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Income Tax Appellate Tribunal, BANGALORE BENCHES “ A ” BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAIShri Irappa Revansiddappa Jalawadil, Shri Chandrashekar, Advocate. Shri Kannan Narayan, JCIT (D.R)
O R D E R PER SHRI CHANDRA POOJARI, A.M. : The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals), Belagavi, Dt.12.11.2018 for the Assessment Year 2011-12.
The only issue in this appeal is levy of penalty Under Section 271D of the Income Tax Act, 1961 ('the Act') .
The assessee offered income Under Section 44AD of the Act. While framing assessment by the Assessing Officer Under Section 143(3) of the Act it was observed that the assessee has borrowed Rs.12 lakhs form Mr.Mallanagouda Biradar S/o Bhimangouda Biradar, an agriculturist by profession, Kesharatti Village of Sindagi Taluk, Dist. Bijapur. Since there was a contravention of provisions of Section 269SS of the Act, the Assessing Officer initiated penalty proceedings Under Section 271D of the Act vide order dt.23.06.2017 at Rs.12 lakhs being 100% of loan borrowed by the assessee in cash otherwise than by a crossed cheque or Demand Draft. On appeal, the CIT (Appeals) observed that there is no “reasonable cause” for the failure to comply with the provisions of section 271D of the Act. According to learned CIT (Appeals), the assessee has not placed any evidence for accepting the loan amount in cash otherwise than by crossed cheque or DD. The assessee pleaded before the CIT (Appeals) that the amount was not loan and the amount was accepted by the assessee from his friend for security reasons as the said person has no bank account. This claim of the assessee was rejected by the CIT (Appeals) and confirmed the levy of penalty. Aggrieved by the order of CIT (Appeals), the assessee is in appeal before us.
We have heard both the parties and perused the material on record. The learned Authorised Representative submitted that the assessee has accepted the amount from Mr.Mallanagouda Biradar S/o Bhimangouda Biradar who is an agriculturist by profession has no bank account. In support of this, the assessee filed an Affidavit from Mr.Mallanagouda Biradar S/o Bhimangouda Biradar. We have carefully gone through the said Affidavit. There was no counter Affidavit filed by the Department though this Affidavit was filed on 20.06.2020. The assessee also furnished the copy of bank S.B Account No.10105100001485 with The Talikoti Sahakari Bank Niyamitha of APMC Yard, Sagarpeth, Talikoti from 1.4.2010 to 31.3.2011 to demonstrate that the said loan was kept with the bank for security reasons since the lendor has no bank account being an agriculturist. The learned Authorised Representative relied on the following decisions of the Tribunal :
i) & 1109/Bang/2009 Dt.31.05.2018 (DCIT Vs. M/s. VSL Steel Ltd.) ii) Karnataka Ginning & Pressing Factory Vs. JCIT 77 ITD 478 ( Mum-Tribunal)
The ld. AR submitted that there was reasonable cause for the assessee to accept the said amount in cash. As seen from the record, these amounts have been accepted by the assessee from 7.1.2011 to 25.02.2011. After that it was refunded back to the assessee by 5.3.2011 as seen from the said bank account which is as follows :
According to the ld. AR, the loan amount was accepted by the assessee for the safe custody since the lendor has no bank account and the Affidavit from the said person has been filed by the assessee before us. First of all, we are not sure whether the amount received by the present assessee from Mr. Mallanagouda Biradar S/o Bhimangouda Biradar can be termed as “Loan” or “Deposit”. These words are not defined in the Expln. (ii) below Section 269SS of the Act except saying that “Loan” or “Deposit” means loans or deposits of money. The terms “Loan” and “Deposit” are not mutually exclusive; there are a number of common features between the two; it was held by the Madras High Court in the case of Abdul Hamed Vs. Rahamath B AIR 1965 Madras 427, that loan is repayable the moment it is incurred, while it is not so with the deposit. In a deposit, unlike a loan, there is no immediate obligation to repay. Normally a deposit is for a fixed period. The amount taken by the assessee in the present case from “Loan” or “Deposit” is temporary advance and there is no evidence that there was any stipulation as to the period or any stipulation for payment of interest. It is therefore a matter of doubt as to whether the amounts received from Mr. Mallanagouda Biradar S/o Bhimangouda Biradar can be considered as loans or deposits. Further the assessee made a plea that the said amount has taken for the purpose of safe keeping and there was no evidence other than Affidavit from Mr. Mallanagouda. On the other hand, before the Assessing Officer the assessee has filed two Affidavits. In one Affidavit dt.22.02.2018, it was stated by the assessee that he has given hand loan which is interest free. During the penalty proceedings there was another Affidavit filed stating that the earlier Affidavit was misrepresentation and indeed the money was kept for safety purpose as temporary measure. These submissions of the assessee are contradictory in nature. Moreso, the contents of Affidavits were not verified by the Assessing Officer. Hence, in our opinion, it is appropriate to examine the concerned deponent and find out the veracity of the same before levying penalty. Accordingly, we set aside the order of lower authorities and remit the issue in dispute to the file of Assessing Officer for fresh consideration.
In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page.