TMI Blog2018 (3) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). As such, the charge framed for levy of penalty get changed by treating the cash deposits in the bank account of the assessee as freight receipts and estimating income therefrom. The ld. DR has not controverted these facts. Once the bank deposits are treated as freight receipt or business receipt for estimating income of the assessee, the same cannot be considered as loans in violation of Section 269SS of the Act. Penalty levied u/s 271D is hereby deleted. - Decided in favour of assessee - I.T.A No. 91/Agra/2016 - - - Dated:- 20-3-2018 - Shri A.D. Jain, Judicial Member And Shri Dr. Mitha Lal Meena, Accountant Member Appellant by : Shri K.C. Agarwal, And Shri Ravi Agarwal, Advocates Respondent by : Shri Waseem Arshad, Sr DR ORDER Dr. Mitha Lal Meena, A.M. This appeal by the assessee is directed against the order of the ld. CIT(A) dated 16.03.2016 in the AY 2006-07, confirming the penalty u/s 271D of the Income Tax Act, 1961 (inshort, the Act ). The assessee has taken the following grounds: 1. That the Ld. Commissioner of Income tax (Appeals) erred in confirming the penalty u/s 27 ID of the Act for ₹ 170000/- without considering the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and is held to be factually incorrect because only 7.5% of 1,70,000 got taxed and not the entire sum. As a matter of fact admitted position isit impugned sums of ₹ 1,70,000/- were of the nature of loans that is why they were admitted to have been returned by account payee cheques later. In view of this admitted position the only thing left to be considered is whether there was any reasonable cause with the appellant for violating the provisions of section 269SS and to receive them, in cash. Since, till now no reasonable cause has been shown by the appellant to receive them in cash, the order of the Additional Commissioner in levying penalty of ₹ 1,70,000/- is hereby confirmed and the appeal is hereby dismissed. 4. Ld. counsel for the assessee has filed a synopsis along with case laws which is duly certified. The relevant part of the synopsis is reproduced as under: 4. The learned AO noted deposits in bank account of the assessee being S.B. A/c no. 881 of Bank of India, Deendayal Nagar, Gwalior aggregating to ₹ 2.00 lakhs and CD A/c No. 92 deposits aggregating to ₹ 25,33,153 total aggregating to ₹ 27,33,153/-. 5. These deposits in both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,68,500/- is also treated as income from undisclosed sources in case of the appellant. Thus, total addition on this account comes to ₹ 3,73,486/-. The appellant, thus gets a relief of ₹ 23,59,667/- . 9. CIT Appeal deleted the addition of ₹ 33,200/- added by the AO as additional income from Dumper Plying. Applying section 44AE of the Income tax Act. AO estimated the income of Dumpers Plying at ₹ 1,16,800/- as shown by the assessee in place of ₹ 1,05,000/- as per calculation u/s 44AE of IT Act. 10. Both assessee and department went in appeal before the ITAT. The Department went against the deletion of ₹ 33,200/- deleted by the CIT Appeal for applying assessment of income of dumpers u/s 44AE of Income tax Act and also went against the application of rate of 7.5% net income on total receipts as per bank deposits of ₹ 27,33,153/- instead of taxing whole. receipts taxed by the AO. 11. The Hon'ble ITAT vide para 8 of the ITAT order dtd. 09.08.12 held as under: - We have considered the rival submissions and the material on record. It is not in dispute that the assessee did not maintain any books of account and even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of 4 dumpers at ₹ 1,16,800.00 u/s 44AE of the Income Tax Act. 13. In view of this finding of ITAT, the nature of the receipts of the bank credits in bank account no. 881 of Bank of India is the freight receipts and not the loan received by the assessee. Since the income is already estimated u/s 44AE for 4 Dumpers, hence no addition was made. Assessee has also confirmed the receipts to be freight receipts vide para 2 of Paper Book at page no. 27 reply given to CIT Appeal which was accepted by the CIT Appeal and he also recorded the same finding in respect of bank deposit being freight receipts. Thus on account of concurrent finding of facts of CIT Appeal and ITAT In assessee case with regard to bank deposits being freight receipts, there is no basis now to held that these are loans, as discussed in the order u/s 271D and confirmed by CIT Appeal. Both these orders have been passed without actually appreciating the facts of the case and the findings recorded by the ITAT In their order. The order of CIT Appeal is against the facts and utter disregard of the order of ITAT and may kindly be cancelled and penalty levied may kindly be cancelled. 14. With regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 269SS of the Income tax Act. SimilarlyRs. 30,000/- Rs. 40,000/- have also been received by the assessee in cash from Shri Ahender and Shri Hemant on 02.06.2005 28.06.2005 respectively and returned these amounts to the above persons back on 11.06.2005 02.07.2005 through cheque No. 62863 62868 respectively in contravention of provisions of section 269SS of the Income Tax Act. Since the assessee has contravened the provisions of section 269SS of the Income Tax Act, therefore, penalty proceedings u/s. 271D are initiated. 6. Further, referring para 5.1 of the CIT(A) s order submitted that just because mischievously or erroneously the amount got treated by the CIT(A) as freight receipts admitted position that they were loans as such cannot be ignored. 7. We have heard both the parties and perused the material on records.The AO observed that theassessee has received in cash ₹ 1.00 lakh, ₹ 30,000/- and ₹ 40,000/- from Halke Singh, Shri Ahender and Shri Hemant on 03.06.2005, 02.06.2005 and 28.06.205 respectively in SB Account No. 881in contravention to the provisions of Section 269SS of the Act and initiated penalty u/s 271D of the Act for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to show that on different dates ₹ 1,68,500/- have been received from Shri Arvind Sikarwar and that same amount also represents freight receipt and therefore, no separate addition of ₹ 1,68,500/- should be made against the assessee. From the bank account at page 6 of the assessment order, it is seen that the assessee has received cash from the five persons in SB Account No.881 and CD92 and as per CIT(A) order an amount of ₹ 1,68,500/- was deposited in A/c No. CD 92 as received in cash from Shri Arvind Sikarwar. Therefore, we find there is factual errorin the order of the lower authorities which the ld. DR could not reconcile with the support of relevant material evidence at the time of hearing. Merely stating that just because mischievously or erroneously the amount got treated by the CIT(A) as freight receipts admitted position that they were loans as such cannot be ignored is not sufficient to prove the charge of receipt of loans in cash, in contravention of provisions of Section 269SS of the Act. 11. It is evident from the above that the freight receipt from dumpers as deposited in bank account SB No. 881 and CD 92 by the assessee were treated as busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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