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TMI Blog2019 (2) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, the amounts received by the assessee are as trade advances and there is no evidence that there was any stipulation as to the period or any stipulation for interest. It is therefore matter of grave doubt as to whether the amounts received from the parties can be characterized as loan or deposit. In our view, they are trade advances received for the purpose of supply of goods dealt by the assessee. Such trade advances cannot fall under the purview of section 269SS of the Act so as to attract penalty u/s. 271D of the Act. - Decided in favour of assessee. - ITA No.934/Bang/2016 - - - Dated:- 31-1-2019 - Shri Chandra Poojari, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri Ravisha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the party Amount Rs. 1. E S Jose 1,00,000 2. Joseph Malliakel 50,000 3. E U Martin 1,00,000 4. Joshi 1,00,000 5. Hotel Rajadhani 5,30,000 Total 8,80,000 4. On appeal before the first appellate authority, the assessee filed written submissions and argued on the merits of the case. The CIT(Appeals), however, allowed partial relief to the extent of ₹ 6,30,000 and confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 269SS of the Act, while the same audit report has categorically stated that the said advances to have been received in respect of goods on the facts and circumstances of the case. 5. The learned CIT(A) was not justified in ignoring the confirmations filed which depicted the complete nature of the transaction, and which was obtained during the pendency of hearing of the appeal on the facts and circumstances of the case. 6. The learned CIT(A) was not justified in stating that the appellant, by not filing the order-confirmation or vouchers for cancellation of order, the advances ought to be considered as loans, when the complete transaction was confirmed by filing of the confirmation statement from concerned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udit report. The amounts reflected in the balance sheet as loans are in the nature of trade advances received by the assessee and the balance sheet alone ought not to have been considered in isolation, but the audit report also ought to have been considered to come to the conclusion that the loans were mere trade advances, rather than cash loans and no penalty ought to have been levied on these facts. The audit report clearly recognized the said advances which substantiates the claim of assessee and hence there was no contravention of the provisions of section 269SS of the Act. It was submitted that the CIT(Appeals) has not considered the detailed written submissions and documents filed by way of paperbook of the assessee before arriving at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in Form 3CD in respect of cash advances is out of abundant caution and goes to the bonafides of the assessee that it was making true and complete disclosure as required by law. But for the mention in Form 3CD, it would not have even come to the attention of the AO. For these reasons, the order of the CIT(A) in sustaining the penalty partly was erroneous. 8. In support of his contentions, the ld. AR relied on the decision of Mumbai Bench of the Tribunal in the case of Karnataka Ginning Pressing Factory v. JCIT, 77 ITD 478 (Mum) . He also drew our attention to Audit Report in Form 3CD stating that these are advances received from customers, which is placed at pages 28 of PB. He also furnished copies of confirmation letter from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan is repayable the moment it is incurred while it is not so with the deposit. In a deposit, unlike a loan, there is no immediate obligation to repay. Normally a deposit is for a fixed tenure. 11. In the present case, the amounts received by the assessee are as trade advances and there is no evidence that there was any stipulation as to the period or any stipulation for interest. It is therefore matter of grave doubt as to whether the amounts received from the parties can be characterized as loan or deposit. In our view, they are trade advances received for the purpose of supply of goods dealt by the assessee. Such trade advances cannot fall under the purview of section 269SS of the Act so as to attract penalty u/s. 271D of the Act. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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