Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DIVISION BENCH ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA Nos. 192 & 193/Chd/2018 (Assessment Years: 2011-12) Shri Mohinder Pal Singh Vs. The Addl. CIT 8-A, Kitchlu Nagar Range- VII Ludhiana Ludhiana
PAN: ADVPS2237F
ITA Nos. 194 & 195 /Chd/2018 (Assessment Years: 2011-12) Shri Ramneek Sehgal Vs. The JCIT 8-A, Kitchlu Nagar Rang-VII Ludhiana Ludhiana PAN: AVMPS2817A (Appellant) (Respondent)
Assessee by : Shri. Nikhil Goyal Department by : Shri Manu Malik Date of hearing : 04/06/2018 Date of Pronouncement : 08/06/2018
ITA Nos. 196 & 197 /Chd/2018 (Assessment Years: 2011-12) Smt. Paramjeet Kaur Vs. The JCIT 8-A, Kitchlu Nagar Range-VII Ludhiana Ludhiana
PAN: AIPPS7061J (Appellant) (Respondent)
Assessee by : Shri. Nikhil Goyal Department by : Shri Manu Malik Date of hearing : 05/06/2018 Date of Pronouncement : 08/06/2018 O R D E R PER BENCH:
All the above appeals have been filed by different Assessees against the
order of the Ld. CIT(A)-3, Ludhiana. Since the issues involved are common in all
the above appeals pertaining to penalty under section 271D and 271E therefore
they are being adjudicated by way of this common order by taking the case of
Mohinder Pal Singh in ITA No. 192/193 CHD-2018 as the lead case.
Appeal wise grounds reproduced here under:
Grounds of appeal in ITA No. 192-CHD-2018 for A.Y. 2011-12 1. That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 61,49,385/- under section 271D of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before him in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. Grounds of appeal in ITA No. 193-CHD-2018 for A.Y. 2011-12 1. That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 79,55,010/- under section 271D of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
Grounds of appeal in ITA No. 194-CHD-2018 for A.Y. 2011-12 1. That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 22,91,700/- under section 271D of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. Grounds of appeal in ITA No. 195-CHD-2018 for A.Y. 2011-12 1. That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 8,70,500/- under section 271E of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. Grounds of appeal in ITA No. 196-CHD-2018 for A.Y. 2011-12 1. That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 75,04,000/- under section 271E of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. Grounds of appeal in ITA No. 197-CHD-2018 for A.Y. 2011-12
That the Ld. CIT(A) has erred in upholding the imposition of penalty of Rs. 76,68,000/- under section 271E of the Act which is arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified. 3. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
Brief facts of the case are that the assessee has received cash loan from
the company namely M/s Ceigall India Ltd. Ludhiana in which he is a Director.
The amounts in cash have been received were varying from Rs. 15,000/- to Rs.
8,00,000/-.
Before the Assessing Officer during the penalty proceedings under section
271D the assessee explained that “all the cash entries are by deposits in one
account by withdrawing the same from other bank due to emergency of
passing of cheques from the accounts and the entries due to business exigency
hence covered under reasonable cause and no entry is un genuine, no entry
has been carried with mala fide intention and there is no loss to the Revenue” .
The assessee has submitted the bank statements of M/s Ceigall India Ltd. from
where the cash was withdrawn by the company, the entry wise clarification was
also submitted before the Assessing Officer and reiterated that the cash loans
was given due to business exigencies. The assessee contended that penalty is
not leviable as the transactions are genuine, the loans were taken for
immediate business requirement and there was a reasonable cause for
accepting the deposit in cash.
The Assessing Officer held that there cannot be any emergency situation
on 35 occasions over a period of one year and there was no reasonable cause
for withdrawal of the cash from one account and depositing the same in the
personal account of the Director and held that since the assessee has not given
any evidence to substantiate the claim of reasonable cause and hence penalty
is leviable.
The Ld. CIT(A) confirmed the penalty on the grounds that the assessee has
failed to substantiate its claim even during the appellate proceedings about the
reasonableness of urgency of the cash loan. The Ld. CIT(A) relied on the
judgment in the case of Tenamal Chajjer (2005) 96 ITD 210 (Chennai) wherein it
was held that the provisions of Section 269SS is very strict and will apply strictly
where the loan or deposit is taken or accepted from any other person otherwise
by an account payee cheque or account payee draft if the amount of such
loan or deposit or the aggregate amount of such loan or deposit is Rs. 20,000 or
more. The only saving clause for reasonable cause is provided in section 273B for
violation of section 269SS and in view of this provision, no penalty under section
271D will be imposed if there is any reasonable clause. The Ld. CIT(A) has also
relied on the judgment in the case of Khijaria Leathers 99 TTJ 616 (Chennai)
wherein it was held that the genuineness of transactions do not exclude the
provisions of Section 269SS.
Before us the Ld. AR argued that the transactions entered between the
assessee who is a director in the company from where the cash deposits have
been received cannot be treated as loan or deposit at all as envisaged in the
provisions of Section 269SS as the amount has been withdrawn by the Director
from the current account maintained by the company. He argued that it is not
the case of the Department that any unaccounted cash has been identified in
the case of the assessee. He further argued that the assessee is a director
maintaining current account with the Company and the assessee is regularly
withdrawing funds from the Company either in cash or via bank transfers and
the reason for the same has been explained on Page 4-5 of the CIT(A) order.
Similarly, the assessee is transferring the funds to the account of the Company as
and when required at the time of emergency needs of the funds by the
Company at the time of clearing of the cheques in the regular course of the
business. At times the transaction is being settled with the salary income or
against the funds transferred by the assessee either via cash or by bank
transfers. This is regular transaction between a director and a Company and this
does not at all constitute loans and deposits as envisaged under section 269SS
of the Act.
7.1. The Ld. AR further argued that it is not the case of the department that
any unaccounted cash has been found, identified are detected in the case of
the assessee. There is always been a corresponding entry in the current account
of the Director maintained by the company. To that extent he argued that the
purpose of the enactment of the provision of Section 269SS is to stop the
circulation of unaccounted cash or introduction of unaccounted monies into
the books by the way of loans which is not the case in the case of the assessee.
He further relied on the judgment in the case of CIT Vs. Idhayam Publications
Ltd. 163 Taxmann 265 wherein it was held that the payment of monies into
current account and withdrawals of monies from the current account in the
presence of any other evidence cannot attract provisions of Section 269SS.
Further reliance was also placed in the case of S.R. Associated Construction Vs.
JCIT (ITAT Kolkata)- ITA No. 209 & 210/Kol/2013 wherein it was held that the
transactions between the company and its Director maintained in a current
account would neither be categorized as a loan or deposit.
The Ld. DR vehemently supported the order of the Ld. CIT(A) wherein the
Ld. CIT(A) in (para no. 7) confirmed the order on the ground that the plain
provisions of the Act is duly attracted. Regarding the case laws cited by the Ld.
AR namely CIT Vs. Idhyam Publications Ltd., S.R. Associated Construction (supra)
no contrary decision was brought to our notice.
We have heard Ld. Representatives of both the parties and perused the
material placed before us.
The issue is whether penalty can be levied in the absence of any other
material to prove or indicate introduction of unaccounted money or any doubt
casted by the department regarding the genuineness of the source or whether
the assessee has brought reasonable cause to enter into such transactions. On
perusal of the records the reasonable cause as canvassed by the assessee is
examined below:
The reasons given by the assessee are 1. Household withdrawals against the salary 2. Cash withdrawn from the company and deposited with PNB SB Account 3. Credit Card payment
Similarly the assessee has given loan to the company mentioned the reasons as 1. Cash withdrawn from HDFC Account and given to the company.
All these transactions have been undertaken between two bank accounts by withdrawing cash from one account and depositing the cash into the other account. The source of repayment or payment of loan was never in question. There was no leakage of Revenue or detection of circulation of unaccounted money by way of cash loans which was the fundamental purpose to curb the circulation of black money. The transactions have been taken place between two current accounts and also between the Director of the Company and the Company itself in the form of maintenance of a current account for contingencies of business purpose and also for contingencies of the Director for salary and payment of credit card dues. While such transactions may attract other provisions of the Income Tax Act,1961, but it is not a fit case for the levy of penalty under section 271E/271D. Hence keeping in view the facts of the instant case and for reasons mentioned above, and in the absence of any evidence of introduction of unaccounted money and following the judgments in the case of CIT Vs. Harpal Singh Jaswant Singh in ITA No. 146 of 1995 (P&H High Court) and
CIT Vs. Saini Medical Stores 277 ITR 420, and CIT Vs. Sunil Kumar Goyal 183 Taxman 53, and keeping in view the facts and circumstances specific to the instant case, no penalty can be leviable under section 271E and Section 271D of the Income Tax Act.
In the result all the appeals of the Assessee’s are allowed.
Order pronounced in the open Court.
Sd/- Sd/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 08/06/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR