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Income Tax Appellate Tribunal, ‘’SMC’’ BENCH, AHMEDABAD
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’SMC’’ BENCH, AHMEDABAD BEFORE, SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ITA No.2472/AHD/2016 �नधा�रण वष�/Asstt. Year: 2012-2013 Paresh Nanubhai Shiroya The J.C.I.T, B-20 Shilp Gram Sidhi, Vs. Range-5(3), Opp. Suramaya Floura, Ahmedabad. B/H Vrindavan Farm Nikol Ahmedabad-382350. PAN: ADKPS6431N
(Applicant) (Respondent) Assessee by : Shri S.N. Divatia, A.R Revenue by : Shri Vinod Tanwani, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 18/07/2019 घोषणा क� तार�ख /Date of Pronouncement: 14/10/2019 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-5, Ahmedabad [Ld. CIT(A) in short], dated 02/08/2016 arising in the matter of penalty order passed under s. 271D of the Income Tax Act, 1961 (here-in- after referred to as "the Act") dated 11/06/2015 relevant to Assessment Year (AY) 2012-13.
The assessee has raised the following grounds of appeal: Page 1 of 7
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1.1 The order passed u/s.250 on 2-8-2016 for A.Y.2012-13 by CIT(A)-5, Abad upholding the penalty of Rs. 13,15,000/- imposed u/s 271D of the Act by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CrT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned penalty. The Ld. CIT(A) has failed to pass a speaking order and merely reiterated the pleas taken by AO. 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the penalty of RS. 13,15,000/-imposed u/s 271D by AO. The Ld. CIT(A) has grievously erred in law and on facts in confirming that there was no sufficient cause for taking loans in cash exceeding RS. 20,000/-. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the penalty of RS. 13,15,000/-imposed u/s 271D by AO. 3.1 The observations made by CIT(A) while upholding that there was no sufficient cause are not admitted by the appellant and are erroneous in so far as the same are contrary to the facts on record. It is, therefore, prayed that the penalty of Rs. 12,15,000/- upheld by the CIT(A) may kindly be deleted.
The only effective issue raised by the assessee is that the Ld. CIT (A) erred in confirming the penalty levied under section 271D of the Act amounting to Rs. 13,15,000.00 only equal to the amount of loan accepted in cash.
Briefly stated facts are that the assessee in the present case is an individual and deriving his income by way of share of profit from the partnership firm and interest income. The assessee in the year under consideration has accepted loan in cash amounting to Rs.13,15,000 from his close relatives and friends who are mostly the agriculturist. The loan providers were 15 in numbers. The assessee claimed that such loan was taken for the purchase of lands situated at village Muthiya along with other persons
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which were registered dated 15th August, 2011 and 22nd May, 2012. The share of the assessee in the impugned lands was 5% and 17.50% only. The assessee in support of the loan transaction has filed the copies of the confirmation along with revenue records of agricultural activity and PAN of all the parties and claimed that the impugned transaction was disclosed by the respective parties in their books of accounts. The assessee also claimed that the impugned transaction of loan was also cross verified by the AO directly from the parties.
2.1 The assessee also explained that the other co-owners agreed to pay their share on time for the purchase of the land and accordingly the assessee accepted the loan in cash as there was no cash available with him during that time. The assessee also claimed that he was under the impression that there will not be any violation of section 269SS of the Act if the loan in cash is accepted from the close relatives and friends who are having income from the agricultural source.
2.2 However, the AO observed that all the parties provided loan to the assessee in cash were having bank accounts except one. But there was no affidavit filed by such party/the assessee that such one-party does not have any bank account. Therefore the AO was of the view that the loan could have been taken by the assessee from the parties easily through the banking channel.
2.3 The AO also observed that the assessee failed to justify that there was a reasonable cause for accepting the loan in cash in violation of the provisions of section 269SS of the Act as provided under the provisions of section 273B
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of the Act. Accordingly, the AO levied the penalty for the amount of loan accepted in cash under section 271D of the Act.
The aggrieved assessee preferred an appeal to the Ld. CIT (A):
The assessee before the Ld. CIT (A) submitted that the purpose of the provisions of section 269SS of the Act was to curb the unexplained black money transactions whereas all the transactions in the instant case are genuine.
3.1 The assessee also claimed that he has accepted the loan in cash under the bona- fide belief and lack of knowledge of the income tax provisions. As such he was under the impression that there is no bar for accepting the loan in cash from the close relatives and friends.
3.2 Therefore the impugned transaction is outside the purview of the penalty provision as specified under section 271D of the Act.
3.3 However, the Ld. CIT (A) disregarded the contention of the assessee by observing that the assessee failed to establish the fact that there was a reasonable cause in accepting the loan in cash. Accordingly he confirmed the order of the AO by levying the penalty of Rs. 13,15,000.00 under section 271D read with section 269SS of the Act.
Being aggrieved by the order of the Ld. CIT-A the assessee is in appeal before us. The Ld. AR before us filed a paper book running from pages 1 to 65 and submitted that all the loan transactions are based on the supporting evidence. Moreover, there was the pressure of making the payment to the Page 4 of 7
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landowners as other co-owners were ready to make the payment for the purchase of the land.
On the other hand, the Ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the assessee has taken the loan in cash in violation of the provisions of section 269SS of the Act. Admittedly, all the transaction was with the indisputable parties and therefore there cannot be any doubt on the genuineness of the transactions.
6.1 The provisions of section 269SS of the Act prohibits to accept the loan in cash exceeding Rs. 20,000 in a year from a single person. However, there are certain exceptions provided under the section where the provisions of section 269SS will not be applied. But the impugned case of the assessee does not fall in any of the exception.
6.2 We further note that the provisions of section 273B of the Act provides immunity from the penalty as discussed above if there was a reasonable cause for failure on the part of the assessee in complying the provisions of section 269SS of the Act. As such the onus lies on the assessee to prove that there was some reasonable cause. In this regard, the assessee has submitted that he has taken the loan from the close relatives and friends in contravention to the provisions of section 269SS of the Act as he was in urgent need of money to make the payment for the purchase of land.
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6.3 We further find that the assessee has purchased the agricultural lands along with other owners. The share of the assessee in both the land was 5% and 17.50% only. The claim of the assessee is that the other co-owners were ready to make the payment to the land owners and at that relevant time he did not had sufficient funds/cash balance. Therefore, he had to borrow the money from the close friends and relatives.
6.4 In this connection, we note that the assessee has accepted the cash from different persons on different dates as evident from the copies of ledger of the parties placed on pages 33 to 46 of PB. But there was no documentary evidence suggesting that such receipt of loan was utilized for making the payment to the landowners. The assessee has not filed before us the cash flow statement /cash book and the payment schedule for making the payment to the landowners. It is because we find wide gap between the dates when the loan was taken and when the property was registered.
6.5 In our considered view, the genuineness of the transaction is not sufficient enough to get the immunity from the rigours provisions of section 269SS of the Act. In this regard we find support and guidance on the judgment of Hon’ble Allahabad High Court in the case of Mahak Singh Vs. CIT reported in 37 taxmann.com 390 wherein it was held as under:
There is a difference between the expression 'genuine and bona fide transaction' and the 'reasonable cause' for not complying with the provisions of section 269SS to avoid penalty proceeding under section 271D. The transaction may be genuine and bona fide but may still violate the provisions of section 269SS. The Legislature has provided for relaxing the rigour of technical breach by giving an opportunity to the assessee to show that there was a reasonable cause for not complying with the provisions of section 269SS. In the present case, concurrent findings have been recorded by Page 6 of 7
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the Assessing Officer, the Commissioner (Appeals) and the Tribunal that the assessee could not establish that he had to arrange the money in hurry to save the honour of family.”
In view of the above, we are of the view that the assessee has not furnished the sufficient documentary evidence to justify that there was urgent need for accepting the loan in cash as most of the parties were having the bank accounts. However, in the interest of justice and fair play, we are inclined to given more opportunity to the assessee to justify the urgent need for accepting the loan in cash in order to get the immunity from the provisions of section 269SS of the Act in pursuance to the provisions of section 273B of the Act. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
In the result, the appeal of the assessee is allowed for the statistical purposes.
Order pronounced in the Court on 14/10/2019 at Ahmedabad.
-Sd- -Sd- (Ms MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 14/10/2019 Manish
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