Pravin Pharma, Mumbai vs Assessee

सव[ौी जोगींि िसंह, Ûयाियक सदःय एवं नरे Ûि कुमार ǒबãलैáया, लेखा सदःय के सम¢

BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND

SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

आयकर अपील सं./I.T.A. No. 2379/Mum/2012 िनधा[रण वष[ / Assessment Year : 2007-08 (िनधा[ Pravin Pharma, बनाम The ITO 23(3)(1), बनाम/ 244/245, Govind Udyog Mumbai Vs. Bhavan, Bal Rajeshwar Road, Model Town, Mulund (W), Mumbai-400 080 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAAFP 6446K (अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent) अपीलाथȸ ओर से/ Appellant by: None ू×यथȸ कȧ ओर से/Respondent by: Shri Akhilendra Yadav

सुनवाई कȧ तारȣख / Date of Hearing :20.01.2015 घोषणा कȧ तारȣख /Date of Pronouncement :20.01.2015

आदे श / O R D E R

PER N.K. BILLAIYA, AM:

This appeal by the assessee is directed against the order of the Ld. CIT(A)-33, Mumbai dt.27.2.2012 pertaining to A.Y.2007-08.

2. The sole grievance of the assessee is that the Ld. CIT(A) erred in confirming the penalty levied by the AO u/s. 271D of the Act.

2 ITA No. 2379/M/2012 3. Briefly stated the facts of the case are that during the year under consideration, the return was filed on 27.10.2007 declaring total income at Rs. 2,31,533/-. The return was selected for scrutiny assessment. During the assessment proceedings, the Assessing Officer noticed that the assessee has accepted loans in cash in contravention to the provisions of Sec. 269SS from the following two parties:

1. Mr. Arvind C. Shah - Rs. 12,12,867/-

2. Shri Nihar A. Shah - Rs. 6,62,500/-

3.1. Finding violation of the provisions of Sec. 269SS, the AO initiated penalty proceedings u/s. 271D of the Act. During the penalty proceedings, the assessee explained that it has accepted interest free advances from family members of partners. It was further explained that since the assessee was in the immediate need of money, it accepted the advances in cash, the circumstances were beyond the control and compliance to the provisions of Sec. 269SS of the Act was not possible.

The AO considered the submissions made by the assessee. The AO found that there was no urgency to the situation. Besides both assessee and the lenders were having bank account in Mumbai and it is not a case that the factory or office is situated in a far of place without banking facilities. The AO was satisfied that the assessee has committed a default and proceeded by levying penalty at Rs. 18,74,869/- equivalent to the cash loans received in contravention to the provisions of Sec. 269SS of the I.T. Act.

4. The assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed two letters and asking for adjournments, no written submissions was filed. After considering the facts and the assessment order, the Ld. CIT(A) observed that since the assessee had 3 ITA No. 2379/M/2012

not filed any written submissions, it means that the assessee is not disputing the facts brought on record by the AO in the penalty order. The Ld. CIT(A) further observed that the assessee's main contention before the Ld. AO was that it was in need and urgency of money which was a reasonable cause for not following the provisions of Sec. 269SS of the Act. It is observed that the assessee was having 4 to 5 months in its hands therefore it cannot be taken as a compelling reason for accepting loans in cash when both the assessee and the lenders have bank accounts in Mumbai. The Ld. CIT(A) at length considered the decision of the Hon'ble High Court of Madras in the case of Kasi Consultant Corpn. Vs DCIT, the order is exhibited at pages 3 to 6 of the Appellate order. Following the decision of the Hon'ble Madras High Court, the Ld. CIT(A) confirmed the levy of penalty.

5. Aggrieved by this, the assessee is before us.

6. None appeared before us on behalf of the assessee.

7. The Ld. Departmental Representative relied upon the findings of the Ld. CIT(A).

8. We have carefully perused the orders of the authorities below. It is an undisputed fact that the assessee has taken loan from two parties totaling to Rs. 18,74,869/- in contravention to the provisions of Sec. 269SS of the Act. It is also an undisputed fact that the assessee could not bring any compelling reason neither before the AO nor before the First Appellate authority to show the need and urgency of taking loan in cash. Both the lower authorities have given a categorical finding that there was no urgency and both assessee and the lenders were having bank accounts in Mumbai therefore there was no reason why the transaction was not 4 ITA No. 2379/M/2012

done through account payee cheque. The decision of the Hon'ble Madras High Court relied upon by the Ld. CIT(A) and exhibited in his Appellate orders is well founded. Considering the facts of the case in totality alongwith the judicial decision relied upon by the Ld. CIT(A), we do not find any reason to interfere with the findings of the Ld. CIT(A) which we confirmed.

9. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court at the time of hearing on 20th January, 2015

Sd/- Sd/-

(JOGINDER SINGH ) (N.K. BILLAIYA) Ûयाियक सदःय/JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER मुंबई Mumbai; Ǒदनांक Dated : 20.01.2015 व.िन.स./ RJ , Sr. PS

आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to :

1. अपीलाथȸ / The Appellant

2. ू×यथȸ / The Respondent.

3. आयकर आयुƠ(अपील) / The CIT(A)-

4. आयकर आयुƠ / CIT

5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड[ फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai