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TMI Blog2014 (10) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... hall accordingly redecide the issue of applicability of the penal provisions of Sec.271D to the facts of the present case, in accordance with law, keeping in view our aforesaid direction, and after giving reasonable opportunity of hearing to the assessee. Levy of Penalty on payments other than account payee cheques - CIT(A) has given categorical finding after examining the bank certificates furnished before the Assessing officer, that transactions of M/s. Madura Capital Market Services Pvt. Ltd. and Mr. Vishal M. Kapadia were not be account payee cheques. Also for M/s. Padinjarathala Securities Ltd. only part of the transaction was by account payee cheque. Being so, the CIT(A) justified the levy of penalty of 20% of the amount of and confirmed the levy of penalty . Regarding the deposits relating to transactions amounting to Rs. 25.50 crores - Admittedly, the CIT(A) has not called for remand report from the Assessing officer in order to verify the correctness of the bank certificate. The CIT(A) should have called for remand report from the Assessing officer so as to physically examine the copies of Cheque Nos. 191212, 191106, 191121 and 191181. Without examining the cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement Consultants P. Ltd. 75,010 2. M/s. Madura Capital Services P. Ltd. 6,00,000 3. M/s. Fresh Capital Market Services 1,60,000 4. Mr. Linesh 1,00,000 5. Mr. Balasubramanian J. 1,50,000 Total 10,85,010 Sl. No. Ledger Folio No. Cheque No. Date Amount 1. 57 191212 22.10.2007 7,00,00,000 2. 61 191106 07.11.2007 7,50,00,000 3. 64 191121 22.11.2007 6,00,00,000 4. 71 191181 18.12.2007 5,00,00,000 Total 25,50,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um security deposit with the assessee having regard to the total volume of business undertaken by them and as per the franchisee agreement, the assessee has to pay commission to these agents. According to the CIT(A), this commission is transferred by way of book entries by debiting the commission payable account and crediting security deposit accounts concerned, after deduction of applicable tax at source. The CIT(A) further observed that since these transactions are going in the security deposit account, they cannot be treated as commission payments exclusively and they are in the nature of deposits to be maintained by the franchisees. Being so, the CIT(A) confirmed the levy of penalty u/s. 271D of the Act of Rs. 2,17,002/- being 20% of Rs.10,85,010/- made by the Assessing officer. 6. Regarding the deposits received through other than account payee cheques/bank drafts at Rs.18,50,000/-, after examining the bank certificates furnished before the Assessing officer, the CIT(A) noticed that transactions of M/s. Madura Capital Market Services Pvt. Ltd. and Mr. Vishal M. Kapadia at Rs.4,00,00/- were not by account payee cheques. Also for M/s. Padinjarathala Securities Ltd. only part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the Assessing officer was not correct in treating them as book entries disregarding the entries in the bank statement/ledger accounts showing these transactions. Accordingly, the CIT(A) deleted the penalty of Rs.5,10,00,000/- levied by the Assessing officer on account of loans received from M/s. Geojit Credits Pvt. Ltd. Against this, the revenue is in appeal before us. 8. We have heard both the parties and perused the material available on record. The first issue to be decided in the first set of appeals is whether the assessee has accepted cash loans from various parties in contravention of the provisions of sec. 269SS of the I.T. Act, so as to invite the rigour of the penal provision of S.271D of the Act. It is the case of the Department that the assessee has accepted cash loan in contravention of the provisions under S.269SS. It was also submitted that the CIT(A) admitted additional evidence and adjudicated the issue without calling for remand report from the Assessing officer which is violation of Rule 46A of the I.T. Rules. Whereas the assessee s consistent stand has been that there was no cash loan, and whatever has happened was only by way of journal entries in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount of Rs.18,50,000/- and confirmed the levy of penalty of Rs.3,70,000/-. 10. Regarding the deposits relating to transactions amounting to Rs. 25.50 crores, the CIT(A) deleted the penalty in respect of transactions to the tune of Rs. 5,10,00,000/-., the CIT(A) admitted additional evidence in the form of bank certificate and on that basis, he deleted the penalty. Admittedly, the CIT(A) has not called for remand report from the Assessing officer in order to verify the correctness of the bank certificate. The CIT(A) should have called for remand report from the Assessing officer so as to physically examine the copies of Cheque Nos. 191212, 191106, 191121 and 191181. Without examining the copy of cheques physically, she deleted the penalty which is not proper. In our opinion, it is just and proper to remit the entire issue to the file of the Assessing officer to conduct necessary enquiry and the assessee has to produce necessary evidence in support of its claim and if the assessee fails to produce the necessary evidence, the Assessing officer is at liberty to take adverse inference and decide accordingly. 11. In the result, both the assessee and the revenue appeals are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the Party Amount 1. Mr. Thomas George 2,50,000 2. Nortech Infonet Pvt. Ltd. 56,000 3. R.K. Navaneeth 1,50,000 4. M/s. Madura Capital Market Services P. Ltd. 6,00,000 5. Miss N. Suchitra 1,24,828 Total 11,80,828 12.1 Accordingly, penalty of Rs.5,14,65,697/- u/s. 271E was levied on the assessee at the rate of 20% of total transactions made. Aggrieved against this, the assessee challenged before the CIT(A). 13. Before the CIT(A), the assessee submitted that various payments of commission, loans and deposits received by it were by way of cheques/account payee drafts. In this connection, the assessee furnished copies of various bank accounts wherein the particulars of various transactions have been shown. The assessee has also furnished the ledger copy of all its accounts and the bank accounts to prove that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so mentioned and even the ledger folio no. with date and amounts were available with the Assessing officer, the Assessing officer could not make proper verification whether these entries were through account payee cheques or not. The CIT(A) observed that as per the details available in the bank statement, against the transaction of Rs.7 crores the name of Geojit was mentioned and for the amount of Rs.7,50,00,000/- the entry was shown as clearing through Cheque No. 191106. Similarly, entries of Rs.6 crores and Rs.5 crores were also reflected in the bank statement of the assessee. According to the CIT(A), the assessee has also furnished the corresponding bank account of M/s. Geojit Credits Pvt. Ltd. where these entries on the corresponding dates were also reflected. The CIT(A) also observed that the assessee has furnished confirmation from the Axis Bank, through which these transactions were effected and these transactions were made through account payee cheques. According to the CIT(A), from the bank account of both the parties and the bank certificates, it was clear that these payments were made by account payee cheques. Therefore, according to the CIT(A), the Assessing officer was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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