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TMI Blog2023 (6) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. - ITA No. 1306/Del/2020 - - - Dated:- 13-6-2023 - Shri Chandra Mohan Garg, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Revenue : Shri T. James Singson, CIT(DR) For the Assessee : Shri Parikshit Aggarwal, CA ORDER PER CHANDRA MOHAN GARG, J.M. This appeal has been filed against the order of CIT(A)-34, New Delhi dated 27.06.2019 for AY 2012-13. 2. The grounds of appeal raised by the revenue are as follows:- i) Whether on the facts and in the circumstances of the case, the Ld. CIT(4) has erred in deleting the penalty us 271D of the Act relying on the order of the Hon 'ble ITAT wherein it was held that the payment of Rs. 2,38,00,000/- made by M/s Spaze Towers Put. Ltd. to the assessee was not a loan transaction made in contravention of the provisions of section 269SS of the Income Tax Act. ii) Whether on the facts and in the circumstances of the case, the Id. CIT(A)has erred in deleting the penalty us 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Put. Ltd. before the Hon'ble Settlement Commission it is evident that Ms Spaze Tower Put. Ltd. had discharged the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 269SS of the Act. The ld. CIT(DR) also pointed out that the Ld. CIT(A) has erred in deleting the penalty relying on the order of the Hon'ble ITAT wherein it was held that penalty us 271D is without any satisfaction and therefore, no such penalty can be levied. The ld. CIT(DR) finally submitted that the first appellate authority has deleted penalty without any justified reason therefore the same may kindly be set aside by restoring that of the Assessing Officer. 4. Replying to the above, the ld. assessee s authorized representative (AR), supporting the first appellate order, submitted that the penalty was imposed by ignoring the fund flow statement submitted before income tax settlement commission by the M/s. Spaze Towers Pvt. Ltd., which has provided cash fund to the assessee and the ld. CIT(A) considered the same on the right prospective and by considering the order of ITAT Delhi Bench in the case of M/s. K S Chawla Sons in ITA No. 5614/Del/2019 dated 28.08.2019 and therefore the same may kindly be upheld. 5. On careful consideration of above submission first of all, we note that the ld. CIT(A) has granted relief to the assessee by considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant in view of the Hon'ble ITS order in the case of Spaze Towers Pvt Ltd. (v) Thereafter, the A initiated penalty proceedings us 271D of the Act in the case of the appellant on the ground that by accepting loans from M/ Spaze Towers Pt Ltd the appellant had violated the provisions of section 269SS of the Act, thereby making him liable for penalty provisions u/s 271D of the Act. (vi) Penalty u/s 271D amounting Rs. 16,66,833/-, Rs. 1,85,00,000/- and Rs. 2,38,00,000/- was thereafter imposed by JCIT, Central Range, Gurgaon in the case of appellant (s for the year under consideration, in the case of Shri Aman Sharma, Shri Bharat Bhushan Kumar and Shri Deepak Kumar for A.Y. 2016-17. (vii) Hon'ble ITAT, Delhi 'D' Bench in the case of M/s K.S. Chawla Sons (HUF) ITA No. 5614/Del/2019 (lead judgment) others dated 28.08.2019 has adiudicated as under on similar facts in other group cases as hereunder:- 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses so incurred have not been claimed as expenses in computing additional income offered before Hon'ble Bench, the same deserves be deducted out of Cash Flow and thereby telescoping set off of cash should be allowed to the extent. 17. It is also not in dispute that taking a leaf out of the statement of facts and fund flow statement filed by Ms 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 Pt Ltd, were nothing but income of the promoters/directors. 18. When this addition was agitated before the Id. CIT(A), the Id. 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 Id. CIT(A) though observed that the same should be considered as loans/deposits in the hands of the promoters/directors in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer 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 A0. He submitted that the amount of Rs. 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 has failed to confirm the transaction in the form of affidavit before the Revenue authorities. He submitted that CIT(A) should have taken note of the fact that cash receipt of Rs. 15 lakhs was towards part payment of the finance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 invoke the provisions of section 269SS of the Act. Facts on record clearly show that Spaze Towers categorically declared admitted of having incurred personal expenditure on behalf of the promoters/ directors before the Settlement commission which has been accepted by the Settlement Commission in its order dated 24.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that penalty us 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 filling income tax return. Ex-parte proceedings were initiated, which resulted in the aforesaid order, as per which net taxable income of the assessee was assessed at Rs. 18,34,584/-. While framing the assessment, the Assessing Officer also observed that the assessee had contravened the provisions of Section 2695S of the Act and because of this the Assessing Officer was satisfied that penalty proceedings under Section 271E of the Act were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 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 us 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. In view of the judgment of Hon'ble ITAT in other group cases of the appellant on similar facts as reproduced above, respectfully following the said order, penalty imposed by the AO cannot be sustained in the cases under consideration and hence deleted. Hence on similar grounds, penalty u/s. 271D of the Act imposed in the following cases in this consolidated order are deleted. (i) Shri Aman Sharma 2016-17 16,66,833/- (ii) Shri Bharat Bhushan Kumar 2016-17 1,85,00,000/- (iii) Shri Deepak Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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