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TMI Blog2015 (6) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly held on the basis of quantum appeal decided by the CIT(A) as well as the ITAT that these are the loan and deposit in cash as covered by Section 269SS of the Act. - Decided in favour of assessee. - ITA No. 876 & 877/JP/2013,ITA No. 904 & 905/JP/2013 - - - Dated:- 15-5-2015 - Shri R.P. Tolani and Shri T.R. Meena,JJ. For the Petitioner: Shri K.L. Moolchandani (Adv) Shri R.K. Khunteta (CA) For the Respondent: Mrs. Rolee Agarwal (CIT) ORDER PER: T.R. MEENA, A.M. These are the cross appeals filed by the assessee as well as by the revenue arise against the orders dated 25/09/2013 and 26/09/2013 for A.Y. 2008-09. The effective grounds of all the appeals are as under:- Grounds of Assessee s appeal ITA No. 876/JP/2013 1 On the facts and in the circumstances, the ld. CIT(A) has factually and legally erred in ignoring the fact that the penalty proceedings got time barred in view of the latest judgment of Hon ble Rajasthan High Court in the case of Shri Jitendra Singh Rathore without appreciating the facts of the case in right perspective, particularly when the same view was taken by the Hon ble High Court earlier also and was followed respectfully by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits for penalty as per CIT(A) ignoring following facts. (i) That ₹ 35,10,000/- was paid in cash to the assessee by two persons Shri Rajendra Prasad and Shri Rajkumar. (ii) That cash of ₹ 1,19,54,712/- received against sale of land has to be considered as deposit within the meaning of section 269SS. (iii) That CIT(A) had held herself held earlier in the order for confirming certain amount, that share application money is deposit within the meaning of section 269SS whereas this logic was not followed for the amount of ₹ 37,45,000/- shown as share application money in the balance sheet. Grounds of Revenue s appeal ITA No. 905/JP/2013 1 On the facts and in the circumstances of the case, the ld. CIT(A), Central, Jaipur has erred in restricting the penalty U/s 271E of the IT Act to ₹ 99,50,000/- out of ₹ 1,77,00,000/- imposed by the JCIT, thus deleting ₹ 77,50,000/- representing amount of cancellation of booking of land and its repayment ignoring that advance cash deposits against sale of land should be considered as deposit falling within the meaning of Section 269SS. 2. All the grounds of appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the various heads as mentioned above. The assessee did not furnish full particulars of these parties, their PAN and sources of funds advanced to the assessee out of the total parties. One of the Director of the company namely Sh. Shankar Lal Khandelwal had been making purchase and sale considerations of properties and also operating bank accounts in the names of some parties in which unaccounted cash/cheque were deposited and withdrawal and unitize for making investment in properties or given money and then name to the assessee company concerns in the garb of share application money and loans. Such receipts of money in the name of these persons also appear in the books of assessee during the year under consideration. The names of these parties are as under: 1. Anita Kumawat 2. Sushil Jhalani 3. Sona Jhalani 4. Meena Gupta 5. Dilip Kumawat 6. Gopal Lal Saini These persons had filed affidavits on oath before the Assessing Officer stating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 20,000/- in cash should not be initiated against it. 2.1 Similarly, the Assessing Officer also referred vide its letter dated 23/2/2012 penalty U/s 271E to the JCIT, which was initiated during the assessment proceedings for A.Y. 2008-09, it was found by the Assessing Officer that the assessee had repaid certain sums of money to various parties of amount exceeding ₹ 20,000/- in cash and violated the provisions of Section 269T of the Act. The Assessing Officer also appended a list alongwith assessment order of repayment of loans more than ₹ 20,000/-. The Assessing Officer also issued notice U/s 274 read with Section 271E dated 30/12/2009 to the assessee by which the assessee was asked to explain as to why proceeding U/s 271E of the Act for repaying advances/loans/deposits exceeding ₹ 20,000/- in cash should not be initiated in the case of assessee. The ld JCIT reproduced the amount received and paid more than ₹ 20,000/- in penalty orders. The ld JCIT before imposing penalty under both the sections gave reasonable opportunity of being heard vide letter No. 1181 dated 23/2/2012. The A.R. of the assessee filed reply on 02/3/2012 before the JCIT, which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the proceedings in the course of which action for imposition of penalty was initiated by the A.O. were completed by 31st Dec., 2009 and end of the relevant Financial Year then is 31.03.2010. So as per the above section time barring date in this case is 31/03/2012 because it is one year from the end of the financial year in which the order of the CIT was received so there was no confusion on time barring date. Had the AR been so confident of the time barring date to be beyond 31/3/2012, he should have quoted the relevant provisions of the Act and also the date. This not being the case it was AR s futile attempt to procrastinate the case. The ld JCIT also considered the assessee s reply dated 30/2/2012 on merit also, which has been reproduced on page Nos. 5,6,7 and 8 of the penalty order. The assessee had also sought inspection on record on 26/3/2012. After considering the assessee s reply, the ld JCIT has held as under: i. In respect of the contention of the assessee that at no stage none of the assessing or appeal authorities had ever opined that the said transactions were loans and deposits within the meaning of Sec. 269SS of the Act, it is stated that this argument of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plots of land and so the advance received is nothing but trade deposit. He further examined the legal position of advances/deposits and object of insertion of Section 269SS on pages 9 to 13 and finally he held that it is a fit case for levy of penalty U/s 271D of the Act as no reasonable cause has been furnished for violation of provisions of Section 269SS of the Act. Thus, he imposed penalty at ₹ 6,34,38,484/- U/s 271D of the Act, which is equivalent of deposit amount. 2.2 Similar findings given by the ld JCIT in the order of Section 271E of the Act. He reproduced the assessee s reply dated 30/3/2012 on page 5 to 7 of the penalty order. He examined the legal position of advances and object of introduction of Section 269SS of the Act. He further held that the object of Section 269T is not to tax any income. It is not a charging section, its object, on the other hand, is to counteract evasion of tax in certain cases. The said section only provides a mode of repayment of certain deposits either by bank draft or account payee cheque with a view to plug the leakage of revenue. The advance is nothing but a kind of deposit. In fact, the nomenclature does not make much sense if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 i.e. after the date on which the Special Bench had passed its order in favour of the department on the same facts. He also not agreed with the submissions of the assessee that Special Bench s findings in case of Dewan Chand Amrit Lal Vs. DCIT (supra) was on different facts. The ld JCIT held that Special Bench s decision in the case of Dewan Chand Amrit Lal Vs. DCIT (supra) is squarely applicable on the case of assessee and two aspects must be firmly borne in mine, namely who may impose the penalty and in what measure. He further referred the Hon'ble Supreme Court s decision in the case of CIT vs. Dhadi Sahu and Varkey Chacko Vs. CIT (supra) wherein it has been held that validity of penalty proceedings has to be seen with reference to the authority empowered to impose the penalty on the relevant date. Therefore, notice dated 30/12/2009 issued by the Assessing Officer in both the penalties without any jurisdiction as he is not empowered to issue notice and impose penalty under both the Sections. The Hon ble Karnataka High Court in the case of Shanbhag Restaurant Vs. Deputy CIT (2004) 266 ITR 393 has held that the period of six months has got to be computed from the date of iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37,45,000/- and on 31/3/2011 at ₹ 37,45,000/- and not ₹ 3,98,38,500/-. The paid up share capital as on 31/3/2011 was shown at ₹ 3,50,000/- and as on 31/3/2012 at ₹ 1,56,00,000/- while the share application money pending allotment is consistent at ₹ 37,45,000/-, therefore, she concluded that submissions of the AR were not supported by the audited accounts of the appellant brought on record. She further clarified that in the balance sheet of A.Y. 2009-10, this amount of ₹ 3,98,38,500/- was not reflected as the share application money and for amount of ₹ 3,09,93,500/- shares were not allotted even after lapse of four years as per the admission of the appellant himself. Accordingly, she held that cash deposited at ₹ 3,60,93,500/- were not for share application money. She further relied on the decision of Hon'ble Jharkhand High Court in the case of Bhalotia Engineering Works Pvt. Ltd. Vs. CIT (supra) wherein repayable of deposit for share has been considered by the Hon'ble High Court. She further relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. M/s Samora Hotels Pvt. Ltd. dated 23/2/2012 ITA No. 313/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash receipt against the share capital has been given that there is no evidence with assessee that except ₹ 37,45,000/-, remaining ₹ 3,60,93,500/- was not for share application, it authorized share capital was ₹ 1 crores only. Thus he conformed penalty U/s 271E of the Act at ₹ 99.5 lacs. . 4. Now the assessee is in appeals before us. The ld AR for the assessee argued that the penalty orders got barred by limitation as the ld Assessing Officer initiated penalty proceedings by issuing the notice on 30/12/2009 (Page 118 of PB) U/s 271D and 271E of the Act. The ld JCIT issued show cause notice on 24th February, 2012 for imposing both the penalties but the assessee had objected before him that logic to issue notice under these Sections after 2 years when the proceeding completed in December, 2009. The second appeal also had decided by the ITAT against these additions in quantum appeal wherein no findings have been given by the ld CIT(A) as well as Hon ble ITAT that these transactions were loans and deposits within the meaning of Section 269SS/269T of the Act. The ld Assessing Officer has also made addition U/s 68 of the Act as unexplained credit. The penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions of both the parties and perused the material available on the record. The ld Assessing Officer sent the penalty notice on 30/12/2009 for both the Sections (PB page No. 118). After a long period, he referred the penalty proceeding to the JCIT vide letter dated 23/2/2012. Thereafter, ld JCIT had given show cause notice on 24/2/2012. This issue has been challenged by the AR of the assessee before the ld JCIT as well as before the ld CIT(A) but they held that these penalties are covered under the proviso to Section 275(1)(a) of the Act. Therefore, it is not barred by limitation but this issue has been dealt by the Hon ble jurisdictional High Court in the case of CIT Vs. Hissaria Bros CIT Vs. Jitendra Singh Rathore (supra), which has been recently considered by the ITAT Mumbai Bench in the case of Lodha Builders (P) Ltd. Vs. ACIT (supra) and this issue has been decided in great length after considering the various decisions of the various courts including the Tribunal. Thereafter it has been decided that for imposition penalty U/s 271D and 271E is covered U/s 275(1)(c) of the Act. As per Section 271(1)(c) of the Act, this order was to pass after the expiry of financial year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 where the assessee s reply has reproduced and purpose of payment has been shown by the assessee for purchase of land, therefore, these are the receipt for business purposes. The remaining amount of ₹ 18.5 lacs received by the assessee through cheque from Shri Rakesh Kumar Gupta, which has been held by the ITAT as stand explained. As the assessee was in property business in purchase and sale of land which reflects from the order of the Assessing Officer that the assessee had purchased land during the year under consideration from its global city project (240 bigha approx) in village Chakbad. The total amount of ₹ 11 crores were paid up to the date of search. The assessee had shown in balance sheet, share application money pending for allotment at ₹ 37,45,000/-, which is for business purpose. However, unsecured loan at ₹ 12,63,58,946/- had been shown but these were not loan envisaged U/s 269SS/269T of the Act as the Hon'ble Supreme Court has held in the case of Kedarnath Jute Mfg. Co. Ltd. Vs. CIT (Central), Calcutta [1971] 82 ITR 363 (SC) that particular deduction will depend on the provisions of law relating thereto not on entries of books of account b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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