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2015 Supreme(Mad) 1858
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUDHAKAR & T. RAJA, JJ.
P. Muthukaruppan - Petitioner
Versus
The Joint Commissioner of Income Tax, Pondicherry - Respondent
Tax Case (Appeal) Nos.850 to 858 of 2014
Decided On : 26-03-2015
For the Appellant:S. Sridhar, Advocate.
For the Respondent:J. Narayanaswamy, Advocate.
The main legal point established in the judgment is that the appellant's repeated cash transactions for accepting and repaying loans did not constitute a reasonable cause under Section 273B, leading to the confirmation of penalty orders.
Headnote:
Penalty - Income Tax - Sections 271D & 271E - 269SS & 269T - The court upheld the penalty for accepting and repaying loans in cash in violation of the Income Tax Act. The appellant's justifications for the cash transactions were not accepted, and the penalty orders were confirmed by the appellate authority and the Tribunal.
Fact of the Case:
The appellant-assessee appealed the penalty orders imposed for accepting and repaying loans in cash, arguing that the transactions were genuine and bona fide. The appellant failed to provide a satisfactory explanation for repeatedly conducting cash transactions, leading to the penalty orders.
Finding of the Court:
The court found that the appellant's conduct of repeatedly accepting and repaying loans in cash, in violation of the Income Tax Act, did not constitute a reasonable cause for the transactions. The penalty orders were upheld by the court.
Issues: The issues revolved around the appellant's justification for accepting and repaying loans in cash, the application of Sections 271D & 271E, and the exercise of discretionary power under Section 273B of the Income Tax Act.
Ratio Decidendi: The court held that the appellant's failure to provide a satisfactory explanation for the repeated cash transactions did not constitute a reasonable cause under Section 273B. The penalty orders were upheld based on the appellant's conduct.
Final Decision: The Tax Case Appeals were dismissed, and the penalty orders were upheld. The court found no merits in the appeals, and no substantial questions of law arose.
T. Raja, J.
1. The appellant-assessee, aggrieved by the impugned common order passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai in I.T.A.Nos.220 to 228/Mds/2014 dated 29.5.2014 for the assessment years 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 respectively, has brought all these tax case appeals raising the following substantial questions of law:-
“(1) Whether the Appellate Tribunal is correct in law in upholding the orders of the respondent in levying penalty u/s 271D of the Act for accepting loan in cash in excess of Rs.20,000/- within the purview of the provisions in section 269SS of the Act for the assessment years 2008-09 to 2011-12 even though the transactions were admittedly genuine and bona fide?
(2) Whether the Appellate Tribunal is correct in law in upholding the orders of the respondent in levying penalty u/s 271E of the Act for repayment of loan in cash in excess of Rs.20,000/- within the purview of the provisions in section 269T of the Act for the assessment years 2008-09 to 2012-13 even though the transactions were admittedly genuine and bona fide?
(3) Whether the Appellate Tribunal is correct in law in sustaining the penalties imposed u/s 271D & 271E of the Act by overlooking the fact of emergency borrowings in cash and the repayments in relation thereto both on the commercial/business as well as personal compulsions/ reasons, thereby establishing the reasonable/sufficient cause as contemplated in section 273B of the Act and further thereby vitiating the respondent's action in proceeding in the matter of levy of such penalties for the assessment years under consideration on the facts and in the circumstances of the case?”
2. The issue raised in all these appeals is pertaining to the levy of penalty under Sections 271D & 271E of the Income Tax Act for the assessment years 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 respectively on the appellant-assessee for violation of the provisions of Sections 269SS & 269T of the Income Tax Act, namely, accepting and repaying loan exceeding Rs.20,000/- in cash from/to the money lender, Mr.A.Kannan, Proprietor of M/s Vadamalayan Finance without assigning proper reasons and justification.
3. Arguing on the substantial questions of law, Mr.S.Sridhar, learned counsel for the appellant in all the appeals, heavily assailing the impugned order, submitted that the appellant received show cause notices under Sections 271-D and 271-E of the Income Tax Act dated 16.12.2011 from the assessing authority, namely, Joint Commissioner of Income Tax, Pondicherry Range, Pondicherry calling upon him to submit his explanation. On receipt of the same, he filed his reply dated 11.1.2012 seeking adjournment. Accepting the said request for adjournment, he was also issued with another notice dated 1.2.2012, which was served upon him on 6.2.2012. Again he sent another letter dated 16.2.2012 seeking adjournment on the ground that a close associate and senior citizen of his community/mentor in business passed away. On the basis of the said request also, the matter stood adjourned to 23.2.2012. Therefore, fresh notices were again issued to him on 16.2.2012, 6.3.2012 & 17.4.2012 and the assessee sent his letters dated 23.2.2012, 15.3.2012 & 19.4.2012 seeking adjournment. However, when he sent his Chartered Accountant Mr.Jayachander to attend the hearing on 14.5.2012, sadly, for the reasons best known to him, it appears that he has not attended the hearing, as a result, the assessing authority has erroneously passed the impugned order holding him guilty under Sections 269SS and 269T of the Income Tax Act, consequently, penalty under Sections 271D and 271E of the Income Tax Act for each of the assessment years was levied. Aggrieved by the same, he preferred appeals before the Commissioner of Income Tax (Appeals), the appellate authority, inter alia, raising the following grounds:-
''(i) The object of introducing S.269SS is to eradicate the evil practice of making false entries in the acc
