9911796707
TMI Blog2012 (10) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceedings it had been observed that the assessee received deposits from D.D. Township (P) Ltd. ("DD" for short) otherwise than by way of account payee cheque or draft. The details are as under:- Date Particulars Description Amount (Rs.) 20.12.2005 Shree Devi Journal 2,50,563/- 17.02.2006 Ujjagar Singh Journal 70,000/- 18.02.2006 Mohan Singh Journal 2,00,000/- 18.02.2006 Sher Singh Journal 4,13,751/- 20.02.2006 Jaswinder Singh Journal 1,50,000/- 21.02.2006 Rajinder Kumar Journal 50,000/- 21.02.2006 Mukhtair Singh Journal 50,000/- 2.1 The AO issued show cause notices to the assessee on 24.12.2008 and 08.06.2009 requesting it to explain as to why penalty u/s 271D may not be levied. It was submitted that the DD made payments on behalf of the assessee for purchasing land from the farmers. The sale agreements executed in this connection show that advances were paid to them in cash. Such payments were made by Shri J.P. Khanna, the representative of the DD, to the farmers. Corresponding entries were made in the books of the assessee crediting the DD by way of journal entries. The AO did not find the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd owners is payment for purchase of land. Thus, the amounts did not represent loans or deposits accepted by the assessee. Further, the payment had to be made in cash failing which the land owners would not have carried through the transactions. Thus, business exigency demanded that the payments should be made to them in cash. In view of these findings, the penalty has been deleted. 3. The case of the ld. senior DR is that the chain of transactions involve the assessee, the DD and Shri J.P. Khanna. This chain has been created to camouflage the actual transaction of loan or deposit showing it to be a business transaction. It is an admitted fact that the receipts from the DD have been made otherwise than by account payee cheque or draft. There is no evidence on record that Shri Khanna had to pay money in cash to the intending sellers. Therefore, it is argued that the case of the assessee is squarely covered u/s 271D for levy of penalty. 3.1 In order to support his case, reliance has been placed on the decision in the case of Chaubey Overseas Corpn. v. CIT [2008] 303 ITR 9/170 Taxman 9 (All.). In this case, one Sanjay Kumar Aggarwal asked Shree Narain and Gopal Dass, brokers of silk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For this purpose, the DD paid Shri Khanna certain amounts by way of cheques. The cheques were deposited in his account. The money was drawn from this account to make payment in cash to the sellers of the lands. Since the lands were purchased on behalf of the assessee through the agent of the DD, corresponding credit was given to the DD in his current account maintained by the assessee. These transactions do not involve acceptance of any loan or deposit otherwise than by account payee cheque or draft. The transactions are recorded by way of journal entries, therefore, no money in cash has been received by the assessee from the DD. The ld. CIT(Appeals) considered all these facts. Thereafter, he came to the conclusion that it was not a fit case for levy of penalty u/s 271D of the Act. 4.1 In order to support his case, the ld. counsel has relied on a number of decided cases. In the case of CIT v. Noida Toll Bridge Co. Ltd. [2003] 262 ITR 260/[2004] 139 Taxman 115 (Delhi), the Tribunal had deleted the imposition of penalty u/s 271D by observing that : * the transaction is by an account payee cheque, * no payment on account is made in cash by the assessee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the family members and repays to different family members. The Hon'ble Court mentioned that these findings are based on appreciation of evidence. Whether the evidence is correctly appreciated or not, the position of law is that it does not give rise to a question of law unless such findings are contrary to evidence on record or the findings are recorded by omitting to consider relevant evidence or taking into account irrelevant evidence. Thus, no question of law arises from the finding of the Tribunal. In the case of CIT v. Lakshmi Trust Co. [2008] 303 ITR 99 (Mad.), the Commissioner (Appeals) had deleted the penalty levied under sections 271D and 271E by recording a finding that transactions of loan are genuine and the identity of the lender is not in doubt. Based upon this finding, the Tribunal held that there was no intention on the part of the assessee to infringe the provisions contained in section 269SS and 269T. The Hon'ble Court concurred with the Tribunal that once transactions are found to be genuine, which is a finding of fact, no question of law arises from the order. In the case of CIT v. Sunil Kumar Goel [2009] 315 ITR 163/183 Taxman 53( Punj. & Har.), the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The decision in the case of Saini Medical Store (supra) lays down that the penalty can be levied only after hearing the assessee. If the Tribunal comes to the conclusion that there is bona fide explanation, the penalty may not be levied if there is a venial breach of the provision. In that case a plea was taken that the transactions were not undertaken with any intention to avoid or evade tax, which was held to be a reasonable cause. However, the question of showing reasonable cause will be decided on the facts of each case. In other words, the plea that there was no avoidance or evasion of tax will not on its own lead to the deletion of the penalty. In the case of Kharaiti lal & Co. (supra), the amount accepted by the assessee was in respect of sale of a truck. The transaction was held to be undertaken in the course of the business and not transaction of a loan or a deposit. In the case of CIT v. Idhayam Publications Ltd. [2006] 285 ITR 221/[2007] 163 Taxman 265 (Mad.), relied upon by the ld. counsel, it has been held that it is for the revenue to establish that the assessee received a loan or a deposit as understood u/s 269SS. The assessee had received cash loan of Rs. 2,94, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered explanation in regard to transactions, the circumstances in which payments were made in cash by Shri J.P. Khanna, and such explanation ought to have been taken as a bona fide explanation. The transaction is also not one of loan or deposit. In these circumstances, we are of the view that the ld. CIT(Appeals) was right in deleting the penalty. 7. Coming to the penalty levied u/s 271E, the A.O. has noted the following transactions:- Date Particulars Description Amount (Rs.) 29.12.2005 Shyambir Journal 2,23,125/- 29.12.2005 Bhim Singh Journal 2,23,125/- 20.1.2006 Rajvati Journal 13,20,500/- 20.1.2006 Ramphal Journal 27,69,250/- 20.1.2006 Shankar Journal 2,50,563/- 20.1.2006 Kham Chand Journal 2,50,563/- 20.1.2006 Mula Journal 2,50,563/- 20.1.2006 Shanti Journal 5,55,750/- 20.1.2006 Somdutt?Nakul Journal 5,09,125/- 20.1.2006 Jagdish/Kela Devi Journal 8,73,125/- 20.1.2006 Shree Devi Journal 2,50,563/- 31.01.2006 Profit Agreements rights Journal 2,31,250/- 31.01.2006 Profit Agreements rights Journal 2,31,250/- 7.1 These amounts represent repayments t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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