Vilas Dattatray Bhambure, Solapur vs Assessee

Vilas Dattatray Bhambure, Joint Commissioner of Plot No. 16/20, Sant Gulab Baba Income Tax, Nagar, Tiwari Wasti, Vs. Range - 1, Solapur Majrewadi, Solapur-413225 (Appellant) (Respondent) PAN No. AATPB1252E

Assessee By: Shri Vilas D. Bhambure Revenue By: Shri Achal Sharma

Date of hearing : 13-05-2015 Date of pronouncement : 27-05-2015

ORDER

PER VIKAS AWASTHY, JM:-

The appeal has been filed by the assessee against the order of

Commissioner of Income Tax (Appeals)-III, Pune dated 29-07-2011 for

the assessment year 2007-08, whereby the penalty levied u/s. 271E of

the Income Tax Act, 1961 (hereinafter referred to as "the Act") has been

confirmed.

2. The brief facts of the case as emanating from records are: The

assessee is a civil engineer and is engaged in the business of civil

construction. The assessee filed its return of income for the assessment

year 2007-08 on 24-03-2008 declaring income of Rs.1,72,846/-. During

the course of scrutiny assessment, the Assessing Officer observed that in

the Balance Sheet, the assessee has shown secured loan of 2 ITA No. 2301/PN/2012, A.Y. 2007-08

Rs.8,31,000/- and unsecured loan of Rs.13,79,737/-. During the

relevant period the assessee repaid loan of Rs.7,11,700/-. The Assessing

Officer called for the details of the loan repayment. The Assessing Officer

after examining the bank pass book concluded that the assessee has

repaid an amount of Rs.2,00,000/- in cash to Shri Vinay Kulkarni, one

of the creditors. Thus, the assessee has violated the provisions of

section 269T of the Act. Penalty proceedings u/s. 271E were initiated

against the assessee. Several opportunities were granted to the assessee

to represent his case. None appeared on behalf of the assessee. The Jt.

Commissioner of Income Tax, Solapur Range-I in ex-parte proceedings

levied penalty of Rs.2,00,000/- u/s. 271E vide order dated 26-08-2010.

Aggrieved by the penalty order, the assessee preferred an appeal

before the Commissioner of Income Tax (Appeals). Before the First

Appellate Authority, the assessee explained the repayment of loan

amounts and the fact that the amount of Rs.2,00,000/- allegedly

withdrawn from the bank by assessee was in fact withdrawn by Shri

Vinay Kulkarni who was one of the creditors as well as joint account

holder with the assessee. The Commissioner of Income Tax (Appeals)

rejected the contentions of the assessee and confirmed penalty order.

Now, the assessee has come in second appeal before the Tribunal

assailing the findings of the First Appellate Authority.

3. The Ld. Counsel for the assessee submitted that penalty has been

wrongly levied. The assessee has not paid the alleged cash amount of

Rs.2,00,000/- in discharge of his liability. The amount has been

withdrawn by Shri Vinay Kulkarni joint account holder, who also

happens to be one of the creditors of the assessee. The Ld. Counsel for

the assessee prayed for deleting the penalty.

3 ITA No. 2301/PN/2012, A.Y. 2007-08

4. On the other hand Shri Achal Sharma representing the

Department vehemently supported the impugned order. The ld. DR

contended that the assessee has not been able to explain the reason for

maintaining joint account with the creditor. The cash withdrawal of

Rs.2,00,000/- from the bank account is part of total repayment of loan

of Rs.7,11,700/- during the impugned assessment year. The Ld. DR

prayed for sustaining the penalty and dismissing the appeal of the

assessee.

5. We have heard the submissions made by the representatives of

rival sides and have perused the orders of the authorities below, as well

as the written submissions filed by the Ld. Counsel for the assessee. It

is an undisputed fact that the assessee has repaid loan amount of

Rs.7,11,700/- during the period relevant to the assessment year under

consideration. The only dispute is with respect to repayment of

Rs.2,00,000/- purportedly paid in cash. The contention of the assessee

is that the amount has been repaid through saving bank account. The

assessee is maintaining joint account with Shri Vinay Kulkarni for the

last more than 10 years and the mode of operation of the account is

either or survivor. The amount of Rs.2,00,000/- was withdrawn from

the bank on 11-09-2006 by Shri Vinay Kulkarni for his personal use.

Before the Commissioner of Income Tax (Appeals), the assessee has filed

an affidavit executed by Shri Vinay Kulkarni to this effect. The assessee

has been depositing the amount in the said bank account from time to

time. It is also an undisputed fact that the assessee has taken loan from

Shri Vinay Kulkarni and for the repayment of the loan amount the

assessee is transferring money in the joint saving bank account.

6. In our considered view the assessee has been able to show that the

loan amounts were repaid through banking channels. So far as the 4 ITA No. 2301/PN/2012, A.Y. 2007-08

withdrawal of Rs.2,00,000/- in cash from joint bank account is

concerned, the contention of the assessee that the amount has been

withdrawn by Shri Vinay Kulkarni, joint account holder of assessee

remains un-rebutted. In support of his contentions the assessee has

filed an affidavit executed by Shri Vinay Kulkarni. The Revenue has not

been able to controvert the claim of the assessee. The intention of the

legislature to secure repayment of loan amount through proper banking

channel is to curb the flow of unaccounted money. In the present case,

there is a complete disclosure of the loan amount, the mode of

repayment and the creditor. In our view this is not a case for levy of

penalty u/s. 271E of the Act. The impugned order is set aside and the

appeal of the assessee is allowed.

Order pronounced on Wednesday, the 27th day of May, 2015

at Pune.

Sd/- Sd/-

(R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated: 27th May, 2015 RK/Sujeet

Copy to

1 Assessee 2 Department 3 The CIT(A)-III, Pune 4 The CIT-IV, Pune 5 The DR, ITAT, "B" Bench, Pune. 6 Guard file.

By Order

//True Copy// Sr. Private Secretary Income Tax Appellate Tribunal, Pune