GRIHALAKSHMI VISION vs. THE ADDITIONAL COMMISSIONER OF INCOME TAX

ITA/83/2014HC KeralaKLHC01026649201407 August 2015Author: HONOURABLE MR. JUSTICE SHAJI P.CHALY,HONOURABLE MR.JUSTICE ANTONY DOMINIC14 pages
AI SummaryDismissed

What were the facts?

The assessee, Grihalakshmi Vision, filed appeals against orders of the Income Tax Appellate Tribunal (ITAT) that upheld penalties imposed under Sections 271D and 271E of the Income Tax Act, 1961. For assessment year 2005-2006, the assessee accepted and repaid loans/deposits in cash, violating Sections 269SS and 269T. The Assessing Officer initiated penalty proceedings, referring the matter to the Joint Commissioner. The Joint Commissioner levied penalties of Rs. 10,83,000 under Section 271D (for accepting cash loans) and Rs. 2,97,000 under Section 271E (for repaying cash loans). These penalties were confirmed by the Commissioner of Income Tax (Appeals) and subsequently by the ITAT. The assessee's appeals to the High Court challenged these concurrent findings.

What did the High Court hold?

The High Court held against the assessee on all issues. Regarding limitation, it was held that penalty proceedings under Sections 271D and 271E are exclusively imposed by the Joint Commissioner, and thus, the initiation of proceedings should be considered from the date the matter was referred to and acted upon by the Joint Commissioner, not the Assessing Officer's assessment order. Therefore, the penalties were not time-barred. On the issue of reasonable cause, the Court found no perversity in the lower authorities' findings that the assessee failed to prove any reasonable cause for violating Sections 269SS and 269T. The explanation that cash was taken for urgent business expenditure was not considered sufficient. The Court also upheld the finding that transactions with partners and sister concerns constituted loans or deposits, as there was no material to suggest otherwise, and the nature of such receipts depends on the agreement and evidence produced, which was lacking in this case. Consequently, the concurrent findings of the lower authorities were upheld, and the appeals were dismissed.

What were the issues?

1. Whether the orders imposing penalty under Section 271D and 271E were passed within the period of limitation prescribed under Section 275(1)(c) of the Income Tax Act, 1961. 2. Whether the Tribunal was correct in confirming the penalty orders without examining the circumstances providing reasonable cause as contemplated under Section 273B of the Act. 3. Whether the authorities below erred in not considering the issue whether cash receipts, being bonafide transactions between the assessee and its sister concerns/partners, can be considered as loans or deposits attracting the provisions of Sections 269SS and 269T of the Act. Assessee's contentions: The penalty orders were beyond the limitation period as proceedings were initiated by the Assessing Officer's order dated 6.11.2007, not the Joint Commissioner's order. The assessee had reasonable cause for the failure to comply with Sections 269SS and 269T. Transactions with sister concerns/partners were not loans or deposits. The assessee relied on D.M. Manasvi v. Commissioner of Income Tax and Commissioner of Income Tax v. Jitendra Singh Rathore for the limitation issue, and Commissioner of Income Tax v. T. Perumal and Commissioner of Income Tax v. Muthoot Financiers for the nature of transactions. Revenue's contentions: The Revenue contradicted the assessee's submissions.

Which sections of the Income-tax Act were involved?

Section 269SS,Section 269T,Section 271D,Section 271E,Section 273B,Section 275(1)(c),Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY FRIDAY, THE 7TH DAY OF AUGUST 2015/16TH SRAVANA, 1937 ITA.No. 83 of 2014 ------------------------ AGAINST THE ORDER IN ITA 103/2011 of I.T.A.TRIBUNAL, COCHIN BENCH, DATED 10-01-2014 APPELLANT/APPELLANT: ---------------------------------- GRIHALAKSHMI VISION KTC BUILDING, YMCA ROAD, KOZHIKODE-673 001. BY ADVS.SRI.P.BALAKRISHNAN (E) SRI.MOHAN PULIKKAL SRI.P.P.NARAYANAN SRI.R.ANAS MUHAMMED SHAMNAD RESPONDENT/RESPONDENT: --------------------------------------- THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE I, KOZHIKODE-673 001. R. BY SR. ADV. SRI.PKR MENON, SC, FOR INCOME TAX R BY SRI.B.RAMACHANDRAN, ADDL.CGSC THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07-08-2015, ALONG WITH ITA. 86/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A.No. 83 of 2014 APPENDIX PETITIONER'S ANNEXURES: ANNEUXRE A:OF THE ASSESSMENT ORDER DATED 6.11.2007 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE (1), KOZHIKODE. ANNEXURE B:OF THE SHOW

The order continues below.

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