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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI LALIET KUMAR
O R D E R
Per Shri A.K. Garodia, Accountant Member
This is an assessee’s appeal which is directed against the order of ld. CIT (A)- 7, Bangalore dated 19.08.2016 for Assessment Year 2009-10.
The grounds raised
by the assessee are as under. “1. The orders of the authorities below in so far as levying penalty u/s 271-E of the Act against the appellant, are opposed to law, equity, weight of evidence, probabilities facts and circumstances of the case.
2. The levy of penalty u/s 271-E of the Act is bad in law in as much as the appellant has not committed any default actionable u/s 271-E of the Act and consequently, the impugned order passed 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 and that there was no animus to defy the statutory provisions of the Act and therefore, he ought not to have confirmed the penalty imposed under the facts and in the circumstances of the appellant's case.
4. Without prejudice to the above, the penalty levied is excessive and liable to reduced substantially.
Page 2 of 4 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.”
It was submitted by ld. AR of assessee that this was the contention raised by assessee before the CIT (A) that the amount of Rs. 45,000/- was deposited in ICICI Bank Account of the sister concern M/s. Pradhan Herbal Company Pratham due to unavoidable business exigency because some cheques were issued to various parties by the sister concern and therefore, immediate fund was required by the sister concern to ensure that those cheques are not dishonoured for want of fund in their bank account. He submitted that the CIT(A) has decided this issue against the assessee on this basis that there are various methods of transfer of funds from one bank account to another and in some of the cases, it can be instant particularly when both the account holders are in the same branch. In this regard, he drawn our attention to page no. 16 of the appeal memo as per which the amount in question of Rs. 45,000/- was withdrawn by the assessee from UCO Bank and the same was deposited in the bank account of the sister concern M/s. Pradhan Herbal Company in ICICI Bank. He submitted that since the bank accounts of the assessee and the sister concern were not in the same bank, the transfer by way of cheque could not be instant and therefore, it should be accepted as a reasonable cause for making cash payment of repayment of loan and hence, under the provisions of section 271E penalty shall be deleted in view of the provisions of section 273B. The ld. DR of revenue supported the order of CIT (A).
We have considered the rival submissions. For the sake of ready reference, we reproduce Para nos. 8 and 8.1 from the order of CIT (A). The same are as under.
“8. There is no dispute from the appellant side that the loan was repaid, in cash and also there is no dispute regarding the amount of loan repaid. The only contention put forward by theappellant is that the amount of Rs.45,000/- was deposited in the ICICI Bank of the sister concern M/s Pradhan Herbal Company due to unavoidable business exigency. It is true that penalty for non-compliance of section 269T of the Act as provided under section 271E of the Act, is not Page 3 of 4 automatic as section 273B provides that no penalty shall be imposable on the person or the assessee for any violation referred to under section 269T of the Act, if he proves that there was reasonable cause for such failure. The Hon’ble Supreme Court in the case of ADIT Vs. Kumari A.R. Shanti (2008) 255 ITR 258 (SC), it has been held that the main object of section 269SS was to curb the menace of false entries in the books and where the transactions are genuine, the provisions of section 26955 and 269TT are not attracted. The courts have taken lenient views on the pena1ty u/s 271E of the Act subject to of some reasonable cause. In the case of Commissioner of Income-tax, Mysore v. Canara Housing Development Co [2015] 62taxmann.com 250 (Karnataka), the hon’ble High Court of Karnataka has observed that normally court should take a liberal view in matters where there is only some violation of provisions of the Act, but the courts have also to consider that the provisions of law are substantially complied. It was further observed that one odd non-compliance made by the assessee should normally not attract penal provisions but, that is in a case where because of some extreme urgency, the violation had been committed for genuine and valid reason. 8.1 However, in the instant case, the appellant narrate a situation where the deposit in cash to the bank of the M/s Pradhan Herbal Company become essential to enable the company to clearthe incoming cheques. In the present world of technology, there are various methods of transfer of funds from one bank account to another. Some of these transfer facility are instant particularly when both the account holders are in the same branch. The Appellant has not depicted any circumstances to show that he was unable to or was restricted to avail these transfer modes of the banking truncations. If the benefit of section 273B of the Act is given in cases as the present one, the very purpose of enacting section 269T of the Act would be frustrated or lost.”
As per the above paras reproduced from the order of CIT (A), it is seen that decision is on this basis that in the present world of technology, there are various methods of transfer of funds from one bank account to another and some of these transfer facility are instant particularly when both account holders are in the same branch. The ld. AR of assessee has shown to us that the assessee was having bank account with UCO Bank and the sister concern was having bank account in ICICI Bank. Hence it is seen that in the present case, neither the branch is same nor the bank is same. We also find that ld. CIT(A) in Para no. 8 of its order has referred to a judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Canara Housing Development Co as reported in 62 taxmann.com 250 wherein it was observed by Hon'ble Karnataka High Court that normally court should take a liberal view
Page 4 of 4 in matters where there is only some violation of provisions of the Act, but the courts have also to consider that the provisions of law are substantially complied and it was further observed that one odd non-compliance made by the assessee should normally not attract penal provisions.
In the present case, this is only one repayment of loan in cash in violation of section 269T and this is not the case of the revenue that the assessee is regularly and repeatedly violating the provisions of section 269T of IT Act. Hence in the facts of the preset case and in the light of this judgment of Hon'ble Karnataka High Court, we hold that in the present case, the assessee deserves liberal view and by adopting liberal view, we hold that in the facts of the present case, the penalty u/s. 271E is not justified because in our considered opinion, the assessee has been able to show reasonable cause for repayment of loan in cash and therefore, as per the provisions of section 273B of IT Act, penalty u/s. 271E is not imposable. We therefore delete the penalty.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on the date mentioned on the caption page.