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TMI Blog2019 (8) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the first appellate authority deciding the quantum additions and also the order of the JCIT levying penalty u/s 271D, we find that the assessment order as well as the order of the JCIT are devoid of any satisfaction regarding initiation of penalty proceedings u/s 271D The Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City [ 2015 (11) TMI 1453 - SUPREME COURT] has held that penalty u/s 271D is without any satisfaction and, therefore, no such penalty can be levied We, accordingly, direct the Assessing Officer to delete the penalty levied in respect of the captioned appellants for all the assessment years under consideration. - SA No.797/Del/2019 And ITA No.5614/Del/2019, SA Nos.765 to 770/Del/2019 And ITA Nos.5629 to 5634/Del/2019, SA Nos.771 to 776/Del/2019 And ITA No.5641 to 5646/Del/2019, SA Nos.777 to 782/Del/2019 And ITA Nos.5647 to 5652/Del/2019 - - - Dated:- 28-8-2019 - SA Nos.790 to 796/Del/2019 And ITA Nos.5622 to 5628/Del/2019, SA Nos.752 to 758/Del/2019 And ITA Nos.5615 to 5621/Del/2019, SA Nos.783 to 789/Del/2019 And ITA Nos.5607 to 5613/Del/2019, SA Nos.759 to 764/Del/2019 And ITA Nos.5635 to 5640/Del/2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finally settled by the Settlement Commission vide order dated 25.04.2018 framed u/s 245D(4) of the Act. The Settlement Commission accepted the offer of additional income of ₹ 52.74 crores on account of bogus purchases and allowed the benefit of telescoping of personal expenses of promoters/directors aggregating to ₹ 16.43 crores. 6. Meanwhile, the appellants preferred appeal before the ld. CIT(A) in respect of the additions made in their respective hands by the Assessing Officer, treating the personal expenses incurred by M/s Spaze Towers Pvt Ltd as their income. 7. The first appellate authority deleted the additions made by the Assessing Officer from the hands of the captioned appellants. However, while allowing the appeals of the appellants, the ld. CIT(A) observed as under: In view of the above discussion, the Assessing Officer is advised to take necessary action in the case of the appellant in the year under consideration with respect to loan/deposit taken from M/s Spaze Towers Pvt Ltd in cash and thus otherwise than by specified modes as per the provisions of the Act. 8. Taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty must act independent without being influenced by the directions/dictates of any authority. 14. The ld. counsel for the assessee further stated that nowhere the Assessing Officer/JCIT has recorded any satisfaction before levying any penalty u/s 271D of the Act. Strong reliance was placed on the decision of the Supreme Court in the case of Jai Laxmi Rice Mills Ambala City 379 ITR 521. 15. Per contra, the ld. DR strongly supported the findings of the Assessing Officer. It is the say of the ld. DR that nowhere the ld. CIT(A) has directed the Assessing Officer to levy penalty. On the contrary, he has only advised the Assessing Officer to look into the matter in the light of relevant provisions of the Act. The ld. DR further relied upon the decision of the Supreme Court in the case of Adinath Builders [P] Ltd 261 Taxmann.com 168. 16. We have heard the rival submissions and have given thoughtful consideration to the orders of the authorities below. We have also carefully perused the assessment order and order of the first appellate authority in quantum proceedings. The undisputed fact is that the Settlement Commission, while accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 27-30 of SOF, and the cash expenses so incurred have not been claimed as expenses in computing additional income offered before Hon ble Bench, the same deserves to be deducted out of Cash Flow and thereby telescoping set off of cash should be allowed to that extent. 17. It is also not in dispute that taking a leaf out of the statement of facts and fund flow statement filed by M/s Spaze Towers Pvt Ltd, the Assessing Officer had made addition in the hands of the captioned appellants by treating the telescoped personal expenses as income of the promoters/directors. This means that at this stage, the Assessing Officer was convinced that the telescoped personal expenses, incurred by M/s Spaze Towers Pvt Ltd, were nothing but income of the promoters/directors. 18. When this addition was agitated before the ld. CIT(A), the ld. CIT(A), taking a leaf out of the decision of the Settlement Commission, came to the conclusion that the same income cannot be taxed in two hands in the same assessment year and, accordingly, deleted the additions. 19. However, while deleting the addition, the ld. CIT(A) though observed that the same should be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, submitted that the said question does not arise in the case at hand inasmuch as both the Commissioner of Income-tax (Appeals) and the Tribunal have recorded a finding that once the Assessing Officer has treated it as an undisclosed income, it could not have proceeded on the foundation that it is a deposit. In our considered opinion, this submission canvassed by Mr. Kocnar has substantial force and the question raised by the Revenue really does not arise in this case. Needless to say that the said question may arise where the facts would be different but the same has no relevance to the case at hand. In view of the aforesaid analysis, the appeal being devoid of merit stands dismissed without any order as to costs 24. The co-ordinate bench in the case of G.S. Entertainment ITSS 437/MUM/2004 had the occasion to consider similar issue. The relevant findings of the co-ordinate bench read as under: 2. The learned Departmental Representative has relied on the order of the AO. He submitted that the amount of ₹ 15 lakhs was received by the assessee in cash as is recorded in the CD seized by the Department. He submitted that Shri Gautam Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o decisions of the Hon'ble High Court of Kolkata and Karnataka High Court, was convinced that there is a violation of provisions of section 269SS of the Act and, therefore, penalty u/s 271D of the Act is leviable and levied penalty accordingly. 27. It is a matter of fact that Spaze Towers was inflating its purchases and cash so generated was spent on the personal needs of the directors/promoters in the form of ceremonial functions, farm house construction etc. Nowhere the actual cash changed hands, but were spent on personal expenses of the promoters/directors. Merely because the promoters/directors agreed to repay the liability, the same cannot be construed as taking loans from Spaze Towers. Since Spaze Towers has incurred personal expenses of the promoters/ directors, the same cannot be construed as loans. 28. In our considered opinion, there must be a clear finding based on cogent and reliable material that the appellants took or accepted any loan or deposit in cash from Spaze Towers. In the absence of any cogent finding, it cannot be assumed that the appellants took or accepted loans/deposits otherwise than by an account payee cheque to inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the first appellate authority deciding the quantum additions and also the order of the JCIT levying penalty u/s 271D of the Act, we find that the assessment order as well as the order of the JCIT are devoid of any satisfaction regarding initiation of penalty proceedings u/s 271D of the Act. 35. The Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City [supra] has held that penalty u/s 271D is without any satisfaction and, therefore, no such penalty can be levied. The relevant findings of the Hon'ble Supreme Court read as under: In these appeals, we are concerned with the question as to whether penalty proceeding under Section 271D of the Income Tax Act (hereinafter referred to as the Act ) is independent of the assessment proceeding and this question arises for consideration in respect of Assessment Years 1991-1992 and 1992-1993 under the following circumstances: In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on the basis of CIB information informing the Department that the assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These appeals are, accordingly, dismissed. 36. The ld. DR had relied upon the decision of the Hon'ble Supreme Court in the case of Adinath Builders Pvt Ltd [supra]. We are of the considered opinion that the Hon'ble Supreme Court has dismissed the SLPs filed by the revenue and the ld. DR has relied upon the head notes, which cannot be considered as judgment of the Hon'ble Supreme Court as the Hon'ble Supreme Court has simply dismissed the SLPs without assigning any reason. 37. Considering the facts of the cases in hand from all possible angles, we do not find them to be fit cases for levy of penalty u/s 271D of the Act. We, accordingly, direct the Assessing Officer to delete the penalty levied in respect of the captioned appellants for all the assessment years under consideration. By this consolidated order, all the appeals are allowed and disposed off accordingly. 38. In the result, all the above captioned appeals are allowed. 39. All the stay applications accordingly become infructuous. Order pronounced in the open court on 28/08/2019. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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