SRI JAGMOHAN SHARMA,BURDWAN vs. JCIT, RG-3, ASANSOL, BURDWAN

O R D E R

Per Dr. Arjun Lal Saini, AM:

Sri Jagmohan Sharma & 553/Kol/2015 Assessment Year: 2011-12 3. The grounds of appeal raised by the assessee( in lead case in ITA No.552/Kol/2015) are as follows: “1. For that the order of ld. CIT(A), Asansol is bad in law as well as in facts and therefore needs to be modified.

2. For that the Ld. CIT(A) erred in law as well as in facts in sustaining the Penalty of Rs. 4,50,000/- in complete disregard to the ratio laid down in binding judgment of the jurisdictional Hon’ble Calcutta High Court as well as Hon’ble ITAT, Kolkata; the penalty so sustained needs to be deleted in full. 3.For that the assessee craves leave to add, to modify or withdraw any ground/s of appeal either before or at the time of hearing”.

4. The facts apropos the ground are that the return of income for the A.Y. 2005-06 was filed by the assessee on 27.10.2005 declaring total income of Rs.1,25,660/-. During the assessment year under consideration, the assessee was engaged in the business of repairing and plying of trucks. The case was assessed u/s 143(3) on 26.11.2007 determining assessed income at Rs.13,04,090/-. During the course of assessment it was found that the assessee has made cash deposit of Rs. 11.00 lacs in the Raniganj Co-operative Bank and the source of such deposit was remained unexplained. Thus, the said cash deposit in bank was treated as unexplained money of the assessee and added back in the assessment U/s 69A of the I.T. Act along with other addition. Subsequently, the Hon`ble ITAT, Kolkata, vide its order No.ITA No.832/Kol/2009, for A.Y.2005-06 set aside the above issue, on account of addition U/s 69A of the Act and directed the Assessing Officer to re-decide the addition on account of unexplained money of Rs.11,00,000/-. Then after, the assessing officer made the assessment under section 143(3)/254 of the Act, as per the direction given by the Hon`ble ITAT and while making the assessment, the Assessing Officer noticed that loan confirmation of the parties from whom short term loan was taken by the assessee for repayment of loan of Rs. 11,00,000/- lacs to the Raniganj Co-operative Bank. Ongoing through the loan confirmations filed by the assessee, it was found that the assessee Page | 2 Sri Jagmohan Sharma & 553/Kol/2015 Assessment Year: 2011-12 has repaid the loans totalling to Rs. 5.00 lacs (being Rs. 4,00,000/- + Rs. 45,000/- + Rs. 55,000/-) in cash to the loan parties during the financial year under consideration and it was evident that the amount of such loan repaid was more than Rs. 20,000/-. On going through the loan confirmations filed by the assessee, it was also found that the assessee has accepted the loans totalling to Rs. 5.00 lacs (being Rs. 4,00,000/- + Rs. 45,000/- + Rs. 55,000/-) in cash from the loan parties during the financial year under consideration and it was evident that the amount of such loan acceptance was more than Rs. 20,000/-. Moreover, the fact of the acceptance and repayment of such loans was never brought to notice of the Department in any earlier stage of assessment. Thus, in the case of the assessee there was a violation of both the sections, that is, section 269SS and Section 269T of the I.T. Act. Therefore, the assessing officer imposed Penalty u/s 271D at Rs.5,00,000/- and u/s 271E at Rs.5,00,000/-.

5. Aggrieved by the penalty orders of the Assessing Officer, the assessee filed an appeal before the ld. CIT(A) who has partly allowed the appeal of the assessee. The ld. CIT(A) observed that against the penalty under section 271D imposed by JCIT on account of taking loans contravening provisions of section 269SS,the details of loans recorded in books of accounts on 29.06.2004 of assessee and considered by JCIT for imposition of penalty were as under: Lender(Shri/Smt.) Relationship Amount Smt. Sumitra Devi Sharma Sister-in-law 4,00,000/- Bhagwati Prasad Sharma Elder Brother 45,000/- Rajesh Sharma Nephew 55,000/- During the appellate proceedings, the Ld. CIT(A) noted that the lenders were, elder brother (Rs. 50,000), nephew (Rs. 50,000) and sister-in-law (Rs. 4,00,000/-) as compared to the amount noted by the Ld JCIT, as noted in table above. Page | 3 Sri Jagmohan Sharma & 553/Kol/2015 Assessment Year: 2011-12 During the appellate proceedings, the assessee stated before the CIT(A) that his case was covered by decision of Hon’ble High Court of Kolkata inthe case of Mansur Ali Khan (ITAT No. 111 of 2012 GA No. 1498 of 2012) wherein it was held that transactions between family relatives are not covered by the provisions of section 269SS and 269T of the Act. The CIT(A) noted that judgments relied by the assessee relate to a transaction between siblings in an explicit manner. It cannot be stretched and cannot become one free of any boundary so as to encompass every relatives like sister-in-law and nephew who are actually members of different family units or even distant relations. Other than very close relatives like parents, siblings or spouse, it cannot be expected in any situation to deposit cash with a person technically not part of ‘family’. As ‘family members’ are not defined anywhere, somewhere there has to be a boundary in deciding who a family member is. The CIT(A) observed that it was for assessee to establish reasonable cause with documentary evidence or with some acceptable evidence. However, the CIT(A) has considered the “elder brother” as part of family and deleted the penalty up to Rs.50,000/- .The CIT(A) noted that assessee had failed to explain the reasonable cause within meaning of section 273B of the Act, therefore, he upheld the imposition of penalty on the remaining sum of Rs. 4,50,000/-( Rs.5,00,000 – Rs. 50,000/-).

6. Not being satisfied with the order of the CIT(A), the assessee is in appeal before us. At the outset, the ld. Counsel for the assessee has submitted before us that Hon’ble ITAT Kolkata Bench, Kolkata has decided the issue on the identical facts in the case of Sri Mansur Ali Laskar in ITA No.1094/Kol/2011 for A.Y 2007-08 dated 30.12.2011 wherein the Hon’ble Tribunal has considered, Niece, Uncle, Aunty, Wife of brother, Wife`s Sister Page | 4 Sri Jagmohan Sharma ITA No.552 & 553/Kol/2015 Assessment Year: 2011-12 and Counsin sister as a family members. As per the said judgment, the list of the family members are given below:

Therefore, Counsel for the assessee has stated that ifNiece, Uncle, Aunty, Wife of brother, Wife`s Sister and Counsin sister are considered as family members then why not sister -in- law and Nephew. That is, as per the Chart given above, sister -in- law and Nephew should also be part of family members, and penalty under section 271D and 271E should not be levied. The ld Counsel also submitted before the Bench that against said judgment of the Kolkata ITAT in the case Mansur Ali Laskar( supra), the Revenue had filed an appeal before the Hon`ble Kolkata High Court,vide ITAT Page | 5 Sri Jagmohan Sharma & 553/Kol/2015 Assessment Year: 2011-12 No.111/2012 GA No. 1498/2012, and the Hon`ble Court had dismissed the appeal of the Revenue and affirmed the judgment of Hon`ble ITAT Kolkata.