Case Law Details
Mr. Girishkumar Popatlal Vs JCIT (ITAT Ahmedabad)
During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has accepted amount of Rs. 1.55 lacs from Shri Bhadresh Girishbhai Patel and Rs. 37,000/- from Shri Bhupendrabhai Poptlal Shah in cash which is in violation of the provisions of Section 269SS of the Act. The A.O. further noticed that the assessee has also made cash repayment of Rs. 1.04 lacs to Bhadresh Patel and accordingly violated the provisions of section 269T of the Act. The A.O. initiated penal proceedings u/s. 271D and 271E of the Act for the alleged violation and levied penalty of Rs. 1,92,000/- u/s. 271D of the Act and Rs. 1,04,000/- u/s. 271E of the Act.
Ld. counsel for the assessee stated that therefore Shri Bhupendrabhai Patel is the brother of the assessee and Shri Bhadresh Patel is the father of the assessee. It is the say of the ld. counsel that the assessee is in the business of retailed trade and therefore whenever there is an urgent need of money, the same is taken from the brother and the father. The ld. counsel vehemently stated that the legislative intent in prohibiting the acceptance and repayment of money in cash over and above Rs. 20,000/- is to check the unaccounted money and not to hit the genuine business need.
The facts of the impugned appeal show that Shri Bhupendrabhai Patel was also an employee of the assessee and his salary was also credited in the same account where the impugned acceptance/repayment of cash was found and is akin to current account. The amount of Shri Bhadresh Patel is also akin to current account. Considering the nature of business of the assessee and its business exigencies, the immediate requirement of cash cannot be ruled out. Further, the relationship of the persons with the assessee also establishes the genuineness of the transaction. Considering the facts in totality, we do not find this to be a fit case for the levy of penalty u/s. 271D & 271E of the Act.
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. ITA Nos. 3072 & 3073/Ahd/2016 are two appeals by the assessee preferred against the two separate orders of the Ld. CIT(A)-10, Ahmedabad dated 28.09.2016 pertaining to A.Y. 2012-13. Both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
2. The grievance of the assessee is that the ld. CIT(A) erred in upholding the levy of penalty u/s. 271D and 271E of the Act for the violation of the provisions of Section 269SS and 269T of the Act.
3. During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has accepted amount of Rs. 1.55 lacs from Shri Bhadresh Girishbhai Patel and Rs. 37,000/- from Shri Bhupendrabhai Poptlal Shah in cash which is in violation of the provisions of Section 269SS of the Act. The A.O. further noticed that the assessee has also made cash repayment of Rs. 1.04 lacs to Bhadresh Patel and accordingly violated the provisions of section 269T of the Act. The A.O. initiated penal proceedings u/s. 271D and 271E of the Act for the alleged violation and levied penalty of Rs. 1,92,000/- u/s. 271D of the Act and Rs. 1,04,000/- u/s. 271E of the Act.
4. Assessee carried the matter before the ld. CIT(A) but without any success.
5. Before us, the ld. counsel for the assessee stated that therefore Shri Bhupendrabhai Patel is the brother of the assessee and Shri Bhadresh Patel is the father of the assessee. It is the say of the ld. counsel that the assessee is in the business of retailed trade and therefore whenever there is an urgent need of money, the same is taken from the brother and the father. The ld. counsel vehemently stated that the legislative intent in prohibiting the acceptance and repayment of money in cash over and above Rs. 20,000/- is to check the unaccounted money and not to hit the genuine business need. The ld. counsel prayed for the deletion of the penalty. Per contra, the ld. D.R. strongly supported the findings of the A.O.
6. We have given a thoughtful consideration to the orders of the authorities below. There is not dispute that the assessee has taken the amount from brother and father in cash. There is also no dispute that the repayment has also been made in cash. The Hon’ble Supreme Court in the case of Kum. A.B. Shanthi 255 ITR 258 has held that “the object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, orif he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seir<ures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relative or friends and it is easy for the so called lender also to manipulate his records later to suit the plea of the taxpayer. The main object of Section 269SS was to curb this menace. The object sought to be achieved was to eradicate the evilpractice of making offalse entries in the amount books and later giving explanation for the same”. Further, the Hon’ble High Court of Bombay in the case of Triumph International Finance 345 ITR 270 has held that “even if the assessee has technically contravened provisions of Section 269T, in absence of finding to effect that repayment of loan/deposit was not a bonafide transaction and was made with view to evade tax, nopenalty under section 271E could not be imposedfor contravening provisions of Section 269T”. The Hon’ble High Court of Madras in the case of Idhayam Publication Ltd. 285 ITR 221 has held that “the transaction between the assessee and the director-cum-shareholder was not a loan or deposit and it was only a current account in nature and no interest was being chargedfor the above transaction. The deletion of penalty wasjustified.”
7. The facts of the impugned appeal show that Shri Bhupendrabhai Patel was also an employee of the assessee and his salary was also credited in the same account where the impugned acceptance/repayment of cash was found and is akin to current account. The amount of Shri Bhadresh Patel is also akin to current account. Considering the nature of business of the assessee and its business exigencies, the immediate requirement of cash cannot be ruled out. Further, the relationship of the persons with the assessee also establishes the genuineness of the transaction. Considering the facts in totality, we do not find this to be a fit case for the levy of penalty u/s. 271D & 271E of the Act. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to delete the impugned penalty. Both the appeals by the Assessee are accordingly allowed.
Order pronounced in Open Court on 19 – 04- 2018.
