Ashok Kumar Goel, Shimla vs Assessee

Ashok Kumar Goel, Vs. The Addl.CIT, 20, The Mall, Shimla. Shimla. PAN: ABJPG7364H (Appellant) (Respondent)

Appellant by : S/Shri Sudhir Sehgal & Ashok Goel Respondent by : Shri Manjit Singh, DR

Date of hearing : 23.03.2015 Date of Pronouncement : 25.03.2015

PER BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed

against the order of learned Commissioner of Income

Tax(Appeals), Shimla dated 22.01.2013, challenging the

levy of penalty under section 271D of the Income Tax Act,

1961.

2. Briefly, the facts are that the assessee is a Director

of M/s Moon International Hotels (P) Ltd. During the year

under consideration, the assessee has shown income from

salary, house property and other sources. The Assessing 2

Officer noted that the assessee had received an amount of

Rs.9,65,000/- and Rs.7,65,000/- in cash from his son Shri

Dheeraj Goel. The Assessing Officer, therefore, held that the

assessee had contravened the provisions of section 269SS of

the Act. He accordingly initiated the penalty proceedings

under section 271D of the Act. However, the Addl.CIT, Shimla

Range, Shimla dropped the penalty proceedings initiated

against the assessee vide his order dated 28.3.2008.

Subsequently, during the course of appellate proceedings in

the case of the assessee's son Shri Dheeraj Goel for the same

assessment year, the learned CIT (Appeals), Shimla vide order

dated 27.10.2010 accepted the explanation of Shri Dheeraj

Goel in respect of the advance of unsecured loans of

Rs.9,65,000/- and Rs.7,65,000/- to Shri Ashok Kumar Goel.

The learned CIT (Appeals) accordingly deleted the addition of

Rs.17,30,000/- . However, the learned CIT (Appeals) directed

that penalty proceedings under section 271D of the Act should

be initiated against Shri Ashok Kumar Goel i.e. the assessee,

the recipient of loans in view of the loans being in cash. The

penalty was accordingly imposed. The assessee challenged

the penalty order before the learned CIT (Appeals) and it was

submitted that the amount of Rs.9,65,000/- is opening

balance and the amount of Rs.7,65,000/- was received as

imprest in this year from his son Shri Dheeraj Goel to assist

him in the purchase of building. It was also submitted that

the penalty proceedings were already dropped by the Addl.CIT,

Shimla. Therefore, the penalty should not be imposed. It was

further submitted that the amount of Rs.7,65,000/- has been 3

returned back to Shri Dheeraj Goel through cheques of

different amounts. The assessee also raised the additional

grounds to say that the assessee was facing genuine financial

hardship and was incurring huge losses and cash flow

position had crippled during that time and had taken massive

loans from HPFC. Because of the business exigencies

warranting immediate discharge of liability and on the spot

decision regarding choice of material purchase and for

effecting economies of scale and since all the entities were

directly being handled by the assessee and for business needs

the amount was taken. The source of the amount is found to

be genuine, therefore, penalty need not to be imposed. The

learned CIT (Appeals), however, did not accept the contention

of the assessee on merits. However, it was found that the

amount of Rs.9,65,000/- was the opening balance as on

1.4.2003. Therefore, penalty to this extent was deleted and

penalty was upheld for the amount of Rs.7,65,000/- during

the year under consideration. The appeal of the assessee was

accordingly partly allowed.

3. According to the defect memos the appeal is time

barred by three days. The learned counsel for assessee

explained that since the wife of the assessee was detected

with metastaic cancer of the gall bladder and was obtaining

treatment at Delhi. Therefore, there was delay of three days

in filing of the appeal. There is no serious challenge to the

explanation of the assessee. Considering the explanation of

the assessee and the nominal delay of three days, we are 4

satisfied that the assessee was prevented by sufficient cause

from filing the appeal within the period of limitation. The

delay in filing of the appeal is accordingly condoned.

4. We have heard the learned representatives of both

the parties and perused the material available on record.

The learned counsel for assessee reiterated the submission

made before the authorities below and stated that the

genuineness of the loans has been accepted by the learned

CIT (Appeals) in the case of Shri Dheeraj Goel vide order

dated 27.10.2010 and the departmental appeal in the case of

Shri Dheeraj Goel in ITA No.2 of 2011 had been dismissed by

the Tribunal vide order dated 27.1.2014. He has submitted

that the earlier penalty proceedings were dropped by the

Assessing Officer (Addl.CIT, Shimla). Therefore, penalty

should not be imposed in the case of the assessee and that

the amount in question was received for business exigencies

which is not in dispute. He has relied upon the decision of

Hon'ble Punjab & Haryana High Court in the case of CIT Vs.

Sunil Kumar Goel, 315 ITR 163 (P&H), in which it was held :

" F a m i l y t r a n s a c t i o n b e t we e n t w o i n d e p e n d e n t a s s e s s e s , b a s e d o n a n a c t o f c a s u a l n e s s , s p e c i a l l y i n a c a s e wh e r e the disclosure thereof is contained in the comp il ation of accounts and wh i c h has no tax effect, establishes "reasonable cause" under s. 273B f or not invoking the penal provisions of ss. 271D and 271E."

5. He has also relied upon the order of the I.T.A.T.,

Chandigarh Bench in the case of ACIT Vs. Amarnath in ITA

No.1199/Chd/2012 dated 31.1.2013, in which cash was found 5

to have been received urgently was considered to be

reasonable cause and departmental appeal was dismissed.

6. On the other hand, the learned D.R for the Revenue

relied upon the orders of the authorities below.

7. Considering the rival submissions in the light of the

material on record, we are of the view that penalty is not

leviable in the facts and circumstances of the case. Section

273B of the Act provides that penalty under section 271D of

the Act shall not be imposable on the person or the assessee

as the case may be for any failure referred to in the said

provision if the assessee proves that there was a reasonable

cause for the said failure. The assessee explained that the

cash was taken by the assessee from his son for business

exigencies. The assessee explained that since he was facing

genuine financial hardship and cash flow position had

crippled during the year under consideration, therefore, the

assessee in dire need of cash taken the cash amount from his

son. The genuineness of the amount received in cash and

source thereof have not been disputed. Rather in the case of

Shri Dheeraj Goel, son of the assessee who has given the cash

to the assessee addition has been deleted finding the loan to

be genuine and the departmental appeal has been dismissed

by the Tribunal. On the premise of the same facts, the

Addl.CIT, Shimla earlier dropped the proceedings under

section 271D of the Act against the assessee. It is only 6

when the appellate order in the case of Shri Dheeraj Goel was

passed by the learned CIT (Appeals) on 27.10.2010 in which

direction was issued to initiate penalty proceedings against

the assessee under section 271D of the Act, penalty

proceedings were initiated afresh. However, the order of the

learned CIT (Appeals) accepting the genuineness of loan has

been confirmed by the Tribunal. Therefore, nothing has been

left against the assessee for inviting levy of penalty in the

case of the assessee. It is well settled law that penalty is

not mandatory in each and every case. The facts and

circumstances of the case shall have to be considered. Since

the cash was required urgently by the assessee for business

needs and amount is received by the assessee from his son

and the genuineness of the transaction is not doubted by the

authorities below, therefore, it being the venial and technical

default in not complying with the provisions of section 269SS

of the Act, the penalty should not be imposed in the case of

the assessee. The case of the assessee would also fall in the

exception by the judgment of the Hon'ble Punjab & Haryana

High Court in the case of Sunil Kumar Goel (supra).

Considering the totality of the facts and circumstances and

detailed submission of learned counsel for assessee, we are of

the view that the assessee has "reasonable cause" for failure

to comply with the provisions of law. Therefore, no penalty is

to be levied against the assessee under section 271D of the 7

Act. We accordingly set aside the orders of the authorities

below and cancel the penalty.

8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 25th day of

March, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 25 t h March, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh