUM/2014 | 2005-2006
Pronouncement Date: 04-10-2016 | Result: Allowed

Appeal Details

RSA Number 99519914 RSA 2014
Assessee PAN AABCK0892N
Bench Mumbai
Appeal Number ITA 995/MUM/2014
Duration Of Justice 2 year(s) 7 month(s) 21 day(s)
Appellant KANUGO FERROMET P.LTD, MUMBAI
Respondent DCIT 5(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Date Of Final Hearing 25-02-2016
Next Hearing Date 25-02-2016
Assessment Year 2005-2006
Appeal Filed On 13-02-2014
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI MAHAVIR SINGH JM AND SHRI RAMIT KOCHAR AM ITA NO.995/MUM/2014 : ASST.YEAR 2005-2006 M /S.K ANUNGO FERROMET PVT.LTD. SHOP NO.6 MAHIMWALA BUNGALOW 12 TH KHETWADI LANE MUMBAI 400 004. PAN : AABCK0892N. / VS. THE ADDL.COMMISSIONER OF INCOME - TAX RANGE 5(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI RAJKUMAR SINGH /RESPONDENT BY : SHRI VIKASH KUMAR AGARWAL / DATE OF HEARING : 04.10.2016 / DATE OF PRONOUNCEMENT : 04.10.2016 / O R D E R PER MAHAVIR SINGH JM : THIS APPEAL BY THE ASSESSEE ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-9 MUMBAI IN APPEAL NO.CIT(A)- 9/DCIT-5(2)/94/2013- 14 DATED 04.11.2013. THE ASSESSMENT WAS FRAMED BY T HE ACIT CIRCLE 5(2) MUMBAI FOR THE ASSESSMENT YEAR 2005-2006 VIDE HIS O RDER DATED 12.12.2007 U/S 143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER THE ACT). THE PENALTY UNDER DISPUTE WAS LEVIED BY THE ADDL.CIT RANGE 5(2 ) MUMBAI U/S 271E OF THE ACT VIDE HIS ORDER DATED 19.03.2013. ITA NO.995/MUM/2014. M/S.KANUNGO FERROMET PVT.LTD. 2 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE-COMPA NY HAS ADVANCED A SUM OF RS.15 00 000 TO SHRI R.BHASKARAN IN EARLIER YEARS IN ITS NORMAL COURSE OF BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE-COMPANY HAS PASSED A JOURNAL ENTRY DEBITING THE LOAN ACCOUNT OF SHRI OM PRAKASH KANUNGO DIRECTOR OF THE COMPANY AND CREDITED THE ADVANCE ACCOUNT OF SHRI R. BHASKARAN. ACCORDING TO THE A.O. THE ASSESSEE HAS RECEIVED THIS AMOUNT OF RS.15 LAKH FROM SHRI R.BHASKARAN IN CASH AND HENCE HE VIOLATED THE PROVI SIONS OF SECTION 269T OF THE ACT BEING REPAYMENT RECEIVED IN CASH. ACCORDIN GLY HE INITIATED PENALTY PROCEEDINGS U/S 271E OF THE ACT. THE ASSESSEE BEFOR E THE ADDL.CIT FILED DETAILED REPLY STATING THAT DURING ASSESSMENT YEAR 2004-2005 THE ASSESSEE- COMPANY HAS ADVANCED A SUM OF RS.15 LAKH TO SHRI R. BHASKARAN TOWARDS BUSINESS DEAL. IN SUPPORT OF WHICH THE LEDGER ACCOU NT COPY OF SHRI R.BHASKARAN IN THE BOOKS OF THE ASSESSEE-COMPANY FO R ASSESSMENT YEAR 2004-2005 WAS FILED. THE ASSESSEE ALSO FILED COPY O F AUDITED BALANCE SHEET FOR ASSESSMENT YEAR 2004-2005 EVIDENCING THEREIN AD VANCE PAYMENT GIVEN TO SHRI R.BHASKARAN BEING DULY REFLECTED THIS AMOU NT. THE ASSESSEE CLAIMED THAT THIS ADVANCE PAYMENT WAS GIVEN FOR INDENTED BU SINESS DEAL BY THE ASSESSEE-COMPANY TO SHRI R.BHASKARAN AMOUNTING TO R S.15 LAKH WHICH COULD NOT MATERIALIZE AND THE SAID ADVANCE PAYMENT HAS BEEN RETURNED BY HIM IN ASSESSMENT YEAR 2005-2006 ONLY THROUGH ACCOU NT PAYEE CHEQUE IN THE NAME OF DIRECTOR OF THE ASSESSEE-COMPANY SHRI O M PRAKASH KANUNGO INSTEAD OF PAYING BACK IT DIRECTLY TO THE ASSESSEE- COMPANY. THE ASSESSEE FILED COMPLETE PARTICULARS OF ACCOUNT PAYEE CHEQUE GIVEN TO SHRI OM PRAKASH KANUNGO BY SHRI R.BHASKARAN IN ASSESSMENT YEAR 2005-2006 AND THE DETAILS WERE AVAILABLE BEFORE THE A.O. THIS FAC T IS NOT DISPUTED BY EITHER ITA NO.995/MUM/2014. M/S.KANUNGO FERROMET PVT.LTD. 3 REVENUE OR ASSESSEE. ACCORDING TO A.O. ONCE THIS LO AN IS RECEIVED BACK BY ACCOUNT PAYEE CHEQUE / DRAFT BY SHRI OM PRAKASH KAN UNGO FROM SHRI R.BHASKARAN ON BEHALF OF THE COMPANY BUT SHRI OM PRAKASH KANUNGO PASSED A JOURNAL ENTRY IN THE BOOKS OF ASSESSEE-COM PANY THE SAME IS TO BE TREATED AS REPAYMENT OF CASH LOAN AND ACCORDINGLY THE ADDL.CIT LEVIED PENALTY U/S 271E OF THE ACT FOR VIOLATION OF THE PR OVISIONS OF SECTION 269T OF THE ACT FOR REPAYMENT OF CASH LOAN. AGGRIEVED ASSE SSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO ALSO CONFIRMED THE ACTION OF THE A.O. ON SIMILAR REASONING. 3. WE HAVE CONSIDERED THE FACTS IN ENTIRETY AND FIN D THAT THE ASSESSEE- COMPANY HAS ADVANCED A SUM OF RS.15 LAKH IN ASSESSM ENT YEAR 2004-2005 IN ITS NORMAL COURSE OF BUSINESS WHICH COULD NOT M ATERIALIZE. SHRI R.BHASKARAN REPAID THIS ADVANCE BUT IT WAS PAID IN THE NAME OF ONE OF THE DIRECTORS OF THE COMPANY SHRI OM PRAKASH KANUNGO TH ROUGH ACCOUNT PAYEE CHEQUE WHO IN TURN RETURNED THIS AMOUNT TO THE ASS ESSEE-COMPANY THROUGH JOURNAL VOUCHER ENTRY. WHETHER THIS TANTAMOUNT TO V IOLATION OF THE PROVISIONS OF SECTION 269T AND CONSEQUENTLY ATTRACT PENALTY U/ S 271E OF THE ACT? IN OUR VIEW THE REPAYMENT IS MADE BY ACCOUNT PAYEE CHEQUE ALTHOUGH IN THE NAME OF ONE OF THE DIRECTORS OF THE ASSESSEE-COMPANY SH RI OM PRAKASH KANUNGO BY SHRI R.BHASKARAN. WE FIND THAT THERE IS A REASON ABLE CAUSE RATHER THE PAYMENT IS THROUGH ACCOUNT PAYEE CHEQUE. IN OUR VIE W THERE IS NO VIOLATION OF PROVISIONS OF SECTION 269T AND CONSEQUENTIAL PEN ALTY U/S 271E IS WITHOUT ANY BASIS. WE DELETE THE PENALTY AND ALLOW THE APPE AL OF THE ASSESSEE. ITA NO.995/MUM/2014. M/S.KANUNGO FERROMET PVT.LTD. 4 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 04 TH DAY OF OCTOBER 2016. !' # $ SD/- SD/- ( RAMIT KOCHAR ) ( MAHAVIR SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER % !& MUMBAI; ! DATED : 04 TH OCTOBER 2016. DEVDAS* + -./ 0/1- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' ( ) / THE CIT MUMBAI. 4. ' / CIT(A) - 9 MUMBAI 5. *+# -. -. % !& / DR ITAT MUMBAI 6. #01 2 / GUARD FILE. / BY ORDER * //TRUE COPY// 2/3 4 (DY./ASSTT. REGISTRAR) % !& / ITAT MUMBAI