TMI Blog2022 (3) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... omers, on the basis of one of the entry having CHQ mentioned against it matching with a bank entry the same day. Treating this entry to be representative of the rest of the entries, the Revenue held that the entries related to business receipts in lacs and in the absence of CHQ mentioned against the entry it was presumed to be receipts in cash. Though it does create a preponderance of probability of the entries being of the same color as the CHQ entry and which may be sufficient for making addition in quantum proceedings, but the same is not sufficient to strictly establish the violation of section 269SS of the Act, of the assessee having received amounts in cash exceeding ₹ 20,000/- from a person on account of sale of flats, so as to attract levy of penalty u/s 271D of the Act. Revenue having not clearly established the violation of provisions of section 269SS of the Act by the assessee ,its entire case resting on interpretation of entry in a diary found during search,it is not a fit case for levy of penalty u/s 271D - Decided in favour of assessee. - ITA No. 1072/Ahd/2019 - - - Dated:- 28-2-2022 - Shri Mahavir Prasad, Judicial Member And Ms. Annapurna Gupta, Accounta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax, Central Range, Vadodara on the plea that since the assessee had received receipt from members amounting to ₹ 26,50,000/- in cash, it had violated provision of Section 269SS of the Act as acceptance of specified sum in cash amounting to ₹ 20,000/- or more after 01/06/2015 was prohibited. 4. The assessee objected to the levy of penalty as under: a)denied having received any amount in cash at all, contending that the notings related to petty expenses b) alternately stated that the notings in the diary had no reference about unit number and name of member therefore there was no basis for holding that receipts from a single person exceeded 20,000/- ,the upper limit specified u/s 269SS of the Act for receiving such payments in cash c) that the onus was on the department to categorically prove violation of the provision by the assessee for levying penalty. 5. The AO rejected all the contentions of the assessee and held that it was a fit case for levy of penalty u/s 271D of the Act. Further the AO held that as the amended provisions of section 269SS came into force w.e.f. 01/06/2015, including any sum received on transfer of immoveable property, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269SS only after 01.06.2015. In case of the assessee the amount of cash received from the members starting from 01.06.2015 comes to ₹ 16,00,000/-. 7. In view of the above, it is clear that the assessee has received unaccounted receipt amounting to ₹ 16,00,000-- in cash and this is a fit case for imposing penalty u/s 271D of the IT Act since there is violation section 269SS of the IT Act, which is proven beyond doubt.As per section 271D of the I.T. Act, 1961, if a person takes or accepts any specified sum in contravention of the provision of Sec. 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposits or specified sum so taken or accepted. 8. I am satisfied that the assessee has intentionally accepted the said amount in contravention of provision of Sec. 269SS, therefore a penalty of ₹ 16,00,000/-is levied on the assessee. The AO is directed to issue demand notice and challan, accordingly. 6. The matter was carried in appeal before the Ld. CIT(A) where the assessee reiterated the contentions made before the A.O., which was dismissed by the Ld. CIT(A) holding at para 5.3 and 5.4 of his order as under: 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 273B for non-levy of the penalty. 7. Aggrieved by the same the assessee has now come in appeal before us raising the following grounds: 1. The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the assessee's case in confirming the action of the Ld. A.O. in levying penalty U/s. 271D of the Act of ₹ 16,00,000/-. 2. Both the lower authorities have erred in law and on facts circumstances of the assessee's case in not appreciating the fact that no penalty U/S.271D of the Act can be levied. 8. Before us, the ld. Counsel for the assessee reiterated the contentions made before the lower authorities which briefly stated were to the following effect: (i) that there was no clear cut finding of fact of the assessee having received amounts in cash in violation of the provisions of section 269SS of the Act. That the said allegation of the department was a mere presumption based on certain notings in a diary found during search wherein neither the name of the persons from whom the amount was received was mentioned nor the amount received from each person, and the amount mentioned therein was in hundreds which was extra polated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y found deposited in bank, represented unaccounted income of the assessee in thousands and received in cash. The total of all such entries, extrapolated to thousands, amounting to ₹ 26,50,000/- was added as undisclosed income of the assessee. The Ld.CIT(A) upheld the finding of the AO that the diary disclosed unaccounted receipts of the assessee from its business but restricted the addition to the extent of profits derived therefrom which was estimated at 9% thereof amounting to ₹ 2,38,500/- It was stated at bar that no appeal was filed against the order of the Ld.CIT(A) by either of the parties. Penalty u/s 271D of the Act was levied on the alleged cash receipts after the amendment to section 269SS of the Act came into force including therein any sum received for transfer of immoveable property, i.e after 01-06-2015, which amounted to ₹ 16,00,000/- 13. Having brought out the facts it is relevant to reproduce the provisions of the section 269 SS of the Act as applicable for the impugned year, to facilitate adjudicating whether there was any violation thereof to attract the levy of penalty u/s 271D of the Act in the present case. 269SS. No person shall take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of 1949) ; (iii) loan or deposit means loan or deposit of money; (iv) specified sum means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. 14. We shall first deal with the contention of the Ld.Counsel for the assessee that the entries having been treated as income of the assessee,section 269SS of the Act has no applicability. Reliance has been placed on various case laws as noted above in earlier part of our order. 15. As per the A.O. and the Ld. CIT(A), however, the assessee s case is covered as qualifying as specified sum received otherwise than through modes specified therein. The Ld. CIT(A) has referred to the definition of specified sum in Section 269SS Explanation (iv) reproduced above for the purpose. 16. We are in agreement with the Revenue on this count. The language of the section is very clear including any specified sum alongwith loans and deposits to be accepted or taken in modes other than cash. And any specified sum was included in the transactions covered by the section by way of amendment by Finance Act 2015 w.e.f 01-06 2015. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscal statutes. The implication of the principle that a taxing statute must be construed strictly is often misunderstood and unjustifiably extended beyond the legitimate field of its operation. We are of the firm opinion that in a taxing statute one has to look merely at what has been clearly stated. There is no presumption as to a tax/penalty. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used . We have proceeded in step with the familiar principles laid down by Rowlatt J. in Cape Brandy Syndicate vs. IRC (1921) 1 KB 64, 71 (KB). We have merely added the word it penalty . A penalty is levy of additional tax, as held by the Supreme Court in CIT vs. Bikaji Dadabhai Co. (1961) 42 ITR 123. It is true that the scheme of the IT Act, 1961, has been changed and Chap. XXI provides for penalty proceedings separately but notwithstanding such changes the Supreme Court in Jain Brothers vs. Union of India (1970) 77 ITR 107 reiterated that penalty is an additional tax. It is true that penalty proceedings are penal in nature and character, in the sense that it follows harsh consequences. In our opinion, the true construction of a charging provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision by which a tax is imposed has to be construed strictly, regardless of the hardship that such a construction may cause either to the treasury or to the taxpayer. If the subject falls squarely within the letter of law he must be taxed, howsoever inequitable the consequences may appear to the judicial mind, If the Revenue seeking to tax cannot bring the subject within the letter of the law, the subject is free no matter that such a construction may cause serious prejudice to the Revenue. In other words, though what is called equitable construction may be admissible in relation to other statutes or other provisions of a taxing statute, such a construction is not admissible in the interpretation of a charging or taxing provision of a taxing statute. 8. In view of the nature and character of a penal provision it must be construed strictly regardless of the hardship that such a construction may cause either to the treasury or to the taxpayer. If a subject falls squarely within the letter of the law he must be penalised, however inequitable the consequences may appear. If, however, the Revenue, seeking to penalise a subject, cannot bring him within the letter of the law, a subje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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