TMI Blog2002 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition of their land by the Government. A search proceeding was carried out at the assessee from 21-8-1995 to 22-8-1995. As a result of search various incriminating documents and records were seized by the department and block assessment order under section 158BC read with section 143(3) was passed on 24-8-1996 for the block period from 1-4-1985 to 21-8-1995. While scrutinizing the seized documents in the course of assessment for block period, the Assessing Officer observed that assessee had accepted and repaid loans/deposits in excess of Rs. 20,000 by mode other than account payee cheques/drafts and thus has contravened the provisions of sections 269SS and 271D. The Assessing Officer thereafter had initiated penalty proceedings under sections 269SS and 269T. We are concerned with the contravention made under the provisions of section 26988 in the present appeals. The year-wise contravention as found by the Assessing Officer is as follows: Asst. year 1990-91 ------------------------------------------------------- Date Amount Name of the depositor ------------------------------------------------------- 13-2-1990 50,000 Shri Vishn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 Shri Vishnu Laxman Patil 24-01-1993 5,000 -do- 25-01-1993 6,000 -do- 30-10-1992 15,000 -do- 01-11-1992 1,000 Shri Vishnu Laxman Patil 07-01-1993 5,000 -do- 16-01-1993 17,000 -do- 22-01-1993 2,000 -do- 06-01-1993 10,000 -do- 28-01-1993 30,000 -do- 29-01-1993 10,000 -do- 30-01-1993 10,000 -do- 02-02-1993 60,000 -do- 01-02-1993 6,000 -do- 24-02-1993 30,000 -do- 01-03-1993 25,000 -do- 27-03-1993 50,000 -do- 20-07-1992 12,000 -do- 12-03-1992 12,500 -do- 17-10-1992 2,140 -do- 26-05-1992 5,000 -do- 06-06-1992 25,000 -do- 05-06-1992 25,000 -do- 29-06-1992 22,000 -do- 14-07-1992 22,000 -do- 09-07-1992 50,000 -do- 16-10-1992 59,009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Vishnu Laxman Patil 02-05-1993 35,000 -do- 22-01-1994 5,500 -do- 14-07-1993 1,00,000 -do- 17-07-1993 50,000 -do- 21-07-1993 12,000 -do- 22-07-1993 5,000 -do- 23-07-1993 50,000 -do- 26-07-1993 33,900 -do- 28-07-1993 35,000 -do- 23-11-1593 1,000 -do- 05-12-1993 2,200 -do- 10-07-1993 50,000 -do- 09-07-1999 80,000 -do- 30-07-1993 30,000 -do- 30-12-1993 50,000 -do- 27-12-1993 41,000 -do- 01-10-1993 10,000 -do- 21-08-1993 10,000 -do- 04-08-1993 20,000 -do- 18-07-1993 12,000 -do- 12-04-1993 15,000 -do- 13-04-1993 5,000 -do- 02-05-1993 20,000 -do- 04-05-1993 4,000 -do- 07-05-1993 3,000 -do- 11-05-1993 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000 Shri Shah Saheb 18-08-1994 25,000 -do- 08-09-1994 5,000 -do- 10-12-1994 52,000 Shri Y.P. Patil 10-12-1994 52,000 -do- 17-04-1994 1,000 Shri Satish Kankariya 06-04-1994 50,000 Shri Ramesh Katkar 11-08-1994 40,000 Shri Dhyaneshwar Patil 40,000 -do- 07-12-1994 10,000 -do- 30-01-1995 10,000 -do- 03-03-1995 10,000 -do- 03-09-1994 10,000 Shri Prakash Rana 12-09-1994 5,000 -do- 15-09-1994 10,000 -do- 03-10-1994 10,000 -do- 22-10-1994 5,000 -do- 28-11-1994 17,000 -do- 14-12-1994 25,000 -do- 23-12-1994 5,000 -do- 23-01-1995 5,000 -do- 03-02-1995 10,000 -do- 14-02-1995 25,000 -do- 21-08-1994 25,000 Shri Ishwar Pagare 14-09-1994 10,000 Shri Anil Rana 28-09-1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the assessee recorded under section 132(4) placed in the compilation at pages 42 to 45. In question No.3 on page 42, a question was asked to the assessee to give details regarding loans taken by him from various parties. The question No.4 is also in regard to the records maintained by the assessee in regard to these loans. Subsequent questions also are in regard to the advances received and interest paid by the assessee on the same. The statement of one of the creditors, Shri Vishnu L. Patil was also perused by us, He was also asked regarding the loans obtained by the assessee from him, In short, the department's case has always been that the assessee has borrowed different sums of money by way of loans in different years from 1990-91 to 1996-97 in contravention of section 269SS, Accordingly, what the assessee repaid were loans and not deposits and therefore, provisions of section 271E are not applicable." Further in para 8 the findings of the Tribunal are as under: ".....Thus, the initiative in depositing money comes usually from the depositor, This is not the case with the assessee, because he has made specific borrowings from different persons and these constitute lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e: To seize, grip, catch etc. To lay hold upon, get into one's hands by force or artifice, to seize capture, esp. in war; to make prisoner; hence,.....To catch, capture. He also referred to the observations given in respect of deposits and loans in Law Lexicon, which are as follows: Deposit: Money paid to a person as an earnest or security for the performance of some contract especially a contract for the sale of immovable property- Deposit and loan: The terms 'loans' and 'deposits' are not mutually exclusive terms. There are a number of common features between the two. In a sense a deposit is also a loan with this difference that it is a loan with something more. Both are debts repayable. But when the repayment is to be furnished the real point of distinction between the two concepts. A loan is repayable the minute it is incurred. But this is not so with a deposit Either the repayment will depend upto the maturity date fixed therefor or the terms of the agreement relating to the demand, on making of which the deposit will become repayable. In other words, unlike a loan there is no immediate obligation to repay in the case of a deposit" "A loan imports a positive act of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. He in this regard places reliance on the following decisions: (1) Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388(All.); (2) Raj Pal Singh Ram Avtar v. ITO [1991] 39 TTJ (Delhi) 544; (3) Smt. Shanti Devi v. Asstt. CIT [1994] 49 ITD 402 (Delhi); (4) Addl ITO v. T. Mudduveerappa Sons [1993] 45 ITD 12 (Bang.); (5) Miss Rose Ben v. Asstt. CIT [1998] 65 ITD 57 (Mum.); (6) Amar Natvarlal Shah v. Asstt. CIT [1997] 60 ITD 560 (Ahd.); (7) D.K. Gupta v. Dy. CIT [1998] 60 TTJ (Delhi) 587; (8) P.K. Narayanan v. ITO [1994] 48 TTJ (Coch.) 125. He further raised a contention that mere admission the part of the assessee is not sufficient for levy of penalty. It was necessary for the department to prove the default. He in this regard placed reliance on the decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar General Mills Ltd. v. CIT [1987] 168 ITR 705; D. Halappa Sons v. CIT [1974] 95 ITR 542 (Mys.). He placed heavy reliance on the decision in the case of D. Halappa Sons to contend that where the assessee had agreed to the levy of penalty, still it was held not leviable by the Court. He further raised a proposition that admission made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant observations of the learned CIT(A) it can be said that there is at least a doubtful issue involved as to whether the penalty is leviable. If it is so, when there two views are possible on any issue in the context of penalty proceedings, according to well settled law, the benefit of doubt must go in assessee's favour. For this proposition he placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 at 195. He further placed reliance on the decision of the Hon'ble Supreme Court in the case of C.A. Abraham v. ITO [1961] 41 ITR 425. 7. He contended that the penal provisions are to be strictly interpreted. According to him, the meaning of word 'loan' or 'deposit' goes in favour of the assessee because the department has not proved that a particular person has given loan to the assessee. He without prejudice to the above contention, raised another contention that Shri Patil, according to his statement placed at pages 13 to 20 of the paper book had raised the loans through various persons. Shri Patil was only an employee of the assessee drawing salary of Rs. 300 p.m. which was increased over the years to Rs. 1,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been held that if the assessee has taken cash loans to meet the business exigencies, no penalty under section 271D may be levied. 8. It is also argued that all such transactions were apparently with the agriculturists who do not have the bank accounts etc. and hence the question of invoking the provision of section 269SS does not arise. Lastly, it was submitted that purpose behind the introduction of section 269SS is elaborated in the circular issued by the CBDT. As per the said circular, section was introduced to curb the practice amongst the assessees who used to explain the cash found during search as belonging to various persons by taking confirmation from them. According to the learned counsel, the facts of the assessee's case do not match with the object for introducing of the said section 269SS. Thus, the present case does not fall within the purview of section 269SS because it cannot be inferred from any where that the purpose of section was to cover such presumptive loans also as per the deeming provision of section 132(4A). Thus, according to the learned counsel, this section does not apply to the notings found as per seized papers in this case. 9. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and binding on Tribunal and principle of res judicata is therefore, applicable as for it relate to the Tribunal. He in this regard referred to the decision of the Hon'ble Supreme Court in the case of M.M. Ipoh v. CIT [1968] 67 ITR 106. In this case the Hon'ble Supreme Court held that the assessments and the facts found are conclusive only in the year of assessment. According to the learned D.R. the facts as have been found by the Tribunal relate to the years under consideration and therefore, the principle of res judicata applies to the Tribunal in respect of proceedings under section 271D as well. 10. He further contended that the case law relied upon by the learned counsel relates to a case law for the provision regarding concealment of income. As pointed out earlier that the provisions under section 271 Dare not at par with the provisions relating to levy of penalty for concealment, therefore, the case law do not have application to the levy of penalty under section 271D. He contended that only course available with the assessee is to establish reasonable cause as provided under section 273B. He further contended that presumption as laid out in section 132(4A) is absolute f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the learned DR is on the principles of res judicata which is not relevant in the present case as the issue in the present case is regarding establishment of fact. The revenue was required to do something extra than to rely on the admission of the assessee. He further contended that the decision relied upon by the learned D.R. in the case of P.R. Metrani (HUF) and Kerala Liquor Corpn.'s case have no application to the facts of the present case as they relate to presumption under section 132(4A). He contended that in the present case, the presumption is applicable and restricted only for the purposes of block assessment and for no other purpose. He further contended that the decision of the Hon'ble Supreme Court in the case of Chuharmal relied upon by the learned D.R. is not applicable to the penalty proceedings. He therefore, contended that penalty is not leviable. For reasonable cause, he placed reliance on page 6 of his submissions made to the CIT(A). 13. We have careful consideration to the rival submissions in the light of the material placed before us. The main crux of the argument of the learned counsel of the assessee is based on the ground that despite being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is any addition called for in respect of section 68. We are not dealing with a situation enumerated as per section 68. The assessee in the present case has himself agreed that these transactions were loans, therefore, there was no obligation on the revenue to further prove by examining each and every party that those were loans. 14. Now coming to the case law relied upon by the learned counsel of the assessee, heavy reliance has been placed on the decision in the case of D. Halappa Sons. According to us, the said case has no relevance to the facts of this case. In the said case assessee agreed for levy of minimum penalty. It was found that the facts warranting levy of penalty do not exist. Therefore, it was held that no penalty is leviable despite the fact that the assessee had agreed for levy of minimum penalty. In the present case, the admission of the assessee was regarding loans obtained and not for levy of penalty thereon. So the decision of Mysore High Court in D. Halappa Sons' case has no application to the facts of the case. 15. Again, reliance has been placed on the decision of Hon'ble Supreme Court in the case of Anwar Ali. This is a case where explanation g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable to the facts of the present case as in the said case, assessee had denied any link or connection with the loose sheets in the form of sworn affidavit and the Assessing Officer did nothing to establish its connection with the assessee. In the present case it has never been denied by the assessee that the transaction recorded in the seized documents were not loan obtained by him. 19. In the case of T. Mudduveerappa Sons also, assessee had denied that it earned secret profit and that the documents seized belongs to it. So this case also is not applicable to the present case. 20. The decision in the case of Miss Rose Ben is also not applicable. The assessee in the said case had stated that she is only carrier of gold and received commission in such capacity. Under those circumstances, it was held that onus was on department to prove that assessee was owner of gold and the department having not discharged the onus, the assessee could be assessed only on her commission. The decision in the case of Amar Natvarlal Shah also has no application to the facts of the present case. The assessee had explained that the entries recorded in the loose papers was representing money ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained such admission through all the proceedings. The admission made is not retracted at any stage till date. The law relating to admission is well settled that what is admitted by a party must be presumed to be true unless contrary is shown. Reference in this regard can be made to the decision of the Hon'ble Supreme Court in the case of Nathoo Lal v. Durga Prasad AIR 1954 SC 355. However, it is open to the assessee who made the admission to show that it is incorrect and the assessee should be given proper opportunity to show that. In the present case, no such attempt has been made by the assessee that admission made by him is incorrect. In absence of any denial or explanation therefor, the admission is almost conclusive regarding the facts contained therein. Moreover, it is a case where assessee obtained a benefit by making certain representation to the taxing authority in one proceedings, he cannot be permitted to deny the truth of representation in another proceedings at a later stage because the authorities viewed his position to his disadvantage by reason of the representation. Following observations of the Bombay High Court in the case of CIT v. Army and Navy Stores Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ru John v. Returning Officer AIR 1977 SC 1724, 1726-7. The above legal position regarding admission has been taken from pages 4907 to 4909 of Chaturvedi and Pithisaria's Commentary, 5th Edition, which was relied upon by the learned counsel of the assessee. 25. Viewing from this legal position, it can well be said that in presence of admission by the assessee that the transactions in question were loans taken by him, the initial onus which was on the revenue was shifted on assessee to prove that what he had stated is not true and transactions were not loan. No such attempt has been made by the assessee. Therefore, the argument that the department must prove that transactions in question were loans taken by the assessee must fail. We also do not find any substance in the arguments of the learned counsel that presumption under section 132(4A) is not available in penalty proceedings. Here in the present appeal, it is not a question of presumption but it is a question of admission of fact by the assessee. It is always open to the revenue to refer the material found at the time of search. Here in the present appeal, there is no question of presumption. Here reference can be made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1991. Besides licence, he was a man of means. The provisions of section 269SS take into consideration 'any person'. Thus, the transactions of the assessee with Shri Vishnu Laxman Patil were the transactions with 'any person', Shri Vishnu Laxman Patil was not an exception. Therefore, the argument of the assessee that penalty is not leviable with respect to transactions relating to Shri Vishnu Laxman Patil, is not acceptable. Similarly, the argument that the amount relating to various persons is also not acceptable as in spite of repeated questions, he could not tell the names of the various persons and to specify the sums obtained from them. 28. Further coming to alternative contention of the assessee that there was a reasonable cause for accepting or taking these loans. This argument of the assessee also holds no ground. This argument has been taken on the strength that the assessee has taken these loans for giving temporary advances to agriculturists who were his clients and who needed the money for their day-to-day expenses. Reliance in this regard has been placed on the following decisions: (a) Chandra Cement Ltd.'s case. We have gone through this decision. The ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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