ITO, WD-9(3), KOLKATA, Kolkata V. M/s Todi Farm And Resort Pvt. Ltd., Kolkata

ITA 1081/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0706 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE ACIT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DBENCH KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM ./ ITA NO.1081/KOL/2016 ( / ASSESSMENT YEAR: 2007-08) ITO, WARD-9(3), KOLKATA 5 TH FLOOR, ROOM-21, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA -69. VS. M/S. TODI FARM AND RESORT PVT. LTD. 4, JAGMOHAN MULLICK LANE, 1 ST FLOOR, KOLKATA 7. ./ ./PAN/GIR NO. :AACCT 4969 J (ASSESSEE) .. (RESPONDENT) ASSESSEE BY : SHRI ARINDAM BHATTACHARJEE, ACIT RESPONDENT BY : SHRI SUBASH AGARWAL, ADV. / DATE OF HEARING : 20/11/2017 /DATE OF PRONOUNCEMENT : 13/12/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINING TO ASSESSMENT YEAR 2007-08, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)3, KOLKATA, IN APPEAL NO.2097/CIT(A)-3/W-9(3)/14- 15/KOL, DATED 29.02.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S.271D OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 28.01.2015. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT UPHOLDING THE PENALTY U/S 271D IMPOSED BY THE AO OF RS.29,00,000/-. 2. THAT THE ASSESSEE RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO ANY GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3.THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE COMPANY INCORPORATED ON 16.08.2006 AND THE SHARE CAPITAL ON INCORPORATION OF THE COMPANY WAS AT M/S. TODI FARM AND RESORT PVT. LTD. ITA NO.1081/KOL/2016 ASSESSMENT YEAR: 2007-08 PAGE | 2 RS.1,50,000/- WHICH WAS RECEIVED IN CASH AND NO BANK ACCOUNT WAS MAINTAINED BY THE ASSESSEE COMPANY. THE ASSESSEE ALSO PURCHASED AGRICULTURAL LAND AT SANGANER, JAIPUR AT A CONSIDERATION OF RS.27,50,000/- AND ALSO TOOK UNSECURED LOAN FROM SWASTIK ENTERPIRISES AMOUNTING TO RS.3,00,000/- OTHER THAN BY ACCOUNT PAYEE CHEQUE AND PAID TO THE SELLER OF THE LAND. ASSESSEE PURCHASED A PIECE OF AGRICULTURAL LAND FOR RS.29,00,000/- AT JAIPUR RAJASTHAN FROM TWO INDIVIDUALS. IT WAS OBSERVED BY THE AO THAT THE PAYMENT FOR THE ENTIRE PURCHASE OF LAND WAS FACILITATED BY A LOAN CREDITOR, VIZ, M/S SWASTIK ENTERPRISES FOR RS. 3,00,000/- PAID DIRECTLY TO THE SAID TWO SELLERS AND A FURTHER SUN OF RS. 26,00,000/- PAID DIRECTLY TO THE SAID TWO SELLERS AND A FURTHER SUM OF RS.26,00,000/- PAID AGAIN DIRECTLY BY THE PROMOTER DIRECTORS AND THEIR RELATIVES WHICH WAS SUBSEQUENTLY ACCOUNTED FOR IN THE BOOKS AS SHARE APPLICATION MONEY. THEREFORE, ASSESSING OFFICER HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961 AND THEREFORE, THE AO IMPOSED PENALTY U/S 271D OF THE ACT AT RS.29,00,000/-. 4.AGGRIEVED BY THE PENALTY ORDER PASSED BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE PENALTY. THE LD CIT(A) OBSERVED THATA PERUSAL OF THE OBSERVATIONS OF THE LD. ADDITIONAL COMMISSIONER( ASSESSING OFFICER) CLEARLY BRINGS OUT THE FACT THAT HE ACCEPTS THAT THE SAID PAYMENTS WERE MADE BY DRAFTS. DURING THE APPEAL PROCEEDINGS, THE ASSESSEE HAS IN FACT FILED COPIES OF THE DRAFTS BY WHICH THE PAYMENTS WERE MADE. THESE WERE OBVIOUSLY AVAILABLE WITH THE AO AS WELL AS THE LD. ADDITIONAL COMMISSIONER. COPIES OF THE ACCOUNT PAYEE DEMAND DRAFTS PRODUCED WERE THE FOLLOWING: SL. NO. IN FAVOUR OF DRAFT NO. AMOUNT DATE MADE IN 1. KHARUN BEGUM 276230 9,00,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 2. NARMADA DEVI 276226 5,50,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 3. KHATUN BEGUM 276231 4,00,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 4. NARMADA DEVI 276229 2,00,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 5. NARMADA DEVI 276228 4,50,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 6. NARMADA DEVI 26227 1,00,000/- 11.08.2006 ALLAHABAD BANK, JAIPUR 0211867 M/S. TODI FARM AND RESORT PVT. LTD. ITA NO.1081/KOL/2016 ASSESSMENT YEAR: 2007-08 PAGE | 3 THE ABOVE AMOUNTS COME TO A TOTAL OF RS 26 LAKHS. AS REGARDS THE REST OF THE RS. 3 LAKHS, THE ASSESSEE HAS SHOWN THEM TO BE PAYMENTS THROUGH TWO CHEQUES WITH NOS.390102 DRAWN AGAINST LNDIAN OVERSEAS BANK FOR RS 1.50 LAKH AND 390102 DRAWN ON LNDIAN OVERSEAS BANK FOR AN AMOUNT OF RS 1.50 LAKH BOTH DATED 1.6.2006 IN THE NAME OF KHAIRUN BEGUM AND NARMADA DEVI RESPECTIVELY. AS REGARDS, THE OTHER CHEQUES PAYMENTS, THE ASSESSEE PRODUCED THE RELEVANT BANK ACCOUNTS.AFTER GOING THROUGH THESE PAYMENTS THE CIT(A) OBSERVED THAT THERE WAS NOTHING ON RECORD TO SHOW THAT ANY CASH PAYMENTS WERE ACTUALLY MADE BY ANY OF THE PAYERS. THE ASSESSEE HAS ALSO FILED THE SALE DEEDS INWHICH THE NAMES OF THE SELLERS HAVE BEEN REFLECTED. THE LD CIT(A) OBSERVED THAT THE LD ADDITIONAL COMMISSIONER GOT HIMSELF MISGUIDED BY THE FACT THAT THE ASSESSEE COMPANY DID NOT HAVE ANY BANK ACCOUNTS AT THE TIME OF THE PAYMENTS. THIS WAS AN ADMITTED FACT BY THE ASSESSEE HIMSELF AND BORNE OUT BY THE FACTS AND CIRCUMSTANCES AT THE TIME OF THE SALE TRANSACTION. THE ASSESSEE DID NOT HAVE A BANK ACCOUNT AT THE TIME OF THE SAID TRANSACTION BECAUSE THE ASSESSEE COMPANY HAD, AS OF THAT TIME, STILL NOT BEEN INCORPORATED. BUT SINCE THE TRANSACTION HAD TO BE COMPLETED ASSOON AS POSSIBLE FOR REASONS OF THE PROMOTERS, THE PAYMENTS WERE MADE TO THE SELLERS AND THE NECESSARY BOOK ENTRIES MADE INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY AFTER IT WAS INCORPORATED. THE MODE OF CONVEYANCE OF THE SAID PAYMENTS HAD ALSO BEEN SHOWN TO BE NOT IN CASH. THEREFORE, LD CIT(A) HELD THAT THERE IS NO ANY VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT AND THEREFORE, HE DELETED THE PENALTY U/S 271D OF THE ACT. 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY.ON THE OTHER HAND, THE M/S. TODI FARM AND RESORT PVT. LTD. ITA NO.1081/KOL/2016 ASSESSMENT YEAR: 2007-08 PAGE | 4 LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT STAND TAKEN BY THE LD DR FOR THE REVENUE ARE NOT BACKED UP BY ANY EVIDENCE WHATSOEVER. AS RIGHTLY OBSERVED BY THE CIT(A), THAT DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FILED COPIES OF THE DRAFTS BY WHICH THE PAYMENTS WERE MADE. THESE DRAFTS WERE AVAILABLE WITH THE ASSESSING OFFICER AND LD ADDITIONAL COMMISSIONER, THE TOTAL AMOUNT PAID THROUGH DRAFT WASAT RS.26 LAKHS. REGARDING THE BALANCE AMOUNT OF RS.3 LAKHS, THE ASSESSEE HAD SHOWN THEM TO BE PAYMENTS THROUGH TWO CHEQUES WITH NOS.390102 DRAWN AGAINST LNDIAN OVERSEAS BANK FOR RS 1.50 LAKH AND 390102 DRAWN ON LNDIAN OVERSEAS BANK FOR AN AMOUNT OF RS.1.50 LAKH BOTH DATED 1.6.2006 IN THE NAME OF KHAIRUN BEGUM AND NARMADA DEVI RESPECTIVELY. AS REGARDS, THE OTHER CHEQUES PAYMENTS, THE ASSESSEE PRODUCED THE RELEVANT BANK ACCOUNTS. WE FIND THAT THERE IS NOTHING ON RECORD TO SHOW THAT ANY CASH PAYMENTS WERE ACTUALLY MADE BY ANY OF THE PAYERS. THE ASSESSEE HAS ALSO FILED THE SALE DEEDS IN WHICH THE NAMES OF THE SELLERS HAVE BEEN REFLECTED. BESIDES, THESE TRANSACTIONS RELATE TO BEFORE INCORPORATION OF THE ASSESSEE COMPANY THEREFORE THE ASSESSEE COMPANY IS NOT LIABLE BASED ON THE FACTUAL POSITION NARRATED ABOVE. THERE DOES NOT SEEM TO BE ANY REASON FOR INVOKING THE PROVISIONS OF SECTION 269SS EITHER ON THE FACT OF THE MODE OF SUCH CONVEYANCE OR ON THE LEGALITY OF HOLDING THE ASSESSEE COMPANY RESPONSIBLE FOR ACTS COMMITTED BEFORE ITS INCORPORATION.IN VIEW OF THE ABOVE, WE QUASH THE PENALTY ORDER U/S 271D OF THE ACT AND UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE, IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13/12/2017. SD/- (N. V. VASUDEVAN) SD/- (DR. A.L.SAINI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 13/12/2017 RS,SPS. M/S. TODI FARM AND RESORT PVT. LTD. ITA NO.1081/KOL/2016 ASSESSMENT YEAR: 2007-08 PAGE | 5 / COPY OF THE ORDER FORWARDED TO : //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE ASSESSEE ITO, WARD-9(3), KOLKATA 2. / THE RESPONDENT-M/S. TODI FARM AND RESORT PVT. LTD. 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.