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2016 (8) TMI 609 - GUJARAT HIGH COURT

2016 (8) TMI 609 - GUJARAT HIGH COURT - TMI - Penalty under section 271D - violation of the provisions of section 269SS or not - treating the deposit/loan of ₹ 40,00,000/- as capital contribution of the member of AOP, for the AOP - Held that:- We have perused the orders of the Commissioner (Appeals) as well as the Tribunal. In this case the transaction was found to be genuine. The Assessing Officer has not doubted the transaction. In that view of the matter, both the Commissioner (Appeals) .....

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NSEL for the Appellant JUDGMENT ( Per : Honourable Mr. Justice KS Jhaveri ) By way of this appeal under section 260A of the Income-tax Act, 1961, the appellant-revenue has challenged the order of the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal ) whereby the Tribunal has dismissed the appeal of the revenue by confirming the order of the Commissioner of Income-tax (Appeals). 2. While admitting the appeal, this court framed the following substantial questions of law: (A) .....

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me for assessment year 1994-95 on 9.3.1998 declaring total income at Rs. Nil. The Assessing Officer passed order under section 143(3) r.w.s. 147 of the Income-tax Act on 20.3.1998. While completing the assessment, the Assessing Officer has noticed that the assessee, an AOP, borrowed loan of ₹ 40,00,000/- from Smt. Shantaben A. Patel, main promoter of the AOP, in cash for expeditious acquisition of land, in violation of section 269SS of the I.T. Act. Therefore, penalty of ₹ 40,00,000/ .....

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IT imposing the penalty. There is no doubt about the fact that Smt. Shantaben was the main promoter of the AOP along with her husband and the sum of ₹ 40.00 lacs was their contribution for acquisition of the land at Valsad for the business purposes of the AOP. Smt. Shantaben had borrowed the funds from Pari Laxminarayan Tulsidas, HUF and South Indian Bank Ltd., through, account payee cheques. These two credits have not been doubted by the Assessing Officer and the Addl. CIT and no addition .....

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efore, provision of section 269SS are not applicable to such facts. In this case there is deposit from a member of AP in the account of AOP, therefore, this case is squarely covered by the decision of I.T.A.T. Ahmedabad. Following the decision of the I.T.A.T., it cannot be held that the member had given any deposit to the AOP so as to attract provisions of sec. 269SS. 8. It is a fact on record that the Govt. of Gujarat acquired the land for the purposes of Government from the five farmers. The f .....

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e of land for its business. The appellant has filed before me a letter from a Bank which suggests that clearing of draft from one station to another station takes about 3 days. It was a case, of ₹ 40 lacs, therefore, the clearing Bank would have tried to seek confirmation from the draft isuing bank and such process would have taken more time. From the facts brought on record, I find that the appellant was in a hurry to make the payment to the farmers in order to acquire the property and it .....

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ion in question has not been disputed at any stage of the proceedings, there is no material whatsoever on the records giving any inkling of the transaction being of the dubious nature. The urgency about the business necessity or the commercial exigencies are solely within the domain of the trade s own decision. Ordinarily a plea as to ignorance of law cannot support the breach of a statutory provision. But then an innocent mistake due to ignorance of the relevant provisions of law, coupled with .....

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e Tribunal dismissed the appeal vide order dated 12.10.2007 by observing in paragraph Nos. 3 and 4 of its order as under: 3. Learned DR supported order of AO. Learned counsel for the assessee reiterated the facts and contends that genuineness of the transaction has not been doubted. It has not been disputed in material terms by AO that but for the cash loan; assessee would not have been in a position to purchase the land from farmers, which was essentially for the AOP and its members. Facts abou .....

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TD 478 iii) Chamundi Granites P. Ltd. Vs. DCIT, 112 Taxman 417 iv) Jay Builders Vs. ACIT. Case Digest 211. For the proposition that when reasonable cause is established penalty under section 271B cannot be imposed. 4. We have heard rival contentions and perused material available on record. Facts have been narrated above. Genuineness of the transaction has not been disputed by the lower authorities, so also importance and urgency of raising cash loan, its payment to farmers for acquiring regrant .....

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