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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO]
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
1. This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)- Puducherry, (‘CIT(A)’ for short) dated 04.08.2016 for the Assessment Year (AY) 2009-2010 confirming levy of penalty of ₹12,00,000/- u/s.271E of the Income Tax Act, 1961 (in short ‘’the Act’’).
The Assessee raised the following grounds of appeal:
‘’1. The order of The Commissioner of Income Tax (Appeals), Puducherry dated 04.08.2016 in l.T.A.No.561/CIT(A)-PDY/2013-14 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case.
2. The CIT (Appeals) erred in confirming the levy of penalty u/s 271E of the Act for the above Assessment Year without assigning proper reasons and justification.
The CIT (Appeals) failed to appreciate that the levy of penalty u/s 271E of the Act was not correct as well as not automatic and ought to have appreciated that the provisions of section 273B of the Act were completely overlooked, thereby vitiating in relation thereto.
The CIT (Appeals) failed to appreciate that the order imposing penalty under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.
The CIT (Appeals) failed to appreciate that the plea of commercial expediency in accepting/repaying the loan/advance exceeding Rs.20,000/- in cash would constitute reasonable cause and hence ought to have appreciated that the penalty imposed in such circumstances would get vitiated on all facets.
The CIT (Appeals) failed to appreciate that the transactions under scrutiny would clearly establish the fact of non applicability of the provisions in section 269T of the Act, thereby vitiating his action in relation thereto. 7.The CIT (Appeals) went wrong in recording the findings in this regard in para 7 of the impugned order without assigning proper reasons and justification.
The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned
order and an order ‘ passed in violation of the principles natural justice would be nullity in law.
The Appellant craves leave to file additional grounds/arguments at the time of hearing’’.
The brief facts of the case are as under: 3.
The appellant is an individual. During the course of survey proceedings u/s.133A of the Act in one Shri. A. Kannan at No. C-4, II floor, Thiyagaraja Apartment, First Main Road, Thanthai Periyar Nagar, Pondicherry, it is found that Shiri. A. Kannan was engaged in the business of financing in cash and the repayment of loan was also accepted in cash. Statement u/s.133A(3) of the Act was recorded from Shri. A. Kannan by Income Tax Officer, Ward I(1), Ponducherry.
It was stated that the assessee had repaid following loans in cash.
A/c. No.3489 2,00,000 �50,000/01.04.2008 2009-10 �50,000/02.04.2008 �50,000/03.04.2008 �50,000/04.04.2008 2,00,000 �50,000/01.05.2008 2009-10 �50,000/02.05.2008 �50,000/03.05.2008 �50,000/04.05.2008 2,00,000 �50,000/01.06.2008 2009-10 �50,000/02.06.2008 �50,000/03.06.2008 �50,000/04.06.2008 2,00,000 �50,000/01.07.2008 2009-10 �50,000/02.07.2008 �50,000/03.07.2008 �50,000/04.07.2008
2,00,000 �50,000/01.08.2008 2009-10 �50,000/02.08.2008 �50,000/03.08.2008 �50,000/04.08.2008 2,00,000 �50,000/01.09.2008 2009-10 �50,000/02.09.2008 �50,000/03.09.2008 �50,000/04.09.2008 Based on this information, the Assessing Officer issued show cause notice u/s.271E r.w.s 269T of the Act on 21.11.2012 calling upon the assessee why penalty should not be levied. In response to show cause notice, assessee had stated that loans were repaid in cash on account of business exigencies as the bankers were insisting deployment of funds by the partner for enhancing the credit facilities extended to one of the business concerns owned by the appellant. Therefore, it is submitted that assessee had reasonable cause for repayment of the loan in cash and hence penalty u/s.271E of the Act is not warranted.
He placed reliance on the following judgments:-
CIT vs. Bhagwati Prasad Bojoria HUF, 263 ITR 487 (Gau) 02. CIT vs. Manoj Lalwani, 260 ITR 590 (Raj) 03. CIT vs. Parma Nand, 180 CTR 489 (Del) 04. Eatachi Agencies 248 ITR 525 (Bom)
It is further submitted that when the genuineness of the transaction was accepted mere technical violation of law does not entail levy of penalty. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of Hindustan Steel vs. State of Orissa, 83 ITR 26.
The Assessing Officer considered the explanation offered and held that intention of the parties are clear to conceal the income and assessee failed to establish business exigencies in accepting the loan in cash as well as repayment of loan in cash, therefore proceeded with levy of penalty of �12,00,000/- vide order dated 30.04.2013.
4. Being aggrieved, an appeal was preferred before the ld. CIT(A), who vide impugned order had confirmed the levy of penalty by holing that assessee had failed to produce any evidence to show that lender had insisted for repayment of loan in cash and even if the transaction is considered genuine still penalty is exigible, placing reliance on the judgment of Hon’ble Jurisdictional High Court in the case of Kasi Consultant Corporation vs. DCIT, 311 ITR 419 and P.
Baskar vs. CIT, 340 ITR 560. Mensrea is not an essential ingredient for levy of penalty.
5. Being aggrieved by the order of the CIT(A), the appellant is in appeal before us in the present appeal. The ld. Authorised Representative submitted that Co-ordinate Bench of the Tribunal in assessee’s own case in to 328/CHNY/2018, for assessment years 2005-06 to 2008-2009, vide order dated 28.01.2019 had held that acceptance of money in cash was on account of business exigencies and therefore constitute reasonable cause for accepting money in cash and accordingly deleted the penalty. He further submitted that the transaction of repayment of loan in cash was held to be genuine and hence no penalty is leviable. The ld. Authorised Representative further submitted that in the absence of regular assessment proceedings, initiation of penalty levied u/s.271E of the Act is not permissible, in this regard, he placed reliance on the decision of Hon’ble Punjab and Haryana High Court in the case of CIT vs. Manohar Lal Thakral, 93 Taxmann. Com 156.
6. On the other hand, the ld. Sr. Departmental Representative placed reliance on the orders of lower authorities.
We heard the rival submissions and perused the material on 7. record. The only issue involved in the present appeal relates to whether imposition of penalty u/s.271E of the Act is justified on the facts of the case. Admittedly, in the present case, loans were repaid in cash. Provisions of Section 273B of the Act provides that no penalty u/s.271E of the Act can be levied in case, when it was proved that there was reasonable cause in the violation of provisions of Section 269T of the Act. Therefore the issue that requires for adjudication is whether explanation offered by the assessee in response to show cause notice is reasonable or not. The explanation of the assessee is that it was forced to repay the loan in cash on account of business expediency to meet the working capital limits of one the business concern in which he is interested; cannot be considered to be valid explanation for repayment of loan in cash. The fact that assessee accepted loan in cash and repaid the loan in cash goes to prove that there is active collusion with the lender in evading the taxes. In the absence of survey proceedings conducted in the premises of Shri. A.
Kannan, this transaction would not have come to light. Further, what can be a valid explanation for acceptance of loan in cash, cannot a valid reason for repayment of loan in cash. Reliance placed by the Authorised Representative on the decision of Co-ordinate Bench in assessee’s own case for deletion of penalty for violation of provisions of Section 269SS of the Act does not hold good. Similarly, the ratio decision of Hon’ble Punjab and Haryana High Court in the case of Manohar Lal Thakral (supra) cannot be accepted having regard to the cogent reading of provisions of Section 269T and 275A of the Act. It is clear that the completion of assessment proceedings is not a condition precedent for initiation of penalty proceedings u/s.269T. Thus, we do not find any reason to interfere with the orders of the lower authorities. Hence, we confirm levy of penalty u/s.271E of the Act.
In the result, the appeal filed by the assessee stands 8. dismissed.
Order pronounced on 20th day of August, 2019, at Chennai.