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Income Tax Appellate Tribunal, DELHI BENCH SMC-1 NEW DELHI
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
The present appeal has been filed by the assessee assailing the correctness of the order dated 15.09.2014 of CIT(A)-XXII, New Delhi pertaining to 2005-06 assessment year on various grounds.
The relevant facts of the case are that penalty u/s 271E r.w.s 274 of the Income Tax Act, 1961 was levied upon the assessee wherein on facts the assessee had been found in assessment proceedings u/s 147/148 to have repaid a loan of Rs. 13 lacs to Sh. Harish Bindal & Tarun Bindal in cash. The levy of penalty was challenged unsuccessfully in appeal before the CIT (A) on I.T.A. 6728/Del/2014 Assessment Year: 2005-06 various grounds including the grounds of reasonable cause.
Aggrieved by this, the assessee is in appeal before the Tribunal.
The background of the case as canvassed before the AO in the penalty proceedings vide letter dated 21.03.2013 is reproduced hereunder:-
.......Repayment of loans in cash is covered by section 269T of Income tax Act. The assessee is very near relative of Mr. Harish Bindal (brother-in-law) and Mr.Tarun Bindal who is son of Mr. Harish Bindal. All repayment of loans of Rs.13 lacs is paid after withdrawing the funds from CANARA Bank of his firm Jay Industries. Hence, the source of repayment of loans is already proved by documentary evidence. Hence, section 68 of Income tax Act is not covered in this case. The assessee agreed that only section 269T is partly covered in this case as the near relative Mr. Harish Bindal demanded cash and he has accepted the receipt of cash against their loan amount..........
Addressing the above letter reproduced in the penalty order, attention was invited to Paper book page No.3. On the basis of the same, it was submitted by the Ld. AR that in the facts of the present case re-opening was done on the basis of tax evasion petition allegedly filed by Sh. B.D.Gupta, some anonymous person, who in fact was Sh. Harish Bindal, who is the near relative of the assessee. The said submission, it was stated, was made before the ACIT vide letter dated 31.12.2012 and is placed I.T.A. 6728/Del/2014 Assessment Year: 2005-06 at Paper Book page-3. For ready-reference, relevant extract there from is reproduced hereunder:-
"We bring to your kind notice that repayment of loans in cash is covered by Section 269T of the Income Tax Act. The assessee is very near relative of Mr. Harish Bindal (Son in Law) and Mr. Tarun Bindal who is son of Mr. Harish Bindal. All repayment of loans of Rs. 13 lacs is paid after withdrawing the funds from Canara Bank of his firm Jay Industries. Hence source of repayment of loans is already proved by documentary evidence. Hence section 68 of Income Tax Act is not covered in this case. The assessee agreed that only section 269 T is partly covered in this case as the near relation Mr. Harish Bindal demanded cash and he has accepted the receipt of cash against their loan account. Section 269T was introduced with a view to counter the evasion of tax. In the instant cash the source of repayment of loan is proved with all documentary evidence. The allegation made in the Tax Evasion Petition received from Shri.B.D.Gupta may be dropped. We request your honour to drop this proceedings u/s 147/148 of Income Tax Act because this is the complaint from an anonymous person and whose identity is not verify by the Department. This complain is basically from Mr.Harish Bindal who is near relative to the assessee and their dispute for so many issues is still pending in the High Court. This complaint is made by Harish Bindal by using the name of B.D.Gupta just to harass the assessee."
3. Inviting attention to the submissions dated 28.08.2014 advanced before the Ld. CIT (A), copy of which is placed at pages 17-42 along with annexures, it was submitted that these I.T.A. 6728/Del/2014 Assessment Year: 2005-06 submissions would address reasonable cause and is relied upon.
For ready-reference, relevant extract from the impugned order is reproduced hereunder:-
"As required by your honour, I am enclosing the following documents for reasonable cause as provided u/s 273B of I.T. Act:-
Copy of Bank statement of Jay Industries from where the cash was withdrawn and paid to Mr. Harish Bindal and Mr. Tarun Bindal.
2. Copy of Drawing A/c of the Assessee where Account of the Assessee was debited on the day of cash payments to Harish Bindal and Tarun Bindal is son of Mr. Harish Bindal.
Mr. Harish Bindal is a brother-in-law of the assessee who insisted for cash payment due to long dispute in family (copy of disputes are enclosed)."
It was his submission that on account of the problems created by Sh. Harish Bindal, the said amount necessarily had to be paid in cash so as to return the loan taken from him. It was submitted that Sh. Harish Bindal refused to take payments by cheque. In view of the delicacy of the relationship with the said relative the insistence of payment in cash could not be ignored.
In support of the said claim, attention was invited to copy of the complaint dated 04.05.2005 filed in the police station before the I.T.A. 6728/Del/2014 Assessment Year: 2005-06 SHO, Shalimar Bagh, u/s 498A/406 diary No.7946 dated 05.05.2005 (copy placed at pages 18 to 21 of the Paper Book).
Ld.AR pleaded that in order to buy peace the assessee had agreed to repay the loan in cash as insisted instead of by cheque. It was submitted that the assessee's explanation that the payment had been made in cash on account of the peculiar unfortunate delicate situation can constitute a reasonable cause. Accordingly it was his prayer that the penalty may be quashed. In the alternate it was submitted the assessee has also raised additional grounds, canvassing that the penalty is time-barred and deserves to be quashed.
The Ld. DR, relying upon the impugned order submitted that in the facts of the present case, the assessee could have repaid the loan by cheque as that would have saved the assessee from a future allegation that the loan was never repaid.
We have heard the rival submissions and perused the material available on record. Considering the same, we find that the fact that Sh. Harish Bindal and Smt. Sunita Bindal had a violent acrimonious relationship is evidence on record which has not been disputed by the Revenue. The reference to the incidents I.T.A. 6728/Del/2014 Assessment Year: 2005-06 set out in the police complaint made by Smt. Sunita Bindal read out by the Ld. AR citing instances of mental and physical harassment necessitating seeking police protection and intervention has not been rebutted by the Revenue. The correctness of the same has not been assailed. In these peculiar facts and circumstances in the face of the turmoil in the family can constitute a reasonable cause. The source of cash payment on facts has been explained by the assessee and is not disputed.
In these peculiar facts in the absence of any rebuttal or the evidences relied upon, we are of the view that in terms of provisions of section 273B of the Act, the assessee has successfully demonstrated the existence of a reasonable cause as envisaged by the said section. Thus accepting the explanation the penalty is directed to be quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 14th March, 2016.