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TMI Blog2022 (3) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... ot between three parties. They were bilateral. The transactions were on the lines of a promissory note. The documents had waived the notice of dishonor and no grace period was granted. This was also indicative of the transaction not being a hundi transaction. Section 69D was not applicable. We find that the facts of the assessee s case are identical to the above reported case of Dexan Pharmaceuticals Pvt. Ltd [ 1995 (1) TMI 54 - ANDHRA PRADESH HIGH COURT] and therefore, the provisions of sec. 69D were not applicable in the case of the assessee. Thus addition made by the Assessing Officer by invoking section 69D was bad in law and the action of Ld. Commissioner of Income Tax (Appeals) deleting this addition contains no infirmity and the same deserves no interference. Thus, the only ground raised by the Revenue stands dismissed. Penalty u/s 271D - contravention to the provisions of section 269SS - HELD THAT:- While deciding the quantum addition above we have held that at no point of time, it was proved that the assessee had actually received any loan or deposit specifically during the period relevant to Assessment Year 2012-13 as there was no material evidence in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. During the course of proceedings u/s 153C, the copy of the order passed by Hon ble ITSC u/s 245D(4) in the case of Shri Satish Sawhney was obtained and proceedings u/s 147 were initiated for A.Y. 2012- 13 by issuing notice u/s 148 on 25/03/2015, against which return of income was filed by assessee stating that the original return filed may be treated as return in response to the notice u/s 148. The reasons recorded were then provided to the assessee on 29.06.2015 and against the same, the objections were filed the assessee which were disposed off by ACIT-2(1) by passing speaking order dated 03.08.2015. The proceedings were then carried on and all the hearings were duly attended and notices were timely complied with by the assessee. The ld. Assessing Officer noted that on the said receipts, no due date was mentioned and these documents were confronted to Shri Satish Shawhney who in the statement stated that this was loan given by him and his family to the assessee. However, the assessee claimed that loans were more than 25 years old. Ld. Assessing Officer also noted that Hon'ble Settlement Commission rightly observed that it is inconceivable that a person (Shri Satish Shahwn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is a paper with headline as promissory note under which name of Shri Sukhwant Singh Babbar has been typed written, but it has not been signed. Moreover, the date part is April 2007 (date component not written). We find that to investigate the above receipts, the investigation wing of Delhi summoned the assessee asking to explain about the receipts and the assessee duly complied with to the summons and casted a doubt on the documents relating to receipt of loan. The assessment proceedings were initiated in the case of Shri Satish Sawhney which ultimately travelled to the Honorable Settlement Commission. The Honorable Settlement Commission in its order u/s 245D(4) assessed the sum of ₹ 3,80,00,000/- in the hands of Shri Satish Sawhney. We find that in the instant case, notices u/s 153C for the assessment years 2006- 07 to 2011-12 were issued on 26.08.2013 i.e., well before 30thSeptember 2013. Assessee s return of income for the A.Y. 2012-13 was before the Ld. Assessing Officer as on the date of issue of notice u/s 153C for six years. Thus, it is clear that the ld. Assessing Officer had ample time to issue notice u/s 143(2) for the A.Y. 2012-13 but probably the ld. Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10 Hundis for ₹ 3.80 crores along with interest within 2 years from the date of execution of this promissory note . While going through the documents it is seen that these receipts are recently given by Shri Sukhwant Singh Babbar to Shri Satish Sawhney. It also appears that the loan was given in cash. Further it is also unbelievable that Shri Satish Sawhney was in possession of ₹ 3.80 crores in the late 80 s. This is a cash loan given to Shri Sukhwant Singh Babbar in April 2007. The Assessing Officer may examine and verify the contents of the hundis and promissory note. 7. From perusal of the above, we find that the Revenue was not convinced with as regard to the transaction, if any, carried out and the period during which such transaction was carried out. Thus, the theory being hypothesis was not conclusive. Therefore, application of Section 69D was unjustified. Our view finds support from the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs Dexan Pharmaceuticals Pvt Ltd, 214 ITR 576 (AP) wherein the Hon'ble High Court set out the characteristics as under: 1) There are always three parties to such transaction. They are the drawer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by and large were illiterate in English, that does not lead to the conclusion that if a document which is otherwise a hundi is written in the English language, such a document cannot be regarded as a hundi. It is the contents of the document that matter and not the language in which it is written. Held further, that the instrument in question contained a definite promise to pay which promise was unconditional; it was signed by the marker and the sum of money to be paid was certain; the identity of the payee was set out and the provision was made for payment to him or to his order. The time of payment however was not merely on demand but at the expiry of the period specified in the instrument. These features answered the definition of promissory note contained in section 4 of the Negotiable Instruments Act, 1881, read with para 2 of section 5 of the Act. Section 5 of the Negotiable Instruments Act defines a bill of exchange and para 2 thereof provides that a promise or order to pay is not conditional within the meaning of the section and section 4 by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Settlement Commission as discussed above in paras 3.2 and 3.3 without any concrete evidence to show that the said loan was taken in the period relevant to the Assessment Year under consideration. In fact, the evidence in terms of the seized documents prima facie shows the transaction pertaining to an earlier period. In view of the above facts and circumstances of the case, I am of the opinion that the addition of ₹ 3.8 crores made u/s 69D on account of loan borrowed in cash through hundies in A.Y. 2012-13 from Mr. Satish Sawhney is not sustainable and is therefore deleted. 13. Before us, the above findings of ld. CIT(A) could not be controverted by the Revenue by bringing any contrary material on record. On consideration of above and in the light of the judicial pronouncements (supra), we are of the view that the addition made by the Assessing Officer by invoking section 69D was bad in law and the action of Ld. Commissioner of Income Tax (Appeals) deleting this addition contains no infirmity and the same deserves no interference. Thus, the only ground raised by the Revenue stands dismissed. Appeal of the Revenue is dismissed. ITA No. 880/Ind/2018 (Penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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