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2016 (4) TMI 1085 - KERALA HIGH COURT

2016 (4) TMI 1085 - KERALA HIGH COURT - TMI - Penalty u/s 271D - Held that:- The fact that ₹ 15,00,000/- was received from Sri.K.C.Basheer on behalf of the assessee is undisputed, although the receipt of the amount or its utilisation are not reflected in the books of accounts of the assessee. Initially in his letter dated 13.12.2010, Sri.K.C.Basheer himself had confirmed that the payment was by way of a loan. It was on that basis the assessee was issued notice dated 24.02.2011. In his repl .....

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ave been given by the Tribunal.

Such being the case, we are clearly of the view that the transaction was correctly taken as a loan and if so the provisions of Section 269SS and Section 271D are attracted to the case. - Decided against assessee. - I.T.A. No.121 of 2014 - Dated:- 12-8-2015 - ANTONY DOMINIC & SHAJI P. CHALY, JJ. For the Petitioner : Advs.Sri.T.M.Sreedharan (SR.), Sri.M.B.Prajith, Sri.V.P.Narayanan, Smt.Divya Ravindran For the Respondent : Adv. Sri.P.K.R.Menon,SR.Coun .....

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ng penalty on the assessee under Section 271D of the Income Tax Act was set aside and the penalty levied was restored. 2. We heard the learned Senior Counsel for the appellant and the learned Senior Standing Counsel for the Revenue. 3. Brief facts of the case are that the assessee is a non-resident Indian. Based on letter dated 13.12.2010 from one K.C.Basheer to the Assistant Commissioner of Income Tax, Calicut where Sri.Basheer confirmed that he had paid a sum of ₹ 15,00,000/- to the asse .....

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V.R. Group), Kannur on behalf of my brother Mr.K.C.Usman who is an Non Resident Indian doing business at Dubai. The said sum of ₹ 15 lacs was given in cash on 21-01-08 after withdrawing from my Savings Bank A/c No.6414 maintained with Indian Overseas Bank, Kadirur. A copy of my bank statement for the relevant period is enclosed. The amounts to my account was transferred from by brother's NRE A/c also maintained at IOB, Kadirur. I am assessed to Income Tax at Ward 2, Kannur and my PN is .....

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s to why penalty under Section 271D shall not be levied. 5. On receipt of this notice, the assessee submitted his reply dated 04.03.2011. In this letter, he denied of having taken or accepted any loan or deposit from any person relating to assessment year 2008-2009 and according to him, ₹ 15,00,000/- received from Sri.K.C. Basheer was only an advance received in connection with the sale of a property. He also stated that he is not denying that one Mr.Sreedharan Nair had received ₹ 15 .....

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and that the advance was given in accordance with the direction of his brother K.C.Usman. 6. On the basis of the above, Annexure-C order dated 29.06.2011 was passed by the Joint Commissioner of Income Tax in which it was found that the assessee had contravened the provisions of Section 269SS and on that basis penalty was levied under Section 271D. The assessee challenged this order before the Commissioner of Income Tax (Appeals) who set aside the order and allowed the appeal by Annexure-D order .....

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essee did not accept any loan or deposit in order to attract the penal provisions of Section 271D. According to the counsel, even the vague statement that it was a loan contained in the letter dated 13.12.2010 given by Sri.K.C. Basheer was clarified by him in his letter dated 04.03.2011 submitted by the assessee along with his reply to the notice dated 24.02.2011. Counsel clarified that this was an advance paid to the assessee by Sri.K.C.Basheer on behalf of his brother Usman pursuant to an agre .....

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that was sought to be modified as a case of payment of advance for sale of the property. It was pointed out that the facts of the case show that the theory of payment of advance was not substantiated in any manner and that therefore, the original version that it was a loan stood established. In such a case, counsel contended, Section 269SS and Section 271D are attracted. 9. We have considered the submissions made. The fact that ₹ 15,00,000/- was received from Sri.K.C.Basheer on behalf of .....

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towards advance for the property that was intended to be sold. It was along with that reply that he enclosed a clarification from Sri.K.C. Basheer to the effect that the amount paid was towards advance as contended by the assessee. The story that payment made was towards the advance was disbelieved by the Tribunal and the reasons thereof have been given by the Tribunal in paragraph 8 of its order which reads thus: "8. We have heard the rival contentions and carefully perused the record. In .....

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is not explained as to how a third person could enter into such an agreement, that too for sale of a property. The reason why the four children or at least the two persons who are residing in Kathirur Village, Tellicherry Taluk, did not sign the said agreement is also not explained. (b) The property, that was proposed to be sold is described as under in the agreement:- "0.20 cents of land with old building No.IV/308 and well in Old survey 4/3 and resurvey 577W1b11 Korambath South Amsam Par .....

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d of six months from the date of the agreement, viz, 21.1.2008 was not given. (d) No further materials in the form of confirmation letters from the buyer or the children of the assessee were furnished to substantiate the explanations. (e) The reason for the delay of about two years in returning the advance amount of ₹ 15.00 lakhs was not explained. (f) The agent of the buyer Shri.K.C.Basheer gave a letter dt.13.12.2010 before the AO, wherein the transaction was mentioned as Loan transactio .....

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