Case Law Details
Vijayaben Gokalbhai Zalavadia Vs JCIT (ITAT Ahmedabad)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Ahmedabad recently delivered a significant verdict in the case of Vijayaben Gokalbhai Zalavadia vs. JCIT (ITAT Ahmedabad). The case involved the imposition of a penalty under Section 271D of the Income Tax Act for loan transactions. In this article, we’ll explore the details of the case, the arguments presented, and the ITAT’s decision.
Detailed Analysis:
1. Background of the Case: The appellant, Vijayaben Gokalbhai Zalavadia, filed an appeal against the order dated May 12, 2013, issued by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year 2011-12. The appeal was primarily related to the imposition of a penalty under Section 271D of the Income Tax Act.
2. Grounds of Appeal: The grounds of appeal presented by the appellant included challenges to the penalty levied, citing errors in the CIT(A)’s decision, and questioning the penalty’s validity in the absence of a regular assessment. The appellant also raised concerns about the penalty being imposed in contravention of Section 269SS of the Act.
3. Facts of the Case: The appellant, an agriculturist with income from agricultural activities, received a loan of Rs. 1,42,000 during the relevant period from The Berna Gamni Seva Sahakari Mandali Limited. The Assessing Officer initiated penalty proceedings under Section 271D based on information received from DDIT (Investigation). The appellant responded with a submission stating that the loan acceptance of Rs. 1,42,000 from the society was conducted through banking channels and not in cash. Bank statements and documentary evidence were provided to support this claim.
4. Penalty Imposition: Despite the appellant’s explanation and submission of bank statements confirming the loan transaction through banking channels, the Assessing Officer imposed a penalty of Rs. 1,42,000 under Section 271D for the alleged acceptance of cash loans in violation of Section 269SS.
5. Appeal to CIT(A): Dissatisfied with the penalty order, the appellant filed an appeal before the CIT(A). However, the CIT(A) upheld the penalty imposed by the Assessing Officer.
6. Arguments Presented: The appellant’s authorized representative argued that a similar issue had already been decided by the Tribunal in the appellant’s favor for assessment years 2013-14 and 2016-17. The representative contended that the facts of those cases were identical to the present case and, therefore, the current appeal should also be allowed.
7. Department’s Response: The Departmental Representative supported the penalty order and the CIT(A)’s decision. While acknowledging that the bank had issued a certificate, the Department raised concerns about discrepancies and mismatches in the adjustments, which they claimed justified the penalty.
8. ITAT’s Decision: After considering both parties’ arguments and reviewing the case materials, the ITAT reached a crucial decision. It observed that the appellant, being an agriculturist with income related to agricultural activities, did not have a regular assessment on her salary income. Importantly, the ITAT noted that the Assessing Officer had never disputed the bank statement, which clearly demonstrated the transfer of Rs. 1,42,000 to The Berna Gamni Seva Sahakari Mandali Ltd. This transaction was also documented in the bank statement dated March 26, 2011.
9. Ruling: The ITAT found that there was no involvement of cash in the transaction, and therefore, Section 269SS, which deals with the acceptance of loans in cash, was not applicable in this case. As a result, the penalty imposed under Section 271D of the Act was deemed unwarranted. The ITAT allowed the appeal, thereby relieving the appellant of the penalty.
Conclusion: The ITAT Ahmedabad’s decision in the case of Vijayaben Gokalbhai Zalavadia vs. JCIT reinforces the principle that penalties under Section 271D of the Income Tax Act should not be imposed on loan transactions conducted through banking channels. This ruling underscores the importance of accurate assessment and adherence to tax regulations while also providing clarity for taxpayers in similar situations. It serves as a reminder that proper documentation and compliance with tax laws are essential to avoid unwarranted penalties and legal complications.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the assessee against the order dated 12-05-2013 passed by the ld. CIT(A) for assessment year 2011-12.
2. The grounds of appeal are as under:-
|
The order passed by Ld CIT(A) is against law, equity and natural justice. |
N.A. | |
| 2. | The Ld. CIT(A) has erred in law and on facts in upholding the penalty levied U/S 271D by Ld. JCIT Gandhinagar of Rs. 1,42,000/- | Rs. 1,42,000- |
| 3. | The Ld. CIT (A) has erred in law and on facts confirming impugned penalty initiated and levied in the absence of regular assessment. | N.A. |
| 4. | The Ld. CIT (A) has erred in law and on facts in confirming and levying penalty in contravention of Section 269SS ignoring the fact that payments were through banking channel. | N.A. |
| 5. | The appellant craves liberty to add. amend, alter or modify all or any grounds of appeal before final appeal. | N.A. |
| Total tax effect | Rs. 1,42,000/- | |
3. The assessee is an agriculturist having agricultural income in the form of salary. The Assessing Officer on receipt of information from DDIT (Investigation) observed that assessee accepted loan of Rs. 1,42,000/- during relevant period from The Berna Gamni Seva Sahakari Mandali Limited. Based on the information, the Assessing Officer issued show cause notice dated 13-05-2019 for levy of penalty u/s. 271D in contravention of section 296SS of the Act. The assessee filed reply dated 20-05-2019 thereby stating that acceptance of loan of Rs. 1,42,000/- from the society was through banking channel and not in cash. The assessee submitted the bank statement wherein transaction of taking the said loan was demonstrated along with documentary evidences. The Assessing Officer after taking cognizance of the reply of the assessee imposed penalty u/s. 271D amounting to Rs. 1,42,000/- for acceptance of cash loan in contravention of provisions of section 269SS of the Act.
4. Being aggrieved by the said penalty order, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) dismissed the appeal of the assessee.
5. The ld. Authorized Representative submitted that the issue contested in the present appeal has already been decided by the Tribunal in assessee’s own case for assessment year 2013-14 and 2016-17 being ITA Nos. 338 & 339/Ahd/2023 order dated 14-07-2023. The facts are identical and therefore the present appeal should also be allowed.
6. The ld. Departmental Representative relied upon the penalty order and the order of the ld. CIT(A) and further submitted that the certificate issued by the bank was not disputed but the adjustments were not matching or co-related and therefore the penalty was rightly imposed and confirmed by the ld. CIT(A)
7. Heard both the parties and perused the material available on record. It is pertinent to note that since the assessee was an agriculturist and deriving income related to agricultural activities, as on salary there was no regular assessment in assessee’s case. The Assessing Officer at no point of time disputed the bank statement of the assessee wherein the amount of Rs. 1,42,000/- was transferred in The Berna Gamni Seva Sahakari Mandali Ltd. and the same was shown in the bank statement dated 26-03-2011. The transaction as well as the ledger along with the certificate was not doubted and in fact the contention of the ld. Departmental Representative that it was mismatching appears to be not correct and thus there was no cash involved in the present transaction. Therefore, section 269SS will not be applicable in the present case and the penalty levied u/s. 271D does not survive. Thus, the CIT(A) as well as the Assessing Officer was not correct in levying the penalty u/s. 271D of the Act. The appeal of the assessee is allowed.
8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 06-09-2023
