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TMI Blog2019 (3) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment done for the impugned assessment year. Admittedly, there were no adverse findings in such scrutiny. Hon’ble Jurisdictional High Court in the case of Idyayam Publications Ltd [2006 (1) TMI 97 - MADRAS HIGH COURT] has clearly held that cash transactions in the current account of a company with its promoters, where such current account was a running one, could not be considered as loan or advances. There is no case for the Revenue that assessee had not produced ledger before AO during the course of assessment proceedings or that the accounts of the promoters in the books of the assessee were not in the nature of funds introduced for the running of its business. Hence we are of the opinion that advances received from the promoters in cash through their respective current accounts could not be considered as loan or advances coming within the ambit of Section 269SS of the Act. - Decided in favour of assessee. - I.T.A. No.1665/CHNY/2018 - - - Dated:- 21-3-2019 - Shri Abraham P. George, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member For the Appellant : Shri. B. Ramakrishnan, FCA For the Respondent : Shri. M. Srinivasa Rao, IRS, CIT. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the balance sum of ₹ 33,66,000/- was received from four parties as advance towards sale of land. However, ld. Commissioner of Income Tax (Appeals) was of the opinion that assessee could not justify the explanation given by it. He thus confirmed the levy of penalty. 4. Now before us, ld. Authorised Representative strongly assailing the orders of the lower authorities submitted that assessment for the impugned assessment year was completed by the ld. Assessing Officer on 25.03.2014 after a scrutiny. As per the ld. Authorised Representative, advances received by the assessee were found to be genuine in such assessment and no additions were made. Contention of the ld. Authorised Representative was that receipt of money from the first four parties mentioned at para 2 above were advances against sale of land. According to him, sale of flats to atleast two of the above had happened in the succeeding year. Further, as per the ld. Authorised Representative, all these persons had filed confirmation letters before ld. Assessing Officer alongwith ledger copy of the assessee in their books, pursuant to summons issued to them. Contention of the ld. Authorised Representative was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as never demonstrated by the assessee. According to him, assessee never furnished any details or reply to the notices issued to the assessee, even during the remand proceedings. Thus, as per the ld. Departmental Representative, lower authorities were justified in levying penalty u/s.271D of the Act. 6. We have considered the rival contentions and perused the orders of the authorities below. There are two types of cash receipts, which have been subject of levy of penalty u/s.271D of the Act. First is what have been claimed by the assessee as advances received from four customers. Details of these are reproduced hereunder:- Sl.No Name of the person (Smt/Shri.) Amount Rs. 1 M.R. Jayalakshmi 12,50,000 2 S. Manohar 3,50,000 3 M. Anandan 5,00,000 4 K. Padma 12,66,000 Second is what has been claimed by the assessee as received from its promoters. Details of these are given hereunder:- Sl.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penal proceedings u/s. 271 (1) (c) were initiated and not any other proceedings. (3) Even in the notice u/s.271D sent by your Office dated 10.11.2014, it was only mentioned as hereunder : Whereas in the course of proceedings before me for the assessment year 2011-12, it appears to me that you: Have without Have concede the particulars of income or furnished inaccurate particulars of such income. Even in the letter cited above, there was no mention about the reasons for which the Penalty Proceedings u/s. 271 D were initiated. I wish to bring to Your kind notice that we have not concealed any income or furnished inaccurate particulars of any income. In this regard, I humbly wish to bring to Your kind notice that since the above Assessee did not receive any fresh Loan or Deposits and did not repay any old Loan during the Previous Year : 2010 - 11 , the initiation of Penal proceedings did not arise and even Your Notice cited above did not specify the reasons for which Penalty proceedings u/s.271D were initiated. But from the discussions during the Scrutiny Hearing Proceedings, I assume that the Penal Proceedings-. u/s. 271 D would have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r personal appearance in response to the summons issued to them by the Learned Assessing Officer . . From the above it could be seen that all the above parties had responded to the Summons issued to them without any Avoidance and given the proof alongwith their Income Tax Returns respectively wherein they have declared the advances given by them to the Assessee Company for purchase of Flats and I humbly wish to reiterate that such amounts were only Advances which will be adjusted against the cost of the Flat at the time of handing over to them respectively and not Loans or Deposits to the Company which carry interest . (2) Advances Received from Promoters: (a)Mr. A.P. Ashok kumar - ₹ 20,30,000/- (b)Mrs. D. Chinnakanu - ₹ 5,80,000/- ( c) Mrs. C. Bama - ₹ 5,80,000I- All the above are Land owners and the Promoters of Joint Venture of Choolaimedu Site and each one had given amounts as and when required by the Company for day to day expenses, Labour Payments and for other regular Construction activities of the Company whenever the funds were in shortage, and whenever the Company had excess funds, the Advances given by the above parties wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not) the amount or the aggregate amount remaining unpaid; or (c) the amount of the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b) is twenty thousand rupees or more . Subsequent to its substitution, the corresponding wordings in the Section are as under:- No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,- (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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