TMI Blog2022 (6) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... rfectly mentioned in that seized documents and the money so received is against the sale of agricultural land for which sale document or agreement to sale is not made on account prevailing dispute between the family members. Accordingly, the amount so received is the advance received against the sale of agricultural land owned by the assessee. During the course of the assessment proceeding the assessee contended that as regards the details of all six persons from whom such advance against sale of agricultural land was received, it is submitted that such advances were received through broker(s) in open market, which is a normal and prevailing practice. All the transactions have been entered through broker. The names of all theses persons have been given by the broker(s). At present, the brokers are not in touch with the assessee. This written submission of the assessee is in accordance with the seized material found during the course of search and assessee has accepted the facts stated in that paper and once the assessing officer has considered the holding of the land, details of the amount received as advance for the sale of agricultural land all the details and facts arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and written arguments placed before us we concur the finding given by the Ld. CIT(A) and thus, based on this finding the appeal of the department is dismissed as the impugned transaction listed on the back side of page 71 is the amount received on the proposed sale transaction of the agricultural land and thus the considering that aspect the assessee has not violated the provisions of section 269SS of the act and in turn he is not liable for the penalty u/s. 271D - Decided against revenue. - ITA No. 1233/JP/2019 - - - Dated:- 5-5-2022 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Sh. P. C. Parwal, CA For the Revenue : S. Naiyer Ali Najmi, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the Department aggrieved from the order of the Commissioner of Income Tax, Appeals-4, Jaipur [ Here in after referred as Ld. CIT(A)] for the assessment year 2015-16 dated 26.08.2019. 2. The hearing of the appeal was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid-19 Pandemic, both the parties have placed their written as well as oral argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,00,000 6 71A 25.03.2015 2015-16 50,00,000 Total 2,75,00,000 From perusal of these documents prima facie, it appears that these loose papers appear to be related to cash loans/advances of Rs. 2,75,00,000/ received by assessee. 6. During the course of assessment proceedings, as per above information possessed with Assessing Officer, it was observed that the assessee had taken/accepted loans/deposits more than rupees twenty thousand in cash or otherwise than by account payee cheque/account payee draft from the following person/party during the F.Y. 2014-15 relevant to A.Y. 2015-16 in contravention of the provisions of section 269SS of the IT Act, 1961: This page attracted attention of the learned assessing officer since it provides transactions of similar nature held at various dates with different persons. Accordingly, the assessee was asked to provide an explanation for these transactions amounting to Rs.2.75 cr for the year under consideration. Accordingly, the assessee field their reply vide letter dated 19.12.2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in the assessment order passed u/s 143(3) r.w.s. 153A dated 30.12.2017 for A.Y. 2015-16 in which the AO has given specific finding which are reproduced as under: (i) Assessee has contended that as these transactions are mentioned overleaf at page no. 71 and page no. 71 contains the details of land holdings of Sh. Babu Lal Data, therefore, these advances are also on account of sale of those land pieces only. Here it is worth to mentioning that no supporting agreement of land has been furnished by the assessee. Just by mentioning of these entries on the backside of a paper, which contains the details of agriculture land, does not sufficient to conclude that the advances have been received against sale of those pieces of land only. In fact, if we take a look on seized documents, we found that page no. 71 to 75 is in continuity of each other and having details of land holdings of all the family members in his/her individual capacity. Therefore, a random noting of transaction on a certain page correlated the transaction with that page automatically without any supporting documentary evidence. (ii) Moreover, the assessee was specifically asked to furnish details of the land(s) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it transpires that the word बयाना in which the assessee is putting stress in support of its claim is actually termed as ब्याज बाजार भाव. If we consider as otherwise, than बयाना / advance could not be subject matter of renewal on time to time on market rate as there is no common practice of renewal of advances in the matter of land deals. Such kind of deals either got finalized and executed through registered documents or got cancelled, if not materialized, but not got renewed. (v) The contention of the assessee of advance against agriculture land is also found though subsequent seized pages, it is very much evident, in which name of some loan broker Mr. Rahul reflecting through which transactions was made. It might be possible that any land deal could be done through any mediation/broker but it is unbelievable that the advances against such kind of deal would also be received through broker only. Moreover, it is further evident from page no. 88, 89, 90, 91 seized, said advance were renewed from time to time and fixed rate of interest were pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the amount of Loan accepted in cash. Accordingly, penalty for 2,75,00,000/- is imposed on the assessee on the terms of section 271D of the IT Act, 1961. 14. Aggrieved from the said order of levying penalty assessee filed an appeal before the Ld. CIT(A) raising as much as ten grounds of appeal for levy of penalty. The assessee filed a detailed submission before the Ld. CIT(A) which is extracted here in below as appearing from page 5 of the order of Ld. CIT(A): WITHOUT PREJUDICE TO OUR SUBMISSIONS MADE IN OTHER GROUNDS OF APPEAL, THE OBSERVATIONS/ CONTENTIONS/ ALLEGATIONS OF THE LD. ADDITIONAL COMMISSIONER OF INCOME TAX, MENTIONED ABOVE ARE COUNTERED AS FOLLOWS: 3.2.1 The Ld. assessing officer has denied acceptance to the fact that the details mentioned overleaf at page. no. 71 are in liaison with page no. 71 i.e. details mentioned on page no. 71A are not regarding landholdings specified on page no. 71 of exhibit no. AS 1. In this context, it is submitted that it is a general tendency of a human being to record details in relation to a document either on the same side of the document or on the other side of the document to reduce chances of misplacement of such crucial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily dispute existing in relation to distribution of Property on account of which no formal agreement could be executed with the proposed buyers. 3.2.4 The assessing officer has tried to establish nexus between page no. 71A and some other page of seized document where name of loan broker Mr. Rahul is mentioned. In this regard, it is submitted that the Ld. assessing officer is here contradicting his own belief. He has clearly denied acceptance of the fact that details mentioned on page no. 71A are for landholdings specified on page no. 71 (para 1 of page no. 7 of assessment order of Assessment Year 2015-16 and para number 10.8.1 (i) of page number 50 for the Assessment Year 2016-17) merely on the basis that it is mentioned at overleaf of the page, however, here he is ready to believe that name of loan broker as mentioned on any random page of seized documents is for transactions stated on page no. 71A which in reality has no connection. The Learned Assessing officer cannot pick choose his own version to draw negative inferences against Appellant. It is surprising that the Ld. AO has just relied upon that certain part of the information/documents, while he ignored the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not at the authority of assessing officer. This provision was inserted with a view that assessing officer is not the competent authority to impose penalty on the appellant, thus, only Joint CIT v/s Additional CIT can impose such penalty. Considering the intention behind fixation of authority for imposition of penalty, it is highlighted that when assessing officer is not competent authority to impose penalty then even contention proposed by him/her cannot be counted as sufficient for imposition of such penalty. As a result, the penalty imposed based on borrowed contentions deserves to be deleted. For this purpose, reliance is placed upon following precedents: (i) In the case of CIT vs. SHREE RAJASTHAN SYNTEX LTD. (2009) 313 ITR 0231 Rajasthan HC, (Annexure 10) it has been held that Simply because the AO of lessee at M had formed a different opinion, on the same set of documents, initiation of reassessment proceedings of assessee (lessor) by the AO at U, on the basis, was rightly held by the Tribunal as on 'borrowed satisfaction' not sufficient for initiating reassessment proceedings Reassessment was initiated only on the basis of opinion arrived at by AD at M, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty imposed by Ld. Additional CIT without bring forth his own satisfaction. 4 0 Ground no. 4 of appeal: Imposition of penalty in contradiction of facts That the Ld. Additional Commissioner of Income-Tax has erred in law as well as on the facts and circumstances of the case in imposing a penalty of Rupees 27500000 and Rupees 16800000 in AY 2015-16 and AY 2016-17 respectively, under section 271D of the income Tax Act, 1961 by holding that that the Appellant has accepted the loan of Rupees 44300000 (27500000.00+16800000.00) in contradiction of the facts on records. 4.1In this regard, it is submitted that the Ld. Additional Commissioner of Income-Tax has imposed penalty u/s 271D of Income Tax Act, 1961 for violating provisions of section 269SS of Income Tax Act, 1961. As per his perspective, the appellant has received an amount of Rs. 2.75cr and Rs. 1.68cr in cash which is in violation of section 269SS of Income Tax Act, 1961. Since, the whole conundrum revolves around section 269SS of Income Tax Act, 1961, thus, it is sine qua non to understand the provisions of section 269SS of Income Tax Act, 1961. To Quote (Section 269SS of Income Tax Act, 1961)No person shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.12.2017. In contravention, it is worth noticing that the contention of Ld. AO is based on sheer presumption/ assumption without even analyzing the page which gave rise to all these arguments. It is pertinent to note here that since the root cause of this conundrum is page no. 71A of exhibit AS-1, it is onus of the assessing officer to understand the document word to word before presenting any opinion upon it. Any contention which goes against the wordings specified in the document automatically becomes false. The learned assessing officer has only worked on his pre-decided motive to prove the Appellant wrong and doing the same he has not even evaluated the root cause i.e. page no. 71A only. 4.4Analysis of page no. 71A of AS-1 (Overleaf of Page no. 71 of exhibit AS-1) 4.4.1 At the outset, the head of the page specifies as heading which implies that the details specified on this page is related to landholdings in Ramgarh. Since, the Appellant has ownership of agricultural land in Ramgarh as disclosed on page no. 71 of exhibit AS-1, therefore, details mentioned on page no. 71A of exhibit no. AS-1 i.e. at overleaf of page no. 71, are in context to agricultural land in Ramgar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given a finding by the ld assessing officer that It might be possible that any land deal could be done through any mediator/broker but it is unbelievable that the advances and interest thereon against such kind of deals would also be transacted through broker only, This is an admission on the part of the Id assessing officer that the amount have been received against the land deals. 4.5 From above explanation, it is an established fact that the transactions stated on page no. 71A are for receipt of advances against sale of agricultural land and not the loans or deposit within the meaning of section 269SS of the Act. But here the question arises, 'can these advances treated as loans or deposits?'. For this purpose, it is submitted that section 269SS does not provide intricate meaning of terms 'loans' or 'deposits' but only states that loan or deposit means loan or deposit of money. Therefore, definition itself does not extend to receipt of advance as per the facts of the present case. 4.6But, it is pertinent to note here that the department has amended section 269SS of Income Tax Act, 1961 through Finance Act, 2015 wherein 'specified sum' w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purpose of goods in future. Karnataka Ginning Pressing Factory vs. Joint Commissioner of Income-tax [2001] 77 ITD 478 (MUM.) (Annexure 17) Moreover, the amounts taken by the assessee in the present case from VE were temporary advances and there was no evidence that there was any stipulation as to the period or any stipulation for interest. It was therefore a matter of grave doubt as to whether the amounts received from VE could be characterised as loans or deposits. They could be more appropriately referred to as temporary advances. Such temporary advances are outside the purview of section 269SS. Therefore, it is our humble request to kindly delete the penalty-imposed u/s 271D of Income Tax Act, 1961, since; same is not applicable as prayed here in above. 15. Based on the submission made by the assessee, the Ld. CITA) observed that the seized document annexure AS-1, page 71A, which was treated as cash loan/ advances received by the appellant from various person and decided that rather provision of section 68 is not applicable considering the facts of the case and deleted the quantum additions and accordingly based on that finding the sum is not of the nature of loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016-17 also does not fall in the category of specified sum' as all transaction are before the cutoff date of 01-06-2015. Considering the above, factual aspects the Ld. CIT(A) deleted the penalty levied u/s 271D of Rs. 2.75 Crores 1.68 Crores for the AYrs 2015-16 2016-17 respectively. 17. Aggrieved from the order of the Ld. CIT(A), the revenue has preferred the appeal before us in respect of the penalty appeal for both the years. The revenue has also preferred an appeal before us by filling a separate appeal in respect of the deleting of the quantum addition made by the Ld. CIT(A) for the quantum additions and even for these quantum appeal even the assessee has filed the appeal before us. 18. The appeal no. 1234/JP/2019 related to the assessment year 2016-17 against which the assessee has filed the application under the vivad se viswas scheme and therefore, the said appeal of the department was dismissed as withdrawn on that fact. Since, in both the year issue being same but only difference on account of amendment and inclusion of the specified sum made applicable. There is no such fact so far as the fact related to this year is considered and the bench has noted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings in para 9 of the order: 9. Perusal of the above section envisage that if any sum is found credited in the books of account and the assessee fails to offer satisfactory explanation regarding the nature and source so offered by him or fails to tender satisfactory explanation, the said amount can be treated as deemed income of the assessee. In our view once it has been held as deemed income of the assessee or an addition u/s 68 has been made the character of the said amount/addition will not remain as a loan or deposit and section 269 SS will not be applicable. Although addition w/s 68 or provisions of sec.269SS are independent provisions but if the alleged income is held to be deemed income of the assessee, the penalty u/s 271D could not be invoked. DIT(Exemptions) Vs. Young Men Christian Association (2014) 111 DTR 77 (Mad.) (HC) (PB page 17-23) Para 7 10 of the decision reads as under: 7. We find from the order of the Tribunal, in the case of transaction relating to receipt of Rs. 1 crore and payment of Rs. 50 lakhs, the Tribunal, having considered the order of the assessing authority that it is a case of unexplain which is subjected to tax under s. 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessee, it could not resort to proceeding under Ss. 269SS read with s. 271 D of the Act, as held by the Tribunal. 20. On the contrary the Ld. DR appearing on behalf of the revenue relied upon the order of the AO and finding given in that order. The Ld. DR has not placed any single argument which establish that the advance amount received by the assessee is not against the disputed agricultural land account, even though the seized material itself shows the name of the persons and amount received from each of the persons on the dates mentioned therein. 21. We have heard the rival contentions, persuaded the submission made and order of the lower authorities. Here it is not disputed by both the parties that the assessee is having sufficient agricultural land on its disposal as joint owner. It is also evident that on the seized material related to the land ownership document on the back side of that paper the assessee has written the date, amount and the name of the person from the money has been received. On the top of the seized material below the details of money received it is also mentioned that [ Ramgadh Jamin ke pete mean on account of Ramgadh land]. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as cash loan once the nature of credit is evidently clear that the money so received is for sale of agricultural land on face of the document seized. Thus, we have gone through the submission of the assessee and material available on the records and on abutted reading of page 71A along with the page 71, it is clear beyond doubt that the transactions entered on the page are pertaining to the agricultural land of the assessee situated and the department has not raised any doubt about the adequacy of the land and the amount related to the said land received by the assessee. Thus, this indirect admission of the department strength the argument of the assessee. 22. On perusal of the assessment order and arguments of the AR of the assessee the page 71 and 71A are related to the case on hand, the Ld. Assessing officer has denied the acceptance to the fact that the details mentioned overleaf at page no. 71 are connected with the details mentioned on page no. 71A and the said paper is part of the seized records. The Ld. AR of the assessee argued that it is general tendency of a human being to record details in relation to a document either on the same side or on the other side of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted or submitted will not change the nature of transactions or it does not affect the facts of the case to decide the issue on hand. 25. The Ld. Addl. CIT while passing the order of levying penalty u/s. 271D has relied upon the finding of the order of the assessing officer in the quantum proceeding for A. Y. 2015-16 where in six issues has been pointed out the assessing officer in relation to the page under consideration, while levying the penalty order, except that point there is no separate finding or satisfaction of the Ld. Addl. CIT in this matter. The Ld. AR of the assessee has already filed the explanation stating that why the said finding of the AO is not correct and is also discussed in above paras. Thus, the order of levying penalty has no separate finding or observation as to why the penalty should sustain. Thus, the said order is considered in the light of the submission made by the Ld. AR of the assessee. The facts of this case and the fact of case of the decision cited by the Ld. Addl. CIT are different and the same is considered as differentiated on facts of this case. Thus, we are of the view that while levying the penalty the Ld. Addl. CIT has not dealt so a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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