JITENDRA MEENA,JAIPUR vs. JCIT, JAIPUR

- आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh HkkxpUn] ys[kk lnL; ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 816 & 1002/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2004-05 & 2008-09 cuke Shri Jitendra Meena The JCIT Vs. 855, Aakron Ka Rasta Central Range Kishanpole Bazar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFZPM 1966 R vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by: Shri S.K. Gogra, CA and Shri S.S. Gogra, Advocate jktLo dh vksj ls@ Revenue by: Smt. Poonam Rai, DCIT - DR lquokbZ dh rkjh[k@ Date of Hearing : 12/01/2017 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 17 /01/2017 vkns'k@ ORDER PER BHAGCHAND, AM Both these appeals have been filed by the assessee against common order of the ld. CIT(A)- 4, Jaipur dated 03-06-2016 for the assessment years 2004-05 and 2008-09 respectively regarding imposing the penalty of Rs. 1,30,000 & Rs. 1,35,000/- u/s 271D of the Act respectively.

2 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur 2.1 During the course of hearing, ld. AR of the assessee prayed for

condonation of delay in assessee’s ITA No. 1002/JP/2016 for the

assessment year 2008-09 as under:-

‘’1. That the ld. CIT(A) Jaipur dismissed the appeals for the assessment years 2004-05 ad 2008-09 vide his order dated 3-06-2016. The appellant under the bona fide impression submitted single appeal before the Hon'ble ITAT against the order of the CIT which was passed by him as single order. The appellant in form no. 36 in column no. 3 & 3B mentioned the reference of appeal for both the years. Subsequently, it was realized by the appellant that the two appeals should have been filed before the Hon'ble ITAT in respect of above both the years. Vide application dated 11- 11-2016 the appellant requested to the Hon'ble ITAT to treat the appeal filed on 12-09-2016 for the A.Y. 2007-08. Since the mistake committed by the noticed voluntarily, therefore, the separate appeal in respect of the assessment year 2010- 11 is being submitted. The delay of 63 delays in filing of the appeal may please be condoned.

It is therefore, humbly prayed that the delay occurred due to bonafide and reasonable cause which may kindly be condoned for imparting justice to the assessee.’’

3 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur 2.2 The ld. DR objected to the condonation application of the assessee

for late filing of the appeal.

2.3 I have heard the rival contentions and perused the materials

available on record. Keeping in view of the facts and circumstances of the

assessee, the condonation application for late filing of the appeal of the

assessee is allowed in view of the judgment of ‘’Hon'ble Apex Court in

the case of Collector, Land Acquisition vs. Mst. Katiji and Others, 167

ITR 471 wherein the Hon'ble Court has observed as under:-

‘’The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression " sufficient cause " in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice--that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. ‘’

Thus the assessee's application for condonation of delay is allowed.

3.1 Apropos assessee's solitary ground for imposition of penalty u/s

271D of the Act in both the appeals, the facts as emerges from the order

of the ld. CIT(A) is as under:-

‘’4. I have duly considered assessee's submission and also carefully gone through assessment order and penalty order passed u/s 271D of the I.T. Act. I have also taken a note of

4 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur factual matrix of the case as well as applicable case laws relied upon. On perusal of the submission, it is seen that assessee during the F.Y. under appeal had received a sum of Rs. 1,30,000/- for A.Y. 204-05 and Rs. 1,35,000/- for A.Y. 2008-09 in cash. In this regard, assessee has contended that the transactions pertaining to sum of Rs. 1,30,000/- for A.Y. 2004-05 and Rs.1,35,000/- for A.Y. 2008-09 are in the nature of current account on urgent basis to meet business liability. Explanation given in this regard does not seem to be bonafide as assessee has failed to explain exact nature of ‘’urgent business requirement’’. It is submitted that a/c maintained by the assessee is a composite a/c which contain details of entries in cheque (especially for salary transaction and loan transactions) and cash transactions but even after repeated request, no such ledger a/c or cash book of company. Therefore, in view of facts and circumstances of the case which assessee has failed to justify its contention, penalty levied of Rs. 1,30,000/- for A.Y. 2004-05 & Rs. 1,35,,000/- for A.Y. 2008-09 u/s 271D of the Act is hereby justified. Assessee's both appeals are failing in Gr. No. 1. 5. In the result, the appeal in ITA No. 366/12-13 pertaining to penalty order passed u/s 271D of the Act stands dismissed for A.Y. 2004-05 6. In the result, the appeal in ITA No. 367/12-13 pertaining to penalty order passed u/s 271D of the Act stands dismissed for A.Y. 2008-09.’’

3.2 During the course of hearing, the ld. AR of the submitted that the

assessee company had received the following funds in form of

contribution / gift from his real brothers (Ramswaroop Meena &

5 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur Ramkaran Meena) in the assessment year 2004-05 & 2008-09

respectively.

A.Y. 2004-05 A.Y. 2008-09 S.N. Name of person Date Amount Name of person Date Amount taken taken 1. Ramswaroop 8-05-13 1,30,000 Ramkaran Meena 6-06-07 1,35,,000 Meena Total 1,30,000 Total 1,35,,000

The ld. AR of the assessee filed the following similar written submissions

in both the appeals which have been taken into consideration.

6 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur To loan is to lend a thing to another, either gratuitously or for reward. In order to constitute loan, there must be a thing loaned, a lender, and a borrower, as well as a contract between parties. The Term “Deposit” is defined in the law lexicon as – Thing stored or entrusted for safe keeping; An act by which a person receives the thing of another person, with the obligation to keep it and to return it in kind; a naked bailment of goods, to be kept for the depositor without reward and to be returned when he shall require it; the delivery of a thing for custody, to be redelivered on demand, without compensation. The essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfillment of certain conditions. The Word “Advance” as defined in law lexicon conveys the idea of furnishing, tendering or offering something which may be returned in the same form, it is also defined as Money in whole or in part, forming the consideration.

Thus funds coupled with above conditions may be termed as loan or advance and merely funds are transferred in between of family members can not be termed as loan or deposit, therefore action of Id AO and confirming the CIT(A) may please be declared as illegal and may please be deleted. 3. The transactions are in between real brothers of joint family. The family tree of appellant is given below:- (i) Shri Ramswroop Meena – elder brother (ii) Shri Ramkaran Meena – elder brother (iii) Shri Rajendra Meena – appellant himself (iv) Shri Jitendra Meena – younger brother That the appellant resides in joint family alongwith his brother’s family and engaged in old parental business of manufacturing & sale Gajak, Tilpatti etc. During the course of search proceedings statement recorded u/s. 132(4) of Shri Ramswroop Meena (elder brother) and while replying answer to question no.: 6,8,9,12,13,17 which were in respect of entire family consisting of all his three elder brother and their families and answered by Mr. Ramswroop Meena (elder brother) only and no question was asked from any of the family members, and these statements were relied upon and no objection / counter examination were made by Income Tax Authority, which also

7 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur corroborates that department has accepted that Narayanji Group is having one & joint family. When it is clear cut finding by Investigating Officer that appellant lives in joint family having common control of funds by elder brother (Shri Ramswroop Meena), then treating transfer of funds from one brother to another and amongst family members is absolutely illegal by treating the same as loan or deposit in hands of appellant. For being loan there has to be two persons and coupled with conditions of repayment of funds. That one single person Mr. Ramswroop Meena is managing entire business affairs of group and decision to transfer funds from one concern to another or to repay the funds could have been said to have been largely influenced by the same individual, it cannot be said that transaction partake the nature of either deposit or loan. The cash of all family members were being kept with key person (Mr. Ramswroop Meena) and there is no physical movement of cash from one person to another person and merely book entries are being passed upon. The copy of Affidavit of Mr. Ramswroop Meena (elder brother) dt. 21.11.2011 which were submitted to Id AO and Id CIT(A) is also enclosed with written submission with the contention that one person was managing the entire business affairs of entire group. 4. The entire transaction is undertaken with bonafide intention. And no ingenuity is brought in the assessment order passed for the above year. The return income is accepted. When there is no case against assessee that these transactions had anything to do with evasion of tax or concealment of income. 5. That Id AO erred in levying of penalty u/s. 271D of the Act on entire amount of funds taken. That without admitting anything on our part it is submitted that penalty may not be levied on entire value of funds and may be levied only on funds which are higher than Rs. 20,000/-. In the present case funds taken from each person is upto Rs. 20,000/-, therefore levy of penalty illegal and may please be deleted. 6. That we placed reliance on following judgments which are squarely covers the appellant’s case:- 1. CIT Vs. Maheshwari Nirman Udyog 2008 – 302 ITR – 201 (Rajasthan High Court) Held that whether a particular transaction was genuine or otherwise is a question of fact and if it had been found by appellate authority that the assessee had shown reasonable cause for accepting

8 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur the money in cash in that circumstances penalty u/s. 271D can not be imposed. 2. CIT Vs. Yasundara Devi 2015 – 66 (II) ITCL – Page 578 (Chennai Tribunal) Held that transaction between family members were genuine and bona fide transactions. The source of money had already been disclosed in the return of HUF. Further it was not the case of Revenue that assessee had introduced unaccounted money in the books of account as the very purpose of bringing in the provisions of section 269SS and 269T was to curb the practice of introducing black money into books of account. The assessee had no intention to evade tax and did not make any attempt to make any liability. The individual had accepted loans from HUF for purchase of property in their individual names and had reasonable cause for accepting such loans. Therefore, the order of CIT(A) sustaining the penalty levied by AO was not justified and same was set aside. Reliance placed on judgment of CIT Vs. Yeshodha reported in 2013 – 351 ITR – page 265 – Madras High Court) 3. Dy. CIT Vs. Tirumalaraju Trinadhu Raju 2016 – 69 (II) ITCL – 342 (Chennai Tribunal) Held that on perusal of ledger of loan account, it was found that assessee had accepted two deposits by way of money transfer from bank and balance credit was accepted by book adjustment. Assessee explained that amount representing the book entry was transferred from his wife account towards amount paid to third party by way of cheque on behalf of assessee. In view of above, assessee had not accepted any loans on deposits by cash in contravention of section 269SS. Thus merely on book entries no penalty can be levied u/s. 271D. 4. CIT Vs. Ajanta Dyeing & Printing Mills 2003 - 264 - ITR - Page 505 (Rajasthan High Court) Held that while levying of penalty u/s. 271D for violation of provision of section 269SS adjustment of Rs. 20,000/- is to be allowed which is permissible u/s. 269SS. 5.Sudha Agro Oil & Chemical Industries Vs. Addl. CIT 2016 – Tax Publisher (DT) – 2783 – Vishakhapatnam Tribunal

9 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur Held that “after taking into consideration of `judgment of Raj. High Court in case of Ajanta Dying & Printing Mills held that “penalty shall be levied after excluding Rs. 20,000/- in each case as permissible u/s. 269SS of the Act. Conclusively, the ld. AR of the assessee prayed that the ld. CIT(A) has

erred in confirming the imposition of penalty of Rs. 1.30 lacs for the

assessment year 2004-05 and Rs. 1.35 lacs for the assessment year

2008-09 respectively u/s 271D of the Act which should be deleted.

3.3 The ld. DR relied on the orders of the lower authorities.

3.4 I have heard the rival contentions and perused the materials

available on record. It is noted from the records that the lower authorities

have confirmed the imposition of penalty u/s 271D of the Act of Rs.1.30

lacs and 1.35 lacs for the assessment years 2004-05 and 2008-09. It is

noted from the records that the funds were taken by the assessee in form

of contribution / gift from his elder brothers which are recorded in the

books of the assessee. These funds were received for meeting his personal

needs. It is also noted that the assessee had taken these funds to meet out

his urgent family requirements i.e. for payment of school fees of children

and house hold expenditures. The assessee had submitted the

confirmation of accounts before the lower authorities. It is also noted that

these transactions are between the real brothers of joint family. It is also

10 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur noted that one single person Shri Ramswaroop Meena is managing entire

business affairs and group and decision to transfer of funds from one

concern to another or to repay the funds is done by the same individual.

The copy of affidavit of Shri Ramswaroop Meena dated 21-11-2011 is

placed on record indicating therein his contention that one person is

managing the entire business of entire group. The ld. AR of the assessee

submitted that entire transaction is undertaken with bona fide intention

and no ingenuity is brought in the assessment orders for the year under

consideration. The return of income of the assessee are accepted and it is

also submitted that there is no case against the assessee that these

transactions had anything to do with evasion of tax or concealment of

income. It may be noted that Section 271D read with Section 269SS was

introduced by the legislature to discourage the menace of black money.

Since these transactions are genuine, this element of black money is

totally ruled out. It is further noted that on similar type of issue the ITAT

Coordinate Bench in the case of Smt. Kusum Dhamani vs. Addl. CIT vide

its order dated 13-06-2014 in ITA No. 847/JP/2011 for the assessment

year 2006-07 had deleted the penalty u/s 271D of the Act by observing

as under:-

11 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur ‘‘4.0 We have heard the rival submissions and perused the relevant material available on record. From the record there is no shred of doubt about the genuineness of the transactions and their disclosure in the books of account and returns of both the assessee who happen to be husband and wife, carrying on the business as sister concerns. Section 271D read with Section 269SS was introduced by the legislature to discourage the menace of black money. Since these transactions are genuine, this element of black money is totally ruled out. The assessee has given an explanation in our view is not unreasonable and is based on business exigencies also for payments to labourers and lenders. Under these circumstances, we are of the view that the transactions being genuine and the assessee having offered reasonable explanation justifying these cash transactions, the impugned penalty u/s 271D is not leviable. Our view is fortified by the judgement of Hon'ble Jurisdictional High Court in the case of CIT vs. Raj Kumar Sharma (supra) and the judgement of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Saini Medical Store (supra) which is followed by Hon'ble P & H High Court in the case of CIT vs. Sunil Kumar Goel (supra). Thus in view of the facts and circumstances of the case and the decisions relied on above, the penalty is deleted.

Respectfully following the decision of ITAT Coordinate Bench in the

case of Smt. Kusum Dhamani vs. Addl. CIT (supra) and also in view of

the following case laws as relied upon by the ld. AR of the assessee

namely :-

12 ITA No. 816/JP/2016 Shri Jitendra Meena. vs. JCIT, Central Range, Jaipur 4. CIT vs. Ajanta Dyeing & Printing Mills (2003) 264 ITR 505 (Raj.)

I direct to delete the penalty of Rs. 1.30 lacs and 1.35 lacs respectively u/s 271D of the Act sustained by the ld. CIT(A) in assessee's case for both the assessment years (supra). Thus the appeals of the assessee are allowed. 4.0 In the result, the appeals of the assessee are allowed. Order pronounced in the open court on 17 /01/2017 Sd/- ¼HkkxpUn½ (Bhagchand) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17 /01/ 2017 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Jitendra Meena, Jaipur 1. izR;FkhZ@ The Respondent- The JCIT, Central Range, Jaipur 2. vk;dj vk;qDr¼vihy½@ CIT(A). 3. 4. vk;dj vk;qDr@ CIT, विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 816/JP/2016) vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत