M.sougoumarin v. The Assistant Commissioner Of Income Taxcircle-I, D.p.thottam, Muthialpetpuducherry – 605 003

M.Sougoumarin .. Appellant/Respondent Vs The Assistant Commissioner of Income TaxCircle-I, D.P.Thottam, MuthialpetPuducherry – 605 003... Respondent/Appellant PRAYER: Appeals under Section 260A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal'B' Bench, Chennai, dated 31.3.2016 made in I.T.A.Nos.262and 263/Mds/2015 against order dt.14/11/14 in ITA.No.1502and 1503/13-14 by the Commissioner of income tax (Appeals-VI, Chennai and against order dt.30.04.2013 in C.R.No.32 &34/JCIT/PD4/27/E/2012-13 by the Joint Commissioner ofIncome Tax, Puducherry. These appeals are against an order dated 31.3.2016passed by the Income Tax Appellate Tribunal 'B' Bench,Chennai, allowing the appeals, being I.T.A.Nos.262 and263/Mds/2015, in relation to the assessment years 2008-2009and 2012-2013 filed by the respondent Revenue andrestoring the penalty imposed by the Assessing Officerunder Sections 271E and 271D of the Income Tax Act, 1961(hereinafter referred to as “the IT Act”). 2. The facts giving rise to these appeals are verybriefly enumerated hereinafter. 3. It appears that a survey under Section 133A of theIT Act was conducted in the case of Mr.A.Kannan,Proprietor, Vadamalayan Finance, No.C-4, II Floor, https://hcservices.ecourts.gov.in/hcservices/ Thiyagaraja Apartment, First Main Road, Thanthai Periyar Nagar,Pondicherry – 605 005, on 8.9.2011 and books of accounts andsupporting documents were impounded under Section 133A(3) of theIT Act. 4. The survey revealed that the said A.Kannan carried onbusiness of lending, even though he had no licence to do so.From the records maintained by the said A.Kannan, it was noticedthat the assessee had obtained and also repaid loans exceedingRs.20,00,000/- in cash. It further appears that the AssessingOfficer found that the loans and repayment had not beenaccounted for in the regular books of accounts of the assesseeor the firm in which the assessee was partner and even if sorecorded, no business exigency and urgency had been establishedfor following a prolonged and persistent system of accepting andrepaying loans only in cash. 5. Sections 269SS, 269T, 271D and 271E of the IT Act provideas follows: “Section 269SS. Mode of taking or accepting certainloans, deposits and specified sum. No person shall take or accept from any otherperson (herein referred to as the depositor), anyloan or deposit or any specified sum, otherwisethan by an account payee cheque or account payeebank draft or use of electronic clearing systemthrough a bank account, if,—(a) the amount of such loan or deposit orspecified sum or the aggregate amount ofsuch loan, deposit and specified sum; or(b) on the date of taking or accepting suchloan or deposit or specified sum, any loanor deposit or specified sum taken oraccepted earlier by such person from thedepositor is remaining unpaid (whetherrepayment has fallen due or not), the amountor the aggregate amount remaining unpaid; or(c) the amount or the aggregate amountreferred to in clause (a) together with theamount or the aggregate amount referred toin clause (b), is twenty thousand rupees or more: Provided that the provisions of this section shallnot apply to any loan or deposit or specified sumtaken or accepted from, or any loan or deposit orspecified sum taken or accepted by,— (a) the Government; (b) any banking company, post office savingsbank or co-operative bank; (c) any corporation established by aCentral, State or Provincial Act; (d) any Government company as defined inclause (45) of section 2 of the CompaniesAct, 2013 (18 of 2013); (e) such other institution, association orbody or class of institutions, associationsor bodies which the Central Government may,for reasons to be recorded in writing,notify in this behalf in the OfficialGazette: Provided that the provisions of this section shallnot apply to any loan or deposit or specified sumtaken or accepted from, or any loan or deposit orspecified sum taken or accepted by,— (a) the Government; (b) any banking company, post office savingsbank or co-operative bank; (c) any corporation established by aCentral, State or Provincial Act; (d) any Government company as defined inclause (45) of section 2 of the CompaniesAct, 2013 (18 of 2013); (e) such other institution, association orbody or class of institutions, associationsor bodies which the Central Government may,for reasons to be recorded in writing,notify in this behalf in the OfficialGazette: Provided further that the provisions of thissection shall not apply to any loan or deposit orspecified sum, where the person from whom the loanor deposit or specified sum is taken or acceptedand the person by whom the loan or deposit orspecified sum is taken or accepted, are both havingagricultural income and neither of them has anyincome chargeable to tax under this Act.Explanation.—For the purposes of this section,—(i) "banking company" means a company towhich the provisions of the BankingRegulation Act, 1949 (10 of 1949) appliesand includes any bank or banking institutionreferred to in section 51 of that Act; (ii) "co-operative bank" shall have the samemeaning as assigned to it in Part V of theBanking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means loan ordeposit of money; (iv) "specified sum" means any sum of moneyreceivable, whether as advance or otherwise,in relation to transfer of an immovableproperty, whether or not the transfer takesplace. Section 269T. Mode of repayment of certain loans ordeposits. No branch of a banking company or a co-operativebank and no other company or co-operative societyand no firm or other person shall repay any loan ordeposit made with it or any specified advancereceived by it otherwise than by an account payeecheque or account payee bank draft drawn in the https://hcservices.ecourts.gov.in/hcservices/ name of the person who has made the loan or depositor paid the specified advance, or by use ofelectronic clearing system through a bank accountif— (a) the amount of the loan or deposit orspecified advance together with theinterest, if any, payable thereon, or (b) the aggregate amount of the loans ordeposits held by such person with the branchof the banking company or co-operative bankor, as the case may be, the other company orco-operative society or the firm, or otherperson either in his own name or jointlywith any other person on the date of suchrepayment together with the interest, ifany, payable on such loans or deposits, or (c) the aggregate amount of the specifiedadvances received by such person either inhis own name or jointly with any otherperson on the date of such repaymenttogether with the interest, if any, payableon such specified advances, is twenty thousand rupees or more: Provided that where the repayment is by a branch ofa banking company or co-operative bank, suchrepayment may also be made by crediting the amountof such loan or deposit to the savings bank accountor the current account (if any) with such branch ofthe person to whom such loan or deposit has to berepaid : Provided further that nothing contained in thissection shall apply to repayment of any loan ordeposit or specified advance taken or accepted from— (i) Government; (ii) any banking company, post officesavings bank or co-operative bank; (iii) any corporation established by aCentral, State or Provincial Act; (iv) any Government company as defined insection 617 of the Companies Act, 1956 (1 of1956); (v) such other institution, association orbody or class of institutions, associationsor bodies which the Central Government may,for reasons to be recorded in writing, Provided further that nothing contained in thissection shall apply to repayment of any loan ordeposit or specified advance taken or accepted from— (i) Government; (ii) any banking company, post officesavings bank or co-operative bank; (iii) any corporation established by aCentral, State or Provincial Act; (iv) any Government company as defined insection 617 of the Companies Act, 1956 (1 of1956); (v) such other institution, association orbody or class of institutions, associationsor bodies which the Central Government may,for reasons to be recorded in writing, notify in this behalf in the OfficialGazette. Explanation.—For the purposes of this section,—(i) "banking company" shall have the meaningassigned to it in clause (i) of theExplanation to section 269SS; (ii) "co-operative bank" shall have themeaning assigned to it in Part V of theBanking Regulation Act, 1949 (10 of 1949); (iii) "loan or deposit" means any loan ordeposit of money which is repayable afternotice or repayable after a period and, inthe case of a person other than a company,includes loan or deposit of any nature; (iv) "specified advance" means any sum ofmoney in the nature of advance, by whatevername called, in relation to transfer of animmovable property, whether or not thetransfer takes place. Section 271D. Penalty for failure to comply withthe provisions of section 269SS. (1) If a person takes or accepts any loan ordeposit or specified sum in contravention of theprovisions of section 269SS, he shall be liable topay, by way of penalty, a sum equal to the amountof the loan or deposit or specified sum so taken oraccepted. (2) Any penalty imposable under sub-section (1)shall be imposed by the Joint Commissioner. Section 271E. Penalty for failure to comply withthe provisions of section 269T. (1) If a person repays any loan or deposit orspecified advance referred to in section 269Totherwise than in accordance with the provisions ofthat section, he shall be liable to pay, by way ofpenalty, a sum equal to the amount of the loan ordeposit or specified advance so repaid. (2) Any penalty imposable under sub-section (1)shall be imposed by the Joint Commissioner.” 6. As observed above, in course of inspection of the booksof A.Kannan, it was found that the appellant assessee had repaidloan of Rs.20,00,000/- in cash to A.Kannan on various dates. 7. Notice under 271E read with Section 269T of the IT Actwas served on the appellant assesee on 2.12.2012. The assessee https://hcservices.ecourts.gov.in/hcservices/ duly filed his reply before the Assessing Officer, but theexplanation offered was not accepted. 8. The Assessing Officer found that the fact that theassessee had taken and repaid loans in cash was admitted. TheAssessing Officer observed that the loans and repayments had notbeen accounted for in the regular books of accounts of theassessee or the firm in which the assessee was a partner andeven if so recorded, no business exigency or urgency had beenestablished to follow a prolonged and persistent system ofaccepting and repaying loans only in cash. 9. The Assessing Officer found that the assessee could notclaim to have a reasonable cause contemplated under Section 273Bof the IT Act to the satisfaction of the Assessing Authority andlevied penalty to the extent of a sum equal to the loan amountrepaid under Section 271E of the IT Act, i.e., Rs.20,00,000/- inrelation to the assessment year 2008-2009, and also leviedpenalty under Section 271D of the IT Act to the extent ofRs.20,00,000/- in relation to the assessment year 2012-2013. 9. The Assessing Officer found that the assessee could notclaim to have a reasonable cause contemplated under Section 273Bof the IT Act to the satisfaction of the Assessing Authority andlevied penalty to the extent of a sum equal to the loan amountrepaid under Section 271E of the IT Act, i.e., Rs.20,00,000/- inrelation to the assessment year 2008-2009, and also leviedpenalty under Section 271D of the IT Act to the extent ofRs.20,00,000/- in relation to the assessment year 2012-2013. 10. Being aggrieved by the orders imposing penalty, theassessee filed appeals, being I.T.A.No.1502/13-14 andI.TA.No.1503/13-14, before the Commissioner of Income Tax(Appeals)-VI, Chennai, who allowed the appeals and deleted thepenalty levied by the Assessing Officer by two several orders,both dated 14.11.2014. 11. The Appellate Tribunal, by the order impugned before us,as observed above, allowed the appeals and restored the penaltyunder Sections 271E and 271D of the IT Act, observing as under: “9. In this case, there is no justifiablereasonable cause for repayment of loans in cash andit is a clear violation of law not for in a singleaccounting year, but continuing the violation firstby the father and next his son (assessee) sincemany years. Therefore, it cannot be said that itis ignorance but it is intentional and totalnegligence on the part of the assessee. Theassessee has not produced books of accounts tovouch for entering such details. These cashtransactions have not been recorded in the regularbooks of accounts of the assessee or the firm inwhich he is the partner. Now, it become essentialto put an end to the prolonged and persistentviolation of law by taking and repaying loans incash exceeding Rs.20,000/-. Under the above factsand circumstances and respectfully following theabove decision of the Coordinate Bench of thereasonable cause for repayment of loans in cash andit is a clear violation of law not for in a singleaccounting year, but continuing the violation firstby the father and next his son (assessee) sincemany years. Therefore, it cannot be said that itis ignorance but it is intentional and totalnegligence on the part of the assessee. Theassessee has not produced books of accounts tovouch for entering such details. These cashtransactions have not been recorded in the regularbooks of accounts of the assessee or the firm inwhich he is the partner. Now, it become essentialto put an end to the prolonged and persistentviolation of law by taking and repaying loans incash exceeding Rs.20,000/-. Under the above factsand circumstances and respectfully following theabove decision of the Coordinate Bench of the Tribunal as well as the decision of the Hon'bleJurisdictional High Court in the case ofP.Muthukaruppan v. JCIT ([2015] 375 ITR 243), wereverse the findings of the ld. CIT (A) in deletingthe penalty levied under section 271E for theassessment year 2008-09 as well as penalty undersection 271D for the assessment year 2012-13 andrestore that of the Assessing Officer by sustainingthe penalty levied under section 271E and 271D ofthe Act for both the above assessment years. Thus,the ground raised by the Revenue stands allowed.” 12. The learned counsel appearing on behalf of the appellantassessee, Mr.A.S.Sriraman, has strenuously argued that thelearned Tribunal breached judicial discipline in ignoring theorders of other Benches of coordinate strength of the learnedTribunal. 13. However, in our considered opinion, every assessmentyear is different and a factual finding pertaining to any oneassessment does not operate as a binding precedent in respect ofsubsequent assessment years. The orders of other Benches ofcoordinate strength of the learned Tribunal pertaining to otherassessment years and/or to other assessees would not operate asa precedent. 12. The learned counsel appearing on behalf of the appellantassessee, Mr.A.S.Sriraman, has strenuously argued that thelearned Tribunal breached judicial discipline in ignoring theorders of other Benches of coordinate strength of the learnedTribunal. 13. However, in our considered opinion, every assessmentyear is different and a factual finding pertaining to any oneassessment does not operate as a binding precedent in respect ofsubsequent assessment years. The orders of other Benches ofcoordinate strength of the learned Tribunal pertaining to otherassessment years and/or to other assessees would not operate asa precedent. 14. In this context, it would perhaps not be out of contextto note that statutory provisions which prohibit acceptance ofrepayment of loans in cash are binding on all Income Tax payeesand breach thereof attracts the penal provisions of the IT Act,and renders an assessee taking or repaying loans exceedingRs.20,000/- liable to penalty. 15. Perhaps interference on the ground of breach ofconsistency or on the ground of perversity may have beenwarranted if loan in cash had been taken once or twice inexceptional exigencies. However, the fact that a lender, noteven licensed, was illegally giving loans only in cash andaccepting repayments in cash cannot be ground for condonation ofregular transactions with such an unauthorised lender. 16. Mr.A.S.Sriraman is correct in his submission thatprovisions should be initiated against the lender, A.Kannan. Inthese appeals, we are not concerned with A.Kannan. It is forthe department to proceed against A.Kannan. However, the merefact that proceedings may not have yet been initiated againstthe said A.Kannan, does not entitle the appellant assessee torelief. It is well settled that there cannot be any equality toa wrong and Article 14 of the Constitution of India does notpermit extension of the benefit of a wrong order and/ordecision to others similarly circumstanced. https://hcservices.ecourts.gov.in/hcservices/ 17. We are of the view that the Appellate Tribunal wascorrect in law in restoring the order of the Assessing Officerfor imposition of penalty under Sections 271D and 271E of the ITAct. 18. It is true that the appeals were entertained. However,on detailed examination of the contentions of the respectivecounsel, we are of view that the finding arrived at by theAppellate Tribunal is a finding on facts. The Tribunal, onconsideration of the facts narrated above, was of the view thatthere was no such reason for regular loan transactions ofborrowing and repayment in cash of amounts exceeding Rs.20,000/-so as to escape penal liability under Sections 271E and 271D ofthe IT Act. There is no question of law, not to speak of anysubstantial question of law, involved in these appeals. 19. Deliberate flouting of the law can never be ajustification for exemption from penalty, except in the rarestof rare cases of extreme exigency. 20. The appeals are, thus, dismissed. Consequently, C.M.P.No.21193 of 2017 is closed. No costs. Sd/- Assistant Registrar(CS IV) //True Copy// Sub Assistant Registrar sasiTo:1. The Registrar Income Tax Appellate Tribunal 'B' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals)-VI Chennai – 600 034. 3. The Joint Commissioner of Income Tax Puducherry Range, Puducherry. 4. The Assistant Commissioner of Income Tax Circle-I, D.P.Thottam, Muthialpet Puducherry – 605 003. +1cc to Mr.S.Sridhar, Advocate SR.No.18971+1cc to Mr.T.R.Senthilkumar, Advocate SR.No.19107 SJ(Co)sm:15.5.2018 T.C. (A) Nos.838 and 839 of 2017