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TMI Blog2014 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 2009-2010. The amounts taken by way of cash, according to the department, was Rs. 1 Crore and the amount that was returned was Rs. 50 Lakhs. This amount, in the course of original assessment proceedings, was treated by the Assessing Authority as credit of income from unexplained/unidentified source and is liable to tax under Section 68 of the Income Tax Act (for short 'the Act'). That issue, however, remains as such. Pending the same, the Department issued show cause notice dated 13.06.11, initiating penalty proceedings on the transaction relating to receipt of Rs. 1 Crore and payment of Rs. 50 Lakhs in the following manner :- a) 23.12.2011-In respect of receipt of Rs. 1 Crore b) 23.12.2011-In respect of payment of Rs. 50 Lakhs 3. There is yet another transaction, where a sum of Rs. 25 Lakhs was received from one Meenakshi as loan and, therefore, notice under Section 271-D was issued for contravention of Section 269-SS of the Act. The notices were resisted by the assessee resulting in an order being passed in the first case by the Joint Commissioner of Income Tax Exemptions, holding that there is a clear contravention of Section 269-SS and Section 269-T liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode of taking or accepting certain loans and deposits.--No person shall after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,-- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,-- (a) Government ; (b) any banking company, post office savings bank or co-operative bank ; (c) any corporation established by a Central, State or Provincial Act ; (d) any Government company as defined in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost office savings bank or co-operative bank ; (iii) any corporation established by a Central, State or Provincial Act ; (iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette. Explanation. For the purposes of this section, (i) banking company shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS ; (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 any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature. * * * * * * * * * 271D. Penalty for failure to comply with the provisions of section 269SS.--(1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271D begins with the words if a person takes or accepts any loan or deposit . The Assessing Officer had recorded a finding that the amount of Rs. 30,000 was the income of the assessee. Impliedly he had recorded a finding that it was neither any loan nor a deposit. The question of the provisions of section 269SS having been contravened was then lost in oblivion and could not have rearisen at any subsequent stage or in subsequent proceedings. The penalty imposed under section 271D read with section 269SS cannot, therefore, be sustained." 9. In yet another decision in Commissioner of Income-Tax V. Standard Brands Ltd. ( 2006) 285 ITR 295), once again, the Delhi High Court held as under :- "In so far as the quantum issue is concerned, the Commissioner of Income-tax (Appeals) in a separate order dated September 6, 2000, came to the conclusion (in paragraph 7.2 of the said order) that the addition under section 158BC of the Act could not be sustained and that the Assessing Officer could at best have taken action under section 147 of the Act. Accordingly, the addition of Rs. 3 lakhs was deleted without prejudice to the action that the Assessing Officer may take for taxing this amount in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Commissioner of Income Tax (Appeals), the relevant portion of which is extracted hereunder for easy reference :- "31. On going through the order of the Commissioner of Income Tax (Appeals), we find that the assessee has obtained cash loan from Smt.Meenakshi, who is an assessee, the identity is proved, the genuineness of the transaction is proved, therefore, it cannot be said that the loan amount of Rs. 25,00,000/- is unaccounted income of the assessee. We also notice from the assessment order that the cash loans introduced by the assessee from other than Smt.Meenakshi have been considered as unexplained credits by the Assessing Officer which shows that the cash loans obtained from Smt.Meenakshi is genuine loan and no such treatment was given to this loan of Rs. 25,00,000/- by the Assessing Officer while completing the assessment. We also find that the assessee was forced to avail cash loans in order to meet the requirements of payments to bank for reducing the credit limit and to honour the cheques already issued. The Department has not filed any evidence to rebut the findings of the Commissioner of Income Tax (Appeals). In the circumstances, we sustain the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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