Pr. Commissioner Of Income Tax Central, Jaipur, Jaipur v. Daksha Jain

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 148/2018 Pr. Commissioner Of Income Tax Central, Jaipur, Jaipur ----Appellant Versus Daksha Jain W/o Shri Virendra Modi, Adarsh Nagar, Sirohi ----Respondent For Appellant(s) : Mr. K.K. Bissa HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE DINESH MEHTA Judgment Per Hon’ble Dinesh Mehta, J 30/10/2018 The appellant has preferred the present appeal under Section260A of the Income Tax Act, 1961, (hereinafter referred to as “theAct of 1961”), laying challenge to the order dated 21.02.2018passed by the Income Tax Appellate Tribunal, Jodhpur Bench,Jodhpur, dismissing Department’s appeal against the order dated16.06.2017 passed by the Commissioner Income Tax (Appeals-2),Udaipur. The appellants have sought setting aside of the appellateorders, consequent to favorable adjudication of the followingquestions of law, which according to them are substantialquestions of law: “1.“Whether the learned ITAT is justified in deletingthe penalty u/s 271E without considering that therepayment of deposits of Rs. 54,93,095/- in cashmade by the assessee to her related persons andwhich are self-evident from the cash book submitted by the assessee herself are squarely covered by theprovisions of Section 269T?” 2.“Whether the learned ITAT is justified in treatingthe “repayments of deposits in cash” to a relatedperson as reflected from the assessee’s cash book asnot covered under the definition of “loans anddeposits” under the provisions of Sec. 269T?” 3.“Whether the learned ITAT is justified in treatingthe regular account of the assessee with the relatedsociety as exempt within the meaning of both theproviso u/s section 269T?” The facts relevant for the purpose of deciding the presentappeal so also to ascertain as to whether the questions of law asproposed by the appellant do arise; are set out briefly hereunder. A search and seizure was carried out in the assessee’s group,comprising of Adarsh Credit Cooperative Society Limited andAdarsh Cooperative Bank Limited, its Director and other relatedpersons. During the course of assessment proceedings, theAssessing Officer summoned the books of accounts of theassessee, which revealed cash transaction to the tune of Rs.54,93,095/- in the assessee’s books in the account of AdarshCredit Cooperative Society Limited. The Assessing Officer treatedthe said deposit of Rs.54,93,095/-, spread on various dates to bein violation of Section 269T of the Act of 1961 and thus proposeda penalty under Section 271E of the Act of 1961. The JointCommissioner, Income Tax issued a show cause notice during thepenalty proceedings. Pursuant to the notice issued by the Joint Commissioner,Income Tax, the respondent - assessee filed a reply andcontended that the amount has been deposited in M/s Adarsh Credit Cooperative Society (hereinafter referred to as ACCS),against the her contribution and the same was not repayment ofloan or deposit attracting penalty under Section 271E of the Act of1961. The Joint Commissioner, Income Tax, however, held thatthere was no occasion for the assessee to make huge payment incash and such cash payment was a violation of provisions ofSection 269T of the Act of 1961, calling for imposition of penaltyunder Section 271E of the Act of 1961. He thus inflicted a penaltyof Rs. 54,93,095/-, vide its order dated 28.08.2015. Pursuant to the notice issued by the Joint Commissioner,Income Tax, the respondent - assessee filed a reply andcontended that the amount has been deposited in M/s Adarsh Credit Cooperative Society (hereinafter referred to as ACCS),against the her contribution and the same was not repayment ofloan or deposit attracting penalty under Section 271E of the Act of1961. The Joint Commissioner, Income Tax, however, held thatthere was no occasion for the assessee to make huge payment incash and such cash payment was a violation of provisions ofSection 269T of the Act of 1961, calling for imposition of penaltyunder Section 271E of the Act of 1961. He thus inflicted a penaltyof Rs. 54,93,095/-, vide its order dated 28.08.2015. Feeling aggrieved with the said imposition of penalty, therespondent preferred an appeal under Section 250 of the Act of1961, which came to be allowed by the commissioner of IncomeTax (Appeals-2), Udaipur vide his order dated 16.06.2017. Thelearned appellate authority observed that it is true that cashdeposits have been made in the accounts of ACCS, but there wasnothing on record to conclude that the appellant had taken anyloan or deposit from the said ACCS and the amount so paid incash was a repayment of such loan or advance. Having gone through the record and after recording theabove finding, the appellate authority held that the explanationfurnished by the assessee that the amount deposited in ACCS’saccount was correct and acceptable and thus deleted the penaltyas the payment/ deposit so made by the assessee was not againstany loan or deposit attracting provisions of Section 269T of theAct. It will not be out of place to reproduce the relevant excerptfrom the order of the appellate authority, which reads thus:-“3.4.1From the perusal of the cash book andsubmissions of the Appellant and order of the JCIT, it is seen that transactions under consideration are relatedto ‘cash deposit’ as mentioned in the narration of thecash book and with account head ‘ACCSST 170’. Fromthese narration, it was concluded by the JCIT that it isthe transaction of repayment of deposits to AdarshSociety. However, after perusal of the records, it isseen that the said conclusion of the JCIT is withoutgiving any finding of fact that Appellant taken anydeposit from the Adarsh Society, which was repaid incash. It is clear from the bare perusal of the section269T of the Act that it prohibits repayment of depositsor loan to any person otherwise than by way ofaccount payee cheque or draft. Thus, following are thenecessary ingredients for application of section 269T a.There is transaction of loan or deposits b.There is repayment of such loan or deposits c.Repayment is made otherwise than way of specified modesspecified modes d.Repayment is made to any person 3.4.2It is well settled judicial principle thatburden of proof in relation to penalty proceedings is onthe revenue, however, in the instant case, the JCIT hasfailed to establish with a finding as to whether (i) thereis transaction of loan or deposit, (ii), there isrepayment of such loan or deposit and (iii) there isrepayment made otherwise than by way of specifiedmode. In the instant case, it has not been establishedwhether deposit was taken, when was deposit takenand of how much amount of deposit was taken. Thisburden has not been discharged, therefore, bareallegation upon the Appellant without establishingaforesaid requirements, do not justify levy of penaltyu/s 271E of the Act. 3.4.3.The Appellant in its submissions hasexplained that these transactions are transaction ofamount being deposited in the account of the Adarsh 3.4.3.The Appellant in its submissions hasexplained that these transactions are transaction ofamount being deposited in the account of the Adarsh Society, which seems reasonable explanation asevident from the bare perusal of the cash book,wherein the source as well as utilization of cash isbeing reflected. Therefore, in my view, there is norepayment of deposits with Adarsh Society in theinstant case, therefore, the provisions of section 269Tdoesn’t get attracted. Further no case has been madeout as to whether there is any repayment of loansmade otherwise by than by way of account payeecheque or demand draft, therefore, levy of penalty isalso not justified on this ground also.” Feeling aggrieved with the said order of the appellateauthority, the Department preferred an appeal before the IncomeTax Appellate Tribunal, Jodhpur Bench, Jodhpur, which came to berejected by the Tribunal, vide its order dated 21.2.2018. Learned Members of the Tribunal while rejecting the appealfiled by the Department observed that the amount in question hadbeen deposited in regular accounts maintained with said ACCS inwhich the assessee was a member. The Tribunal also held that theburden of proof in relation to the penalty proceedings was on theRevenue and that the Assessing Officer has failed to establish thatthe amount of Rs.54,93,075/- in ACCS’s account was towards arepayment of loan/ deposit, which by no stretch of imaginationcan be termed as her contribution towards Society. Mr. Bissa, learned counsel for the appellant contended thatthe learned Members of the Tribunal have erred in holding that theburden of proof in cases of penalty proceedings is on the Revenue.He argued that the onus lay upon the assessee to establish thatthe payment in cash, which has been made in the account ofACCS was not in violation of the provisions of Section 269T of theAct of 1961. We have considered the arguments advanced by Mr. Bissaand perused the material available on record including theprovisions of Section 269T of the Act of 1961. If the facts of the present case are considered carefully, ittranspires that the respondent assessee had made payment ofRs.54,93,095/- in cash in the account of ACCS Limited. Pursuantto the notice for levy of penalty, the assessee furnished herexplanation and asserted that the said payment has been madetowards her contribution in the Society, by pointing out that theassessee was a member of the Society. A perusal of Section 269T of the Act of 1961 reveals that it prohibits a person from making repayment of loan or deposit,otherwise than by way of an account payee cheque or accountpayee draft. A bare look at the aforesaid provision leaves no roomfor ambiguity that the rigours of the said provision is attractedonly in the event when the assessee makes repayment of loan oradvance. In other words, existence of loan or advance is a sinequa non or foundational fact for the applicability of the provisionsof Section 269T of the Act of 1961. In the extant facts, theassessee had stated that the amount of Rs.54,93,095/- was paidin the account of ACCS towards her membership contribution. Theassessing officer was having books of accounts of the assessee,including the cash book evincing the contentious payment. It wasthus incumbent upon him to have recorded the finding that thereexisted a loan or deposit or advance by the said recipient viz.Adarsh Credit Cooperative Society. In absence of any loan oradvance by the ACCS, the cash payment made to it does not fallfoul to Section 269T of the Act of 1961. There is nothing on record to show that there existed a loanor advance by said ACCS, repayment whereof has been made incash. Argument of Mr. Bissa that the burden was on assessee toshow that the payment was not in violation to Section 269T ismisconceived and ex-facie contrary to settled canon of burden ofproof. It is a settled proposition that the burden to prove lies upona person who asserts a fact. In the facts of the present caseassessee put forth her explanation and took a stand that thereexisted no loan or advance from ACCS and the amount was paidtowards her contribution in the society. As such the burden entirely lay upon the assessing officerfirst to establish that there existed a loan or advance and thecontentious payment in repayment of such loan. That being thefactual and legal position, we are of the considered opinion thatthe learned Commissioner (Appeals-2), Udaipur was perfectlyjustified in holding that there is no violation of the provisions ofSection 269T of the Act of 1961 and consequently, levy of penaltyunder Section 271E of the Act of 1961 was uncalled for. While concurring with the views of the appellate authorityand the Income Tax Appellate Tribunal, we neither find anyinfirmity in their order nor do we find any substantial question oflaw involved herein. The appeal is therefore, dismissed. (DINESH MEHTA),J(SANGEET LODHA),J Arun/PS (36)