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TMI Blog2018 (9) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue could not on the one hand, contend that the amount as undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of ₹ 20, 000/-. - Thus we cancel the penalty levied u/s 271D of the Act and uphold the order of the CIT(A). - Decided in favour of assessee - I.T.A.No.108/Viz/2017 - - - Dated:- 20-9-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri V.Appala Raju, DR For The Respondent : Shri G.V.N.Hari, AR ORDER PER D. S. SUNDER SINGH, Accountant Member: This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Guntur vide ITA. No. 81/15-16/CIT(A)-1/GNT dated 30. 11. 2016 for the block assessment period 1995-2002 against the penalty imposed u/s 271D of the Act. 2. The assessee is an individual. A search u/s 132 was carried out in the assessee s case along with Shri P. Bhaskara Rao in the group cases of M/s Virat Crane Bottling and Virat Crane Industries o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims made by the assessee with regard to the interpretation of the notings found in Page No, 5 6 as loans borrowed instead of the loans advanced, the undisclosed income of the assessee as computed in the original assessment for the asst year 1998-99 for ₹ 57, 80, 000/- on this issue and ₹ 4, 10, 000/- for asst. year 1999-2000 is taken as undisclosed income in the form of monies advanced by the assessee towards loans and the interest accrued there on which were not admitted as income, is taxed as undisclosed income of the years forming part of the block Period and the undisclosed income is computed. 3. The assessee went on appeal before the CIT(A) and the Ld. CIT(A) deleted the addition holding that the sum of ₹ 40, 00, 000/- was not the money advanced by the assessee but it was the money borrowed by the assessee from Shri Manik Rao and ANR. For ready reference, we extract, relevant part of the order of the Ld. CIT(A) which is made available in page No. 10 at para No. 10. 2 reproduced as under : 10. 2. With regard to page No. 5, the content of the paper is extracted above. It is clear that the amount taken from Manik Rao was ₹ 30 Iakhs and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason that Mr. Bhaskar Rao has pleaded ignorance with respect to the contents of these documents. His statement is not of much help. Similarly, regarding the letter written by Shri Manik Rao in response to an enquiry by the Assessing Officer, we find that this does not help either way for the reason that he has completely denied any transaction with the assessee. A perusal of the letter demonstrates that Mr. Manik Rao states that he has neither received any advance nor given any loan to the assessee. If this letter is treated as evidence, then, the conclusions of the Assessing Officer that the assessee has given money to Mr. Manik Rao, would also be negated. Thus, under these circumstances, we can only examine the contents of the seized material and then come to a conclusion, whether it is a loan given or loan taken. There is no corroborative evidence to suggest the order of the Assessing Officer. A perusal of the same demonstrates that ₹ 7, 20, 000/- was interest upto the month of July, 1998 in Page No. 5 of the seized material and this is appearing as 7. 2 in page No. 6 of the seized material. The other figures are also tallying. Thus, both the pages represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal before this Tribunal. During the appeal hearing, the Ld. DR argued that the Ld. CIT(A) has erred in deleting the penalty holding that there was a commercial expediency and the assessee had received the loans to meet the urgent business needs. Since the assessee failed to prove the commercial expediency, the assessee could have received the money in cheque or demand draft but not in cash, therefore argued that the JCIT rightly invoked the provisions of section 269SS of the Act and imposed penalty u/s 271D of the Act which required to be upheld. 7. On the other hand, the Ld. AR argued that in the instant case, initially, the AO treated the sum as income holding that the said sum was unexplained investment, accordingly, made the addition as undisclosed income in the block period. After the issue has gone to the appellate authorities i. e. to the Ld. CIT(A) and the ITAT in the second round, the appellate authorities have accepted the said sum as the amounts borrowed by the assessee but not the money advanced by the assessee and hence, the JCIT initiated penalty u/s 271D of the Act for contravention of the provisions of section 269SS of the act. During the course of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of ₹ 20, 000/-. For ready reference we extract relevant part of judgement of the Hon ble High court which reads as under: 7. On these facts, we are of the view that the Revenue could not on the one hand, contend that the amount of ₹ 3 lakhs is undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of ₹ 20, 000. 8. The Revenue, having taken the stand that the income was undisclosed income in the hands of the assessee, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal. 8. 1. Similar view was taken by the Hon ble Delhi High court in Commissioner of Income-tax v . R. P. Singh Co. (P. ) Ltd. [2012] 21 taxmann. com 50 (Delhi). The coordinate bench of ITAT Mumbai 'D' Bench in Deputy Commissioner of Income-tax v. G. S. Entertainment[2009] 28 SOT 39 (Mumbai) (URO) following the decision of Hon ble Delhi High court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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