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TMI Blog2024 (2) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... g or belongs to such person and the contents of such books of account and other documents are true.This presumption is rebuttable one and operates only against the person in whose possession the books of account, other documents, money, bullion, jewellery or other valuable article or thing is found. The assessee is a third party and therefore, this presumption could not be raised against the assessee. Connection with the cash payments and receipts - So far as the assessee is concerned, he has denied having received any such loan. To support the same, the assessee also filed confirmatory letter from the other party that no such cash transactions have taken place between the assessee and the other group. No further enquiry has been made by Ld. AO to corroborate the receipt of loan by the assessee. The allegation is merely on the basis of one-sided entries found in the premises of a third party. Therefore, the impugned penalty could not be sustained considering this point. As undisputed AO has moved a proposal to appropriate authority for initiation for proceedings u/s 271D on 26.05.2022 whereas the assessment order was passed on 28.09.2021. The proposal has been moved nearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in holding that penalty proceedings u/s.271D had not been validly initiated for the reason that the assessing officer has not recorded satisfaction in the assessment order regarding violation of provisions of Sec. 269SS, placing reliance on the apex court decision in the case of CIT Vs Jai Laxmi Rice Mills(2015) 379 ITR 521(SC) and decision of High Courts and Tribunals rendered on the basis of the said Supreme Court decision, without appreciating that the decision in the case of Jai Laxmi Rice Mills supra was rendered in the context of peculiar facts of the case, which could not be applied to the facts of the present case. 2.2 The Ld.CIT(A) erred in failing to appreciate that in the case of Jai Laxmi Rice Mills, the penalty u/s.271E was levied on the basis of reasons recorded in the assessment order set aside(Non-existent). In that context, the Supreme Court directed to delete the penalty levied u/s.271E for the reason that satisfaction recorded for initiation of penalty proceedings in the assessment order set aside would not survive. But in the instant case, on the basis of reference made by the assessing officer, the Addi.CIT initiated penalty proceedings as the case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only advisory and not mandatory in nature. 3.2 The Ld.CIT(A) failed to appreciate that the circular states that, reference can be made during the course of assessment proceedings or any other proceedings under this Act. In this case, 153C assessments have been completed on the basis of strength of warrant issued in the case of Vels group of Educational Trust. The proceedings before ITSC have been pending in the case of Vel's group and the AO's action of referring the case to Addi.CIT was in compliance of Board's Circular, though it is only advisory in nature. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. 2. The Ld. CIT-DR advanced arguments supporting the impugned penalty as levied by Ld. AO. The Ld. CIT-DR submitted that penalty has wrongly been deleted on legal grounds. On the other hand, Ld. AR supported the impugned order and submitted that the adjudication in the impugned order is in consonance with the departmental circular and binding decisions of Hon ble Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said background, the assessee assailed proposed penalty. 3.4 However, Ld. Addl. CIT held that presumption raised u/s 132(4A) could be rebutted only with convincing evidences. Whether the assessee was in requirement of loan / deposit was not material. There was no necessity that evidence should be collected from assessee s premises. The confirmatory letter as furnished by the assessee was dated 30.08.2022 i.e., much after the issuance of show-cause notice issued on 05.08.2022. This confirmation letter will not be corroborative evidence to rebut the contention narrated in the seized material. Finally, Ld. Addl. CIT imposed penalty of Rs.75 Lacs u/s 271D which was subjected to assessee s further appeal before first appellate authority. Appellate proceedings 4.1 The assessee assailed penalty on merits as well as on legal grounds. The assessee reiterated that it had no connection with the cash payments and receipts as mentioned in the seized material of M/s Vels group and these entries were merely one-sided entries only. The submissions made during penalty proceedings were again reiterated during appellate proceedings. The assessee also submitted that the presumption u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 19 of the impugned order. It was further noted by Ld. CIT(A) that similar ratio was laid down by Chennai Tribunal in the case of T. Shiju vs. JCIT (ITA No.2829/Chny/2018) which, following the cited decision of Hon ble Apex Court in CIT vs. Jai Laxmi Rice Mills (supra), deleted penalty u/s 271D due to non-recording of satisfaction. Similar ratio was laid down by Delhi Tribunal in the case of Anglican India Consultancy Pvt. Ltd. Vs. Addl. CIT (ITA No.121/Del/2016 dated 03.10.2017); Kolkata Tribunal in Binod Kumar Agarwal vs. JCIT (ITA No.238/Kol/2013 dated 04.02.2016); Bangalore Tribunal in Smt. S.B. Patil vs JCIT (ITA Nos.1053 1054/Bng/2014). 4.5 Concurring with all these decisions, Ld. CIT(A) held that recoding of satisfaction in the assessment order regarding the violation of provisions of Sec.269SS was mandatory requirement for valid initiation of penalty proceedings u/s 271D of the Act. No such penalty could be levied if AO failed to record such satisfaction in the assessment order. Since no such satisfaction was recorded in the present case, the penalty was not validly initiated and therefore penalty orders passed were bad-in-law. 4.6 The Ld. CIT(A) also concurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this presumption is rebuttable one and operates only against the person in whose possession the books of account, other documents, money, bullion, jewellery or other valuable article or thing is found. The assessee is a third party and therefore, this presumption could not be raised against the assessee. So far as the assessee is concerned, he has denied having received any such loan. The assessee also submitted that it had no connection with the cash payments and receipts as mentioned in the seized material and it was completely one-sided entries by other group. To support the same, the assessee also filed confirmatory letter from the other party that no such cash transactions have taken place between the assessee and the other group. No further enquiry has been made by Ld. AO to corroborate the receipt of loan by the assessee. The allegation is merely on the basis of one-sided entries found in the premises of a third party. Therefore, the impugned penalty could not be sustained considering this point. 7. It is also an undisputed fact that Ld. AO has moved a proposal to appropriate authority for initiation for proceedings u/s 271D on 26.05.2022 whereas the assessment order was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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