TMI Blog2014 (11) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... sarily was a loan or deposit and even if the amount is considered deposit then deposit includes advance against goods - There was no reasonable cause in making cash payments as the repayments made in Ghaziabad has been claimed to have been deposited in Kanpur which is beyond human probabilities specifically keeping in view of the fact that during the period of repayments in cash the assessee received from same party through journal entries huge amounts – the order of the CIT(A) is upheld – Decided against assessee. - I.T.A. No.2592/Del/2011 - - - Dated:- 28-2-2014 - SHRI I.C. SUDHIR AND SHRI T.S. KAPOOR, JJ. For The Appellant: Shri Akilesh Kumar, Advocate. For The Respondent : Ms. Meenakshi Vohra, Sr. DR. ORDER PER TS KAPOOR, AM: This is an appeal filed by the assessee against the order of Ld CIT(A) dated 8.3.2011. The grounds of appeals taken by the assesse are as under:- 1. That the Ld CIT(A) erred in holding that passing/serving single order/demand notice under two different provisions of the Act is valid, as the same is against the scheme of the Act. 2. That on merits, the Ld CIT(A) erred in not appreciating the fact that transaction was not cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,30,000/- The repayments to other party M/s Hindon Forgings (P) Ltd. was also made partly through cheques and partly through cash sales. The Assessing Officer held that the cash payments were made in contravention of provisions of section 269T of the Act and therefore accordingly imposed penalty equivalent to amount of repayments. The Assessing Officer also held that loans were accepted otherwise by cheques or bank draft therefore further imposed penalty for violation of provisions of section 269SS. 3. Aggrieved with the order the assessee filed appeal before Ld CIT(A) and Ld CIT(A) after going through the detailed submissions of assessee deleted the penalty u/s 271D for violation of section 269SS whereas upheld the penalty u/s 271E of the Act for violation nof provisions of section 269T. The Ld CIT(A) while upholding the penalty u/s 271E made the following observations:- 5.2.2. 271E However, the situation in respect of penalty u/s 271E is equally simple and conclusion is equally straight forward against the appellant. 5.2 2 1. First of all, it is crystal clear that the cash repayments of ₹ 10,80,000/- to M/s Premsons Forging (P) Ltd. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of assessee cannot be relied upon simply because all these entities are controlled by assessee only. The agreement, placed in this respect, between assessee and Premsons Forging has no authenticity. Assessee is director in both M/s Premsons Forging (P) Ltd. and in M/s Hindon Forge (P) Ltd. such unregistered agreement can be created any time, and it is a self-serving instrument. In any case, it does not help the assessee significantly, because nature and sequence of transaction can better be 'observed' from facts rather than 'stated' by such mutually convenient agreement. 5.2.2.4. The most crucial and clinching aspect is that even if these were 'advances'; these would fall in the nature of 'trade deposits' and, hence 'Deposits'. Thus, even by his own explanation, appellant does not go outside the purview of Section 269T/271E. 5.2.2.5 There are so many court cases applicable to facts of present case, supporting levy of penalty u/s 271E but I would concentrate on case law of Chaubey Overseas Corporation v. CIT (2008) 303 ITR 9 (Alld.) of the jurisdictional High Court, whose ratio is squarely applicable to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore executing the sale. In respect of repayments to second party, the Ld AR submitted that the facts are same in other case also. In view of the above circumstances it was submitted that genuineness of transaction was not in doubt and it was submitted that advances were received towards future sales and therefore were not covered for considering violation of section 269T of the Act. Reliance in this respect was placed on the following case laws:- 1. CIT v. Kailash Chand Deepak Kumar 317 ITR 351 (Alld.) 2. CIT v. Rugmini Ram RAghav Spiunners (P) Ltd. 304 ITR 417(Mad.). 3. CIT v. Dhyam Publication Pvt. Ltd. 285 ITR 221. 7. It was further submitted that there was an agreement which was executed at the time of accepting loans and it contained one of the terms which required that whenever payments were required by the lenders the same could be paid in cash also if the lenders required so. Our attention was invited to paper book pages 36 37 where a copy of mutual agreement was placed. 8. Further reliance was placed on the decisionnof Cochin Bench in the case of Muthoot M. George Bankers 46 ITD 10 with the proposition that cash transactions between sister concerns were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t contention of Ld AR that since it was a composite order and therefore void ab inito is not tenable in view of the fact that no grievance is caused to the assessee as the appeal filed by the assessee has been decided on merits and Ld CIT(A) has not rejected the appeal of assessee holding that the order was not appealable. Therefore. Ground No.1 is dismissed. 14. Regarding merits of the case as contained in ground No.2 3 we find that assessee has argued that there was no tax evasion and transactions were found to be genuine and there was no mala fide intention and therefore relying upon various judgments argued that penalty was not imposable. However, from the examination of copy of accounts placed at paper book page 38, we find that the amount of ₹ 1,96,30,000/- was received by the assessee from M/s Premsons Forging Pvt. Ltd. and this advance was received for making investment In the business of assessee. Against this advance the assessee repaid an amount of ₹ 89 lakhs through cheques and further repaid ₹ 10,80,000/- through cash and also adjusted ₹ 46,93,190/- against sale of goods. The payments in cash has been made starting from November Ist to Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove payments, repayments in contravention of provisions of section 269T are ₹ 10,80,000/-. All these payments were made in Ghaziabad as the assessee is based in Ghaziabad whereas the Bank of the firm M/s Premsons Forging Pvt. Ltd. is situated at Kanpur. It is not understandable as to how these payments were carried from Ghaziabad to Kanpur and that too on many days in the month whereas the facility of online deposit in third party bank account was also available. The contention of the Ld AR that assessee had received amounts as advance against goods is not correct as the assesse originally received the loan or deposit for making purchase of business assets. Secondly, the cash was repaid before sales were made. The classification by assessee in his balance sheet cannot alter the nature of transaction which necessarily was a loan or deposit and even if the amount is considered deposit then deposit includes advance against goods. There was no reasonable cause in making cash payments as the repayments made in Ghaziabad has been claimed to have been deposited in Kanpur which is beyond human probabilities specifically keeping in view of the fact that during the period of repayment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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