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TMI Blog2019 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri A.K.Srivastava ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.43/Mum/2017 for A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-50, Mumbai in appeal No.CIT(A) 50/IT-723/2014-15 dated 2011-12 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D of the Income Tax Act, 1961. 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271D in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee is a real estate developer. A search and seizure action u/s.132 of the Act was carried out on 26/05/2011 at the premises of the assessee and other companies and entities promoted by Shri Harresh N Mehta and late Shri Jitendra N Mehta alongwith Directors and employees of the companies etc. Rohan Group headed by Shri Harresh N Mehta is one of the leading builders of the South and the Central Mumbai and mainly engaged in construction of residential buildings and redevelopment of old and dilapidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the post assessment proceedings, the identity of various loan parties as mentioned on page 206 along with creditworthiness was substantiated before the AO with documentary evidence. iv) It is contended that the loans appearing on page No. 206 are accepted through banking channel and shown in the books of account of the assessee company and hence penalty u/s. 271D cannot be levied. 3.2. The Addl. CIT (the ld. AO herein) did not heed to the aforesaid contentions of the assessee and proceeded to levy penalty u/s.271D of the Act amounting to ₹ 20,24,50,000/- in the hands of the assessee by observing as under:- 6. It is evident from the above discussion that the assessee had accepted loans in cash in contravention of provisions of section 269SS of the Income Tax Act and hence, liable for penalty u/s. 271D of the Income Tax Act. Reliance is placed on decisions of Hon'ble Bombay High Court in the case of Dhanji R. Zalte (136 taxman 644) and Hon'ble Kerala High Court in the case of K.V. George (42 taxmann. com 261). 7. Hence, I am satisfied that the assessee had accepted loans in cash of ₹ 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the penalty proceedings nor in the course of the appeal proceedings, the appellant has been able to put forward any reasonable cause for violation of the provisions of section 269SS. Therefore, I am of the view that the Additional CIT was justified in imposing the penalty under section 271 D., therefore, confirm the penalty order and dismiss the first ground of appeal 4. Aggrieved, the assessee is in appeal before us. 5. We have heard rival submissions and perused the material available on record. The crucial document to be seen in this regard is loose sheet page No.206, Annexure A-1 which apparently indicates loan transactions of the assessee. This seized document admittedly was seized from the premises of Shri Samir Shah during his search action u/s.132 of the Act. Hence, undoubtedly the presumption in terms of Section 292C of the Act would go in favour of Shri Samir Shah and it is for him to rebut the said presumption that the said contents of the said seized document in page No.206 does not belong to him and in fact it belongs to a third party including the assessee. It would be crucial to address the issue of alleged re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to examine the issue in the remand proceedings; a letter dated 23.08.2017 was issued to the assessee to allow him to submit his explanation proving his claim for the fresh evidences submitted before your goodself. During the remand proceedings it was seen from the records submitted by the assessee that a search u/s. 132 of the Income Tax Act, 1961 was carried out at the premises situated 1404, Shivtapi Building, Opp. T. K. Compound, Gamdevi, Mumbai - 400 007 on 26.05,2011. During the course of search proceedings; the statement of Shri Samir Indralal Shah was recorded u/s. 132(4) of the Act and various loose papers and documents were seized from the residential premises. The replies of the assessee filed during the penalty proceedings and during the remand proceedings have been perused carefully. The detailed observations regarding the claim of the assessee are as follows: 1. The alleged page no. 206 of annexure A-l contains the names of the parties along with the amount of principal loan appearing in the 3rd column given by each of them to Rohan Group entities (all amount apparently appearing in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in statement dated 21/07/2011 recorded u/s. 132(4) of the IT Act 1961 has in his answer to Q. No. 39 stated that people who had invested the money with the builders were asking for higher rate of interest and thus there were numerous such workings and notings prepared by him to be presented before the builders for negotiation. He has also mentioned he had habit of writing the names of persons who referred (always few in numbers) the cheque depositors and not the actual cheque depositors (who generally are large in numbers and difficult to keep the records of the same). He however claims that these cash expenses were actually not paid by the builder to his clients and were only workings. Thus it is difficult to ascertain the nature of said notings as no cash movement or dates or quarters or person to whom it was handed over has been explicitly mentioned in the said noting. 5. Further Late Shri Jitendra N Mehta vide his sworn in statement dated 22/07/2011 recorded u/s. 132(4) of the IT Act 1961 has in his answer to Q. No. 4 (wherein he was confronted to the statement of Shri Samir Shah) has stated that he has denied the allegation made by the department and has sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that these are cash loans is factually incorrect, as per the Remand Report of the AO. 14.5 The AO had made further investigations by issuing summons u/s. 131 of the Act to the variotis lenders, who had appeared before him. On this account also, I have noted that the AO had returned a categorical finding in the Remand Report that the identity, genuineness and credit worthiness of the lenders had been duly proved in the Remand Proceedings conducted by the AO. I have also noted that the AO had based his finding on cogent material and evidences namely, copy of PAN, copy of bank statement reflecting the amount of loan, loan confirmations and ITR acknowledgment etc, of the various lenders. It is clear from these facts and circumstances that the principal amount mentioned on Page No. 206 of Annexure A-l represent loans not in cash but are loan transactions, which are duly recorded in the regular books of accounts of both the lenders and the Rohan Group o/ concerns...................................................... 14.22 Accordingly, the addition made by the AO in the assessment order needs to be deleted, in view of the Remand Report given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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