THE COMMISSIONER OF INCOME TAX vs. WENS CARGO MOVERS PVT. LTD

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ITA/16/2012HC BombayHCBM03018822201213 February 2014Author: HON'BLE SHRI JUSTICE S C DHARMADHIKARI,HON'BLE SHRI JUSTICE RAVINDRA V. GHUGE3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the penalty under Section 272D of the Income Tax Act, 1961, could not be levied for violation of Section 269SS when there was a reasonable cause, as provided for under Section 273B. The Tribunal and the Commissioner of Income Tax (Appeals) had concurrently found that the assessee had made out a reasonable cause. The assessee's explanation was that it lacked Core-Banking facilities and had to borrow cash from sister concerns, which withdrew cash from their bank accounts. The High Court found that this explanation was reasonable, especially considering it was a transaction with sister concerns. The Court stated that it had no jurisdiction under Section 260A to substitute its view for that of the lower authorities when their view was not improbable or impossible. Therefore, the appeal was dismissed as it did not give rise to any substantial question of law.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Aurangabad, against Wens Cargo Movers Pvt. Ltd. The core issue revolved around a penalty levied under Section 272D of the Income Tax Act, 1961, for alleged violation of Section 269SS. The assessee had borrowed cash from two sister concerns to meet its branch cash requirements, as it lacked Core-Banking facility. The sister concerns withdrew cash from their bank accounts and advanced it to the assessee. The Assessing Officer levied the penalty, which was challenged by the assessee. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) concurrently held that the penalty could not be levied.

What were the issues?

1. Whether the penalty under Section 272D of the Income Tax Act, 1961, could be levied for violation of Section 269SS, when the assessee had a reasonable cause for the non-compliance. Assessee's Contention: The assessee argued that there was a reasonable cause for accepting the cash loan, as it lacked Core-Banking facilities at its branches and needed cash for business operations. The explanation provided was reasonable and should exempt it from penalty under Section 273B. Revenue's Contention: The revenue contended that the penalty under Section 272D was rightly levied for the violation of Section 269SS. The revenue's argument is not explicitly detailed in the provided text, but it is implied that they disagreed with the findings of the lower authorities regarding reasonable cause.

Which sections of the Income-tax Act were involved?

Section 272D,Section 269SS,Section 273B,Section 260A

AI-generated summary — verify with the full judgment below

{1} TA 16.12.odt IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO.16 OF 2012

The Commissioner of Income Tax, Aaykar Bhavan, Aurangabad

Petitioner/s Versus Wens Cargo Movers Pvt. Ltd. Vardhaman Chambers, Mondha Road, Surana Compunnd, Aurangabad.

Respondent/s Mr. Alok M. Sharma, ASGI for the petitioner. Mr. R.N. Dhorde, Senior Advocate h/f. Mr. V.R. Dhorde, Advocate for the Respondent

CORAM : S.C. DHARMADHIKARI & RAVINDRA V. GHUGE, JJ.

DATE  : 13TH FEBRUARY, 2014. PER COURT: 1] Heard   Mr.   Sharma,   Assistant   Solicitor General   of   India,   appearing   on   behalf   of   the appellant. Mr. Sharma would vehemently urge that the controversy in this appeal is identical to another Tax Appeal,   namely,   Tax   Appeal   No.29   of   2011,   "The Maryadit”,   and   that   appeal   was   admitted   on   the substantial questions of law, enumerated in the order of this Court dated 6th February, 2014. {2} TA 16.12.odt 2] We  are  unable  to  agree. In  this case,  the Tribunal,   as   also,   the   Commissioner   of   Income   Tax (Appeals), concurrently found that the penalty under Section 272D of the Income Tax Act, 1961, could not have   been   levied   for   violation   of   the   mandate   of Section 269SS thereof. For,   Section   273B   provides that   penalty   would   not   be   leviable   and   cannot   be levied if there was a reasonable cause and which the assessee has made out. 3] If   that   is   the   course   adopted   by   the Commissioner of Income Tax (Appeals) and the Tribunal and they have concurrently held that the cause shown by   the   assessee   was   reasonable,   then,   we   have   no juri iction and particularly, under Section 260A, of the Income Tax Act, to substitute their views with our view.  The view taken cannot be said to be improbable or   impossible.   The   view   is   that   the   cause   shown   is reasonable and based on the explanation given. 4] The   assessee   in   this   case   did   not   have   a Core­Banking   facility   in   order   to   meet   the   cash requirements at its branches.   It borrowed from the two   sister   concerns   the   cash   amount.   The   sister concerns withdrew cash from their as a bank accounts and   advanced   it   to   the   assessee   for   the   purpose   of business operations. 5] Merely   because   the   assessee   had   sufficient cash balance in its head office books at the relevant time,   would   not   mean   that   as   a   facility   for   its branches it could not have borrowed the money in the

{3} TA 16.12.odt manner   it   had.     Ultimately,   this   was   a   case   of transaction with sister concerns. The explanation was, therefore, found to be reasonable and we see no reason to interfere with such course adopted and by applying the correct legal principles. 6] The   appeal   does   not   give   rise   to   any substantial question of law. The same, therefore, is dismissed.

[RAVINDRA V. GHUGE] [S.C. DHARMADHIKARI] JUDGE JUDGE.

grt/­

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