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TMI Blog2012 (10) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... en taken as a bona fide explanation. The transaction is also not one of loan or deposit - CIT(Appeals) was right in deleting the penalty. Orders of lower authorities no where show that the money was repayable after notice or after a period of time. This is an additional factor in favour of the assessee - levy of penalty u/s 271D, rightly deleted - IT Appeal Nos. 5689 & 5690 (Delhi) of 2010 - - - Dated:- 16-3-2012 - K.G. Bansal, C.M. Garg, JJ. Ms. Renuka Jain for the Appellant. P.N. Monga and Mona Monga for the Respondent. ORDER K.G. Bansal Accountant Member These two appeals regarding leviability of penalty u/s 271D and 271E of the Income-tax Act, 1961 were argued in a consolidated manner by the ld . senior DR and the ld . counsel for the assessee . Therefore, a consolidated order is passed. 1.1 The only substantive ground taken in appeal no. 5689 ( Del ) /2010 is to the effect that the ld . CIT ( Appeals) erred in deleting the penalty of Rs. 11,84,314/- levied by the AO u/s 271D of the Act. Similarly, the only ground taken in appeal no. 5690 ( del ) /2010 is that the ld . CIT ( Appeals) erred in deleting the penalty of Rs. 77,07,502/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial institutions, sale etc. will be discharged by the developers. In view of this agreement, a current account was maintained by the assessee in respect of the DD. The payments made by the DD on behalf of the assessee were credited in the account and re-payments to it were also debited in this account. The balance payable has been shown in the balance-sheet as current liabilities and provisions. It was further submitted that the developer has made payments to the farmers on behalf of the assessee through representative Shri J.P. Khanna. Shri J.P. Khanna was paid in this behalf by the developer by way of cheques . Such sale agreements had been filed before the AO and the transactions recorded in the account of the DD are supported by the purchase agreements. Thus, it was argued that the assessee has not received any loan or deposit from the DD. 2.3 The ld . CIT ( Appeals) considered the facts and submissions made before him. It is mentioned that Shri J.P. Khanna has made payment to various persons on behalf of the DD. He is situated in Mohali and he received payments by way of cheques from the DD. The cheques were deposited in his account and subsequently cash was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee against this order on the ground that the word "deposit" means keeping of money with a person or a bank for earning interest. Therefore, provisions of section 269D were not attracted. This order was reversed by the Tribunal by mentioning that the word "deposit" means every kind of deposit and there is no difference between a deposit, business deposit or trade deposit. The Hon'ble Court came to the conclusion that the words "any deposit" has been used to cover all sorts of deposits including trade deposits. Therefore, the mater was decided in favour of the revenue. 4. In reply, the ld. counsel furnished background facts in brief that the assessee is a company. Its accounts are liable to be audited and have been audited as such. The assessee had filed the return of income and audited accounts were enclosed with the return. The accounts have been accepted by the AO as seen from assessment order passed u/s 143(3) of the Act. In this order, no satisfaction had been recorded that provisions of section 269SS have been violated by the assessee. In fact, the assessee has not doubted in any manner whatsoever the transactions of the assessee with the DD. There is no finding eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing that the assessee received an amount of Rs. 6,49,344/- as an advance for purchase of truck and this amount was adjusted against the value of the truck. The Hon'ble Court came to the conclusion that the findings were of fact. The amount received by the assessee was in the form of advance and not a loan as alleged by the department. Therefore, provisions of section 269SS are not attracted. In the case of CIT v. Saini Medical Store [2005] 277 ITR 420/[2006] 150 Taxman 246 (Punj. Har.), the CIT(Appeals) had accepted the explanation of the assessee that the breach of the provision was on account of bona fide belief of the assessee and the same was not with any intention to avoid or evade the tax. These findings were confirmed by the Tribunal. The cause shown by the assessee was held to be a reasonable cause by the CIT(Appeals) and the Tribunal. The Hon'ble Court inter-alia considered the decision in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) and came to the conclusion that the findings of the CIT(Appeals) and the Tribunal are in the nature of findings of fact based on appreciation of material on record. These findings do not lead to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Noida Toll Bridge Co. Ltd. ( supra ), is not applicable to the facts of the case as material findings were recorded that no payment was made in cash by the assessee or on its behalf and IL FS, who made the payment, held more than 30% paid up capital of the assessee. Further, it is submitted that the genuineness of loan is not a relevant consideration as held in the case of Thenamal Chhajjer v. Jt. CIT [2005] 96 ITD 210 (Chennai). It is also submitted that it is not incumbent on the AO to record any satisfaction in the assessment order, as held in the case of Cargill India (P.) Ltd. v. Dy. CIT [2008] 110 ITR 616/167 Taxman 114 (Delhi); and Asstt. CIT v. Vinman Finance Leasing Ltd. [2008] 115 ITD 115 (Vishakhapatnam) (TM). 6. We have considered the facts of the case and submissions made before us. The facts are that the assessee entered into a collaboration agreement with the DD for purchase of land on its behalf and development thereof by the developer. The developer purchased lands from farmers on behalf of the assessee through its agent, Mr. J.P. Khanna. In lieu of the consideration paid by the DD, its account was credited by way of journal entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the assessee has not accepted any deposit from the DD by way of money in cash. It has credited the account of the DD in respect of purchase consideration paid on its behalf by the DD through Mr. J.P. Khanna. The entries are made by way of journal entries. From this fact, it becomes clear that the credit has been given for purchase of lands. The lands were purchased in the course of business of developing them in association with the DD. Therefore, the transactions are in the nature of business transactions, recorded through the current account. The DD was subsequently paid through this account. Thus, it is not a case of accepting loan or deposit. Rather, it is a case of carrying out business transaction for purchase of land and making payment thereof. Further, the transactions have been found to be genuine and no part of the amount has been found to be unexplained money. It has no where been recorded in the assessment order or the penalty order that the transactions were undertaken with a view to avoid or evade payment of tax. It is no doubt true that proof of genuineness of loan does not absolve the assessee from levy of penalty, as held in the case of Thenamal Chhajjer ( s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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