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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the assessee, pertaining to assessment year 2008-09, is directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-Durgapur, in Appeal No.63/CIT(A)-DGP/2011-12 dated, 24.12.2014, which in turn arises out of an order passed by the Assessing Officer u/s.271(E) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 27.05.2011.
The brief facts qua the assessee are that the assessee filed its return of income declaring income of Rs.9,49,772/- out of gross receipt of Rs.1,17,32,490/-. The assessee’s case was selected for scrutiny u/s.143(2) of the Act and AO has completed the assessment by making various additions. During the assessment Promod Kumar Singh A.Y. 2008-09 proceedings, the AO noted that there was cash transaction of loan with his wife Smt. Usha Singh, which violated the provisions of section 269SS & 269T of the Act. The loan taken by the assessee in cash from his wife was Rs.8,54,000/- and total loan repaid in cash for Rs.5,00,000/-. The AO observed that these cash transaction of loan violated the provisions of section 269T of the I.T. Act 1961. The penalty imposable U/s 271E is equivalent to the amount of repayment of loan as deposit in contravention of the section 269T of the I.T. Act, 1961. Therefore, the AO imposed penalty u/s 271E of the Act at Rs.5,00,000/-. 3. Aggrieved from the order of the AO, the assessee filed an appeal before the CIT(A), who has confirmed the penalty u/s 271E of the Act. The assessee submitted before the CIT (A) that transactions between husband and wife, and between father and son are not considered for the purpose of section 269SS and section 269T of the Act, because they are not “other Person” as mentioned in section 269T of the Act. That is, the provisions of section 269T do not applicable to relatives. The assessee explained to the ldCIT(A), about the provisions of section 269T of the Act, which reads as under: “269T: Mode of repayment of certain loans or deposits No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it [or any specified advance received by it] otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit [or paid the specified advance,] [or by use of electronic clearing system through a bank account] if……….. Ld Counsel therefore submitted before the Ld. CIT(A), that the term Other Person mentioned in section 269T does not include transactions between father& son, Page | 2 Promod Kumar Singh A.Y. 2008-09 husband & wife. The assessee also cited two judgment before the CIT(A) Viz: in the case of Sri Madhu Ghosh Vs. J.C.I.T ( ITA No. 271/Kol/09), the assessee wherein received an advance of Rs.5 Lakhs from his relative and accordingly, it was held that Section 269SS of the Act will not apply. Similarly, in the case of Manoj Kumar Narari Vs. ITO ITA No.1679/kol/11 dated 20.04.2012, wherein it was a fact that impugned transaction was in the nature of trade and advance received for supply of special type of fertilizer and under such assurance, such amount was advanced by his brother which was repaid. In such a circumstances it was held that provisions of section 271E read with Section 269T of the Act do not apply. However, the CIT(A) ignored all submissions of the assessee and held that the expression ‘any other person’ occurring in section 269T of the Act is wide enough to encompass a spouse. The Furthermore, the legislature has specially provided by way of two proviso to the person, the person who would be excluded from the operation of the provisions of section 269T of the Act. The legislature has in their wisdom made no exception in respect of any kind of family relationship between borrower and lender in this behalf. This way, ld. CIT(A) confirmed the penalty under section 269T of the Act.
Not being satisfied with the order of the Ld. CIT(A), the assessee is in appeal before us and has taken the following grounds of appeal:
1. FOR THAT the Ld. Commissioner of lncome Tax (Appeals) Durgapur failed to appreciate that none of the conditions precedent required to be satisfied for the assumption of jurisdiction u/s. 271E read with s. 269T of the lncome Tax Act, 1961 existed and/or have been complied with and/or fulfilled in the instant case by the Ld. Joint Commissioner of lncome Tax, Range 2, Durgapur and his specious action in upholding the impugned order imposing penalty to the extent of Rs.5,00,000/- in that legal perspective is therefore ab initio void, ultra vires and ex-facie null in taw. Page | 3 Promod Kumar Singh A.Y. 2008-09 2. FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s.271E of the lncome Tax Act, 1961, the Ld. Commissioner of lncome Tax (Appeals) Durgapur misconceived his jurisdiction in upholding the action of the Ld. Joint Commissioner of lncome Tax, Range 2, Durgapur of passing the specious order imposing penalty to the extent of Rs. 5,00,000/- misconstruing the expression "any other persons” appearing in the provisions of s.269T of the Act and his purported finding reached on such tenuous premise is completely unfounded, unjustified and untenable in law.
3. FOR THAT the Ld. Commissioner of lncome Tax (Appeals) Durgapur acted unlawfully in upholding the order imposing penalty u/s.271E of the lncome Tax Act, 1961 amounting to Rs. 5,00,000/- passed by the Ld. Joint Commissioner of lncome Tax, Range 2, Durgapur and was remiss in not taking into consideration the reasonable cause as envisaged within the scope and ambit of the provisions of s. 273B of the lncome Tax Act, 1961 on the facts and circumstances of the instant case and the adverse conclusion reached on that behalf is totally illegal, illegitimate and infirm in law.”
Although, in this appeal, the assessee has raised three grounds of appeal
, but at the time of hearing the solitary grievance of the assessee has been confined to the issue that Ld. Commissioner of lncome Tax (Appeals) acted unlawfully in upholding the order imposing penalty u/s.271E of the lncome Tax Act, 1961 amounting to Rs. 5,00,000/-
6. The ld. Counsel for the assessee has submitted before us that assessee is a contractor. On scrutiny of the cash book and ledger in course of assessment proceedings, the AO found that the assessee had repaid a sum of Rs.5,00,000/- , out of the unsecured loan of Rs.8,54,000/- in cash to Smt. Ushasingh, the details of which are depicted in the assessment order itself. As a consequence, the AO initiated proceedings u/s.271E of the Act and levied penalty of Rs.5,00,000/- on account of repayment of loan to his wife. The Ld. AR submitted that assessee is a contractor. The assessee purchased fuel from one Raj Luxmi Auto Filling Station and for the purpose of purchase of the said fuel, the assessee had to pay the Page | 4 Promod Kumar Singh A.Y. 2008-09 money by cash. In the course of assessment proceedings the AO fund that the assessee had made cash payment to the said Raj Luxmi Auto Filling Station. The AO found that the cash payments made to the said Raj Luxmi Auto Filling Station was in violation of section 40A(3) and made addition on that account. The AO further found from the cash book that for the purpose of making payment of the cash to Raj Luxmi Auto Filling Station the assessee took cash loan from his wife Smt. Usha Singh on different occasions whenever the cash was needed and also repaid the said cash money when the availability of funds was there. The ld. Counsel also submitted that the loan was taken by the assessee from his wife which is not disputed and whenever surplus cash was available the amount was repaid to his wife. The Ld. Counsel also submitted that the transaction between husband and wife cannot attract the provisions of Section 269SS and 269T of the Act. The Ld. Counsel also submitted that the loan taken by the assessee from his wife does not contravenes the provisions of section 269SS of the Act. The provisions of section 269SS of the I.T Act applied loan deposits taken from other persons. The term defines in the provisions of section 269SS of the Act “any other person”, does not applicable to close relatives. The expression “any other person” in the context of the introduction of Section 269SS means persons who are not intimately or not very closely connected to the assessee. Here in this case, the husband and wife are closed connected and the wife cannot be termed in the definition of “any other person”. In addition to this, the Ld. Counsel for the assessee has relied on the following judgments: i) ITA No.172(Gau) of 2010 A.Y 2001-02 in the case of Kuldip Singh vs. Income-Tax Officer, Ward-3(2) & Page | 5