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TMI Blog2014 (11) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... that if it is loan account than assessee has again contravented the provisions of section 269SS/T. 4. That the Ld CIT(A) erred in not considering the alternative prayer of assessee that that there was reasonable cause for making repayment in cash and as such upholding of penalty is against the true spirit of the penal provision of section 271E read with section 273B. In the aforesaid circumstances order of the Ld CIT(A) upholding the penalty u/s 271E Rs. 12,63,405/- is wholly illegal besides being against the settled law and material on the record, hence requested to be cashed. 2. The brief facts of the case are that the assessee was engaged in the business of acquiring and selling of assets of old factory building & plant & machinery. During the year under consideration the assesse entered into one transaction for purchase of assets of a company and bid was given to pick up under the name of S.R. Industries with different composition but ultimately assessee took this bid in the individual capacity. To part finance the deal the assessee took loans from his two sister concerns namely M/s Premsons Forgings Pvt. Ltd. and M/s Hindon Forgings Pvt. Ltd. The Premsons Forgings Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the .assessee in its requirement for fund, is unambiguously in the nature of 'loan' or 'Deposit'; the exact nature is known to assesee. But, either it is loan or deposit' the impact for purpose of judging the cash repayments, from the view point of penalty u/s 271E, would be same. 5.2.2.2 Secondly, the appellant's strenuous efforts to characterize these receipts as 'Advances' on the ground that these are linked to sales effected later to these parties; is of No consequence; it does not help the assessee even a little bit, as we shall see in a short while. 5.2.2.3 But, First point is that certainly these huge inflows, much before sales were effected, are not linked to sales. This is no linkageneither time-wise nor amount-wise. Much lesser amount of sales have been effected, and, that too, much later!! On my direction, the appellant furnished copies of a/cs of Premsons Forging (P) Ltd and Hindon Forge (P) Ltd. in his books. Now, from the perusal of these, any one can very well observe that in both the cases, assesee has First received the fund then has paid back a part of it in cash; major part by cheque and only thereafter has effected some sales. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the order of Assessing Officer was illegal and void ab inito and it is not an appeal able order which is against the law. 6. Arguing on merits of the case it was submitted that assessee in the capacity of HUF and in partneRs.hip with other persons had acquired a factory. However, at the time of making payments the other partneRs. did not participate so the assessee had to make payments which were made by his sister concern directly to the vendor. It was further submitted that a part of repayment of such loan was made in cash and part of amount was adjusted against sales and majority of loans were repaid through cheques. He further argued that the amount received was not unsecured loans as these were classified as advance from customeRs. and our attention was invited to paper book page 17 where a copy of balance sheet was place. It was further submitted that the Assessing Officer has recorded a wrong finding regarding the quantum of sales and our attention was invited to paper book pages 38 to 53 where copies of sale bills was placed. It was submitted that a significant amount of sales were made against the advances received. It was further submitted that majority of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to clear the cheques already issued by them and in this respect our attention was invited to Addl. Paper book page 12 where a certificate from Premsons Forging Pvt. Ltd. was placed. Therefore, it was argued that there was reasonable cause. Reliance in this respect was placed on the following judgments:- 1. OMEE EngineeRs. v. CIT 294 ITR 599. 2. CIT v. Permanand 26 ITR 255. 3. CIT v. Triumph International Finance Pvt.Ltd. 345 ITR 270. 10. In view of the above arguments, the Ld AR submitted that penalty was not imposable. 11. The Ld DR, on the other hand, submitted that Assessing Officer is a quasi judicial authority and therefore there is no illegality in the composite order passed for imposing penalty for violation of provisions of section 269SS & 269T of the Act. Arguing upon the merits, the Ld DR submitted that deposit include amounts received as deposits against sales and submitted that in fact the amounts was received as unsecured loans and even if these are considered to be advance against sales even then deposit includes against deposits and reliance in this respect was placed on the case law of Chobey Overseas Corporation v CIT 303 ITR 9. Regarding mutual agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made at the closing of month of December whereas the cash payments were made in the month of November. Regarding reasonable cause, the Ld AR had argued that the amount was required to be deposited in the bank account of Premsons Forging Pvt. Ltd. to avoid ishonour of cheques is also not correct as the amounts were repaid in Ghaziabad whereas the bank account of Premsons Forgings Pvt. Ltd. is in Kanpur. We find cash payments were made as detailed below:- Date Amount Month Ist November 60,000/- 2 November 40,000/- 3 November 60,000/- 4 November 20,000/- 5 November 20,000/- 7 November 20,000/- 9 November 20,000/- 10 November 20,000/- 20 November 1,60,000/- 21 November 1,60,000/- 22 November 1,00,000/- 23 November 80,000/- 24 November 3,20,000/- 25 November 1,00,000/- 11,80,000/- Out of the above payments, repayments in contravention of provisions of section 269T are Rs. 10,80,000/-. All these payments were made in Ghaziabad as the assessee is based in Ghaziabad whereas the Bank of the firm M/s Premsons Forging Pvt. Ltd. is situated at Kanpur. It is not understandable as to how these payments were carried from G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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