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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI RAJENDRA & SHRI SAKTIJIT DEY
आदेश / ORDER शक्तिजीि दे, न्याययक सदस्य के द्वारा / PER SAKTIJIT DEY, J.M.
This is an appeal filed by the assessee against the order dated 25th February 2013, passed by the learned Commissioner (Appeals)– 34, Mumbai, confirming imposition of penalty under section 271D of Shri Martin Alex Correa 2 the Income Tax Act, 1961 (for short "the Act") for the assessment year 2007–08.
Briefly the facts are, the assessee is an individual. In the course of assessment proceedings for the impugned assessment year, the Assessing Officer, noticing that the assessee has accepted cash loan of ` 2.50 lakh in violation of provisions of section 269SS of the Act, forwarded information to the appropriate authority for initiating action for imposition of penalty under section 271D. As a consequence, proceedings for imposition of penalty under section 271D, was initiated with issuance of show cause notice on 22nd December 2010 to the assessee. In response to the said show cause notice, it was explained by the assessee that he had received cash of ` 2.50 lakh from M/s. Edna Misquitta on 3rd August 2006. It was submitted that said Ms. Edna Misquitta’s husband had immovable property for the management of which he had appointed the assessee attorney before his death on 17th December 2000. It was submitted after her husband’s death, Ms. Edna Misquitta, also executed a power of attorney on 14th August 2001 in favour of the assessee for managing the property inherited by her. It was submitted that as a result of such power of attorney the relationship between the assessee with M/s. Edna Misquitta is that of a trust and trustee and not of a lender and Shri Martin Alex Correa 3 borrower. It was submitted, the lady had advanced money to the assessee from time to time which as on 31st March 2007, aggregated to ` 1.06 crores which also included the amount of ` 2.50 lakh given in cash. It was submitted though the amount of ` 2.50 lakh was shown as loan in the Balance Sheet due to the mistake committed by the Accountant, but, real nature of transaction between the assessee and M/s. Edna Misquitta, is not in the nature of loan but funds given by her in trust. The authority concerned, however, did not find merit in the explanation of the assessee. He was of the view that the claim of the assessee that due to mistake committed by the Accountant, the amount of ` 2.50 lakh was shown as loan in the Balance Sheet is not acceptable. He further observed on verification of books of account, he found that the assessee has shown the said amount as loan. He also observed, the assessee has not produced any evidence to indicate that the amount of ` 2.50 lakh was taken for purchase of any property in the name of Ms. Edna Misquitta. Thus, on the basis of the above, the authority concerned proceeded to pass an order on 10th February 2011, imposing penalty of ` 2.50 lakh under section 271D of the Act.
Being aggrieved of penalty order so passed, the assessee preferred appeal before the first appellate authority. The learned Commissioner (Appeals), after considering the submissions of the Shri Martin Alex Correa 4 assessee and examining the facts and materials on record, observed that on going through the power of attorney, it was not indicated that relationship between the assessee and M/s. Edna Misquitta, is in the nature of trustee and trust. He also observed that no documentary evidence could be produced by the assessee to demonstrate that the amount received was for the purpose of purchase of any property whereas the Balance Sheet and books of account of the assessee show the amount of ` 2.50 lakhs as loan. Therefore, opining that provision of section 269SS was violated by the assessee in accepting the cash loan, he sustained the imposition of penalty under section 271D of the Act.
The learned Counsel for the assessee submitted before us that purpose of introducing of section 269SS is to curb introduction of unaccounted money. In case of assessee, since the transaction is genuine and no unaccounted cash was introduced, the provisions of section 269SS of the Act are not applicable. In this context, he relied upon the following decisions:–
i) Smt. Rupali Desai, 88 ITD 76 (Mum.)(TM); and ii) Eetachi Agencies, 248 ITR 525.
Shri Martin Alex Correa 5
He submitted that the amount of ` 2.50 lakh was advanced by Ms. Edna Misquitta, suo–motu for meeting expenses to be incurred on her behalf, hence, it is not in the nature of loan, therefore, penalty under section 271D of the Act cannot be imposed. For such proposition, he relied upon the decision of the Hon'ble Delhi High Court in All India Deaf and Dumb Society, 283 ITR 113 (Del.). Further, he submitted that Ms. Edna Misquitta, is a distant relative of the assessee, therefore, the transaction between relatives do not invite the provisions of sections 269SS and 271D of the Act. For this purpose, he relied upon the decision of the Tribunal, Ahmedabad Bench, in Vir Sales Corporation, 50 TTJ 130 (Ahd.). Lastly, the learned counsel submitted that when the assessee is able to show reasonable cause for accepting the amount in cash and the transaction is bona fide, no penalty is imposable. In this regard, he relied upon the decision of the Hon'ble Gujarat High Court in Bombay Conductors and Electricals Ltd., 301 ITR 328 (Guj.).
The learned Departmental Representative, on the other hand, submitted that the provisions of section 269SS puts a bar on cash transaction exceeding certain prescribed limit. Therefore, receipt of loan exceeding the prescribed limit in cash straight away attracts the provisions of section 269SS. The learned Departmental Representative
Shri Martin Alex Correa 6 submitted that power of attorney executed by Ms. Edna Misquitta, has no relationship with the cash loan as it was executed in the year 2001. Therefore, the assessee cannot take a plea that the amount of ` 2.50 lakh was received in terms with the power of attorney for incurring expenditure on behalf of the assessee. He, therefore, submitted that in the facts and circumstances of the case, imposition of penalty is justified.
We have considered the submissions of the parties and perused the material available on record. We have also examined the case laws relied upon by the learned counsel for the assessee. Undisputedly, it is a fact on record that the assessee in its Balance Sheet has shown the amount of ` 2.50 lakh as loan received in cash. Even the books of account of the assessee mention the aforesaid amount of ` 2.50 lakhs as loan. Therefore, as per assessee’s own narration, since he has received cash loan of ` 2.50 lakh, prima–facie, there is a violation of provisions contained under section 269SS of the Act. Though, the assessee has tried to wriggle out from rigours of sections 269SS and 271D of the Act by contending that such entries in the Balance Sheet and books of account are as a result of mistake committed by the Accountant but, in our view, such plea of the assessee is not acceptable as it is not a bona fide plea. Though the assessee has made
Shri Martin Alex Correa 7 an endavour to project the loan taken as amount received as a trustee by virtue of power of attorney but, in our view, such plea of the assessee is on thin ground. Had it been a case of holding the money of the lady in trust, the assessee would not have shown it as loan in its books of account and financial statement. As far as the contention of the learned Counsel for the assessee that the transaction is bona fide and there is no accounted money, hence, provisions of section 263SS is not applicable, we are unable to accept such contention of the assessee. On reading of the provisions of section 269SS of the Act, it is very clear that it is applicable to a situation where cash loan is accepted in excess of the prescribed limit. Therefore, there is nothing in the said provision to show that it will apply only in a case where unaccounted cash is introduced or transaction is not bona fide. Therefore, in the facts of the present case, since it is proved that the assessee has received cash loan of ` 2.50 lakh in violation of provisions contained in section 269SS, imposition of penalty, in our view, is justified. As far as the decisions relied upon by the learned Counsel for the assessee are concerned, suffice to say, there is no dispute or doubt with regard to the principle laid down, therein, but, they are in the context of specific facts involved in those cases and will not apply to each and every case irrespective of difference in facts. Therefore, the decision relied upon do not, in any manner, help
Shri Martin Alex Correa 8 assessee’s case. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the assessee.
In the result, assessee’s appeal stands dismissed. Order pronounced in the open Court on 09.10.2015