9911796707
TMI Blog1997 (1) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... 71D of the Act. The penalty so imposed be deleted." 2. The brief facts of the case are these : The assessee is a private limited company which was incorporated on 29-9-1989 with a view to carry on the business as developer and builder. It purchased the plot No. 226 at Panvel for a consideration of Rs. 12,33,990 vide conveyance deed dated 20-11-1989. The said land has been shown in the balance-sheet as on 31-3-1990 under the head 'Current assets'. The return for A.Y. 1991-92 was originally filed by the assessee on 30-8-1993 which was treated as non est by the department since it was out of time and therefore, notice under section 148 was issued. The return under section 148 was filed by the assessee on 28-1-1994. The balance-sheet as on 31-3-1991 however, showed the value of land at Rs. 40,00,990 enhancing the value of land by Rs. 27.67 lakhs and also showing the corresponding liability under the head 'Unsecured loans'. In order to understand this factual position, it is necessary to mention that the search was conducted at the premises of Mr. V.R. Banthia, Director of the assessee-company in the financial year 1990-91, in the course of which, it was found from the papers seized t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 269SS are not contravened. Entry by rectification cannot fall within the ambit of section 269SS. In support of his contention, he referred to the decision of the Ahmedabad Bench of the Tribunal in the case of Bombay Conductors Electricals Ltd. v. CIT [ITA No. 1609 (Ahd.) of 1994 dated 30-11-1995], wherein it has been held that constructive loan could not come within the mischief of the provisions of section 269SS. He also relied on the decision of the Calcutta High Court reported in Jatia Investment Co. v. CIT [1994] 119 CTR (Cal.) 372 and the decision of the Tribunal Cochin Bench at Muthoot M. George Bros. v. Asstt. CIT [1993] 47 TTJ (Coch.) 434. 4. On the other hand, the learned departmental representative Mr. Sanjay Prasad, strongly opposed the contention advanced on behalf of the assessee. Regarding the finding of the Assessing Officer to the effect that it had taken loan in cash, he referred to confirmation letter filed by the assessee in the course of assessment proceedings. He pointed out from the confirmation letter that Mr. Banthia had given in writing that the amount of Rs. 27.67 lakhs has been invested by him in cash out of the funds available in procuring p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from his letter dated 29-9-1994 written to the Dy. CIT Range-II, Pune. The learned counsel for the assessee has also denied this fact before us. We have gone through the entire material placed before us but we are unable to uphold such a finding of fact recorded by the Assessing Officer. The relevant portion of confirmation letter of Mr. Banthia, on which reliance has been placed by the learned Departmental representative is reproduced below : "The amount of Rs. 27,67,000 (Rs. twenty-seven lakhs sixty-seven thousand only) appearing in the records of Sunflower Builders Pvt. Ltd. Raikar Bhavan, 2nd Floor, Sector 17, Washi, New Bombay-73 under the head of unsecured loans has been invested by me in cash out of funds available in procuring plot No. 226 at Panvel in the name of Sunflower Builders Pvt. Ltd." Perusal of the aforesaid letter shows that Mr. Banthia has never said that he gave money in cash by way of loan to the assessee-company. What he has confirmed is that he had invested money in cash in purchasing the plot in the name of the assessee out of available funds with him. The land was admittedly purchased on 28-11-1989. In the course of hearing both the parties proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...................................................................................... Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from ................................................................... (a) ......................................................................................................... (b) ......................................................................................................... (c) ......................................................................................................... (d) ....................................................................................................... (e) ......................................................................................................... Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation-- (i) ......................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent assessees. Therefore, we are of the opinion that the provisions of section 269SS cannot be applied where the assessee merely acknowledges the debt incurred earlier and there is no transfer of money from one person to another. The same view has been taken by the Tribunal, Ahmedabad Bench in the case of Bombay Conductors Electricals Ltd. wherein it has been held that deposit/loan must be made through money and constructive loan or deposit could not come within the mischief of provisions of section 269SS. In that case, the assessee had purchased goods worth Rs. 23.00 lakhs from its subsidiary company and since it was not in a position to pay the said amount immediately, the holding company agreed to treat the amount as loan. The respective entries were made by the assessee in this regard. On these facts, the Tribunal held that the provisions of section 269SS could not be applied. For the benefit of our order, we may refer the following observations of the Hon'ble Supreme Court in the case of Bombay Steam Navigation Co. (1953)(P.) Ltd. v. CIT [1965] 56 ITR 52 at page 57 : "An agreement to pay the balance of consideration due by the purchaser does not in truth give rise to a loa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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