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TMI Blog2023 (2) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... ed respectively by the revenue and assessee against the appeal-order dated 06.07.2020 passed by Ld. CIT(A), which in turn arise out of penalty order dated 30.09.2016 passed by learned Addl. CIT / Joint CIT, Central, Indore ["Ld. Addl. CIT"] u/s 271D of Income-tax Act, 1961. 2. Since the factual backdrop and basis for adjudication of all these matters is same, we proceed to decide by this common order for the sake of convenience. 3. Heard the learned Representatives of both sides at length and case-records perused. 4. The registry has informed that there is a fling-delay of 439 days in ITA No. 283/Ind/2021 and 94 days in ITA No. 20/Ind/2021, therefore these appeals are time-barred. The Ld. AR prayed that the delay has occurred due to Covid-19 Pandemic. The Ld. AR further placed reliance on the order of Hon'ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeals are proceeded with for hearing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alting & Toll Highways (India) Ltd. from its unaccounted income." 6. Finally, the Ld. AO completed re-opened assessment vide order dated 03.03.2016 after making an addition of Rs. 1,15,14,659/- by observing and holding thus: "14. Therefore, it is clear and evident that the assessee company has given the loan of Rs. 1,15,00,000/- to the company M/s AIDPL out of undisclosed income and charged total interest of Rs. 14,659/- for A.Y. 2008-09 and the same transaction has not been incorporated in the regular books of account. Hence, an addition of Rs. 1,15,00,000/- and interest charged of Rs. 14,659/- is made on account of unexplained cash credit to the total income of the assessee for A.Y. 2008-09. Penalty proceeding u/s 271(1)(c) of the Act is initiated separately on this issue. Further, the matter is being referred to Addl. Commission of Income-tax (Central), Indore for issuing notice and imposing penalty u/s 271D and 271E of the "Act". 7. Against assessment-order, the assessee filed first-appeal to Ld. CIT(A) wherein the challenge was made to the legality of re-assessment as well as the addition of Rs. 1,15,14,659/- on merit. While deciding appeal, the Ld. CIT(A) upheld the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and order u/s 263 has been passed accordingly. 3. Considering the above facts, the addition of Rs.1,15,14,659/- was wrongly been made in the assessment order of PATH(I)Ltd which may kindly be deleted." 4.2.1. From the report of the AO, it is clear that the additions in AY 2008-09 were wrongly made in the assessment order passed dated 03.03.2016 u/s 143(3) r.w.s. 147 which is under consideration. Therefore, addition made by the AO amounting to Rs. 1,15,14,659/- is deleted. Therefore, appeal on this ground is allowed." Penalty-matters upto first-appeal: 8. As observed earlier, while completing assessment the Ld. AO made a reference to Ld. Addl. CIT for imposing penalty u/s 271D and 271E of the act. Based on such reference made by Ld. AO, the Ld. Addl. CIT issued two separate notices, both dated 23.03.2016, one for penalty u/s 271D and other u/s 271E, which are placed in the Paper-Book at Page No. 47 and 48, scanned copies thereof being reproduced below: 9. Subsequently, the Joint Commissioner of Income-tax (Central), Indore also issued two separate notices, both dated 08.07.2016, one for penalty u/s 271D and other u/s 271E, which are placed in the Paper-Book at Page No. 49 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttings on pageD23 (mentioned in bottom) share buyback 13/1/9 3,66,25,000 is also getting correlated with the entry mentioned in Page No. 21 of LPS-1 relating to entry in 15 Jan, 09. During the course of assessment proceedings, the submission of the assessee Agroh Infrastructure Developers Pvt. Ltd (AIDPL) is as follows: _ b. The first table Contains calculation of interest On Rs. 85.00 Lacs given by Agroh infrastructure Developers Private Limited to Prakash Asphaltings and Toll Highways India Limited. The Amount of Advance Rs. 85.00 Lacs is Correct and was given by the Agroh Infrastructure Developers by way cheque on 25/03/2008, however, total interest charged from PATH for the year is Rs 1159466/- which has been included in books and TDS also has been deducted on same. Copy of account of Prakash Asphalting and Toll Highways India Limited is enclosed herewith. From this Submission of the assessee, it is clear that in page no. 23 of LPS-1 the entry of Rs. 85 lakhs is a valid entry and is a loan given by AIDPL to PATH. Obliviously, if the left-hand side column on upper side of page.23 is correct and if it means that AIDPL has given loan to PATH from bank account. Then, it autom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FY 2007-08 (AY 2008-09) through cheque and appellant has paid total interest on the said loan at Rs. 1159466/- which is fully recorded in books of account. However, for the other amounts mentioned on the said loose papers no such loan was taken or interest was paid by the appellant. The appellant has further contended that the statement of Shri Shailendra Singhal was never confronted with the appellant. The appellant has also taken a plea that presumption applied by the AO u/s 132(4A) & 292C of the Act that the onus of explaining the contents of the seized documents is on the appellant, is baseless, because the said loose paper was found from third party premises i.e. AIDPL. 4.1.2 I have considered the facts of the case, evidences on record and findings of the AO. After considering the entire factual matrix and evidence/material on record inter alia written submissions filed, I reach to conclusion that impugned imposition of penalty was made on the basis of assumption and presumption which neither sustainable on facts nor in law. The AO has reached to conclusion that few of the entries in printouts and books of appellant are matching and therefore imposed the penalty. These docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessity of existence of transaction was never proved or attempted by the department. 4.1.4 This is settled legal position that any 'dumb document' cannot be used as an evidence to draw an adverse inference against the assessee. Case laws supporting this proposition are as under:- XXX (not reproduced for brevity) 4.1.8 The AO during the course of appellate proceedings vide letter dated 29.05.2017 has stated that the apepllant has accepted cash of Rs. 1,22,19,659/-, therefore, penalty u/s 271D ought to have been levied at Rs. 1,22,19,659/-. However, penalty was levied at Rs. 1,15,00,000/- only. Therefore, the AO has requested to enhance the penalty by Rs. 7,05,000/-. The facts of the case has been discussed in depth in above mentioned paras, therefore, I do not find any merit in enhancing the penalty by Rs. 7,05,000/- which has been levied on the basis of impugned loose papers as discussed above. Thus, penalty levied by the AO is not being enhanced. 4.1.9 In view of the above discussion, material evidences on record and case laws cited, the AO failed to establish the nexus on receipt or repayment of impugned loans. It is settled legal pronouncement, that presumption how str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 269SS of the Act. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that then penalty was imposed on the basis of dumb documents despite the fact that the data on the said documents was duly corroborated as per the findings in the penalty-order." The assessee has also filed Cross-Objection No. 47/Ind/2021 on the following ground: "Ground No.1 Penalty order under section 271D of the Income Tax Act 1961(the Act) is bad in law: On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal)-3, Indore (hereinafter referred to as the Ld. CIT(A)) erred in not holding that penalty order dated September 30, 2016 under section 271D of the Act is bad in law. The appellant prays that the penalty order dated September 30, 2016 under section 271D of the Act be quashed as without jurisdiction and bad in law." Submissions of Ld. AR: 16. Ld. AR representing the assessee took the lead to argue all matters. He straightaway carried us to the remand-report submitted by Ld. AO to Ld. CIT(A), which we have already reproduced here-in-above in Paragraph No. 7, and requested us to peruse content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is admitted by AIDPL in AY 2008-09 and order u/s 263 has been passed accordingly. 3. Considering the above facts, the addition of Rs.1,15,14,659/- was wrongly been made in the assessment order of PATH(I)Ltd which may kindly be deleted." 4.2.1. From the report of the AO, it is clear that the additions in AY 2008-09 were wrongly made in the assessment order passed dated 03.03.2016 u/s 143(3) r.w.s. 147 which is under consideration. Therefore, addition made by the AO amounting to Rs. 1,15,14,659/- is deleted. Therefore, appeal on this ground is allowed." He then carried us to the factual-report submitted by Ld. AO to Ld. Addl. CIT, as reproduced here-in-above in Paragraph No. 11, and requested us to peruse contents thereof which, according to him, is self-speaking and self-explanatory. We repeat the same again while emphasizing the contents directly relevant to us: "In this connection, it is submitted that the required factual report in the above mentioned assessee for levy of penalty u/s 271D & 271E of the Income Tax Act, 1961 (hereinafter referred to as the Act) is as under: 1. The Search and seizure action u/s 132 of the Act was conducted on the business premises of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3" was found and seized from the premise of M/s PATH Oriental Highways Public Limited, Mhow / AIDPL and not from assessee. That apart, the authorities initially framed a conclusion that the assessee had given loan to AIDPL (Hereafter referred to as "original conclusion"), but subsequently they reversed their conclusion to the effect that AIDPL has given loan to the assessee, in other words the assessee has taken loan from AIDPL (Hereafter referred to as "reversed-conclusion"). Then, Ld. AR submitted that the assessment of assessee was re-opened on the basis of "original-conclusion". Ld. AR submitted that the "original-conclusion" was absolutely incorrect, hence the action taken u/s 148 as well as order of re-assessment is bad. Ld. AR submitted that although the Ld. CIT(A) has deleted the addition on the basis of "reversed-conclusion" and granted relief to the assessee on merit, yet the primary grievance of assessee that the re-assessment itself was invalid, is not suitably settled. Ld. AR prays us to annul the order of re-assessment therefore. 18. Regarding penalty-matter, although Ld. AR harped on the legal submission that if the reassessment-order is declared as invalid, the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven loan to the assessee. They further agree that the re-assessment proceedings as well penalty-proceedings u/s 271D / 271E were initiated on the basis of "original conclusion". With such undisputed fact, we are required to check the validity of assessment-order and penalty-order. 22. We observe that the "original-conclusion" was such that the assessee had given loan to AIDPL but the "reversed-conclusion" was just opposite i.e. AIDPL had given loan to assessee. Now, if we give weightage to "original- conclusion", which could not be said to faulty as per understanding gained by authorities at that time, the result would be such that the order of reassessment would be valid but the penalty-proceeding would be invalid because penalty u/s 271D / 271E are not attracted in case of "loan given". As against this, if we give weightage to "reversed-conclusion" i.e. the AIDPL has given loan to assessee, the consequences would be just opposite i.e. the re-assessment proceeding would be invalid but the penalty-proceeding shall be valid. Thus, if one proceeding is saved, other has to be quashed. Hence we have given our anxious thought in the matter. After a mindful consideration, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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