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2015 (6) TMI 396 - ITAT JAIPUR

2015 (6) TMI 396 - ITAT JAIPUR - TMI - Penalty U/s 271D and 271E - period of limitation - violation of conditions of conditions of section 269SS - Cash receipts - Held that:- For imposition penalty U/s 271D and 271E is covered U/s 275(1)(c) of the Act. As per Section 275(1)(c) of the Act, this order was to pass after the expiry of financial year, in which the proceeding, in the course of which action for imposition of penalty has been initiated, or completed, or within six months from the end of .....

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as there was no loan or deposit envisaged U/s 269SS as these are the business transactions. The ld CIT(A) wrongly held on the basis of quantum appeal decided by the CIT(A) as well as the ITAT that these are the loan and deposit in cash as covered by Section 269SS of the Act. - Decided in favour of assessee. - ITA No. 876 & 877/JP/2013,ITA No. 904 & 905/JP/2013 - Dated:- 15-5-2015 - Shri R.P. Tolani and Shri T.R. Meena,JJ. For the Petitioner: Shri K.L. Moolchandani (Adv) & Shri R.K. Khunteta .....

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he latest judgment of Hon ble Rajasthan High Court in the case of Shri Jitendra Singh Rathore without appreciating the facts of the case in right perspective, particularly when the same view was taken by the Hon ble High Court earlier also and was followed respectfully by the Hon ble ITAT, Jaipur Bench, Jaipur. Such view has been accepted by the Department also as no Reference or SLP has been filed against such view of the Judicial Authorities. Thus, it is virtually a covered point . Not followi .....

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ed and confirmed by the Authorities Below deserves to be deleted. Grounds of Assessee s appeal ITA No. 877/JP/2013 1 On the facts and in the circumstances, the ld. CIT(A) has factually and legally erred in ignoring the fact that the penalty proceedings got time barred in view of the latest judgment of Hon ble Rajasthan High Court in the case of Shri Jitendra Singh Rathore without appreciating the facts of the case in right perspective, particularly when the same view was taken by the Hon ble Hig .....

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ase the learned CIT(Appeals) has factually and legally erred in upholding the penalty U/s 271E of the Act to the extent of ₹ 99,50,000/- out of ₹ 1,77,00,000/- as levied by the A.O. without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed by the Authorities Below deserves to be deleted. Grounds of Revenue s appeal ITA No. 904/JP/2013 1 On the facts and in the circumstances of the case, the ld. CIT(A), Central, Jaipur has erred in deleting .....

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held earlier in the order for confirming certain amount, that share application money is deposit within the meaning of section 269SS whereas this logic was not followed for the amount of ₹ 37,45,000/- shown as share application money in the balance sheet. Grounds of Revenue s appeal ITA No. 905/JP/2013 1 On the facts and in the circumstances of the case, the ld. CIT(A), Central, Jaipur has erred in restricting the penalty U/s 271E of the IT Act to ₹ 99,50,000/- out of ₹ 1,77,00 .....

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and ₹ 99,50,000/- respectively. The revenue was against the appeal on deleting of penalty under these Sections at ₹ 1,92,09,712/- and ₹ 77,50,000/- respectively. The assessee is a company and the assessee has Income from property business, development of township. Search and seizure operation was carried out U/s 132(1) of the Act on 16/11/2007 at the business premises of assessee. During the course of search and seizure operation, documents/loose papers were found and seized. .....

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ave been shown as work in progress. No sales were made during the year. During the year under consideration, the assessee had shown the following figures appearing under various heads on the liabilities side of the balance sheet as on 31/03/2008. i) Paid up share capital ₹ 1,00,000/- ii) Share Application money ₹ 37,45,000/- pending allotment iii) Unsecured loans ₹ 12,63,58,964/- iv) Current liabilities ₹ 70,38,288/- The Assessing Officer further observed that share appli .....

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ll particulars of these parties, their PAN and sources of funds advanced to the assessee out of the total parties. One of the Director of the company namely Sh. Shankar Lal Khandelwal had been making purchase and sale considerations of properties and also operating bank accounts in the names of some parties in which unaccounted cash/cheque were deposited and withdrawal and unitize for making investment in properties or given money and then name to the assessee company concerns in the garb of sha .....

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nkar Lal Khandelwal. Further they had connection with the bank accounts opened in their names and deposits and withdrawal made from these bank accounts or any deposit or withdrawals made in their names in Shankar Khandelwal s concerns. It has been held by the Assessing Officer that the assessee company was in possession of unaccounted funds which was utilized in its unaccounted parallel property business. The assessee had failed to prove the genuineness of transaction and creditworthiness of the .....

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e ld Assessing Officer as per chart given on page No. 8 of the assessment order also made disallowance U/s 40A(3) by giving the detailed observations on pages 8 to 11 at ₹ 5,13,95,252/-. The ld Assessing Officer also initiated penalty proceedings U/s 269SS and 269T of the Act. As per Section 271D and 271E of the Act, these penalties can be imposed by the Joint Commissioner of Income Tax (JCIT), therefore, the ld Assessing Officer made reference to the JCIT, Central Range, Jaipur vide lette .....

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cheque and accordingly penalty notice U/s 274 read with Section 271D dated 30/12/2009 was issued to the assessee by the Assessing Officer by which the assessee was asked to explain as to why penalty proceedings U/s 271D of the Act for accepting advances/loans/deposits exceeding ₹ 20,000/- in cash should not be initiated against it. 2.1 Similarly, the Assessing Officer also referred vide its letter dated 23/2/2012 penalty U/s 271E to the JCIT, which was initiated during the assessment proc .....

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in as to why proceeding U/s 271E of the Act for repaying advances/loans/deposits exceeding ₹ 20,000/- in cash should not be initiated in the case of assessee. The ld JCIT reproduced the amount received and paid more than ₹ 20,000/- in penalty orders. The ld JCIT before imposing penalty under both the sections gave reasonable opportunity of being heard vide letter No. 1181 dated 23/2/2012. The A.R. of the assessee filed reply on 02/3/2012 before the JCIT, which has been reproduced in .....

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be befitting to being this fact on record and adjourn the proceedings to the first or second week of April, 2012. The ld JCIT held that AR of the assessee appeared on 26th March, 2012 but there was no such commitment of taking the proceedings in April, 2012. Had it been so, the notice would not have mentioned time barring dated as 31/3/2012 and the hearings would not have been so frequently conducted. Also, the AR did not even bother to quote the relevant provisions according to which the case .....

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this point, it is imperative to quote proviso to section 275(1)(a) which talks of bar of limitation for imposing penalty- provided that in a case were the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeal) U/s 246 or u/s 246A and the Commissioner (Appeals) passes the order on or after the first day of June 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings in th .....

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c., 2009 and end of the relevant Financial Year then is 31.03.2010. So as per the above section time barring date in this case is 31/03/2012 because it is one year from the end of the financial year in which the order of the CIT was received so there was no confusion on time barring date. Had the AR been so confident of the time barring date to be beyond 31/3/2012, he should have quoted the relevant provisions of the Act and also the date. This not being the case it was AR s futile attempt to pr .....

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ning of Sec. 269SS of the Act, it is stated that this argument of the assessee is factually incorrect. The A.O. has very categorically stated in the note to the assessment order that The assessee had received loans and advances during the year otherwise than by account payees which attract the provisions of Section 269SSAnnexure- I of such receipts is attached and subsequently penalty notice u/s 275D read with Sec. 271-272 for violation of provision of Sec. 269SS was also issued on 30/12/2009 by .....

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68 of the receipts has no bearing on the violation of the provisions of Sec. 269SS. Even if the addition was made by the A.O. u/s 68 after treating the receipts as unexplained cash credit, but still the transaction was done in cash such that the provisions of Sec. 269SS were violated (this issue will be elaborately discussed in the subsequent paras). Although the additions made by the A.O. u/s 68 were knocked out by the appellate authorities but that does not mean the money was not received from .....

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tly applicable to the instant case. They have been considered and the issue needs to be understood in the right perspective. The assessee is engaged in the business of purchase and sale of plot(s) of land. During the concerned year, the assessee company has received certain sums of money more than ₹ 20,000/- otherwise than by A/c payee cheque/draft. The assessee states that they were advances in lieu of sale of plots of land. The assessee is a trader of plots of land and so the advance rec .....

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of Section 271E of the Act. He reproduced the assessee s reply dated 30/3/2012 on page 5 to 7 of the penalty order. He examined the legal position of advances and object of introduction of Section 269SS of the Act. He further held that the object of Section 269T is not to tax any income. It is not a charging section, its object, on the other hand, is to counteract evasion of tax in certain cases. The said section only provides a mode of repayment of certain deposits either by bank draft or accou .....

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one Shankarlal on 07/11/2007 against the return of share application money. He further held that this calls for raising a very valid issue as to why the assessee made repayment of such huge amount of money in cash when assessee is a company and the transactions would have been made through account payee cheques/drafts. It is not understandable as to what prevented the assessee to avoid the banking channel. Even if share application money cannot be considered to be a loan within the meaning of Se .....

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halotia Engineering Works Pvt. Ltd. Vs. CIT 275 ITR 399 on repayment of loan in cash. Finally he imposed penalty U/s 271E at ₹ 1,77,00,000/-, which is equivalent to repayment of deposit amount. 3. The assessee challenged the penalty before the ld. CIT(A), who had allowed the penalty partly. The ld CIT(A) had considered the Hon ble Jurisdictional High Court decision in the case of CIT Vs. Jitendra Singh Rathore (2013) 257 CTR (Raj) 18 after receiving the remand report from the JCIT on limit .....

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DCIT (supra) even though the order was passed on 30/11/2005 i.e. after the date on which the Special Bench had passed its order in favour of the department on the same facts. He also not agreed with the submissions of the assessee that Special Bench s findings in case of Dewan Chand Amrit Lal Vs. DCIT (supra) was on different facts. The ld JCIT held that Special Bench s decision in the case of Dewan Chand Amrit Lal Vs. DCIT (supra) is squarely applicable on the case of assessee and two aspects .....

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not empowered to issue notice and impose penalty under both the Sections. The Hon ble Karnataka High Court in the case of Shanbhag Restaurant Vs. Deputy CIT (2004) 266 ITR 393 has held that the period of six months has got to be computed from the date of issue of notice by the DCIT/JCIT, therefore, limitation cannot be computed from the date of issue of notice by the Assessing Officer. The department has filed revision petition in case of Jitendra Singh Rathore passed by the Hon'ble Rajastha .....

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d on 30/3/2012, which was well within time. The ld CIT(A) also gave the finding on merit on page Nos. 11 to 17 and held that the ld CIT(A) s finding in quantum addition was not specific, therefore, it has not been accepted by him and he also held that the Hon ble ITAT had also not adjudicated the order of the ld CIT(A) in quantum appeal that deposits were advanced for land and confirmed the order of the CIT(A) for addition of ₹ 4,95,82,259/-. The ld CIT(A) had quantified the deposits not a .....

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Jaipur Vs. DIT ITA No. 953/JP/2011 dated 02/2/2012. She further verified the share application money as claimed by the assessee with evidence, which were not supported with proper evidence and quantified at ₹ 3,09,93,500/- as no evidence was filed before the ld CIT(A) to verify these deposits were for share allotment. She further held that moreover as per balance sheet for the year under consideration, the various share capital was only ₹ 1 crore so the company was not authorized to .....

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AR were not supported by the audited accounts of the appellant brought on record. She further clarified that in the balance sheet of A.Y. 2009-10, this amount of ₹ 3,98,38,500/- was not reflected as the share application money and for amount of ₹ 3,09,93,500/- shares were not allotted even after lapse of four years as per the admission of the appellant himself. Accordingly, she held that cash deposited at ₹ 3,60,93,500/- were not for share application money. She further relied .....

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e appellant too had not reflected the amount of ₹ 3,98,38,500/- in its balance sheet for this year and subsequent assessment as share application money. The authorized share capital for this year was ₹ 1 crores so it could not possible for payment of amount of ₹ 3,98,38,500/- as share application money. In subsequent three years also, the share application money had consistently been shown at ₹ 37,45,500/- while in this assessment order, the unsecured loans had been shown .....

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ssessee also relied on same case narrated for penalty U/s 271D of the Act. The ld CIT(A) gave the same finding as given for 271D penalty that is notice dated 10/3/2009 was nonest. Show cause notice by the ld JCIT on 24/2/2012 and penalty order was passed on 30/03/2012, which was well within time. 3.2 He further considered the case on merit and verified the cash deposits were advanced for land. He held in para 15 that there is no evidence for ₹ 81,35,272/- that these cash deposits were rece .....

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liable to impose penalty U/s 271E of the Act. The assessee s claim that ₹ 3,98,38,500/- were received in cash for issue of shares, out of this the assessee returned back ₹ 86 lacs in cash. Similar findings as given in penalty order U/s 271D on cash receipt against the share capital has been given that there is no evidence with assessee that except ₹ 37,45,000/-, remaining ₹ 3,60,93,500/- was not for share application, it authorized share capital was ₹ 1 crores only. .....

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under these Sections after 2 years when the proceeding completed in December, 2009. The second appeal also had decided by the ITAT against these additions in quantum appeal wherein no findings have been given by the ld CIT(A) as well as Hon ble ITAT that these transactions were loans and deposits within the meaning of Section 269SS/269T of the Act. The ld Assessing Officer has also made addition U/s 68 of the Act as unexplained credit. The penalty proceeding had become time barred within the mea .....

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U/s 271D and 271E is covered by Section 275(1)(c) of the Act for limitation purpose. He particularly drew our attention that Hon ble ITAT Mumbai had considered the Hon'ble Rajasthan High Court s decision in the case of CIT Vs. Hissaria Brothers, CIT Vs. Jitendra Singh Rathore (supra) and ACIT Vs. Dipak Kantilal Takvani (2013) 39 Taxmann.com 53 (Rajkot Trib) (TM( wherein it has been held that penalty U/s 271D and 271E is covered U/s 275(1)(c) as per this Section, six months is allowed to comp .....

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f the Act. As per this Section, the limitation starts from after the expiry of financial year, in which the proceedings in the course of which action for imposition of penalty has been initiated, or completed within one year from the end of the financial year, in which the order of Commissioner received by the Principal Chief Commissioner, whichever period expired later. The ld JCIT has initiated penalty proceeding on 24/2/2012 by issuing show cause notice under these Sections to the assessee. T .....

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e Sections (PB page No. 118). After a long period, he referred the penalty proceeding to the JCIT vide letter dated 23/2/2012. Thereafter, ld JCIT had given show cause notice on 24/2/2012. This issue has been challenged by the AR of the assessee before the ld JCIT as well as before the ld CIT(A) but they held that these penalties are covered under the proviso to Section 275(1)(a) of the Act. Therefore, it is not barred by limitation but this issue has been dealt by the Hon ble jurisdictional Hig .....

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er was to pass after the expiry of financial year, in which the proceeding, in the course of which action for imposition of penalty has been initiated, or completed, or within six months from the end of the month, in which action for imposition of penalty is initiated, whichever period expire later. The Assessing Officer initiated the penalty proceeding under both the Sections on 30/12/2009. As per this section, it had to complete by 30th September, 2010 whereas actual penalty orders were passed .....

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t these are business transactions and not covered U/s 269SS, which can be verified from the order of the ld CIT(A) as well as order of the Hon ble ITAT. The Hon ble ITAT had deleted the additions made by the Assessing Officer U/s 68 of the Act as well as U/s 40A(3) of the Act and also held that these were business transactions. 9. The ld DR relied upon the order of the Assessing Officer and argued that no where these aspects has been considered by the ld CIT(A) as well as the Hon ble ITAT in qua .....

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d from the order of the ld CIT(A) in quantum which has been reproduced by the Coordinate Bench on page No. 17 for ₹ 6,87,500/- and mentioned amount was paid for booking of plots by Shri Anil Dhandia, ₹ 15,000/- by M.S. Chaudhary paid as share capital. ₹ 54 lacs were received from Shri Rampal Yadav and Shri Surja Ram for which the assessee has filed affidavit which has been reproduced by the CIT(A) in his order on page 20 where the assessee s reply has reproduced and purpose of .....

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project (240 bigha approx) in village Chakbad. The total amount of ₹ 11 crores were paid up to the date of search. The assessee had shown in balance sheet, share application money pending for allotment at ₹ 37,45,000/-, which is for business purpose. However, unsecured loan at ₹ 12,63,58,946/- had been shown but these were not loan envisaged U/s 269SS/269T of the Act as the Hon'ble Supreme Court has held in the case of Kedarnath Jute Mfg. Co. Ltd. Vs. CIT (Central), Calcutt .....

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