2015 (1) TMI 420 - HC - Income Tax

Penalty under Section 271D - violation of Section 269-SS - surrender of income - Receipt of Loan in cash - held that - Revenue has relied on the statement of Yogesh Gupta recorded on 31st May, 2006. In the said statement Yogesh Gupta had disclosed and surrendered an amount of ₹ 13.05 crores as additional income in the financial year 2005-06. This included ₹ 2 crores in his own hand and ₹ 9.05 crores as income of Real Tech Projects Pvt. Ltd. ₹ 2 crores was disclosed as undeclared income of Home Developers Pvt. Ltd. In the said statement in question Nos.11 and 12 Yogesh Gupta was asked to explain document A-12. Yogesh Gupta had stated that these were unaccounted transactions in cash. No question was put to state or furnish the details of the writer or recipient i.e. the details of the companies, which had received the said amounts. He was also not asked to specify or state whether the amount received was on account of advances for flats or loan. Revenue was fully satisfied by the surrender made and closed their investigation. Thus, in the present case, there is doubt, but it is not established that the respondent- assessee had taken loan/deposit in cash. There is suspicion but this alone without further verification and investigation cannot justify the finding that the respondent-assessee had taken loan/deposit in cash. The findings recorded by the tribunal are not perverse. - Decided against Revenue.

Summary

Issues:
Appeal against deletion of penalty under Section 271D of the Income Tax Act for assessment years 2001-02, 2002-03, and 2003-04.

Analysis:
1. The respondent-assessee, a company, faced a survey under Section 133A and related companies were subjected to search and seizure operations under Section 132, leading to the discovery of a document indicating cash receipts as loans. The Assessing Officer imposed a penalty under Section 271D for violating Section 269-SS by treating the amounts as unaccounted loans.

2. The CIT (Appeals) and the tribunal overturned the penalty, citing reasons such as the accepted income returns, lack of verification on the nature of receipts, absence of the assessee's name in the document, and the document's source not being the respondent's office. The tribunal highlighted the lack of evidence linking the respondent to the cash transactions mentioned in the document.

3. The Revenue relied on a statement by Yogesh Gupta, disclosing additional income, including unaccounted transactions in cash. However, the statement did not provide details on the recipients of the cash amounts or specify if they were loans or advances for flats. The tribunal found the evidence insufficient to establish that the respondent had taken cash loans or deposits, emphasizing the need for further verification and investigation.

4. The High Court upheld the tribunal's decision, stating that the findings were not unreasonable. The court emphasized that suspicion alone without concrete evidence cannot justify the conclusion that the respondent received cash loans or deposits. The court dismissed the appeal, noting that the decision was based on the specific facts of the case and refrained from commenting on pending appeals before the tribunal.