M/S. DRL LOGTISTICS PVT. LTD.,BENGALURU vs. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - 2(1), BENGALURU

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ITA 814/BANG/2017Status: DisposedITAT Bangalore22 December 20175 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities had not properly examined the notes provided by the assessee regarding the mode of transactions. Therefore, the matter was restored to the Assessing Officer for fresh examination of the assessee's claims and the reasonable cause for any cash transactions.

What were the facts?

The assessee received and repaid certain amounts to directors and their family members. Penalties were levied under Sections 271D and 271E for alleged violations of Sections 269SS and 269T respectively. The assessee contended that transactions were through cheques and there was reasonable cause for any cash transactions.

What were the issues?

Whether penalties under Sections 271D and 271E were rightly levied when transactions were claimed to be through cheques, and if there was a reasonable cause for any cash transactions.

Which sections of the Income-tax Act were involved?

Section 271D,Section 271E,Section 269SS,Section 269T

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI JASON P. BOAZ

For Appellant: Shri. V. Srinivasan, Advocate
For Respondent: Dr. Pradeep Kumar, ACIT
Hearing: 18.12.2017Pronounced: 22.12.2017

Per Sunil Kumar Yadav, Judicial Member

1.

These appeals are preferred by the assessee against the respective orders of CIT(A) on following grounds: Grounds of appeal in

1. The orders of the authorities below in so far as levying penalty u/s 271D of the Act against the appellant, are opposed to law, equity, weight of evidence, probabilities facts and circumstances of the case.

2. The learned CIT[A] is not justified in upholding the penalty imposed u/s 271-D of the Act without appreciating that the appellant has not committed any default actionable u/s 271-D of the Act and consequently, the impugned order passed is bad in law and the same deserves to be cancelled. 2.1 The learned CIT[A] ought to have appreciated that the appellant had received certain amounts from its Directors and members of the family of the Directors and thus, the amounts so received cannot be regarded as a loan or deposits from any other person to levy penalty u/s. 271-D of the Act and hence, the penalty levied deserves to be cancelled.

3. Without prejudice to the above, the learned CIT[A] ought to have appreciated that the appellant was prevented by reasonable cause in complying with the provisions of sec. 269SS of the Act and that there was no animus to defy the statutory provisions of the Act and therefore, the penalty imposed ought to have been cancelled. 3.1 The learned CIT[A] ought to have appreciated that the failure to comply with the provisions of Sec 269 SS of the Act was due to reasonable cause on account of the ignorance of statutory provisions and therefore, the penalty imposed deserves to be cancelled.

4. Without prejudice to the above, the learned CIT[A] ought to have appreciated that the penalty levied of Rs. 10,50,000/- and Rs. 10,25,000/ aggregating to Rs. 20,75,000/- in respect of the amounts received by the appellant from Smt. Nalini K Dharamshi is excessive especially when the amounts received in cash was only Rs. 10,50,000/- and therefore, the penalty sustained by the learned CIT[A] is liable to reduced substantially.

5. Without prejudice to the above, the learned CIT[A] ought to have appreciated that the penalty levied of Rs. 87,000/- and Rs. 92,500/- aggregating to Rs. 1,79,500/-in respect of the amounts received by the appellant from Smt. Nalini K Dharamshi is excessive especially when the amounts received in cash was only Rs. 92,500/- and therefore, the penalty sustained by the learned CIT[A] is liable to reduced substantially.

6.

Without prejudice to the above, the learned CIT[A] ought to have appreciated that the penalty levied of Rs. 8,20,000/- in respect of the amounts received by the appellant from Smt. Komal K Dharamshi is unjustified as the appellant had received the said amounts through banking channels and therefore, the penalty sustained by the learned CIT[A] is liable to be deleted.

7.

For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the cost.

1.

The orders of the authorities below in so far as levying penalty u/s 271E of the Act against the appellant, are opposed to law, equity, weight of evidence, probabilities facts and circumstances of the case.

2. The learned C!T[A] is not justified in upholding the penalty imposed u/s 271-E of the Act without appreciating that the appellant has not committed any default actionable u/s 271-E of the Act and consequently, the impugned order passed is bad in law and the same deserves to be cancelled. 2.1 The learned CIT[A] ought to have appreciated that the appellant had repaid certain amounts to its Directors and members of the family of the Directors and thus, the amounts so repaid cannot be regarded as a loan or deposits repaid to any other person to levy penalty u/s. 271-E of the Act and hence, the penalty levied deserves to be cancelled. 3. Without prejudice to the above, the learned CIT[A] ought to have appreciated that the and 814/Bang/2017 Page 3 of 5 appellant was prevented by reasonable cause in complying with the provisions of sec. 269T of the Act and that there was no animus to defy the statutory provisions of the Act and therefore, the penalty imposed ought to have been cancelled. 3.1 The learned CIT[A] ought to have appreciated that the failure to comply with the provisions of Sec. 269T of the Act was due to reasonable cause on account of the ignorance of statutory provisions and therefore, the penalty imposed deserves to be cancelled. 4. Without prejudice to the above, the learned CIT[A] ought to have appreciated that the penalty levied of Rs. 1,25,000/- in respect of amount repaid to Sri. Kushalchand D Shah is excessive especially when the amount was not repaid in cash and therefore, the penalty sustained by the learned CIT[A] is liable to reduced substantially. 5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.

2.

During the course of hearing, the learned counsel for the assessee invited my attention to Annexure -7 attached to statement of particulars in Form 3 CD required to be filed before the AO with the submission that assessee has received certain amount from 6 persons of which details are in the statement in which it has been categorically mentioned that acceptance has been made by cheque but necessary evidence was not available in the possession of the assessee. For the sake of reference, the details furnished are extracted hereunder: “Annexure 11 Particulars of each loan or deposit in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year:- Sl. Name Address PAN Amount of Whether Maximum Loan or No. loan or the loan or amount deposit taken deposit deposit was outstanding or accepted taken or squared up in the otherwise accepted during the account at than by an previous any time account payee year during the cheque or an previous account payee year bank draft 1 Nalini K 15,00,000 No 30,75,000 Refer Note Dharamshi 2 Nalini K 7,75,000 No 30,75,000 Yes Dharamshi 3 Kushalchand 2,87,000 No 13,75,000 Refer Note D Shah and 814/Bang/2017 Page 4 of 5 4 Kushalchand 92,500 No 13,75,000 Yes D Shah 5 Komal K 15,40,000 No 15,40,000 Refer Note Dharamshi 6 Sanjali R 90,000 Yes 90,000 Yes Dharamshi Note: The acceptance have been made by cheques. However we are unable to verify whether the same is made by account payee cheque/demand draft, as the necessary evidence is not in the possession of the assessee.”

3.

It was further contended that the lower authorities have considered the amount received and paid without looking to the narrations given in the table and has treated the receipt and payment in cash and accordingly levied the penalty under section 271D & 271E of the Act. The learned counsel for the assessee further contended that since the assessee has received and paid the amount through cheque there is no violation of provision to section 269SS and 269T of the Act. Moreover, he has furnished the reasonable cause for receipt of certain amount in cash also. Since this aspect was not examined by the lower authorities, the matter may be sent back to the AO to examine the details furnished by the assessee by making the necessary enquiry.

4.

The learned DR however placed reliance upon the order of the CIT(A). He however agreed that let the matter be sent back to the AO for verification and examination of the issues in the light of evidences to be filed by the assessee.

5.

Having heard the rival submissions and from the careful perusal of the record, we are of the view that since the lower authorities have not applied their mind to the note given by the assessee below the table showing the details of receipt, the issue requires to be verified and examined. Accordingly, we set aside the order of the CIT(A) in both the cases and restore the matter to the AO to examine the claim of the assessee and also to examine the reasonable cause as contended by the assessee for receipt of certain amount in cash also. Accordingly, appeals of the assessee are allowed for statistical purposes. and 814/Bang/2017 Page 5 of 5 6. In the result, appeals of the assessee are allowed for statistical purposes.

Pronounced in the open court on 22nd December, 2017.

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