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TMI Blog2015 (1) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax. If that date is taken, then the penalty order is passed within the period of limitation. - Decided against assessee. Cash Receipt in violation of section 269T - repayment of loan or advance in cash - Held that:- The provisions of section 269T of the Act were invoked on the basis of certain entries found on certain seized documents. Unless and until it is proved that the seized documents relate to the assessee-company, the repayment of loan or advance in cash to different parties cannot be held to be done in violation of the provisions of section 269T of the Act, for which penalty under section 271E of the Act can be invoked. Even the ld. CIT(A) does not deliberate on the issue and having made reference to various pronouncements on this aspect, he confirmed the penalty. Under the given facts and circumstances of the case, we find no merit in the penalty levied under section 271E of the Act. We accordingly set aside the order of the ld. CIT(A) and delete the penalty. - Decided in favour of assessee. - ITA No. 264/LKW/2013, ITA No. 265/LKW/2013 - - - Dated:- 10-12-2014 - Sunil Kumar Yadav, JM And A. K. Garodia, AM,JJ. For the Petitioner : Shri K R Rastogi, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on the ground of period of limitation has argued that the assessment was completed on 13.12.2010, in which direction was given to initiate penalty proceedings under section 271E of the Act, therefore, the limitation starts from 31.12.2010 and as per section 275(1)(c) of the Act, the penalty order is to be passed either before the expiry of the financial year or six months from the end of the month in which action for imposition of penalty is initiated. Therefore, penalty order should have been passed before 31.6.2011. Since the penalty order was passed on 25.10.2011, the same is barred by limitation. In support this contention, the ld. counsel for the assessee has placed reliance upon the following judgments:- 1. Lodha Builders (P) Ltd. Vs. ACIT, 106 DTR 226. 2. CIT vs. Worldwide Township Projects Ltd., 106 DTR 139. 3. CIT vs. Hissaria Bros., 291 ITR 244. 7. The ld. D.R., on the other hand, has contended that as per provisions of section 275(1)(c) of the Act, the penalty order is to be passed either before the expiry of the financial year or before six months from the end of the month, in which action for penalty is initiated, whichever period expires later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty order that the Joint Commissioner of Income-tax has issued a notice under section 274 of the Act for imposing penalty under section 271E of the Act on 15.4.2011. Therefore, in the real sense action for imposing penalty was initiated by issuance of notice by the Joint Commissioner of Income-tax. If that date is taken, then the penalty order is passed within the period of limitation. 9. Our attention was also invited to the order of the Tribunal in the case of Lodha Builders (P) Ltd. Vs. ACIT (supra), in which the Tribunal has held that limitation period is to be counted from the date of assessment order i.e. the date on which the Assessing Officer has taken a decision to make reference to the Joint Commissioner of Income-tax, who is authorized to impose penalty. But in this case, it is not clear from the facts as to when reference was made to the Joint Commissioner of Income-tax for imposing the penalty. Moreover, the Joint Commissioner of Income-tax is not bound by the reference made by the Assessing Officer. He has to apply his own mind before initiating the penalty proceedings under section 271E of the Act. 10. In the case of CIT vs. Worldwide Township Projects L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f book entry by debiting the account of Shri. Z. H. Siddiqui and crediting the account of Shri. W. H. Siddiqui. Further, equity shares of the company for ₹ 25.91 lakhs were allotted to Shri. W. H. Siddiqui out of credit balance in his current account through transfer of the book entry. The Assessing Officer has examined these details in the assessment proceedings and accepted the same as general. The copy of the ledger account of Shri. Z. H. Siddiqui and Shri. W. H. Siddiqui in the books of the assessee-company and copy is placed on record. 14. Shri. Z. H. Siddiqui has also gifted ₹ 7.50 lakhs through transfer by means of the book entry to his mother, Smt. Swaleha Naim from his current account. Accordingly the book entry was passed by crediting the said sum in the account of Smt. Swaleha Naim. The Assessing Officer has accepted the gift in the case of the donor and donee and treated the transaction as genuine. Further the equity shares of the company for ₹ 25 lakhs were allotted to Smt. Swaleha Naim out of credit balance in her current account through transfer of book entry. This transaction was also examined by the Assessing Officer and found to be genuine. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and from a careful perusal of the same, we also find that by way of transfer entry, Shri. Z. H. Siddiqui has gifted a sum of ₹ 7.50 lakhs to his mother, Smt. Swaleha Naim. Out of credit amount in the name of Shri. W. H. Siddiqui and Smt. Swaleha Naim, shares of ₹ 25.91 lalkhs were allotted to Shri. W. H. Siddiqui and shares for ₹ 25 lakhs were allotted to Smt. Swaleha Naim. All these transactions were undertaken by making transfer entry in the books of account. There was no movement of cash from one place to the other. Likewise, the shares for ₹ 10 lakhs were also allotted to the assessee. Since there was no transaction in cash, the sole question arises is whether the penalty under section 271E of the Act can be initiated in such a circumstance? The answer was given by the Hon'ble Delhi High Court in the case of CIT vs. Worldwide Township Projects Ltd. (supra), in which their Lordships have held that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter sale of shares. The assessee appellant had debited the account being cost of shares. The transaction between Karta of HUF and the HUF could not be termed as deposits as provided under Section 269-T at the relevant time. The transactions were made between two taxable entities. The repayment was made, by debit entires. In the circumstances, the provisions of Section 269-T providing for deposits to be made over and above ₹ 20, 000/- only by account payee cheque or account payee bank draft, were not attracted. 17. We are of the opinion relying upon the reasoning given in the judgments cited as above, that the transactions in question being that of repayment of loan by debit entry did not come within the mischief of Section 269-T. We are also of the view, that the Explanation (iii) explaining the terms loan or deposit would not make any difference and is as it does not change the method of the transaction in the present case. 18. The appeal is allowed. The questions of law are decided in favour of assessee-appellant and against the revenue. The department will proceed accordingly. 18. In the case of CIT vs. Triumph International Finance (I) Ltd. (supra), similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty should not be upheld u/s 271E of I.T. Act. 5. The penalty upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him. 22. Besides, the assessee has also raised two additional grounds, which are extracted as under:- 1. The present penalty order is barred by limitations as it is passed beyond the period of six month from the order of assessment as prescribed under section 275(1)(c) of Incometax Act. 2. That the amount has been considered as undisclosed income by invoking provisions of section 68 of Income-tax Act in the assessment, it cannot be again considered as deposit for levy of penalty under section 271E of the Act. 23. In support of admission of additional grounds, the ld. counsel for the assessee has contended that since these grounds go to the root of the case, the same may be admitted in the light of the judgment of the Hon'ble Apex Court in the case of National Thermal Power co. Ltd. Vs. CIT, 229 ITR 383 and other various judicial pronouncements. 24. Finding force in the contentions of the assessee, we admit the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.4.2007 3. -do- Rs.27,000/- 27.4.200 4. Swaleha Naim Rs.26,000/- 07.4.2007 5. -do- Rs.28,000/- 06.6.2007 28. The proceedings under section 271E of the Act was initiated and during the course of penalty proceedings, the assessee has taken a stand that the transaction was taken place by the Directors and their relatives in their personal capacity and these transactions do not belong to the assessee-company. During the course of assessment proceedings, the assessee-company has denied and disowned about the alleged transactions and designs. It was also contended before the Assessing Officer that since the additions on the said transaction was made in the hands of the assessee-company and the matter is pending before the ld. CIT(A), the same cannot be treated to be repayment of loan by the assessee-company. But the contention of the assessee was not accepted by the ACIT and accordingly penalty of ₹ 3.25 lakhs was levied against the assessee, against which a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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