TMI Blog2017 (7) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 31-7-2017 - Shri V. Durga Rao, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member Assessee by : Shri G.V.N. Hari Advocate. Department By : Shri R. Govinda Rajan CIT DR V. Durga Rao, This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), Guntur, dated 25/07/2013 for the Assessment Years 2005-06. 2. Facts of the case, in brief, are that the assessee is an individual deriving income from purchase and sale of fish, had filed his return of income admitting loss of ₹ 13,96,013/-. A search and seizure operation was conducted in the group cases of assessee on 19/02/2009. In response to a notice under section 153A, the assessee filed his return of income admitting loss of ₹ 40,01,628/-. The Assessing Officer has accepted the return filed by the assessee. Subsequently, the Assessing Officer has initiated penalty proceedings under section 271D of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). During the course of assessment proceedings, it was noticed that the assessee had obtained unsecured loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's mother and partly from out of the assessee s accumulated incomes as duly disclosed in the books. 3. The assessee is regularly assessed to income tax both in his individual status and in the status of his HUF for more than 20 years. He has always have been filing the returns of his income voluntarily and in good faith. 4. The assessee has been carrying on business in fish for about 15 years ago as a proprietor in the name of Coastal Aqua Agency at Bhimavaram. However, since the year 2002 in the said business he sustained huge losses which are as follows:- Asst year Loss returned (Rs.) 2003-04 2,45,101 2004-05 39,75,435 2005-06 42,45,615 2006-07 82,39,039 2007-08 7,79,084 The assessee's daughter, namely, Shipla, who was born on 7.9.1986, attained majority on 7.9.2004. In order to provide funds for her marriage the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09. Consequently, assessments for six preceding years, including the assessment year 2005-06, were reopened u/s. 153 A and all such assessments were completed under the said section accepting the losses returned by the assessee. 10. The source of the amounts credited, being the loan given by Corporation Bank, was duly established and the transactions were accepted as genuine in the 'course of the assessment proceedings. 11. The Addl. Commissioner of Income Tax, Central Range, Visakhapatnam, initiated penalty proceedings u/s.271 D of the Income Tax Act, 1961 and, notwithstanding the objections of the assessee, levied penalty to the tune of ₹ 18 lakhs. 12. Against the levy of the penalty, this present appeal is being filed. 4. The ld. CIT(A) after considering the submissions made by the assessee held that section 269SS do not apply in assessee s case and therefore, no penalty can be levied under section 271D of the Act and penalty levied by the Assessing Officer is cancelled by observing as under:- 5.5 The appellant has sought relief on two grounds (a) that the amount received from his daughter P.Shilpa is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) ACIT Vs. Bh. Harshavardhana Raju in ITA No. 208/VIZ/2011 by order dated 13/07/2011 b) G. Narasinga Rao Vs. JCIT in ITA No. 318/VIZ/2008 by order dated 13/04/2010 c) Dr. Dutta Siva Sankara Rao Vs. ACIT in ITA No. 69 70/VIZ/2008 by order dated 13/08/2009. 8. We have heard both the sides, perused the material available on record and orders of the authorities below. 9. In this case, the assessee is carrying on the business of buying and selling of fish, had filed his return of income for the Assessment Year 2003-04, 2004-05 2005-06, 2006-074 2007-08 by declaring loss from the above business. The assessee s daughter applied for loan in Corporation Bank, Bhimavaram, for that assessee himself stood guarantor. The loan amounts were partly disbursed on 01/11/2014. When the loan was disbursed in the name of his daughter P. Shilpa, who was studying at the relevant point of time, the assessee had received ₹ 9 lakhs, ₹ 9 lakhs and also received ₹ 19,35,000/- through bank cheque. The entire amount received by the assessee was of ₹37,35,000/-. The entire transaction was done in between Corporation bank and his dau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al grandfather, who appears to have either no knowledge or semi knowledge of the provisions of the Act relating to transactions involving acceptance and repayment of loans and deposits in cash exceeding the prescribed limit of ₹ 20,000/-. No doubt, such grant father of the appellant along with other members of his family including the appellant were not the first time assessees but had been enrolled as assessees from the earlier years, and, perhaps, might have obtained the services of any tax practitioner in filing their past returns. But then sometimes, it so happens that the assessees tend to undertake transactions in certain situations with their limited knowledge of the legal provisions and procedure, without, realizing that their misplaced action could leading to defaults, thereby attracting penal provisions. In the instant case, it appears to be such a case of miscalculated adventure resulting in default under section 269SS of the Act on the part of the appellant. Since there is no doubt about the fact that the appellant himself, on account of his pursuance of studies outside his native place, had no direct role to play in the method and mode of transaction in augmentin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has taken a loan without interest from his father and his wife when he was burdened with the obligation of borrowed funds of the outsiders. In the case of CIT Vs. Sunil Kumar Goel (supra) the Lordship of Punjab Haryana High Court has held that family transactions between two independent assessees based on an act of casualness, especially in a case where the disclosure thereof is contained in the compilation of accounts, and which has no tax effect, establishes reasonable cause u/s 273B for not invoking the penal provisions of section 271D and 271E. The relevant observations of the Punjab Haryana High Courts are extracted hereunder for the sake of reference: The Tribunal was right in recording its conclusion that a reasonable cause had been shown by the assessee. The Tribunal relied on the fact that the assessee had produced his cash books, depicting loans taken by him unilaterally before the Revenue in the instant action of the assessee in as much as the assessee did not attempt by the impugned act to avoid any tax liability. Furthermore, there is no dispute about the fact that the instant cash transactions of the assessee were with the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no reason to take a contrary view in this appeal. We therefore following the aforesaid order of the Tribunal hold that under the given circumstances penalty in the instant case is not sustainable in the eyes of law. We therefore set aside the order of CIT(A) and delete the penalty. 12. In the case of Dr. Dutta Siva Sankara Rao (supra) the coordinate bench of the tribunal has held as under:- 3. Having heard the rival submissions and from a careful perusal of record we find taht the assessee has taken a loan in cash but it was from his close relatives. Similar is the positions with regard to its payment. Now the question posed before under section is; whether it was done under a bo0nafide belief? And if it is done under a bonafide belief, whether assessee is entitled for benefits of section 273B of the I.T. Act, according to which no penalty shall be imposable on the assessees as the case may be for any failture referred to the different provisions mentioned in this section if it proves that there was reasonable cause for the said failure. The facts of the case are examined in the light of this provision and we find that since the assessee has taken a lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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