9911796707
TMI Blog2014 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 3. Briefly stated the facts are:- 3.1 That the respondent/assessee filed its return of income for the assessment year 2007-08 on 30.10.2007. The return was taken up for scrutiny and the Assessing Officer found that during the year in question, the assessee had shown purchases of land worth Rs.14.22 crores which was reflected as closing stock in trade. The assessee had also reflected a sum of Rs.14,25,74,302/- as Sundry Creditors. The assessee explained that the Sundry Creditor reflected in its books was M/s PACL India Ltd., which had purchased lands on behalf of assessee from several land owners. M/s PACL India Ltd. had made payments through demand drafts to various land owners from whom the land was acquired on behalf of the assessee. The Assessing Officer concluded, that the transaction as disclosed by the assessee amounted to M/s PACL India Ltd. extending a loan to the assessee. The Assessing Officer further concluded that the said transaction fell foul of the provisions of Section 269SS/269T of the Act, which proscribed any person from accepting any loan or deposit exceeding Rs.20,000/- otherwise than by an account payee cheque. Since no funds had passed through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the given circumstances of the case. 3.5 The aforementioned order of CIT (Appeals) dated 28.01.2013 was challenged by both the Revenue as well as the assessee. Whilst the assessee was aggrieved with the conclusion of CIT (Appeals) that the penalty order was within time, the Revenue was aggrieved by the finding that Provisions of Section 269SS of the Act were not violated. The ITAT accepted the contention of the assessee that penalty order under Section 271D of the Act was barred by time as the provisions of Section 271(1)(c) of the Act were applicable in the given facts of the case. In view of this finding, the ITAT concluded that the appeal preferred by the Revenue has become infructuous. 4. The learned counsel for the Revenue has contended that the assessment order for the assessment year 2007-08 was passed on 30.12.2009. The assessee's appeal, impugning this order before CIT (Appeals), was rejected on 23.02.2012. According to the Revenue, an order imposing penalty under Section 271D of the Act could be passed till 31.03.2013 (i.e. one year after the end of the financial year 2011-12 during which the appeal order was passed). It was submitted that since the penalty orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required under sections 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under sections 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, clause (a) of sub-section (1) of section 275 cannot be attracted to such proceedings. If that were not so clause (c) of section 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing institution referred to in section 51 of that Act; (ii) "co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); (iii) "loan or deposit" means loan or deposit of money." 8. A plain reading of the aforesaid Section indicates that (the import of the above provision is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liability arises on account of book entries. The object of the Section is to prevent transactions in currency. This is also clearly explicit from clause (iii) of the explanation to Section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money". The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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