Income Tax Officer, Hyderabad V. M/s. Sishtasoft Services Pvt. Ltd., Hyderabad

ITA 1237/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4819 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOLGY
• Assessee Lawyers: P VINOD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE THE HONBLE VICE PRESIDENT, SHRI D.MANMOHAN AND SHRI B.RAMAKOTAIAH, HONBLE ACCOUNTANT MEMBER ITA NO.1237/HYD/2013 : ASST. YEAR 2008 - 09 INCOME TAX OFFICER WARD 3(1), HYDERABAD V/S. M/S. SISHTASOFT SERVI C ES PVT. LTD., HYDERABAD. ( PAN - AAICS 1835 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SOLGY DR RESPONDENT BY : SHRI P.VINOD DATE OF HEARING 23 . 12 .2013 DATE OF PRONOUNCEMENT 23.12.2013 O R D E R PER D.MANMOHAN, VICE PRESIDENT: TH IS AN APPEAL FILED AT THE I N S TANCE O F THE REVENUE AND IT PERTAINS TO ASSESSMENT YEAR 2008 - 09. 2. PENALTY OF RS.14,42,000 LEVIED BY THE ASSESSING OFFICER ON THE GROUND THAT AMOUNTS WERE BORROWED BY TH E ASSESSEE COMPANY IN VIOL A TION OF THE PRO V ISION S O F S.269SS OF THE ACT, HAVING BEEN CANCELLED BY THE CIT(A), EXCEPT WITH REGARD TO A SUM OF RS .42,000, REVENUE IS IN APPEAL BEFORE US CONTENDING INTER - ALIA THAT THE LEARNED CIT(A) ERR E D ON F A CTS IN HOL D IN G TH A T LOAN S TO THE EXTENT OF RS.14 LAKHS HA VE BEEN RECEIVED BY CHEQUE S , WITHOUT APP R ECI A TING THE FACT THAT THE LOAN AMOUN TS DID NO T MATCH WITH THE ENT R IES IN THE BANK STATEMENTS. 3. IT DESERVES TO B E NO T ICED THAT THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER ACCEPTING THE NIL INCOME DECLARED BY THE ASSESSEE. HOW E VER, PROCEEDINGS WERE INITIATED UNDER S.274 READ WITH S.271 ON TH E GROUND THAT THE ASSESSEE COMPA N Y ACCEPTED UN S ECURED LOANS AMOUNTING TO ITA NO. 1237/HYD/2013 M/S. SISHTASOFT SERVICES PVT. LTD., HYDERABAD. 2 R S .14,42,000 IN CASH IN VIOLATION OF THE PROVISION S OF S .269SS OF THE AC T. IN RE SPON S E THERETO, TH E ASSESSEE SUBMITTED THAT IT HAS RECEIVED UNSECURED LOANS O F R S .14 LAKH S FROM I T S DIRECTORS THROUGH CROSSED CHEQUES AND RS.42,000 FROM ITS CEO IN CASH. DURIN G THE COURSE OF P E N A L T Y PROCEE D IN G S, THE ASSESSEE COMPANY DID NO T PRO D U C E CONFIRMATION FOR THE ABOVE REFERRED AMOUNTS FROM I T S DIRECTORS AND HENCE THE ASSESSING OFFICER ASSUMED THAT ACCEPTANCE OF LOANS HAVING NOT BEEN SATISFACTORILY EXPL A IN E D ; AS A CONSEQUENCE, THE LOAN WAS RECEIVED IN VIOLATION OF P R O V IS I ON S OF S.269SS OF THE ACT. HE MAINLY P R OCEEDED ON THE ASSUMPTION THAT S.271D IS A DETERRENT PROVISION SO AS TO ENSURE THAT THE P A RTIES WOULD NO T GO IN FOR A ACCOMMODATIVE TRANSACTION S AND IT IS MAINLY TO PR E VENT T RANSAC TIONS IN BLACK MONEY AND TO ENSURE THAT PAYMENT OF R S .20,00 0 AND ABOVE ARE TRACEABLE TO TRANSACTION S THROUGH A BANK. ACCORDINGLY, HE IMPOSED A PENALTY O F R S .14,42,000 UN D ER S.271D OF THE AC T. 4. AGGRIEVED, ASSESSEE CON T ENDED BEFO R E THE FIRST APP E LLATE A U T H ORITY THAT THE ASSESSING OFFICER OVERLOOKED THE EXPLANATION GIV E N BY TH E ASSESSEE VIDE LET T ER DATED 30.7.2012 WITH REGARD TO THE FACT THAT LOANS TO THE E X TENT OF RS.14 LAKHS WE R E RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUE S ; WITH REGARD TO BALANCE OF RS.42 ,000 PENALTY LEVIED BY THE ASSESSING OFFICER , HAVING BEEN CONFIRMED BY THE CIT(A) , IT IS NOT NECESSARY FOR US TO REFER TO THAT ASPECT. 5. STATEMENT OF FA C TS ANNEXED TO THE FORM 35 MAKES IT CLEAR THA T T H E ASSESSEE HAS CONSI S TENTLY TAKEN A PLEA THAT LOAN S TO THE EXTENT OF R S .14 LAKHS WERE RECEIVED BY THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES. THE LEARNED CIT(A) IN P A RA 4 OF HER ORDER OBSERV ED THAT A SUM OF R S .13 LAKH S WAS RECEIVED FORM SHRI MALLKARJUNA AND RS.1,00,000 FROM MS.SUBHASHREE, AND I T IS REFLEC T ED IN THE BANK STATEMENT OF THE ASSESSEE WITH CANARA BANK. HAVING VERIFIED THE FACTUAL MATRIX OF THE CA S E, THE LEARNED CIT(A) CONCLUDED THAT NO CA S E W AS MADE OUT BY THE ASSESSING OFFICER TO HOL D THAT PROVISION S O F S .269SS OR S.271D HA VE ANY RO LE TO PL A Y WITH REGARD TO THE LOANS TO THE E X TENT OF R S .14 LAKHS. AGG R IEVED BY THIS FIN D IN G , REVENUE IS IN APPEAL B E FO R E US. IT DESERV E S TO ITA NO. 1237/HYD/2013 M/S. SISHTASOFT SERVICES PVT. LTD., HYDERABAD. 3 B E NO T I C ED H E RE THAT THE ASSESSEE CLAIMED TO HAVE FURNISHED AN EXPLANATION B E FO R E THE ASSESSING OFFICER WI T H REGARD TO FACTUM O F RE C EIPT OF LOANS THROUGH ACCOUNT PAYEE CHEQUE AND EVEN THE CIT(A) HA S A CCEPTED THE CONTENTION OF T HE ASSESSEE AF TE R VERIFICATION OF THE CLAIM THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS UNABLE TO CONTROVER T THE FIN D IN G S OF THE CI T(A) AND NO M A TE R IAL WHATSO E VER WAS BROU G H T ON R ECORD, TO SHOW THAT THE AMOUNTS IN QUESTION W ERE RECEIVED OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE S . HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE O F THE VIEW THAT THE ORDER PASSED BY THE CIT(A ) DOES NO T CALL FOR ANY INTERFERENCE. AS PRONOUNCED IN THE OPEN COURT, WE CONFIRM THE ORDER OF THE CIT(A) AND D ISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION O F HEARING ON 23.12.2013 SD/ - SD/ - (B.RAMAKOTAIAH ) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT DT/ - 23 RD DECEMBER 2013 COPY FORWARDED TO: 1. M/S. SISHTASOFT SERVICES PVT. LTD., 203 SRINI V ASA SOMASHIKARA TILAKNAGAR, NEW NALLAKUNTA , HYDERABAD. 2 . INCOME TAX OFFICER WARD 3(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S