Case Law Details
Balwan Singh Vs ACIT (ITAT Delhi)
The assessee is engaged as a transporter and has not maintained any regular books of account. The assessment has been made on estimations, keeping in mind the transportation receipts earned by the assessee which also includes some of impugned entries towards cash receipts by way of loan.
The assessee in the course of survey itself, on being questioned, responded that the cash has been received by way of temporary loan from family members to meet the business exigency having regard to the nature of business he is involved in. The fact of business exigency has not been denied by the Revenue.
The CIT(A) has disregarded the defense of the assessee mainly on account of the fact that the assessee has failed to come out with complete facts and documents regarding the transactions. We find that the turnover receipts declared by the assessee at Rs. 39,61,195/- was enhanced to Rs.1,33,67,162/- for the purposes of estimation of income based on such impounded records. Therefore, imposition of penalty separately towards such receipts by way loan is not justified.
The impromptu response of the purportedly uneducated assessee at the time of survey, in our view, requires to be seen in its natural perspective and requires to be given credence. The assessee has declared that the money was received from family members to meet the business exigencies. Having regard to the nature of business of the assessee and ground realities, such explanation appears plausible.
Some of the case law of the Hon’ble High Courts and Co-ordinate Benches of Tribunal viz; DCIT vs. Rupen Dass, (2011) 7 ITR 55 (Kol) (Trib); CIT vs. Balaji Traders, (2008) 167 Taxman 27 (Mad); CIT vs. Laxmi Trust Co., (2008) 303 ITR 99 (Mad); DCIT vs. Vignesh Flat Housing, (2007) 105 ITD 359 (Chennai); Dillu Cine Enterprises vs. CIT, (2002) 80 ITD 484 (Hyd); Hindustan Steel Limited vs. State of Orissa, (1972) 83 ITR 26 (SC) Says in corus that the breach of Sections 269SS and 269T for receipt/repayment of cash attributable to business exigencies is a mere technical or venial breach.
The assessee has shown existence of reasonable cause in accepting/repayment of cash to meet the immediate business requirements. In our view, mitigating circumstances exists to exonerate the assessee from the recourse of penalty under Sections 271D and 271E of the Act. We accordingly set aside the order of the CIT(A) and cancel the penalty imposed under Sections 271D and 271E of the Act by the competent authority.y
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed at the instance of the assessee challenging the imposition of penalty under Section 271D amounting to Rs.21,82,000/- and under Section 271E amounting to Rs.16,70,000/- of the Income Tax Act, 1961 (the Act) concerning AY 2008-09.
2. Briefly stated, the assessee is engaged in the business of transportation as proprietor of M/s. Balwan Road Carriers & M/s. Global Travelling Corporation. A survey under Section 133A was conducted on 19.11.2007 in the business premises of the assessee. Certain documents and registers were impounded from the business premises towards lorry receipts, expenses and other entries. In the course of the assessment under Section 143(3) dated 31.12.2010, the assessee could not produce any books of accounts and claimed that assessee does not maintain any regular books of account. The assessment was completed on the basis of registers impounded. These registers allegedly contained entities of cash receipts and cash payments exceeding Rs.20,000/- from various persons which are admitted as cash loan deposits receipts and cash loan deposits repayments. The competent authority, i.e., Additional Commissioner of Income Tax invoked the provisions of Sections 271D and 271E for alleged infringement of Sections 269SS and 269T and imposed penalty of Rs.21,82,000/- and Rs.16,70,500/- respectively. The assessee challenged the imposition of penalty under Sections 271D and 271E of the Act before the CIT(A). The CIT(A) however dismissed the appeal of the assessee and confirmed the action of the Assessing Officer.
3. Being aggrieved, the assessee preferred appeal before the Tribunal.
4. When the matter was called for hearing, ld. counsel for the assessee submitted at the outset that assessee is engaged in the business of plying of truck and filed return on the basis of estimations with reference to gross receipts derived. The assessment was completed on the basis of impounded material and other incidental information. The receipt from transportation was revised at Rs.1,33,67,162/- and income was revised at Rs.6,68,358/- @ 5% of the receipt. Some other additions were also made and ultimately the assessment was framed at Rs.8,83,358/- against returned income of Rs.4,72,029/-. In this backdrop, ld. counsel for the assessee adverted to the statement of the assessee recorded under Section 133A of the Act as extracted in the impugned penalty order passed under Sections 271D and 271E of the Act dated 30.06.2011 and pointed out that while the fact of the receipt of hand loans and repayment thereof is not denied, it was pointed out in the same vein in question no.9 of the statement that such loans were taken from family members for business need and used for payment to drivers and other business associates to enable him to ply the trucks. It was further pointed out that no books of accounts were maintained and the assessee being uneducated does not understand such laws. Ld. counsel pointed out that repayment has been made in few days time against the receipt from transportation and the amount involved are very small. It was further pointed out that no inquiry has been made with the corresponding family members for granting such hand loans. Referring to several decisions rendered by different Benches for exoneration from penalty in case of such immediate business exigencies, ld. counsel submitted that having regard to the totality of the facts, where it is practically unfeasible for an uneducated/undereducated assessee or its drivers and staff to make effective use on any banking channel, a benign view should be taken consistent with the ground realities and judicial pronouncements and the penalty imposed under Sections 271D and 271E should be cancelled.
5. Ld. counsel for the Revenue, on the other hand, relied upon the order of the CIT(A) and submitted that it was incumbent upon the assessee to follow the law laid down by the statute and ought not to have indulged in receipt of cash loans or repayment thereof. The Ld. DR accordingly submitted that no interference with the order of the CIT(A) is called for.
6. We have carefully considered the rival submissions. Before we proceed to adjudicate the issue, certain facts are reiterated for convenience. The assessee is engaged as a transporter and has not maintained any regular books of account. The assessment has been made on estimations, keeping in mind the transportation receipts earned by the assessee which also includes some of impugned entries towards cash receipts by way of loan. The assessee in the course of survey itself, on being questioned, responded that the cash has been received by way of temporary loan from family members to meet the business exigency having regard to the nature of business he is involved in. The fact of business exigency has not been denied by the Revenue. The CIT(A) has disregarded the defense of the assessee mainly on account of the fact that the assessee has failed to come out with complete facts and documents regarding the transactions. We find that the turnover receipts declared by the assessee at Rs.39,61,195/- was enhanced to Rs.1,33,67,162/- for the purposes of estimation of income based on such impounded records. Therefore, imposition of penalty separately towards such receipts by way loan is not justified. The impromptu response of the purportedly uneducated assessee at the time of survey, in our view, requires to be seen in its natural perspective and requires to be given credence. The assessee has declared that the money was received from family members to meet the business exigencies. Having regard to the nature of business of the assessee and ground realities, such explanation appears plausible. Some of the case law of the Hon’ble High Courts and Co-ordinate Benches of Tribunal viz; DCIT vs. Rupen Dass, (2011) 7 ITR 55 (Kol) (Trib); CIT vs. Balaji Traders, (2008) 167 Taxman 27 (Mad); CIT vs. Laxmi Trust Co., (2008) 303 ITR 99 (Mad); DCIT vs. Vignesh Flat Housing, (2007) 105 ITD 359 (Chennai); Dillu Cine Enterprises vs. CIT, (2002) 80 ITD 484 (Hyd); Hindustan Steel Limited vs. State of Orissa, (1972) 83 ITR 26 (SC) Says in corus that the breach of Sections 269SS and 269T for receipt/repayment of cash attributable to business exigencies is a mere technical or venial breach. The assessee has shown existence of reasonable cause in accepting/repayment of cash to meet the immediate business requirements. In our view, mitigating circumstances exists to exonerate the assessee from the recourse of penalty under Sections 271D and 271E of the Act. We accordingly set aside the order of the CIT(A) and cancel the penalty imposed under Sections 271D and 271E of the Act by the competent authority.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 04/04/2022.
