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TMI Blog2024 (8) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... is a fact on record that the director of Sudama Resorts had surrendered income on account of cheques found during search at its premises. There is agree with assessee, no concrete finding of the Revenue ,based on authentic evidence, of the assessee having accepted and repaid loan in violation of the provisions of section 269SS/T of the Act. The finding of the Revenue to this effect is merely based on surmises and conjectures. With no clear finding based on authentic evidence of the assessee having violated the provisions of Section 269SS and 269T of the Act, we agree with assessee that there was no case for levy of penalty u/s 269D and 269E of the Act respectively. As in the case of Sneh Builders [ 2011 (5) TMI 1156 - ITAT PUNE] squarely applies to the case of the assessee wherein identical penalty levied u/s 271D of the Act on the presumption that the assessee must have taken loan in violation of provisions of Section 269SS was deleted noting no concrete evidence brought on record to establish the fact of the assessee having violated the relevant provisions - Appeals of the assessee are allowed. - Smt. Annapurna Gupta, Accountant Member For the Assessee : Shri Dhrunal Bhatt, AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty levied by Ld. Jt. CIT, Range-4(2), Ahmedabad of Rs. 8,25,000/- u/s 271D of the Act for alleged violation of provisions of Section 269SS of the Act, in the penalty order dated 29.03.2018 made by him for A.Y. 2013-14. 2. In law and in the facts and circumstances of the case, the CIT(A) has also failed to appreciate the fact that no transactions in cash referred to in the penalty order were effected and thus no penalty is leviable 5. Drawing our attention to the facts of the case, the ld. Counsel for the assessee drew our attention to the order passed by the Assessing Officer levying penalty u/s 271E of the Act narrating the same as under:- In this case, the information was received by the ITO(Inv.), Unit-II, Ahmedabad from the Police Inspector, Navrangpura Police Station Ahmedabad that a search action was carried out on Sudama Resorts on 30/06/2012 and consequently seized the assets which included cash amounting to Rs. 17,17,091/- and cheque/Demand Daft of Rs. 36,75,000/-. Regarding source of cash and cheques/Demand Draft, statement of Shri Kaushik J. Shah, Director of Sudama Resorts was recorded u/s. 131(1A) of the I.T. Act on 07/05/2013. In the said statement, it is state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding cash of Rs. 8.25 lacs for which he has given 11 numbers of cheque of Rs. 75,000/- each dated 15th of each month starting from May 2012 to March 2013. Thus it proves that the assessee has received cash loans of Rs. 8.25 lacs during F.Y. 2012-13 relevant to the A.Y. 2013-14 which are in violation of provision of section 269SS of the I.T. Act. Further, from the above facts it is clear that the assessee has given 11 bearer cheques for repayments of cash loans of Rs. 8,25,000/-, which is in violation of provisions of section 269T of the LT. Act, 1961, which is liable to penalty u/s.271E of the I.T. Act, 1961 in respect of default committed u/s.271E of the I.T. Act, 1961. 6. Referring to the above, the ld. Counsel for the assessee pointed out that in the search operation carried out by the police at Sudama Resorts, cash of Rs. 17,17,091/- and cheque/Demand Draft of Rs. 36,75,000/- were found. This information was received by the ITO (Investigation), Unit-II, Ahmedabad and the cash/cheques were requisitioned u/s 132A of the Act on 27.01.2015. Statement of the Director of Sudama Resorts Pvt. Ltd. was recorded u/s 131(1A) of the Act, i.e. of Mr. Kaushik J. Shah, who confessed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was received by ITO(Inv) Unit-Il Ahmedabad. The cash cheques were requisitioned u/s 132A on 27/01/2015. Statement of Mr Kaushik J Shah, Director of Sudama Resorts Pvt Ltd, was recorded u/s 131(1A) where he confessed to arranging finance for the members of Sudama Resorts Pvt Ltd. He admitted to cheques being obtained from the Financiers. He however was unable to give the names of the Financiers. He (Mr. Kaushik Shah) owned up the same as HIS income for FY 2012-13 relevant to AY 2013-14. The Assessee's (Mr Atul N Shah) reply dated 13-12-2017 (on Pg 3-4 of Penalty order) was not accepted and ultimately JCIT levied penalty u/s 271D for having accepted loan in Cash being violation of section 269SS. Penalty of Rs. 8.75 Lacs was levied. Penalty u/s 271D levied The penalty is based solely on presumption that cash loan was received against the security of cheques this is based on the statement of Mr Kaushik J Shah the fact that signed cheques were found during search. Assessee's Contentions: There is no specific reference to question and the response of the Mr Kaushik Shah based on which the JCIT has come to above conclusion - more particularly when TWO cheques of Rs. 75K each d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope for doubt that the assessee committed offence and was liable to be visited with penalty. The penalty cannot be imposed on vague and imaginary evidence. No such definite evidence was available in the instant case to show that the assessee contravened provisions of section 26955 to justify levy of penalty under section 271D. The Commissioner (Appeals), on the basis of statement of the assessee, assumed that he must have received loan or deposit of Rs. 30,000 and, therefore, imposed penalty of a equal amount which inference was not supported by any cogent material. The Accountant Member had properly analyzed statement of the assessee. There were large number of credit and debit entries in unreliable photocopies of accounts relied upon by the revenue authorities. Entry or entries taken singly or jointly did not establish that the assessee received loan/deposit of Rs. 30,000 in contravention of statutory provision. The penalty had been imposed on estimate and guess work and Rs. 30,000 had been taken in an ad hoc manner. There was no justification to hold that statutory provisions had been violated in terms of section 271D. Legal effect of the order proposed by the Judicial Member w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). We uphold the same 3) SC in Umacharan Shaw Bros (371 ITR 271) held that conclusion as a result of suspicion could not take the place of proof. This principle would apply even in case of penalty proceedings though the decision was rendered in connection with grant of registration to the firm. With Regards to levy of penalty u/s 271E for violation of section 269T on similar facts It has not been conclusively proved that the Assessee has taken Loan in cash how can there be an allegation of loan being repaid in cash based on Bearer Cheques found during Search No evidence as to loan has been repaid in cash. Reliance was placed on various judicial decisions in support, cited in the submissions of the assessee reproduced above. 8. The ld.DR, however, relied on the orders of the authorities below pointing out that during penalty proceedings and even in appellate proceedings, the assessee, it was noted by the Revenue Authorities , had not furnished any explanation for the cheques found pertaining to him at Sudama Resorts of Rs. 8.25 lakhs, and in the light of the statement recorded of the director of the Sudama Resorts. 9. We have heard the contentions of both the parties. As transpire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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