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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY
आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed by the CIT(A)-II, Pune on 12-12-2013 in relation to the Assessment Year 1999-2000 confirming penalty under section 271D of the Income-tax Act, 1961 (hereinafter also called `the Act’).
It is a second round of proceedings before the Tribunal. In the first round, the Tribunal remitted the matter to the file of
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ld. CIT(A) for disposal of the assessee’s ground of limitation
as well as the merits. In the second round of proceedings, the
ld. CIT(A) dismissed the appeal of the assessee against which
the assessee has come up in appeal before the Tribunal.
The facts of the case are that, on verification of cash
book, it was observed by the Assessing Officer during the
course of assessment proceedings that the assessee accepted
certain loans in cash on various dates from Shah group
amounting to Rs.79,18,000/-. The AO initiated penalty
proceedings in the assessment order passed u/s.143(3) r.w.s.
147 on 08-12-2006. In the course of penalty proceedings, the
AO opined that there was a violation of the provisions of
section 269SS in respect of cash loans received by the assessee
amounting to Rs.79,18,000/-. On being show caused as to
why penalty u/s.271D of the Act be not imposed in this regard,
the assessee submitted that its business activities were close
and inoperative for about last 7 years and the assessee firm had
borrowed money from many private money lenders and Shree
Suvarna Sahakari Bank Ltd. since last 10 years. To meet the
financial crunch of the firm, the assessee raised certain loans
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in cash from unorganized finance sector for disposing off its
existing liabilities. The AO imposed penalty of the equal sum
of Rs.79,18,000/-. The assessee approached the ld. CIT(A)
who noticed that the correct amount of loans was to the tune of
Rs.88,18,000/- and not Rs.79,18,000/- for which the penalty
was imposed by the AO. After entertaining objections from
the assessee, the ld. CIT(A) enhanced the penalty to
Rs.88,18,000/-. The Tribunal remitted the matter to the ld.
CIT(A). In the fresh round of proceedings before the ld.
CIT(A), no relief was allowed.
We have heard the rival submissions and gone through
the relevant material on record. There is no denial of fact that
the assessee, in fact, raised loans in cash amounting to
Rs.88,18,000/- which is in violation of the provisions of
section 269SS of the Act. Once there is violation of the
provisions of section 269SS, penalty is triggered u/s.271D of
the Act. However, it is relevant to note that section 273B
deals with certain penal provisions, including section 271D,
and provides that no penalty shall be imposed if the assessee
succeeds in proving that the failure resulting in imposition of
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penalty was for a reasonable cause. Thus, it is evident that
escape from the clutches of penalty u/s 271D for violation of
the provisions of section 269SS is possible when the assessee
succeeds in proving that a reasonable cause existed in terms of
section 273B for violation of section 269SS.
Adverting to the facts of the instant case, we find that the
assessee specifically submitted before the AO during the
course of penalty proceedings, which fact has also been
captured in the penalty order, that its business was inoperative
for the last 7 years and it had already borrowed loans from
Shree Suvarna Sahakari Bank Ltd. and many private money
lenders since last 10 years. To meet the financial requirements
of repayment, for which the lenders were hard pressing, the
assessee had to borrow money from unorganized finance
sector in cash, which led to the imposition of the instant
penalty. Further, the assessee had a bank liability of about
Rs.50 crore against mortgage of assets of about Rs.5 crore
only, which fact has not been falsified. The submissions made
by the assessee in this regard have not been controverted by
the AO or the ld. CIT(A) in any manner. When this fact is
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seen in the light of return filed by the assessee declaring loss
of Rs.4.35 lakhs, it clearly emerges that the loans were taken
by the assessee in cash in violation of provisions of section
269SS to meet the financial liabilities. This in our considered
opinion constitutes a reasonable cause warranting non-
imposition of penalty u/s.271D of the Act in terms of section
273B of the Act. We, therefore, order to delete the penalty of
Rs.88,18,000/- imposed/enhanced by the AO/ld. CIT(A).
In view of our decision on the deletion of penalty on
merits, there is no need to espouse and adjudicate the
limitation issue taken up by the assessee in its appeal.
In the result, the appeal is allowed to this extent.
Order pronounced in the Open Court on 15th January, 2019.
Sd/- Sd/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 15th January, 2019 सतीश
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आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश आदेश 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. आयकर आयु�(अपील) / The CIT (Appeals)-II, Pune The CIT-II, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय 5. अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune; 6. गाड" फाईल / Guard file. // True copy //
आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No.914/PUN/2014 M/s. P.R. Associates
Date 1. Draft dictated on 14-01-2019 Sr.PS 2. Draft placed before author 14-01-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *