Sri.m.palani Adaicalam v. The Assistant Commissioner Of Income Tax, Circle-I, D.p.thottam, Muthialpet, Puducherry-3

THE HONOURABLE MRS. JUSTICE V.BHAVANI SUBBAROYANTAX CASE APPEAL NOS.34 TO 40 OF 2018& ALL CONNECTED PENDING CMPS (heard through video conferencing) Sri.M.Palani Adaicalam ...Appellant in all the appealsVs The Assistant Commissioner of IncomeTax, Circle-I, D.P.Thottam, Muthialpet,Puducherry-3. ...Respondent in all the appeals APPEALS under Section 260A of the Income Tax Act, 1961against the common order dated 31.3.2016 made in ITA.Nos. 264 to270/Mds/2015 on the file of the Income Tax Appellate Tribunal,Chennai ‘B’ Bench respectively for the assessment years from2006-07 to 2012-13 and against the order of the Commissioner ofIncome Tax (Appeals)VI Chennai 34 dated 14.11.2014 made inI.T.A. No. 1504/MDS/13-14 to 1510/MDS/13-14 and against theorder of the Joint Commissioner of Income Tax, Puducherry Range,Puducherrydated29.04.2013madeinC.R.No.32/JCIT/PDY/271D/2012-2013 and C.R. No. 32/JCIT/PDY/271E/2012-2013.For Appellant : Mr.A.S.Sriraman For Respondent : Mr.J.Narayanaswamy, SSC COMMON JUDGMENT(Judgment was delivered by T.S.SIVAGNANAM,J) We have heard Mr.A.S.Sriraman, learned counselappearing for the appellant – assessee and Mr.J.Narayanaswamy,learned Senior Standing Counsel appearing for the respondent –Revenue. 2. Totally there are seven appeals. This bunch of sevenappeals filed by the assessee under Section 260A of the IncomeTax Act, 1961 (for short, the Act) are directed against thecommon order dated 31.3.2016 made in ITA.Nos.264 to 270/Mds/2015on the file of the Income Tax Appellate Tribunal, Chennai ‘B’Bench (for brevity, the Tribunal) respectively for theassessment years from 2006-07 to 2012-13. https://hcservices.ecourts.gov.in/hcservices/ 3. The appeals are entertained to decide the followingsubstantial questions of law : “i. Whether the Appellate Tribunal iscorrect in law in restoring the action ofthe Original Authority/Assessing Officer inimposing penalty under Section 271D of theAct for the assessment years 2006-07 and2012-13 on the presumption of violation ofSection 269SS of the Act while overlookingthe provisions of Section 273B of the Act ?and ii. Whether the Appellate Tribunal iscorrect in law in restoring the action ofthe Original Authority/Assessing Officer inimposing penalty under Section 271E of theAct for the assessment years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 on thepresumption of violation of Section 269T ofthe Act while overlooking the provisions ofSection 273B of the Act? ” 4. The common issues involved in all these appeals areas to whether the Assessing Officer was justified in imposingpenalty under Sections 271D and 271E of the Act for theviolation of Section 269SS of the Act and Section 269T of theAct respectively without applying the provisions of Section 273Bof the Act and as to whether the Tribunal was right in reversingthe orders dated 14.11.2014 passed by the Commissioner of IncomeTax (Appeals)-VI, Chennai [hereinafter called the CIT(A)]restoring the orders of penalty as passed by the AssessingOfficer. 5. We have carefully gone through the common orderpassed by the Tribunal. 6. The assessee contended before the Tribunal that inhis own case in respect of identical transactions for the sameand other assessment years, the Tribunal held in favour of theassessee while coming to the conclusion that the provisions ofSection 273B of the Act could be applied to the assessee’s caseand penalty was vacated. 7. Interestingly, in the orders relied upon by theassessee namely ITA.Nos.1820 to 1825/Mds/13 dated 31.10.2013 andITA.Nos. 2047 to 2051/Mds/2013 dated 22.7.2014, the very sameassessment years, which are under consideration in this bunch ofappeals were also involved and the cases were decided in favourof the assessee. 6. The assessee contended before the Tribunal that inhis own case in respect of identical transactions for the sameand other assessment years, the Tribunal held in favour of theassessee while coming to the conclusion that the provisions ofSection 273B of the Act could be applied to the assessee’s caseand penalty was vacated. 7. Interestingly, in the orders relied upon by theassessee namely ITA.Nos.1820 to 1825/Mds/13 dated 31.10.2013 andITA.Nos. 2047 to 2051/Mds/2013 dated 22.7.2014, the very sameassessment years, which are under consideration in this bunch ofappeals were also involved and the cases were decided in favourof the assessee. 8. Therefore, the sheet anchor of the argument of theassessee before the Tribunal was requesting the Tribunal toapply the decisions in the assessee’s own case and grant therelief. The Tribunal, though referred to the decisions cited by https://hcservices.ecourts.gov.in/hcservices/ the assessee before it, thought fit to follow the case of theassessee’s father in ITA.Nos.220 to 228/ Mds/2014 dated29.5.2014 and sustained the penalty imposed by the AssessingOfficer. 9. On a reading of the common order passed by the Tribunal,we find that the Tribunal did not render any finding as to whythe decisions in the assessee’s own case in ITA.Nos.1820 to1825/Mds/ 2013 dated 31.10.2013 and ITA.Nos.2047 to 2051/Mds/2013 dated 22.7.2014 were not applicable. 10. It is seen that the Tribunal noted the submissions madeby the assessee that his case was covered by those twodecisions. If such is the submission made by the assessee beforethe Tribunal, the Tribunal is enjoined upon a duty to considerthe said orders and upon consideration, to our mind, threeoptions are available to the Tribunal, firstly, to apply thedecisions and decide the case in favour of the assessee. Thesecond option being to distinguish the decision in theassessee’s earlier case on factual grounds and set out reasonsas to how they do not apply to the assessment year underconsideration and distinguishable. The third and last beingwould be to consider the findings given by the Coordinate Benchof the Tribunal and assign reasons that in the opinion of theTribunal, the decisions do not lay down the correct legalprinciple or there is any error of law committed by theCoordinate Bench prompting the Tribunal to take a differentdecision and after abiding by the cardinal principles ofjudicial discipline, the Tribunal ought to have referred thematter to the Principal Bench to be referred to a Larger Benchfor a decision. We find that the Tribunal did not follow any oneof the above three principles. 11. Mr.J.Narayanaswamy, learned Senior Standing Counselappearing for the respondent – Revenue has relied upon thejudgment of the Hon’ble First Bench of this Court in the case ofthe assessee’s brother – M.Sougoumarin Vs. ACIT [TCA.Nos.838 &839 of 2017 dated 13.3.2018]. It is submitted by the learnedSenior Standing Counsel that the penalty, which was imposed onthe appellant - assessee was affirmed by the Tribunal asconfirmed by the Division Bench of this Court by dismissing theassessee’s appeal. Therefore, it is also submitted that theCourt should follow the said decision in the case ofM.Sougoumarin and sustain the order passed by the Tribunal inthe instant case. 12. The admitted legal principle is that the Tribunalis the last fact finding Authority in the hierarchy of remediesunder the Act. The scope of adjudication by this Court has beenclearly circumscribed under the Statute, which can be culled outby reading the provisions of Section 260A of the Act and otherrelated provisions. The Tribunal, as the last fact finding 12. The admitted legal principle is that the Tribunalis the last fact finding Authority in the hierarchy of remediesunder the Act. The scope of adjudication by this Court has beenclearly circumscribed under the Statute, which can be culled outby reading the provisions of Section 260A of the Act and otherrelated provisions. The Tribunal, as the last fact finding Authority/Forum, had held that the assessee had a reasonablecause to be entitled to the benefit of Section 273B of the Act,which states that notwithstanding anything contained in theprovisions of Sections 271D and 271E of the Act, no penaltyshall be imposable on the person or the assessee, as the casemay be, for any failure referred to in the said provisions if heproves that there was reasonable cause for the said failure. Itis the further submission of Mr.J.Narayanaswamy, learned SeniorStanding Counsel appearing for the respondent – Revenue thatthere was no reasonable cause brought out by the assessee to beentitled to the benefit of the said provision. 13. However, we find that the Tribunal did not examinethe nature of transaction and the issue as to whether the CIT(A)was justified in accepting the cause shown by the assessee to bea reasonable cause to be entitled to the benefit of Section 273Bof the Act. The decision, which has been referred to inparagraph 8 of the impugned order, does not relate to theassessee. The Tribunal referred to the said decision and allowedthe Revenue’s appeal and affirmed the penalty imposed by theAssessing Officer. We find that there is no discussion as to whythose two decisions rendered by the Coordinate Bench of theTribunal in the assessee’s own case respectively dated31.10.2013 and 22.7.2014 could not be applied to the facts andcircumstances of the present case. 14. In the case of the assessee’s brother – the saidM.Sougoumarin, which was relied upon by the Revenue before us,the Hon’ble First Bench of this Court held that the Tribunal, onconsideration of facts, was of the view that there was no suchreason for regular loan transactions of borrowing and repaymentin cash of amounts exceeding Rs.20,000/- so as to escape penalliability under Sections 271E and 271D of the Act and that therewas no question of law, not to speak of any substantial questionof law, involved in those appeals. 15. However, in the instant case, there are twodecisions of the Coordinate Bench of the Tribunal, which heldthat the assessee had a reasonable cause and consequentlyentitled to the benefit of Section 273B of the Act. Therefore,in our considered view, the decision in the case of theassessee’s brother – M.Sougoumarin is distinguishable on factsand this decision cannot be applied to the facts andcircumstances of the case on hand. 16. Mr.A.S.Sriraman, learned counsel appearing for theappellant – assessee has referred to the decisions of thisDivision Bench in the case of Sarvodaya Mutual Benefit Trust Vs.PCIT [TCA.No.682 of 2018 dated 03.7.2019] and in the case ofA.S.Shipping Agencies Private Limited Vs. DCIT [TCA.Nos.596 to600 of 2019 dated 09.8.2019]. These decisions are referred to insupport of his submission that the Tribunal ought to have applied the decision in the assessee’s own case and should nothave dismissed the assessee’s appeal. 16. Mr.A.S.Sriraman, learned counsel appearing for theappellant – assessee has referred to the decisions of thisDivision Bench in the case of Sarvodaya Mutual Benefit Trust Vs.PCIT [TCA.No.682 of 2018 dated 03.7.2019] and in the case ofA.S.Shipping Agencies Private Limited Vs. DCIT [TCA.Nos.596 to600 of 2019 dated 09.8.2019]. These decisions are referred to insupport of his submission that the Tribunal ought to have applied the decision in the assessee’s own case and should nothave dismissed the assessee’s appeal. 17. In both these cases, there were earlier orders passedby the Tribunal, which were neither noted nor dealt with by theTribunal. In the decision in the case of Sarvodaya MutualBenefit Trust, we had referred to the decision of the Hon’bleSupreme Court in the case of Union of India & Others Vs.Kamlakshi Finance Corporation [reported in (1992) 1 SCC 648]wherein the principle of judicial discipline was pointed out aswell as the decision of the Division Bench of this Court in thecase of CIT Vs. L.G.Ramamurthi And Ors. [reported in (1977) 110ITR 453]. Accordingly, without venturing into the merits of thematter nor attempting to answer the substantial questions oflaw, the matters were remanded to the Tribunal for a freshconsideration. 18. It is argued by Mr.J.Narayanaswamy, learned SeniorStanding Counsel appearing for the respondent – Revenue that thefactual circumstances involving the assessee will clearly showthat they are not entitled to the benefit under Section 273B ofthe Act. 19. We are not inclined to examine the merits of thematter nor make an attempt to answer the substantial questionsof law, as we are of the considered view that the mattersrequire to be reconsidered by the Tribunal for the reasons wehave set out in the preceding paragraphs. It is for the Tribunalto take note of the fact and deal with the earlier orders passedby its Coordinate Bench respectively dated 31.10.2013 and22.7.2014, which ended in favour of the assessee. 20. For the above reasons, these appeals are allowed, theimpugned orders are set aside and the matters are remanded tothe Tribunal for a fresh consideration bearing in mind theobservations made by us in this common judgment. The substantialquestions of law are left open. No costs. Consequently, allconnected pending CMPs are closed. To 1.The Income Tax Appellate Tribunal, Chennai ‘B’ Bench. 2.The Assistant Commissioner of Income Tax, Circle-I,D.P.Thottam,Muthialpet, Puducherry-3.D.P.Thottam,Muthialpet, Puducherry-3. https://hcservices.ecourts.gov.in/hcservices/ 3.The Commissioner of Income Tax(APPeals)VI Chennai 34. 4.The Joint Commissioner of Income Tax Puducherry Range Puducherry TCA.Nos.34 to 40 of 2018 & All connected pending CMPs BR(CO)SP(29/09/2020)