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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.150/SRT/2018 (�नधा�रणवष� / Assessment Year: (2010-11) (Virtual Court Hearing) Mukesh Dahyabhai Patel, Vs. The JCIT, Rang-3(2), Prop. Of Mukesh Textiles, P-414-417, Surat. New GIDC, Katargam, Surat-395004. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABBPP2226M (Assessee) (Respondent) Assessee by : Ms Himali Mistry, CA Revenue by : Ms Anupama Singhla, Sr. DR सुनवाईक�तार�ख/ Date of Hearing : 27/08/2021 घोषणाक�तार�ख/Date of Pronouncement : 20/09/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to assessment year (AY) 2010-11, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-3, Surat [in short “the ld. CIT(A)”] in Appeal No. CAS/3/453/2015-16 dated 24.08.2017, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act 1961, (hereinafter referred to as “the Act”). 2. Grounds of appeal raised by the assessee are as follows: “(1) On the facts and circumstances of the case and as per law, the learned CIT(A) erred in levying penalty of Rs.3,22,018/- u/s.271D of the Act. (2) The assessee submits that the learned CIT(A) did not properly appreciate the real nature of transactions and therefore, was not justified in confirming the above penalty. (3)The assessee craves leave to add, alter or vary any of the grounds of appeal.”
The appeal filed by the assessee for Assessment Year 2010-11, is barred by limitation by 114 days. The assessee has moved a petition requesting the Bench to condone the delay. Learned Counsel explained the reasons that Mr.
ITA No.150/SRT/2018 Assessment Year.2010-11 Mukesh Dahyabhai Patel Mukesh Dahyabhai Patel died on 07.02.2021 after that his wife succeeded his pending litigations, and as a result there was delay in filing the appeal before this Tribunal. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing. 4. Succinct facts are that assessee before us is an individual and filed his return of income for A.Y. 2010-11, on 21.07.2010 declaring total income of Rs.5,30,420/-. The scrutiny assessment was finalized u/s 143(3) of the Act on 23.01.2013, determining total income at Rs.7,36,470/-. The assessing officer has observed that assessee has shown outstanding unsecured loan from M/s Mukesh Dahyabhai Patel-HUF at Rs.28,18,660/-. On verification of cash book of the assessee, if was revealed that assessee has accepted unsecured, loan of Rs.2,10,018/- other than by an account payee cheque. It was held by the AO that this is in contravention of section 269SS of the I.T. Act and attracts penalty under section 271D of the Act. Therefore, Assessing Officer, vide letter dated 05.10.2015, has proposed to initiate penalty proceedings under section 271D of the I.T. Act. During the penalty proceedings, the assessee submitted its reply, however, the assessing officer held that there is no force in the reply of the assessee. Finally, taking into account other facts and figures of the assessee, the assessing officer was of the view that assessee has committed default U/s 269SS of the Act by receiving the loan from M/s Mukesh D Patel HUF, M/s Niketa Synthetics and Satyam Mukeshbhai Patel in cash. As per section 271D of the I.T. Act 1961, if any person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. Therefore, assessing officer held that assessee without any reasonable cause has contravened the provision under section 269SS of the I.T. Act, 1961 thereby making himself liable for penalty U/s 271D of the I.T. Act, 1961, therefore, AO imposed a penalty of Rs.3,22,018/-.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the penalty imposed Page | 2
ITA No.150/SRT/2018 Assessment Year.2010-11 Mukesh Dahyabhai Patel by the assessing officer. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel submits before us that alleged loan form Shri Mukeshbhai Patel (HUF) is his agricultural income and cannot be said to be loans. In case of other loans received in cash, Ld Counsel explains that the loans are received from relatives and hence, penalty u/s 271D is not leviable. The ld Counsel states that "Mukesh Dahyabhai Patel HUF" is not a loan account but simply accumulation of agriculture income earned by the assessee over the years. However, due to error of records, instead of crediting capital account of the assessee with the agriculture income received, the same was accumulated in HUF account classified under unsecured loan. It could have been given any name other than HUF account for that matter. The ld Counsel submits before us ledger extract of Mukesh Dahyabhai Patel HUF, which was also submitted during the penalty proceedings and the same is reproduced below:
ITA No.150/SRT/2018 Assessment Year.2010-11 Mukesh Dahyabhai Patel
The ld Counsel with help of the above chart explains the Bench that Mukesh Dahyabhai Patel HUF account is nothing but Agriculture income and expenditure account where each entry finds its traceability to Statement of Member's account and Agriculture Bills issued by the buyer (paper book page 23-26). Net Agriculture income worked out to Rs.1,97,114 for the year is offered by the assessee for taxation in order to derive correct slab of taxation in computation of income. ( Paper book Page 18).Apart from the fact that Rs. 2,10,018/- is nothing but part of total agriculture receipt of Rs. 3,04,887/- received by the assessee during the year and offered for taxation after reducing agriculture expenses of Rs.1,07,763/-.
The ld Counsel further states that Niketa Synthetics and Satyam Mukeshbhai Patel, both are relatives of the assessee. The first being sister concern of the assessee and the later being son, whenever there was a need from each other, the amounts were taken and repaid. Besides, from the ledger account of Niketa Synthetics (page 33), the amounts received in cash were very nominal, that is, below Rs. 10,000/- and taken to meet business exigencies. In case of Satyam Mukeshbhai Patel, apart from him being assessee's son, the amounts received from him was in fact repayment of debit balance of Rs. 57,475 outstanding as on 12.06.2009. ( vide ledger account paper book Page 34). On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
ITA No.150/SRT/2018 Assessment Year.2010-11 Mukesh Dahyabhai Patel 8. Taking into account the facts narrated above, we note that penalty u/s 271D of the Act should not be levied. Section 273B of the Act provides that imposition of penalty is not automatic and if "reasonable cause" is established by the assessee, the penalty shall not be imposed. We note that in assessee`s case, the transactions were entered with the sister, to meet business exigencies, and recorded by the assessee in his books of accounts. Besides, cash transactions below Rs.20,000/- would not be treated as violation of section 269SS of the Act. The ld Counsel explains that Rs. 2,10,018/- is nothing but part of total agriculture receipt of Rs. 3,04,887/-. Niketa Synthetics and Satyam Mukeshbhai Patel, both are relatives of the assessee, first being sister concern of the assessee and the later being son. In some cases, the amounts received in cash were very nominal, that is, below Rs. 10,000/- and which was taken to meet business exigencies. In case of Satyam Mukeshbhai Patel, apart from him being assessee's son, the amounts received from him was in fact repayment of debit balance of Rs. 57,475/- outstanding as on 12.06.2009. Therefore, we note that ld Counsel explains the transactions successfully and we find merit in her submissions, hence penalty levied by assessing officer needs to be deleted. 9. We note that in order to support the family members, if the money has been transferred by (assessee) to his son and wife on various occasions, then this is simply transfer of money from one family member to another family member to support the day to day expenses, educational expenses and other family expenses. The Sections 269SS and 269T did not apply to the transactions between son and father, between husband and wife and between close relatives. The Section 269SS states that “no Person shall, take or accept from any other person any loans or deposits……………” Therefore, section 269SS and 269T applicable only on commercial transactions, and business transactions. The husband, wife and son are not any other person, as mentioned above in the section 269SS of the Act. The term “any other person” applies to commercial transactions, and business transactions. We note that the loans taken by son from his father and mother are in the nature of financial support within the family and this is a reasonable cause falling u/s 273B of the Act. Therefore, consideration the factual position narrated above, Page | 5
ITA No.150/SRT/2018 Assessment Year.2010-11 Mukesh Dahyabhai Patel we are not inclined to accept the contention of the Assessing Officer in any manner and hence the penalty so levied at Rs.3,22,018/-, is hereby deleted.
In the result, the appeal filed by the assessee is allowed.
Order is pronounced on 20/09/2021 by placing result on Notice Board.
Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat �दनांक/ Date: 20/09/2021 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order
// TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat