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Global Realty Heritage Venture Cochin Pvt. Ltd., Shree Kaila Devi Real Estate Ltd, Gagan Buildwell Pvt Ltd, Fortune Developers International Pvt Ltd Versus Addl. CIT, Range-3, New Delhi

2015 (11) TMI 1121 - ITAT DELHI

Penalty u/s 271D and 271E - Held that:- Nothing has been brought on record by the Revenue to show that the assessee as a result of his business and interactions with the department in the earlier years had been made aware that accepting and repaying in cash to sister concerns in order to tide over financial emergencies were in violation of the provision of the Act. In the absence of any such evidence the plea of bonafide belief in the peculiar circumstances cannot be discarded. It is seen that t .....

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roup company has been searched accordingly since nothing has been brought on record to canvass that reasonable cause is not constituted appeals of the assessee have to be allowed.

Decision rendered in Bhalotia Engineering Works (2004 (8) TMI 66 - JHARKHAND High Court ) is entirely distinguishable on facts the impugned orders are set aside and the penalties imposed in each of these appeal is quashed. - Decided in favour of assessee. - ITA No. 856/Del/2014, ITA No. 857/Del/2014, ITA No .....

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e is that penalty imposed u/s 271D of the Act by the AO on facts has wrongly been confirmed in appeal by the CIT(A). In ITA No.855/Del/2014 the prayer is that penalty wrongly imposed u/s 271E by the AO upheld by the CIT(A) in appeal may be quashed. 2. In the said background referring to the facts as found recorded in ITA No.856/Del/2014 and referring to the legal position therein it was canvassed that the penalty order may be quashed. 3. The Ld.Sr.DR relying upon the impugned orders stated that .....

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on'ble Jharkhand High Court is fully applicable. 4. Accordingly in view of the above stated stand of the parties, it is considered appropriate to first bring out the facts and the arguments thereon briefly in each of these appeals:- ITA No.856/Del/2014 5. The assessee in ITA No.856/Del/2014 assails the correctness of the order dated 19.12.2013 of CIT(A)-XXXI, New Delhi pertaining to 2006-07 assessment year wherein the penalty imposed by the Assessing Officer u/s 271D of the Income tax Act, 1 .....

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and it was accepted by the AO vide his order dated 29.11.2010. However, the AO held that the assessee had accepted ₹ 50,000/- in cash as share application from M/s Gagan Buildwell Private Limited in violation of section 269SS. Accordingly penalty u/s 271D was imposed relying upon the decision of the Hon'ble Jharkhand High Court in the case of Bhalotia Engineering Works (P.) Ltd. vs CIT (2005) 275 ITR 399. The explanation offered by the assessee in the penalty proceedings was not accept .....

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d that the genuineness and the bonafide of the assessee stand explained and addressed. Thus the penalty it was submitted has wrongly been invoked by the AO and confirmed by the CIT(A). Reliance was placed on the following decisions:- 1. ITO vs M/s Avadh Rubber Ltd. [ITA no.-1853/Kol/2008] Order dated 28.05.2010 (ITAT, Kolkata Bench); 2. CIT vs I.P.India Ltd. 343 ITR 353 (Delhi High Court); 3. CIT vs Samora Hotels (P.) Ltd. [ITA No.313/2006] order dated 23.02.2012 (Delhi High Court); 4. ITO vs M/ .....

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2008) (Mad.); 9. CIT vs Speedways Rubber (P.) Ltd. 326 ITR 31 (Punjab & Haryana High Court); 10. CIT vs Kardah Lexoplast (P.) Ltd. [ITA No.-184/99] (Allahabad High Court) 6.1. Accordingly relying upon the aforesaid decisions it was submitted that if for a moment it is considered that there is a decision of the Hon'ble Jurisdictional High Court in the case of Bhalotia Engineers Works (P.) Ltd. (cited supra) than considering the plethora of decisions cited before the AO and the CIT(A) ther .....

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ed as being the decision of the Jurisdictional High Court it was binding on the tax authorities. The CIT(A) it was submitted by not following the said decision had committed a judicial improprietary. In support of the said submission reliance was placed on the case Agarwal Warehousing Leasing Ltd. vs CIT (2002) 124 Taxman 440 (M.P). It was further submitted that the Ld. Commissioner has committed judicial indiscipline in terms of the decision of the Apex Court in the case of Union of India vs Ka .....

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received in cash from a sister concern and was proposed to be adjusted as share application. The money it was submitted was utilized for making payment of stamp duty and court fee and had to be deposited in cash. On account of these peculiar facts and circumstances and the business compulsions of the Company the amount was necessarily accepted from the sister concern in cash. It was submitted that due to the business compulsions the amount was received in cash under a bonafide belief that avail .....

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the claim of the assessee as a bonafide claim and while holding the default to be technical in nature decided the issue in favour of the assessee. The view so taken it was submitted was despite the availability of the decision of the Hon'ble Jharkhand High Court in Bhalotia Engineering Works Ltd. (cited supra) and was cited before the Hon'ble High Court by the Revenue. For similar reasons, the decisions of the Madras High Court in the case of Rugmini Ram Ragav Spinners P.Ltd. [2008] 304 .....

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be quashed. 6.4. It was further submitted that on facts the decision of the Hon'ble Jharkhand High Court in Bhalotia Engineering Works Ltd. (cited supra) was distinguishable. ITA No.785/Del/2014 7. In ITA No.785/Del/2014 the assessee assails the correctness of the order dated 19.12.2013 of CIT(A)-XXXI, New Delhi pertaining to 2005-06 assessment year again wherein as a result of the same search proceedings u/s 132 in the Rajdarbar Group of companies, the assessee was required to file a return .....

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ard to the commercial expediency. Herein also it was submitted that there was a deadline for registering and execution of sale deed for a land at village Jhatedi, Sonepat. The agreement to purchase the land had been entered into with agriculturists and since the deadline was approaching finances in cash were required in order to meet the costs of stamp duty etc. It was submitted that ultimately herein also the amount was repaid by cheque on 31.03.2007. ITA No.-786/Del/2014 8. In ITA No.786/Del/2 .....

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s, penalty u/s 271D was imposed and upheld in appeal. Herein also it was submitted no addition on the said amount has been made by the AO. The amount has been accepted as a genuine receipt from the sister concern. Inviting attention to para 3 of the impugned order, it was submitted by the Ld. AR that the urgent need of cash arose to meet the various expenses and when it was noticed that the assessee did not have sufficient funds to meet the routine necessary expenses. Herein also the assessee wa .....

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itted can be termed as a technical breach not justifying penalty as per settled legal opinions cited. ITA No.857/Del/2014 9. In ITA No.857/Del/2014, the assessee assails the order dated 19.12.2013 of CIT(A)-XXXI, New Delhi pertaining to 2007-08 assessment year wherein also it was pleaded that the AO has accepted the transaction as genuine as no addition u/s 68 has been made. This fact it was submitted is found recorded at page 2 of the impugned order. The receipt of ₹ 4 lacs cash as share .....

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d stamp duty etc. Herein also originally the intention was to adjust the receipt in cash by way of share application however, the amount as per record it was submitted was returned by cheque on 16.06.2010. Accordingly it was his submission the penalty has wrongly been imposed and upheld. ITA No.-855/Del/2014 10. In ITA No.-855/Del/2014, the assessee assails the correctness of the order dated 19.12.2013 of CIT(A)-XXXI, New Delhi pertaining to 2009-10 assessment year wherein the penalty imposed by .....

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estate development observed that in the year under consideration no business activity had taken place and the assessee had only received interest income of ₹ 56,094/- on FDR. Thus the income returned under the head of "income from business" was considered under the head income from "other sources". He also took note of the fact that the assessee had repaid the amount of ₹ 3 lacs in cash to M/s V.K.Fiscal Services Pvt.Ltd. in violation of the limit prescribed u/s 2 .....

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ayment to a sister concern did not constitute a violation. 12. Thus having addressed the facts of the case in the context of the stand of the parties thereon where the Ld. Sr. DR has heavily relied upon the decision of the Hon'ble Jharkhand High Court in Bhalotia Engineering Works Ltd. (cited supra) and the Ld.AR has relied upon I.P. India Ltd. amongst others of the Jurisdictional High Court (cited supra); CIT vs Raugmini Ram Raghav Spinners (P.) Ltd. (cited supra) and CIT vs Speedways Rubbe .....

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ducts Ltd. (cited supra), I am of the view that the penalty imposed in each of these cases deserves to be quashed. Nothing has been brought on record by the Revenue to show that the assessee as a result of his business and interactions with the department in the earlier years had been made aware that accepting and repaying in cash to sister concerns in order to tide over financial emergencies were in violation of the provision of the Act. In the absence of any such evidence the plea of bonafide .....

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