Commissioner of Income Tax vs Shree Ambica Flour Mills Corporation

The Tribunal, Ahmedabad Bench ''B'' has referred the following four questions for the opinion of this Court u/s 256(1) of the Income Tax Act,

1961 (the Act) at the instance of the Commissioner.

R.A. No. 713/And/1997:

Whether the Tribunal is right in law and on facts in cancelling the penalty levied u/s 271D ?

Whether the Tribunal has correctly appreciated the facts on records so as to cancel the penalty levied ?

R.A. No. 714/Ahd/1997:

1.Whether the Tribunal is right in law and on facts in cancelling the penalty levied u/s 271E ?

Whether the Tribunal has correctly appreciated the facts on record so as to cancel the penalty levied ?

Heard Mr. B.B. Naik learned standing counsel for the applicant revenue. Though served, there is no appearance on behalf of respondent

assessee.

In relation to the two questions under reference application No. 713/ Ahd/1997, the assessing officer came to the conclusion that there was

violation of provisions of Section 269SS of the Act and hence, imposed penalty of Rs. 8,100 u/s 271D of the Act. The said penalty was confirmed

by the Commissioner (Appeals).

When the matter was carried before the Tribunal, the following facts were recorded by the Tribunal:

The counsel for the assessee submitted that for the period December, 1987 to March, 1989 total transactions in the name of Manal Anandkumar

was Rs. 18,374. Therefore, for the financial year 1989-90 the opening balance was Rs. 18,374. Cheque of Rs. 15,000 was given on 25-7-1989

and Rs. 5,000 on 23-10-1989. The cheque were also given on 15-12-1989 and 20-12-1989, only a sum of Rs. 2,100 was paid in cash. It was

submitted that this payment was not business deal but was only receipt of cash gift which was deposited in the books of the company. In the case

of Sun Tours & Travels there is an opening balance of Rs. 7,148 and for a sum of Rs. 6,000 which is a cash receipt on 8-3-1990. All other

payments are by cheque.

After appreciating the facts on record, the Tribunal came to the conclusion that though on the face of it, there seems to be a default by the

assessee in the case of Manal Anandkumar. There was every reason to believe that the amount in question was only for safe custody and not for

anything else. In relation to the other party, it has been recorded by the Tribunal that Sun Tours & Travels is a concern of Shri Rajnikant, son of a

partner and pertains to Sharafi account. It has further been found by the Tribunal that the assessee has reasonable cause in accepting the amount in

cash.

In relation to the two questions referred under reference application No. 714/Ahd/1997, the assessing officer noted that the assessee had paid

certain amount in cash totalling to Rs. 2,11,531 and, therefore, imposed a penalty of Rs. 71,500 u/s 271E of the Act. The Commissioner

(Appeals) confirmed the said penalty.

In the appeal filed by the assessee, the Tribunal has come to the conclusion that in light of the facts recorded in para No. 7 of the order, the

transactions between sister concerns are not covered by either provisions of Section 269SS or Section 269T of the Act. It has further been held

that it is a common trading practice for parties to make payment on behalf of each other to sister concern. That the provisions of Section 269SS

and Section 269T of the Act have been brought on statute book with a specific intention of curbing black money and taking advantage of cash

transaction for explaining the cash available during the search. The Tribunal has, therefore, concluded that the default, if any, is of a venial nature

and no penalty can be imposed.

In the aforesaid set of facts and circumstances of the case, it is apparent that the Tribunal has merely appreciated the facts and evidence on

record. There is no evidence to come to the conclusion that such appreciation of facts and evidence is not correct, or is perverse. Therefore, the

impugned order of Tribunal in relation to deletion of penalty u/s 271D and Section 271E of the Act does not call for any interference.

Accordingly, all the four questions are answered in the affirmative, that is in favour of the assessee and against the revenue.

The reference stands disposed of accordingly with no order as to costs.