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TMI Blog2024 (2) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 for the A.Y. 2013-14. 2. The Revenue has raised the following grounds of appeal are as under:- i) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty u/s 271D of the Act relying on the order of the Hon'ble ITAT wherein it was held that the payment of Rs. 2,00,00,000/- 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 Ld. CIT(A)has erred in deleting the penalty u/s 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Pvt. Ltd. before the Hon'ble Settlement Commission it is evident that M/s Spaze Tower Pvt. Ltd. had discharged the liabilities of the assessee by making payments in cash which is violation of the provisions of section 269SS of the Act. iii) Whether on the facts and in the circumstances of the case, the Ld. CIT (A)has erred in deleting the penalty relying on the order of the Hon'ble ITAT wherein it was held that since M/s Spaze Towers Pvt. Ltd. incurred expenditure towards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. The undisputed fact is that the Settlement Commission, while accepting the settlement offer of additional income of Rs. 52.74 crores on account of bogus purchases has also accepted the telescoping of personal expenses of the promoters/ directors aggregating to Rs. 16.43 crores. The relevant findings of the Settlement Commission read as under: An action of Search / Survey was conducted on applicant u/s 132 of the Income Tax Act, 1962 (Act) on 17.02.2016. The applicant submitted letter dt. 11.3.2016 to Ld DD1T- Investigation Unit-Ill, Gurgaon (even well before receiving copies of seized documents), Stating the discrepancies in records totaling to Rs. 81.00 crs. (and not undisclosed income or surrender as stated in the rule-9 report by Ld Pr CIT). It is respectfully submitted that the applicant has addressed and considered each and every issue stated in the said letter dt. 11.3.2016 and offered a sum of Rs. 53.04 cr., in the present SOF, which shall be dealt with, in the subsequent paras apart from additional surrender of Rs. 1.65 crs in the hands of Sh Arvinder Dhingra which is also pending for adjudication before the Hon'ble Bench). Therefore, the total amount affirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oters/directors in the light of the relevant provisions of the Act. It is true that the Id. CIT(A) nowhere directed the Assessing Officer to initiate penalty proceedings but it is equally true that prior to this decision of the ld. CIT(A), the Assessing Officer never took a view that the impugned telescoped expenses incurred by M/s Spaze Towers Pvt Ltd was in fact, loan/deposit given by the said company to the promoters/directors. 20. Dehors the fate of quantum additions, the Assessing Officer cannot treat the same amount as income of the appellants as well as loans/deposits in the hands of the appellants. 21. The Hon'ble Delhi High Court in the case of Standard Brands Ltd [supra] held as under: 6. Against the order dated 6-9-2000, the revenue preferred an appeal before the Income Tax Appellate Tribunal. By an order dated 6-10-2004, the Tribunal (in paragraph 9 of the said order) upheld the view taken by the Commissioner (Appeals) in his order dated 69-2000. The Tribunal held that the receipt was outside the scope of undisclosed income defined under section 158B(b) of the Act. 7. On these facts, we are of the view that the revenue could not on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards part payment of the finance agreement dt. 28 th July, 1998. 3. The learned Counsel for the assessee has opposed the submission of the learned Departmental Representative. He submitted that the amount of Rs. 15 lakhs was assessed by the AO as undisclosed income of the assessee for the block period of the assessee and therefore, the provision of Section 269SS of the IT Act, 1961 does not apply to the facts of the case. He submitted that the issue is covered in favour of the assessee with the decision of the Hon'ble Delhi High Court CIT v. Standard Brands Ltd. (2006) 204 CTR (Del) 48 : (2006) 285 ITR 295 (Del). 4. We have considered the rival submissions. We find that it is not a case of regular assessment of the assessee. The block assessment of undisclosed income for the block period was framed by the AO and the amount of Rs. 15 lakhs was added as undisclosed income of the assessee for the financial year 1998-99. Once the amount in question is assessed as the undisclosed income of the assessee in the block assessment for the block period of the assessee, the provision of Section 269SS r/w Section 271D cannot be resorted to. The issue in the present case is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission in its order dated 24.05.2018. 29. The Assessing Officer, at first, treated the said transaction as income of the assessee which is evident from the appellate proceedings in respect of the quantum additions. This also clearly shows that the Assessing Officer was not sure whether Spaze Towers has given any cash loan to the promoters/directors. Since Spaze Towers incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by the directors/promoters but the same cannot be construed as loan or deposit within the framework of section 269SS of the Act. 30. Considering the facts in totality, in our considered opinion the transaction is devoid of any lender - borrower relationship. In other words, the amount which is the subject matter of consideration in the present cases is out of tax paid from income/disclosed sources of Spaze Towers. 31. The Hon'ble Karnataka High Court in the case of Chamundi Granite 239 ITR 694 relied upon by the JCIT has also held that the ultimate aim of section 269SS is to prevent evasion of tax. Whereas, the facts of the appellants clearly shows that the taxes have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under Section 271E of the Act were to be initiated. 3. The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee. 4. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. 4. The Tribunal as well as the High Court has held that it could not be so for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent-assessee against order dated 20-5-2019, has been allowed. 2. The case in brief is that on 17-2-2016, a search under section 132 of Act 1961 was carried out at the premises of Spaze Towers Pvt. Ltd, where books of account are maintained. The respondent was one of the directors of Spaze Towers Pvt. Ltd, and subsequently, a notice under section 153-A of the Act was issued to him to on 28-112016 asking him to file his return of income. In response to the said notice, the respondent filed his return of income for the assessment year 2015-2016 declaring an income of Rs. 94,11,350/-. The assessment of the case of the respondent, under section 153 (1) (B) was completed on 26-12-2017 (A-1) and the Assessing Officer made the following additions in the returned income: 1. Addition of Rs. 3,00,000/- on account of cash receipts from M/s Spaze Towers Pvt. Ltd to meet personal household expenses. 2. Addition of Rs. 45,91,675/- on account of unrecorded investment in gold and diamonds. 3. Addition of Rs. 75,00,000/- on account of unrecorded expenses on a marriage function of the daughter of the respondent during the year. 3. Feeling aggrieved, the respondent pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the assessee had received an amount of Rs. 3 lakhs in cash from M/s D.S. Imports. The amount represented undisclosed income in the hands of the assessee but as per assessee, it was a deposit made by M/s D.S. Imports. Hon'ble Delhi High Court dismissed the appeal of the revenue and held that the revenue could not, on the one hand, contend that amount of Rs. 3 lakhs is undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000/-. The Revenue having taken the stand that the income was undisclosed income in the hands of the assessee, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal. 9. Reference at this stage can further be made to judgment of Hon'ble Delhi High Court in a case of CIT v. R.P. Singh Co. (P.) Ltd. [2012] 21 taxmann.com 50/340 ITR 217 wherein the appeal of the revenue was dismissed and the operative para of the judgment reads as under: Mr. Kochhar, learned counsel for the assessee, submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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