TARAI TRANSPORT CORPORATION,SILIGURI vs. JCIT, RANGE-1, SILIGURI

3. That the Ld. CIT (Appeals) has misinterpreted the phrase "Loans and Advances" in the Balance Sheet of the appellant standing in the Asset side which denotes loans and advances made and not accepted by the appellant.

4. That the Ld. CIT (Appeals) has completely misconceived the decision of the Hon'ble ITAT [Kolkata] in the case of the appellant wherein the Ld. Tribunal had set aside penalty imposed u/s 271 I) in similar circumstances by making his own assumptions about the order of the Ld. Tribunal and not by relying on the facts.

5. That the Ld. CIT (Appeals) has erred while completely ignoring the decision given by the Hon'ble Calcutta High Court in the case of the appellant while confirming the penalty order u/s 2711).

6. That the Ld. CIT (Appeals) failed to give cognizance to the fact the transactions between assessee firm and M/s Sunil Kumar Kundu. sister Page 2 of 6 I.T.A. No.: 273/KOL/2024 Assessment Year: 2016-17 Tarai Transport Corporation. concern, were made due to business exigency and confirmed a penalty of Rs. 1,00,00,000/-.

7. That the Ld. CIT (Appeals) has erred while taking the view that the Revenue leakage in the instant case cannot be determined as the assessment was made under the purview of 'Limited Scrutiny" where in fact, both the Ld. A.O., making the assessment order and the Ld. JC1 I. making the penalty order had the scope of extending the verification for the purpose of determining Revenue Leakage.

8. That the Ld. CIT (Appeals) has erred by misinterpreting that the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Sunil Kumar Goel (2009) 315 ITR 163 (P&H-HC) was not applicable in the case of the appellant.

9. That the penalty order confirmed by the Ld. CIT (Appeals) is bad in law. unlawful and unjustified and the same should be quashed and your appellant be given such reliefs) as prayed for.

10. That the appellant craves your Ld. permission to add. amend or modified the above on or before the date of hearing of the appeal.”

3. Before us, the ld. A/R argued that since the penalty did not directly emanate from the order u/s 143(3) of the Act in the case of the appellant, there was no satisfaction recorded by ld. AO. In fact, as mentioned earlier, the entire gamut of payments purportedly hit by the provisions of Section 269SS of the Act were discovered from the case of another person, Sh. Sunil Kumar Kundu who had purportedly advanced alleged loans amounting to Rs. 1 Crore to the appellant, otherwise than through an account payee cheque or account payee draft. Regarding the necessity of satisfaction being recorded by the Assessing Officer (in short ld. 'AO'), the ld. A/R relied on the case of CIT vs. M/s. Jai Laxmi Rice Mills Ambala City reported in (2015) 379 ITR 521 (SC). 3.1. Ld. A/R also placed before us ITAT’s order in the assessee’s own case bearing for AY 2001-02. Through this order the Hon'ble ITAT had accepted the contention of the appellant regarding loans and advances received from three entities, including M/s. Sunil Kumar Kundu, the same person or entity i.e. the subject matter of adverse treatment in the present appeal. It was informed that the Income Tax Department took this matter up to the Hon'ble High Court of whereby the appeal was dismissed vide ITA No. 694 of 2007, GA No. 3440 of 2007 dated 31.01.2008. This same I.T.A. No.: 273/KOL/2024 Assessment Year: 2016-17 Tarai Transport Corporation. matter travelled up to the Hon'ble Supreme Court where the SLP filed by the Income Tax Department was dismissed vide CC 872/2009 dated 30.10.2009. 3.2. The ld. D/R was contended to rely on the orders of authorities below.

4. The averments of the ld. A/R, the cases relied upon by him and the decisions rendered by the Hon'ble ITAT, Kolkata in the assessee’s own case for AY 2001-02 have been carefully perused. Right at the outset, it needs to be mentioned that under similar facts and circumstances, which even involved the same entity/person, Sunil Kumar Kundu for the AY 2001-02, Hon'ble ITAT has relied on the provisions of Section 273B of the Act to grant relief to the assessee from the rigours of penalty imposed u/s 271D of the Act. For the sake of easy recall, the provisions of Section 273B of the Act are extracted as under: “Notwithstanding anything contained in the provisions of clause (b) of sub- section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271-I, section 271J, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.” 4.1. It is clear from a plain reading of Section 273B of the Act that in case it can be reasonably deduced from the facts and circumstances that “reasonable cause” was there leading to the purported default then no penalty would be imposable in such a case. It is seen from a perusal of the ld. CIT(A)’s order that in para 6.2.5 the appellant’s contention has been recorded as under: “6.2.5 Further, the appellant has contended that there was a reasonable cause on account of the business exigencies and the nature of the business transactions. It is contended that the appellant is engaged in the business of transportation. The entire chain of activities performed involves engagement of labourers and goods vehicles. Thus, cash was required for making payment to these labourers/vechiles owner etc. The money was taken from the sister concerns in cash for making payment to these parties Page 4 of 6 I.T.A. No.: 273/KOL/2024 Assessment Year: 2016-17 Tarai Transport Corporation. as cash was available with the sister concern. Therefore, it was contended by the appellant that there was reasonable cause for borrowing in cash. The money was taken for genuine business need of the appellant-firm. The acceptance of cash from the sister concerns was not for avoidance of any tax” 4.2. Admittedly, similar situations prevailed in the case pertaining to AY 2001-02 which was the subject matter of appeal before the Hon'ble ITAT (supra). At this stage, some relevant portions from the order of the ITAT may be extracted for reference as under:

In the case under consideration before us, we find that the assessee had the current account of M/s Sunil Kumar Kundu, M/s. Farm Chemicals anti M/s. Farm Tea & Chemicals (P) Ltd. All the above three concerns are sister concerns in which the partners of the assessee-firm are either partners or directors. The assessee has neither paid any interest nor received any interest on the current account of those parties. Acceptance of cash by the assessee at a time was below Rs.20,000/-. The genuineness of the transactions has not been disputed by the Revenue. All the three sister concerns are assessed to income-tax and the amount has been debited in the books of the respective concerns. It has been explained by the learned counsel that the assessee is a transporter. It does not own the truck of its own and it engages the trucks of outside for transportation of the goods of its customers. The assessee has to make the advance payment to the drivers in cash. Therefore, the cash was accepted from sister concerns for making the payments to the truck drivers. He has produced before us the copy of the cash book of the respective dates so as to prove the utilization of the money accepted in cash. The Revenue has not disputed the facts stated by the learned counsel. ……………………………………………………………… ……………………………………………………………… The A.O in the order passed u/s 143(3) dated 31 3.2004 has accepted the income returned by the assessee. Moreover, the contention of the learned counsel for the assessee that the cash was accepted for immediate business requirement has also not been controverted before us. Therefore, we accept that there was reasonable cause for acceptance of cash from the sister concerns and, accordingly, in view of Sec, 2738 levy of penalty would not be justified. The Hon'ble Apex Court in the case of Kum. A.B. Shanlhi (supra) has held that the levy of penalty u/s, 27ID is discretionary and considering the totality of the facts of the assessee’s case, in our opinion, the assessee’s case is not a fit case for imposition of penalty u/s. 27 ID amounting to Rs.73,63,012/-. We, therefore, cancel the same.