Niki Agro Products Pvt Ltd, Jalgaon V. JCIT, Jalgaon

ITA 1461/PUN/2012

• Counselvise Citation: 146124514 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Principle of natural justice; Reasonable cause; Documents seized
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1572/PN/2011 (ASSESSMENT YEAR 2008-09) NIKI AGRO PRODUCTS PVT. LTD., PLOT NO.V/191/1, MIDC, JALGAON- 425 003 .. APPELLANT PAN NO.AABCN6531B VS. ACIT, CIRCLE-2, B.J.MARKET, JALGAON-425 001 .. RESPONDENT ITA NO. 1461/PN/2012 (ASSESSMENT YEAR 2008-09) NIKI AGRO PRODUCTS PVT. LTD., PLOT NO.V/191/1, MIDC, JALGAON- 425 003 .. APPELLANT PAN NO.AABCN6531B VS. JCIT, RANGE-2, JALGAON .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 09-12-2013 DATE OF PRONOUNCEMENT : 31-12-2013 ORDER PER R.K. PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 10-10-2011 AND 14-05-2012 OF THE CIT(A)- II, NASHIK RELATING TO ASSESSMENT YEAR 2008-09. FO R THE SAKE OF CONVENIENCE, BOTH THE APPEALS WERE HEARD TOGETHER A ND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 ITA NO.1572/PN/2011 (A.Y. 2008-09) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PVT. LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROCESSING, EXPO RT AND IMPORT AND TRADING OF ALL KINDS OF PULSES, CATTLE FEED, FO OD GRAINS, OIL SEEDS ETC. THE ASSESSEE IS ALSO ACTING AS A COMMISSION A GENT. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE COMPANY FILE D ITS RETURN OF INCOME ON 30-09-2008 DECLARING TOTAL INCOME AT RS.1 5,23,170/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH AT THE PREMI SES OF SHRI SATISHCHAND G. MITTAL AN AMOUNT OF RS.50 LAKHS WAS RECEIVED BY THE ASSESSEE COMPANY. THE DIRECTOR OF THE ASSESSEE COM PANY SHRI KANTILAL MOTILAL JAIN HAS ACKNOWLEDGED THE RECEIPT OF SUCH LOAN ON THE LETTER HEAD OF THE COMPANY WHICH CONTAIN REVENUE S TAMP AND SEAL OF THE COMPANY DULY SINGED BY SHRI KANTILAL JAIN AS RE CEIVED FOR AND ON BEHALF OF THE ASSESSEE COMPANY. THE AMOUNT WAS REC EIVED ON 01-04- 2007 WHICH WAS RETURNED ON 07-11-2007 AND THE RATE OF INTEREST WAS 12% PER ANNUM. SHRI SATISHCHAND G. MITTAL HAS OFFE RED AN AMOUNT OF RS.50 LAKHS AS HIS UNDISCLOSED INCOME AND HAS ALSO OFFERED AN AMOUNT OF RS.3,61,500/- AS INTEREST ACCRUED ON SUCH LOAN. THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN A S TO WHY AN AMOUNT OF RS.3,61,500/- SHOULD NOT BE ADDED TO HIS TOTAL I NCOME BEING UNACCOUNTED EXPENDITURE. 2.1 IT WAS EXPLAINED BY THE ASSESSEE THAT ALTHOUGH AN AMOUNT OF RS.50 LAKHS HAS SHOWN TO HAVE BEEN RECEIVED ON THE LETTER HEAD OF THE COMPANY BUT THE MONEY HAS NO RELATION WITH THE BUSI NESS AND HENCE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSE E. THE DIRECTOR 3 WHO HAS SIGNED THE SAME ON LETTER HEAD MIGHT HAVE E NTERED INTO THE LOAN TRANSACTION WITH SHRI SATISHCHAND G. MITTAL ON HIS PERSONAL ACCOUNT. HOWEVER, THE ASSESSING OFFICER WAS NOT SA TISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THA T THE ACKNOWLEDGEMENT WAS GIVEN ON THE LETTER HEAD OF THE COMPANY DULY AUTHENTICATED AND SIGNED ON REVENUE STAMP BY ONE OF THE DIRECTOR WITH THE SEAL OF THE COMPANY. SHRI SATISHCHAND G. MITTAL HAS STATED U/S.132(4) OF THE ACT BEFORE THE SEARCH PARTY TO HA VE GIVEN THE LOAN OF RS.50 LAKHS TO THE ASSESSEE COMPANY AND HAS PAID TA X ON THAT AS HIS UNDISCLOSED INCOME ALONG WITH THE INTEREST ACCRUED THEREON AMOUNTING TO RS.3,61,500/-. SHRI SATISHCHAND G. MITTAL AGAIN IN HIS ANSWER TO QUESTION NO.3 ON 20-12-2010 HAS CONFIRMED THE TRANS ACTION OF LOAN TO THE ASSESSEE COMPANY FOR WHICH THE DIRECTOR SHRI KA NTILAL JAIN HAS SIGNED/ACKNOWLEDGED. THE COMPANY HAS NOT FILED ANY EVIDENCE, I.E. BOOKS OF ACCOUNT OR ANY OTHER DOCUMENT MAINTAINED B Y THE DIRECTOR TO SHOW THAT THE AMOUNT OF RS.50 LAKHS HAS BEEN RECEIV ED BY HIM IN HIS PERSONAL CAPACITY. THE DENIAL/EXPLANATION OF THE A SSESSEE COMPANY VIDE LETTER DATED 08-12-2010 IS NOT SUPPORTED BY AN Y CORROBORATIVE EVIDENCE. REJECTING THE EXPLANATION OF THE ASSESSE E THE ASSESSING OFFICER MADE ADDITION OF RS.3,61,500/- BEING INTERE ST FOR THE PERIOD FOR WHICH THE MONEY WAS UTILISED BY THE ASSESSEE. 3. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER : 6. I HAVE CAREFULLY GONE THROUGH THE SUBMISSION OF TH E APPELLANT, ASSESSMENT ORDER AND THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ISSUE OF GIVING PROPER OPPORTUNITY TO THE APPELLANT I S CONCERNED, I FIND FROM THE ASSESSMENT ORDER AS WELL AS FROM THE SUBMISSION OF THE APPELLANT THAT THE A.O. HAD SUPPLIED COPIES OF THE RE LEVANT PAPERS FOUND AND SEIZED AT THE PREMISES OF SHRI SATISHCHAND G. MITTAL TO THE APPELLANT ON 07/12/2010. IT IS AN ADMITTED FACT THA T THE APPELLANT WAS 4 GIVEN AN OPPORTUNITY TO GIVE ITS EXPLANATION ON THE CONTENTS OF THE SEIZED PAPERS. IN FACT, THE APPELLANT HAD FURNISHED A DETAILED REPLY ON 01/12/2010. THEREFORE, I DO NOT FIND ANY MERIT IN THE CONTENTION OF THE APPELLANT THAT THERE WAS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 7. AS REGARDS RECEIPT OF LOAN AND PAYMENT OF INTEREST, I HAVE PERUSED THE COPY OF SEIZED PAPER ON THE BASIS OF WHICH AO HAS HELD THAT THE APPELLANT HAD RECEIVED A CASH LOAN OF ` 50 LAC FROM SHRI SATISHCHAND. THE SEIZED DOCUMENT IS A COPY OF THE LET TER HEAD OF THE APPELLANT COMPANY DATED 01/04/2007 SHOWING THAT THE APPELLANT COMPANY THROUGH ITS DIRECTOR (SHRI KANTILAL JAIN) HA D RECEIVED A CASH LOAN OF ` 50 LAC ON INTEREST FROM ONE SHRI SATISHCHAND. THE RE CEIPT HAS BEEN SIGNED BY DIRECTOR OF THE APPELLANT COMPANY FOR NIKKI AGRO PRODUCTS PVT. LTD., I.E. THE APPELLANT COMPANY. SH RI SATISHCHAND VIDE LETTER DTD.27/11/2007 HAS ACKNOWLEDGED HAVING GIVEN A LOAN OF ` 50 LAC ON INTEREST TO THE COMPANY. SHRI DEEPAK KANTILA L JAIN, S/O. KANTILAL JAIN, ANOTHER DIRECTOR OF THE COMPANY THOUGH IN HIS STATEMENT RECORDED ON OATH ON 22/11/2007 DURING SURVEY U/S.133 A STATED THAT THE CASH WAS RECEIVED BY HIS FATHER IN HIS PERSONAL CAPA CITY AND THE COMPANY HAD NOTHING TO DO WITH IT, I FIND THE CONTE NTION TOTALLY UNACCEPTABLE. THE RECEIPT IS ON THE LETTER PAD OF T HE COMPANY WITH A REVENUE STAMP AND STAMP OF THE COMPANY AFFIXED ON IT AND SIGNED BY DIRECTOR (SHRI KANTILAL JAIN) FOR THE COMPANY STATIN G RECEIVED ` 50 LAC ON INTEREST. THE APPELLANTS FURTHER STATEMENT THAT THE COMPANY WAS NOT AWARE OF THE TRANSACTION IS FAR FROM TRUTH AND DE VOID OF ANY MERIT. AN AFFIDAVIT DT. 15/01/2011 GIVEN BY SHRI KANTILAL JAIN STATING THAT HE USED THE LETTER PAD OF THE COMPANY IN A HURRY AND SIGNED AS DIRECTOR INADVERTENTLY IS FABRICATED AND SEEMS TO BE AN AFTERTH OUGHT EFFORT TO SAVE THE COMPANY FROM THE VARIOUS LEGAL/PENAL ACTIONS FOR RECEIVING ` 50 LAC IN CASH AND NOT REPORTING THE TRANSACTION IN T HE REGULAR BOOKS OF ACCOUNT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ABOVE REFERRED AFFIDAVIT IS FALSE AND CONTRADICTORY TO THE CONTENTS OF THE SEIZED DOCUMENT. THE SAME IS REJECTED. IN VIEW OF THE ABOVE, IT IS HELD THAT THE SAID LOAN OF ` 50 LAC WAS RECEIVED BY THE COMPANY IN CASH THROUGH ITS DIRECT OR SHRI KANTILAL JAIN. A PERUSAL OF THE ASSESSMENT ORDER FURTHER REVEAL S THAT SHRI SATISH MITTAL IN HIS STATEMENT RECORDED ON OATH ON 20/12/20 10 HAS CONFIRMED HAVING GIVEN A LOAN OF ` 50 LAC IN CASH TO NIKKI AGRO PRODUCTS PVT. LTD. THROUGH ITS DIRECTOR SHRI KANTILA L JAIN. SHRI SATISHCHAND HAD OFFERED THIS AMOUNT, I.E. ` 50 LAC AND ` 3,651,500/- AS INTEREST RECEIVABLE ON ` 50 LAC AS HIS ADDITIONAL INCOME IN HIS STATEMENT RECORDED U/S.132(4) OF THE ACT AND SUBSEQUENT LY FILED RETURN INTERALIA INCLUDING THE SAID ADDITIONAL INCOM E. THE DIRECTOR SHRI KANTILAL JAIN NEVER EXPLAINED THE FACTS OF THE TRANSACTION, I.E. PURPOSE OF BORROWING ` 50 LAC IN CASH, HOW DID HE USED THE SAID CASH AND WHAT WAS HIS SOURCE OF REPAYMENT OF THE LOAN ETC . ALL CIRCUMSTANTIAL EVIDENCES THUS PROVE CONCLUSIVELY THAT T HE CASH LOAN OF `50 LAC WAS IN FACT BORROWED BY THE APPELLANT COMPAN Y WHO DID NOT SHOW IT IN ITS REGULAR BOOKS OF ACCOUNTS. AS REGARDS APP ELLANTS CONTENTION THAT AO WAS NOT JUSTIFIED IN TREATING ` 3,61,500/- AS ITS UNEXPLAINED EXPENDITURE U/S.69 AS IT DID NOT PAY THE AMOUNT, I FIND THAT ALL CIRCUMSTANTIAL EVIDENCES CONTRADICT THE APPE LLANTS SUBMISSION IN REGARD TO PAYMENT OF INTEREST. THE UNDISPUTED FAC TS OF THE CASE (I) THE COMPANY RECEIVED ` 50 LAC IN CASH AS LOAN ON INTEREST (II) THE SAID LOAN WAS REPAID ON 7/11/2007 AS PER THE LETTER DT.27/ 11/2007 WRITTEN BY SHRI SATISHCHAND TO SHRI KANTILAL JAIN (I II) INTEREST WAS DUE AS ON 27/11/2007 AND (IV) SHRI SATISHCHAND OFFERED IN TEREST OF ` 3,61,500/- FOR TAXATION IN HIS RETURN OF INCOME FOR AY 2008-09. SINCE SHRI SATISHCHAND HAS SHOWN THIS INTEREST OF ` 3,61,500/- AS HIS INCOME, IT COULD BE SAFELY CONCLUDED THAT THE COMPANY HAD IN FACT PAID THIS 5 AMOUNT TO SHRI SATISHCHAND DURING AY 2008-09 OUTSIDE ITS REGULAR BOOKS OF ACCOUNT. THE LOAN AS MENTIONED ABOVE WAS ON INTEREST. THERE WAS NO QUESTION OF RECOVERY OF ANY PAPER RELATI NG TO RECEIPT OF INTEREST FROM THE PREMISES OF SHRI SATISHCHAND AS THE SEA RCH TOOK PLACE ON 22/11/2007 AND THE INTEREST WAS NOT PAID TIL L 27/11/2007. AO UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WAS JUST IFIED IN TREATING THE SAID EXPENDITURE OF ` 3,61,500/- AS APPELLANTS UNEXPLAINED EXPENDITURE. THE ADDITION IS CONFIRMED AND APPELLANTS GROUND IN THIS REGARD IS DISMISSED. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILING I N THE CASE AND AS PER THE PROVISION OF LAW, IT MAY PLEASE BE HELD THA T THE LD.CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT COMPANY HA D TAKEN A CASH LOAN OF RS.50 LAKHS FROM SHRI SATISHCHAND MITTAL, THOU GH IT IS TAKEN BY THE DIRECTOR FOR HIS OWN PURPOSE, AS PER AFFIDAVIT FIL ED BY THE DIRECTOR, WHICH WAS REJECTED WITHOUT ESTABLISHING THAT CONTENTS O F THE AFFIDAVIT ARE UNTRUE. THE FINDING OF THE CIT(A) THAT THE LOA N IS TAKEN BY THE APPELLANT COMPANY MAY BE VACATED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISION OF LAW, IT MAY PLEASE BE HELD THA T THE LD.CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.3,61 ,500/- ON ACCOUNT OF INTEREST CLAIMED TO HAVE BEEN RECEIVABLE BY SAID MR. SATISHCHAND MITTAL. THERE IS NO EVIDENCE THAT SAID IN TEREST HAS BEEN PAID BY THE APPELLANT COMPANY. IN VIEW OF THE PROV ISION OF SECTION 69C OF THE I.T. ACT, NO SUCH ADDITION CAN BE SUSTAINED UNLESS IT IS PROVED THAT APPELLANT COMPANY HAD INCURRED SUCH EXPE NDITURE AND HENCE ADDITION CONFIRMED BY THE CIT(A) MAY PLEASE BE CANCELLED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILING I N THE CASE AND AS PER THE PROVISION OF LAW, IT MAY PLEASE BE HELD THA T THE LD.CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THERE IS NO VIOLATIO N OF PRINCIPLE OF NATURAL JUSTICE, THOUGH, FROM THE APPELLATE ORDER IT SELF SPEAK THAT COPIES OF SAID DOCUMENTS WERE PROVIDED ON 07/12/2010 A ND STATEMENT OF SHRI SATISHCHAND MITTAL WAS RECORDED ON 20-12-2010, ON THE BACK/BEHIND THE APPELLANT AND USED AGAINST THE A PPELLANT WITHOUT PROVIDING ANY OPPORTUNITY OF BEING CROSS EXAMINE TO H IM AND HENCE ASSESSMENT ORDER PASSED VIOLATING THE PRINCIPLE OF NATURA L JUSTICE. THEREFORE, ASSESSMENT ORDER PASSED AND CONFIRMED BY CIT(A ) IS BAD IN LAW AND VOID AB-INITIO AND MAY PLEASE BE ANNULLED. 4.1 AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY OPPO SED THE ORDER OF THE CIT(A). HE SUBMITTED THAT WHEN THE SEARCHED PERSON, I.E. SHRI SATISHCHAND G. MITTAL HAS OFFERED AN AMOUNT OF RS.3 ,61,500/- AS 6 INTEREST RECEIVABLE, THEREFORE, IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE COMPANY HAS NOT PAID ANY INTEREST TO SHRI SATISHCHAND G. MITTAL. SINCE THE ASSESSEE COMPANY STRONGLY DENIED TO HAVE RECEIVED ANY SUCH LOAN AND SINCE THE DIRECTOR SHRI KANTILAL JAIN HAS INADVERTENTLY GAVE THE ACKNOWLEDGEMENT ON THE LETTE R HEAD OF THE COMPANY WHICH WAS ALREADY STATED BEFORE LOWER AUTHO RITIES AND SINCE THE OTHER DIRECTOR SHRI DEEPAK K. JAIN HAS DENIED T O HAVE RECEIVED ANY SUCH LOAN BY THE COMPANY, THEREFORE, THE ADDITI ON OF RS.3,61,500/- BY THE ASSESSING OFFICER BEING UNEXPLAINED EXPENDIT URE AND UPHELD BY THE CIT(A) SHOULD BE DELETED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT DURING THE COURSE OF SEARCH ON 22-11-2007 AT THE PREMISES OF SHRI SATISHCHAND MITTAL/AGARWAL, A PAPER CONTAINING RECEIPT OF RS.50 LAKHS BY THE ASSESSEE COMPANY WAS FOUND WHICH WAS D ULY ACKNOWLEDGED ON REVENUE STAMP WITH STAMP OF THE ASS ESSEE COMPANY AND SIGNED BY THE DIRECTOR SHRI KANTILAL JAIN. THE RE IS ALSO NO DISPUTE TO THE FACT THAT SHRI SATISHCHAND G. MITTAL IN HIS STATEMENT RECORDED U/S.132(4) HAS CONFIRMED TO HAVE GIVEN THE LOAN OF RS.50 LAKHS TO THE ASSESSEE COMPANY. THE RELEVANT ANSWER AS REPRODUCE D BY THE ASSESSING OFFICER AT PAGE 5 OF THE ORDER WHICH READ S AS UNDER : 9. SHRI SATISH MITTAL HAS ONCE AGAIN CONFIRMED THE T RANSACTION OF LOAN AS DISCUSSED ABOVE WHILE GIVING HIS STATEMENT ON OAT H IN ANSWER TO QUESTION NO.3 ON 20-12-2010. AS DISCUSSED EARLIER A ND PORTION OF THE REPLY IS REPRODUCED HERE BELOW : 7 .... YES, THIS PAPER IS RECEIPT OF 50 LAKH RUPEES CASH LOAN GIVEN BY ME TO NIKKI AGRO PRODUCT PVT. LTD. AND FOR WHICH DIRECTOR SHRI KANTILAL JAIN HAS SIGNED/ACKNOWLEDGED BY DIRECT OR OF COMPANY TO WHOM CASH LOAN IS GIVEN BY ME... THE ASSESSEE IN THE INSTANT CASE NEVER ASKED THE AO TO CONFRONT SHRI SATISHCHAND G. MITTAL. THE DENIAL BY THE OTHER DIR ECTOR THAT THE MONEY HAS NOT BEEN RECEIVED BY THE COMPANY AND IS RECEIVE D BY THE DIRECTOR IN HIS PERSONAL CAPACITY DOES NOT HAVE ANY FORCE IN ABSENCE OF ANY POSITIVE STATEMENT TO SHOW THAT THE SAME WAS RECEIV ED BY THE OTHER DIRECTOR IN HIS PERSONAL CAPACITY AND NOT FOR THE C OMPANY. 7.1 WE FIND THAT SHRI SATISHCHAND G. MITTAL HAS DEC LARED AN AMOUNT OF RS.50 LAKHS AS HIS UNDISCLOSED INCOME AND PAID T AX ON THE SAME AND HAS ALSO OFFERED INTEREST INCOME OF RS.3,61,500/- A S ACCRUED TO HIM FOR THE PERIOD FROM 01-04-2007 TILL 07-11-2007. UNDER THESE CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ABOVE ADDITION OF RS.3,61,500/- MADE BY THE ASSESSING OFFICER BEING UNEXPLAINED EXPENDITURE FOR THE ABOVE PERIOD. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SHRI SATISHCHAND G. MITTAL HAS SHOWN THE SAME ON ACCRUAL BASIS AS INTEREST ACCRUED DOES NOT FIND ANY FORCE SINCE THE AMOUNT WA S NOT ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY AND IT REMAINS OUTSIDE THE BOOKS OF ACCOUNT. IN THIS VIEW OF THE MATTER A ND IN VIEW OF THE DETAILED ORDER PASSED BY THE LD.CIT(A), WE FIND NO INFIRMITY IN HIS ORDER UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER. WE ACCORDINGLY UPHOLD THE SAME. THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ACCORDINGLY DISMISSED. 8 7.2 SO FAR AS ONE OF THE GROUND REGARDING VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, WE FIND THE SAME IS ALSO WITHOUT A NY MERIT SINCE THE ASSESSEE WAS GIVEN ADEQUATE OPPORTUNITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE WAS CONFRONTED WITH THE SEIZED DOCUMENTS FROM THE RESIDENCE OF SHRI SATISHCHAND G. MITTAL/AGARWAL. THE ASSESSING OFFICER AT PAGE 3 OF THE ASSESSMENT O RDER HAS ALSO OBSERVED AS UNDER : IN RESPONSE TO SAID, ASSESSEE HAS APPLIED FOR COPIES OF SEIZ ED PAPERS IN QUESTION AND WITH A VIEW TO MEET NATURAL JUSTICE, COPIES OF ALL PAPERS REQUESTED BY THE ASSESSEE COMPANY WERE GIVEN TO TH E AUTHORISED REPRESENTATIVE OF THE ASSESSEE AS REFLECTED IN ORDER SHEET ENTRY DATED 07-12-2010. AFTER HAVING POSSESSION OF SUC H PAPERS, ASSESSEE HAS FURNISHED A WRITTEN REPLY DATED 08-12-2010 R ECEIVED IN THIS OFFICE ON THE SAME DAY.............. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAI LED ORDER PASSED BY THE CIT(A) THE GROUNDS RAISED BY THE ASSESSEE ARE D ISMISSED. ITA NO.1461/PN/2012 (A.Y. 2008-09) : 8. AS MENTIONED EARLIER IN THE PRECEDING PARAGRAPHS THE ASSESSEE COMPANY HAS TAKEN AN AMOUNT OF RS.50 LAKHS ON LOAN @ 1% INTEREST PER ANNUM FROM SHRI SATISHCHAND G.MITTAL. THE COPY OF ACKNOWLEDGEMENT ON THE LETTER HEAD OF THE ASSESSEE COMPANY DULY SIGNED BY THE DIRECTOR SHRI KANTILAL MOTILAL JAIN O N REVENUE STAMP WITH SEAL OF THE COMPANY WAS FOUND FROM THE RESIDEN CE OF SHRI SATISHCHAND G. MITTAL DURING THE COURSE OF SEARCH. SINCE THE LOAN WAS RECEIVED IN CASH IN EXCESS OF RS.20,000/- BY CONTRA VENING THE PROVISIONS OF SECTION 269SS THE ASSESSING OFFICER R EFERRED THE MATTER TO THE JT.CIT, RANGE-2, JALGAON FOR INITIATION OF P ENALTY PROCEEDINGS U/S.271D. THE JOINT COMMISSIONER ISSUED NOTICE U/S .274 R.W.S. 271D ON THE ASSESSEE COMPANY TO EXPLAIN AS TO WHY PENALT Y U/S.271D SHOULD 9 NOT BE LEVIED FOR VIOLATION OF THE PROVISIONS OF SE CTION 269SS. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE VIDE ITS LETTER DATED 03- 03-2011 STATED AS UNDER : .... THAT WE HAVE NEVER FILED ANY SUCH ACCEPTANCE O F DEPOSIT TO ANY OF THE AUTHORITIES OF INCOME TAX. FURTHER IN THE STATEM ENT OF OATH TAKEN ON 22-11-2007 WE HAVE STATED THAT THE COMPANY HAS NEV ER ACCEPTED ANY SUCH DEPOSIT AND IT IS IN THE PERSONAL NATURE OF OT HER DIRECTOR, I.E SHRI KANTILAL MOTILAL JAIN. FURTHER, WE HAVE ALSO G IVEN OUR STATEMENT BEFORE ADI THAT THOUGH THE TRANSACTION HAS BEEN GIVEN ON THE LETTER HEAD OF THE COMPANY, THE TRANSACTION HAS NO RELATION WITH THE COMPANYS BUSINESS AND HENCE NOT RECORDED IN BOOKS OF AC COUNTS. THEREAFTER, WE HAVE ALSO SUBMITTED THE COPY OF AFFIDA VIT OF SHRI KANTILAL MOTILAL JAIN ACCEPTING THE SAID LIABILITY O F RS.50 LCAS, THE COPY OF WHICH IS ENCLOSED HEREWITH. SINCE THE ABOVE TRANSA CTIONS HAS NO RELEVANT OF THE COMPANYS BUSINESS NOR RECORDED IN BOOK S OF ACCOUNT WE DO HEREBY REQUEST YOU TO DROP THE PENALTY PROCEED INGS OF THE COMPANY.... 9. HOWEVER, THE LD. JCIT WAS NOT SATISFIED WITH THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE. HE REFERRED TO THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS DISCUSSED T HE ISSUE AFTER CONFRONTING THE SAME TO THE ASSESSEE AND AFTER CONS IDERING THE STATEMENT OF SHRI SATISHCHAND G. MITTAL RECORDED DU RING THE COURSE OF SEARCH U/S.132(4) AND AFTER GOING THROUGH THE AFFID AVIT AS WELL AS WRITTEN STATEMENT GIVEN BY THE ASSESSEE FROM TIME T O TIME. HE REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY OF RS.50 LAKHS FOR RECEIVING THE LOAN IN CASH IN VIOLATION OF PROVISIO NS OF SECTION 269SS DURING THE F.Y. 2007-08. THE REASONING GIVEN BY THE LD. JCIT FOR LEVYING THE PENALTY U/S.269SS ARE AS UNDER : AS PER HIS REQUEST, THE CASE WAS ADJOURNED TO 13 TH JULY, 2011. ON THE SAID DATE, NEITHER SHRI KANTILAL MOTILAL JAIN ATTEND ED NOR ANY REPRESENTATIVE OF SHRI KANTILAL JAIN OR OF THE ASSESSEE COMPANY ATTENDED. NO WRITTEN EXPLANATION TILL DATE HAS BEE N SUBMITTED BY THE ASSESSEE COMPANY. THIS ITSELF SHOWS THAT SHRI KANTILAL MOT ILAL JAIN HAS NOTHING TO SAY IN THE MATTER TO SUPPORT HIS CONTENTION THAT LOAN WAS TAKEN IN INDIVIDUAL CAPACITY. ALSO FOR THE FOLLOWIN G REASONS, I AM OF THE FIRM OPINION THAT THE ASSESSEE COMPANY HAS ACCEPTED THE CASH IN CONTRAVENTION OF SECTION 269SS OF THE I.T. ACT, 1961 . (I) IT IS VERY MUCH CRYSTAL CLEAR THAT NIKKI AGRO PRO DUCTS PVT. LTD. THROUGH DIRECTOR SHRI KANTILAL MOTILAL JAIN HAS ACCE PTED THE CASH LOAN FROM SHRI SATISH MITTAL IN CONTRAVENTION OF SECTION 2 69SS ON 01-04- 2007. THE NOTING ON THE LETTER PAD CLEARLY GOES TO PROVE THAT THE 10 ASSESSEE COMPANY HAS ACCEPTED THE CASH OF RS.50 LACS IN TH E CAPACITY OF COMPANY ONLY AND NOT IN THE CAPACITY OF THE SO CA LLED SHRI KANTILAL MOTILAL JAIN. IN ORDER TO SUPPORT THIS CONTENTION, T HE COPY OF SUCH LETTER IS ANNEXED WHICH WILL BE A PART OF THIS ORDER. (II) EVEN FOR A WHILE, IF IT IS CONSIDERED THAT SHRI KANTILAL JAIN HAS ACCEPTED THE CASH IN HIS INDIVIDUAL CAPACITY FOR THE SO CALLED REASON THAT HE WANT TO PURCHASE A HOUSE AT DELHI. I HAVE NO DOUBT TO STATE HERE THAT SUCH CONTENTION IS BASELESS AND AFTER THOUGHT. TO SUPPORT MY SAY, THE STATEMENT ON OATH OF SHRI KANTILAL MOTILA L JAIN HAS BEEN RECORDED, WHEREIN, HE HAS STATED THAT HE HAS KEPT THE CASH IN HAND FOR SO CALLED PURCHASE OF HOUSE THROUGH BROKER BUT HE COUL D NOT EVEN STATE THE EXACT NAME, PHONE NO., MOBILE NO., ADDRESS O F THE SO CALLED BROKER OR SO CALLED LOCATION OR PLOT OR PURCHASE OF H OUSE OR THE NAME OF THE BROKER FROM WHOM THE PROPERTY DEALING WAS CLA IMED. IN REPLY TO Q.NO.5 MENTIONED SUPRA, IT WAS TOLD THAT HIS BUDGET FOR THE PURCHASE OF PROPERTY WAS RS.50 LACS ONLY AND WHEREAS SELL ER WAS DEMANDING RS. ONE CRORE. IT IS A MATTER OF COMMON KN OWLEDGE THAT IN PROPERTY DEALING WHEN THE DEAL IS ALMOST AT FINAL STAG E THEN ONLY IF THERE IS SOME SHORTAGE OF FUND, THE PURCHASER ARRANGES F OR THE SAME AND MAJOR PORTION OF PURCHASE MONEY IS BEING INVESTED BY THE PURCHASER FROM HIS OWN SOURCE AND AT LEAST THE PURCHASE R CAN TELL THE NAME OF THE SELLER AS WELL AS THE LOCATION OF THE PROP ERTY FOR WHICH DEALING WAS MADE. NO PURCHASER WILL ARRANGE WHOLE OF THE AMOUNT FROM INTEREST BEARING LOAN AND KEPT IT IDLE FOR 7 OR MORE MONTHS AT HIS RESIDENCE AS IS IN THE CASE OF SHRI KANTILAL MOTILAL JA IN AS CLAIMED. IT IS TO BE MENTIONED HERE THAT HE WAS GIVEN AN OPPORTUNIT Y OF BEING HEARD IN THE MATTER TO PRODUCE ANY SUCH DETAILS TO PROVE HI S CONTENTION AT LEAST THAT HE HAS TRAVELLED FROM DELHI TO JALGAON FOR THE PERIOD IST NOV,2007 TO 7 TH NOV, 2007. TO FURNISH SUCH DETAILS HE WAS GIVEN TIME UPTO 13 TH JULY, 2011. BUT, HERE ALSO NEITHER ANY LETTER FOR ADJOURNMENT NOR ANY SUCH PROOF/ CONTENTION HAS BEEN FURNISHED BY S HRI KANTILAL MOTILAL JAIN, I.E. EVIDENCE OF HIS VISIT FROM DELHI T O JALGAON FROM THE BOOKS OF ACCOUNT. IN VIEW OF ABOVE FACTS, I HOLD THA T CASH LOAN WAS NOT TAKEN BY SHRI KANTILAL JAIN IN INDIVIDUAL CAPACITY AS CLAIMED BY HIM. THE MONEY WAS RECEIVED BY HIM AS THE DIRECTOR OF THE COMPANY AND WAS REPAID BY COMPANY. THE PHOTO COPY OF RECEIPT OF MONEY HAS BEEN SIGNED BY SHRI KANTILAL JAIN IN THE CAPACITY OF DIRE CTOR DULY STAMPED BY THE COMPANY. (III) SHRI SATISH MITTAL HAS ALREADY SURRENDERED IT IN HIS RETURN OF INCOME FOR THE A.YR.2008-09. THE COPY OF COMPUTATI ON OF INCOME OF SHRI SATISH MITTAL IS ANNEXED HEREWITH WHICH FORMS PAR T OF THIS ORDER, WHICH CLEARLY SHOWS THAT LOAN WAS RETURNED BY M/S. NIKK I AGRO PRODUCTS PVT. LTD. ON 07/11/2007. (IV) SHRI SATISHCHANDRA MITTAL HAS ALSO ADMITTED THAT THE LOAN WAS GIVEN BY HIM TO THE ASSESSEE COMPANY, AS REFLECTED IN AN SWER TO QUESTION NO.2 OF HIS STATEMENT RECORDED U/S.132(4) ON 2 4/11/2007. (V) SHRI SATISHCHANDRA MITTAL HAS ONCE AGAIN CONFIRME D THE TRANSACTION OF LOAN IN HIS STATEMENT ON OATH IN ANSWER TO QUESTION NO.3 ON 20/12/2010 RECORDED BY A.O. DURING THE ASSESS MENT PROCEEDINGS MENTIONED SUPRA IN PARA 7(9). 8. IN VIEW OF THE ABOVE, I HAVE NO HESITATION TO STAT E HERE THAT THE ASSESSEE COMPANY HAS ACCEPTED THE LOAN OF RS.50 LACS FROM SHRI SATISH MITTAL BY CASH ONLY IN CONTRAVENTION OF SECTION 269SS WITHOUT REASONABLE CAUSE. THE ASSESSEE COMPANY COULD NOT SUBSTANT IATE ITS CONTENTION EVEN AFTER AVAILING AMPLE OPPORTUNITIES G IVEN BY THE UNDERSIGNED. 11 9. THEREFORE, I AM IMPOSING A PENALTY OF RS.50 LACS (R S.FIFTY LACS ONLY) BEING AN AMOUNT OF LOAN ACCEPTED IN CASH IN VI OLATION OF PROVISONS OF SECTION 269SS DURING THE F.Y.2007-08 RELE VANT TO A.YR.2008-09. 10. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF TH E JCIT BY HOLDING AS UNDER : 5. I HAVE CAREFULLY GONE THROUGH THE PENALTY ORDE R, SUBMISSION OF THE APPELLANT AND THE MATERIAL ON RECORD. THE APPEL LANT HAS REITERATED ITS EARLIER SUBMISSION THAT THE CASH LOAN OF ` 50 LAC FROM SHRI SATISH G. MITTAL WAS TAKEN BY SHRI KANTILAL JAIN, ONE OF THE DIRECTO RS OF THE APPELLANT COMPANY, IN HIS PERSONAL CAPACITY. THE APPELLANT HA S MADE SIMILAR ARGUMENT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS T HE PENALTY PROCEEDINGS. SHRI KANTILAL M. JAIN IN HIS STATEMENT RECORDED ON OATH ON 04/07/2011 BY AO STATED THAT THE SAID CASH LOAN OF ` 50 LAC WAS TAKEN BY HIM IN HIS PERSONAL CAPACITY TO BUY AN IMMOVABLE PROPERTY IN DELHI. HE FURTHER STATED THAT SINCE HE COULD NOT FINALIZE AN Y IMMOVABLE PROPERTY, HE RETURNED THE LOAN AMOUNT AFTER 7-8 MON THS. HE STATED THAT HE DID NOT PAY ANY INTEREST THOUGH THE LOAN WAS TAKE N AT THE INTEREST RATE OF ` 1/-[(12 % PA)]. SHRI KANTILAL JAIN HOWEVER, COULD NOT PRODUC E ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM TH AT HE TOOK THE CASH LOAN IN HIS PERSONAL CAPACITY FOR BUYING IMMOVABLE P ROPERTY IN DELHI. HE COULD NOT PROVIDE ANY DETAILS OF THE IDENTIFIED PROPERTIES OR THE BROKER. HE EVEN DID NOT REMEMBER THE DATE ON WHICH HE RETURNED THE HUGE AMOUNT OF ` 50 LAC TO THE LENDER. SHRI KANTILAL JAIN REITERATE D THAT HE HAD KEPT THIS MONEY WITH HIM IN DELHI FROM WHERE HE BROUGHT IT BACK AND RETURNED TO THE LENDER IN PERSON. HE HOWE VER, COULD NOT TELL WHEN THE SAID AMOUNT WAS RETURNED. SHRI SATISH G. MITTAL VIDE LETTER DT. 27/01/2007 ADDRESSED TO SHRI KANTILAL JAIN HAS ACKN OWLEDGED THAT HIS SON AMOL MITTAL RECEIVED THIS AMOUNT FROM KANTILAL JAIN ON 07/11/2007. SHRI KANTILAL JAIN HOWEVER, COULD NOT PRODUCE ANY E VIDENCE THAT HE TRAVELLED FROM DELHI TO JALGAON DURING THE 1 ST WEEK OF NOVEMBER, 2007. SHRI KANTILAL JAIN AND HIS SON SHRI DEEPAK K. JAIN ANOTHER DIRECTOR IN THE COMPANY HAVE FILED AFFIDAVITS THAT THE SAID CASH LO AN OF ` 50 LAC WAS RECEIVED BY THE FORMER (SHRI KANTILAL JAIN) IN HIS INDIVIDUA L CAPACITY. THIS ISSUE HAS BEEN DISCUSSED IN DETAIL IN THE APPEAL ORDER IN THE CASE OF APPELLANT COMPANY FOR A.Y. 2008-09 (APPEAL NO.NSK/CIT(A)-II/4 31/10-11 DT. 10/10/2011) WHEREIN IT HAS BEEN HELD THAT THE CASH LOAN OF ` 50 LAC WAS BORROWED BY THE APPELLANT COMPANY ON INTEREST FROM SHRI SATISH G. MITTAL. PAGE 40 OF ANNEXURE S-L, FOUND AND SEIZED FROM THE R ESIDENCE OF SHRI SATISHCHAND G. MITTAL DURING SEARCH U/S.132 OF THE AC T ON 22/11/2007 CLEARLY ESTABLISHES THIS FACT. THE SAID RECEI PT HAS BEEN SIGNED BY SHRI KANTILAL JAIN AS DIRECTOR FOR NIKKI AGR O PRODUCTS (P) LTD. ON THE LETTER HEAD OF THE COMPANY WHEREIN HE HAS AC KNOWLEDGED HAVING RECEIVED ` 50 LAC ON INTEREST FROM 'SETH' SATISHCHANDJI. THIS FACT OF ADVANCING ` 50 LAC TO THE COMPANY GETS FURTHER SUBSTANTIATED BY THE STATEMENT OF SHRI SATISHCHAND MITTAL RECORDED ON OAT H ON 24/11/2007 WHEREIN HE HAS OFFERED ` 50 LAC AS HIS UNDISCLOSED INCOME FOR A.Y. 2008-09. HE HAS ACCEPTED HAVING GIVEN THI S AMOUNT TO 'NIKKI AGRO'. WHILE SHRI SATISHCHAND G.MITTAL WHEN CONFRONT ED ON 22/11/2007 WITH THE ABOVE REFERRED PAGE 40 OF ANNEX URE S-L (RECEIPT & ISSUED BY NIKKI AGRO PRODUCTS (P) LTD ACKNOWLEDGI NG THE LOAN OF ` 50 LAC ON INTEREST) EXCUSED HIMSELF IN GIVING THE EXPLANATION ON HEALTH GROUND ACCEPTED THE FACT AND DISCLOSED ` 50 LAC AS ADDITIONAL INCOME FOR A.Y. 2008-09 ON 24/11/2007. SIMILARLY, SHRI DEEPA K JAIN (DIRECTOR OF NIKKI AGRO PRODUCTS (P) LTD AND SON OF SHRI KANTILA L M.JAIN) WAS 12 CONFRONTED WITH THE ABOVE REFERRED RECEIPT ON THE D AY OF SEARCH (22/11/2007) . HE IN ANS. NO.4 OF THE STATEMENT STATE D THAT IN REGARD TO LOAN OF ` 50 LAC BY THE COMPANY FROM SATISHCHAND G. MITTAL ON 01/04/2007 HE HAD TELEPHONIC CONVERSATION WITH HIS FATHER AT 3.30P.M. WHO TOLD THAT BECAUSE OF HEALTH PROBLEMS, HE WAS NOT I N A POSITION TO ANSWER THE QUERY WITHOUT LOOKING AT THE DOCUMENTS IN QUESTION. FROM THE ABOVE IT IS ESTABLISHED BEYOND DOUBT THAT O N THE DAY OF THE SEARCH BOTH SHRI SATISHCHAND G.MITTAL, THE LENDER AN D SHRI DEEPAK JAIN AND FOR THAT MATTER SHRI KANTILAL JAIN (WITH WHOM D EEPAK JAIN WAS STATED TO BE IN TOUCH ON TELEPHONE) WERE IN THE DEN IAL MODE ABOUT THE RECEIPT SHOWING A CASH LOAN OF ` 50 LAC ON INTEREST BY SHRI SATISHCHAND G.MITTAL TO NIKKI AGRO PRODUCTS (P) LTD. THROUGH IT S DIRECTOR SHRI KANTILAL JAIN. THE AMOUNT OF ` 50 LAC WAS NOT A SMALL AMOUNT THAT A NORMAL PERSON ENGAGED IN BUSINESS WOULD LOSE SIGHT OF OR WOULD NOT REMEMBER. FURTHER, THE RECEIPT WAS DATED 01/04/2 007 AND THE SEARCH TOOK PLACE ON 22/11/2007 I.E. GAP OF 8 MONTHS ONLY. THIS PERIOD TOO WAS NOT THAT LONG PERIOD THAT A PERSON WOU LD FORGET ABOUT THE TRANSACTION. UNDER THE FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE, IT IS ESTABLISHED THAT SUBSEQUENT STATEMENTS/RECEIPTS SHOWIN G THAT THE LOAN WAS TAKEN IN PERSONAL CAPACITY OF SHRI KANTILAL M.JAIN ARE AFTERTHOUGHT, CONCOCTED AND FABRICATED AND THEREFOR E DISMISSED. LAST BUT NOT THE LEAST, THE FACT THAT THE SAID LOAN WAS GI VEN TO THE APPELLANT COMPANY GETS FURTHER REINFORCED BY MANY OTHER DOCUM ENTS RELATED TO THE COMPANY FOUND AND SEIZED FROM THE RESIDENTIAL PREMI SES OF SHRI SATISHCHAND G.MITTAL EG. PAGE 27,28, AND 38 SHOW BU SINESS TRANSACTIONS WITH NIKKI AGRO PRODUCTS, JALGAON BY SHRI NARESH MI TTAL / SHRI SATISHCHAND MITTAL. TO SUM UP, IF THE LOAN WAS RECEIVED IN THE IN DIVIDUAL CAPACITY, SHRI SATISHCHAND G.MITTAL, SHRI DEEPAK JAIN AN D SHRI KANTILAL JAIN WHO WERE SPECIFICALLY CONFRONTED WITH THE LOAN O F ` 50 LAC ON THE DATE OF SEARCH ITSELF (22/01/2007) WOULD HAVE TOLD THIS F ACT TO THE DEPARTMENT. SIMILARLY SATISHCHAND G.MITTAL WHEN CON FRONTED ON RECOVERY OF CASH OF ` 1,04,79,895/- FROM HIS RESIDENCE DID NOT SAY THAT THE AVAILABLE CASH INTERALIA INCLUDED RECOVERY OF CA SH LOAN OF ` 50 LAC FROM NIKKI AGRO THOUGH HE MENTIONED SO MANY OTHER N AMES WHOSE CASH WAS STATED TO BE INCLUDED IN ` 1,04,79,895/-. SHRI SATISHCHAND'S RECEIPT DT. 27/11/2007 ISSUED TO SHRI KANTILAL JAIN STATING THAT HIS SON AMOL MITTAL RECEIVED BACK ` 50 LAC FROM THE LATTER (SHRI KANTILAL JAIN) ON 07/11/2007 IS, THEREFORE, NOTHING BUT AN ATTEMPT TO EXPLAIN THE SOURCE OF CASH OF ` 1,04,79,895/-, RECOVERED FROM HIS RESIDENCE ON 22/11/2007. AGAIN ` 50 LAC IS HUGE SUM AND IF HE HAD RECEIVED THIS AMOUNT ON 07/11/2007 AS CLAIMED BY HIM, HE WOULD HAV E CERTAINLY SAID THIS FACT IN HIS STATEMENT RECORDED ON 22/11/2007 DURING THE COURSE OF SEARCH PROCEEDINGS ESPECIALLY WHEN HE WAS SPECIFICALLY CONFRONTED WITH THE SOURCE OF AVAILABILITY OF CASH AM OUNTING TO ` 1,04,79,895/-. TO CONCLUDE, IT IS HELD THAT A LOA N ` 50 LAC WAS RECEIVED BY THE APPELLANT COMPANY I.E. NIKKI AGRO PRODUCTS (P ) LTD., JALGAON IN CASH ON 01/04/2007 FROM SHRI SATISHCHAND G.MITTAL, R/O JALGAON ON INTEREST. THE APPELLANT'S GROUNDS/ SUBMISSIONS IN T HIS REGARD ARE THEREFORE, REJECTED. THE AO WAS THUS JUSTIFIED IN I NITIATING PENALTY PROCEEDINGS U/S. 271D IN THE CASE OF THE APPELLANT COMPANY. 6. THE APPELLANT'S OTHER GROUNDS AND SUBMISSION REL ATE TO INTENTION OF INTRODUCING THE SEC. 269SS/ 269T OF THE I T ACT 1961. APPELLANT HAS STATED THAT THE AO HAS FAILED TO BRING ON RECORD TH AT THE TRANSACTION WAS MADE WITH THE APPELLANT COMPANY. AS REGARDS THE NAME OF THE LOANEE, IT HAS BEEN DISCUSSED IN DETAIL IN THE AFORESAID PAR A THAT THE APPELLANT COMPANY TOOK A LOAN OF ` 50 LAC IN CASH ON INTEREST FROM SATISCHAND G. MITTA L ON 01/04/2007 THROUGH ITS DIRECTOR SHRI KANTILAL M. JAIN. APPELLANT'S REPEATED ARGUMENTS ON THIS ISSUE ARE THEREFORE, DEV OID OF MERIT AND REJECTED. AS REGARDS APPLICABILITY OF SEC. 269SS O F THE IT ACT, THE PROVISIONS OF SEC. 269SS ARE AS FOLLOWS: 13 269SS :- NO PERSON SHALL, AFTER THE 30 TH DAY OF JUNE, 1984 TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFTER IN THIS SECTION REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF, (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGRE GATE AMOUNT OF SUCH LOAN AND DEPOSIT; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR D EPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FO RM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HAS FALLEN DUE OR NOT), THE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT RE FERRED TO IN CLAUSE(B), IS THOUSAND RUPEES OR MORE. PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM OR ANY LOAN OR DEPOS IT TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED BY (A) GOVERNMENT; (B) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK O R CO-OPERATIVE BANK (C) ANY GOVERNMENT ESTABLISHED BY A CENTRAL, STATE O R PROVINCIAL ACT (D) ANY GOVERNMENT COMPANY AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956(1 OF 1956) (E) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE: [PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTI ON SHALL NOT APPLY TO ANY LOAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN OR DEPO SIT IS TAKEN OR ACCEPTED ARE BOTH HAVING AGRICULTURAL INCOME AND NE ITHER OF THEM HAS ANY INCOME CHARGEABLE TO TAX UNDER THIS ACT] SINCE IT IS ESTABLISHED BEYOND DOUBT THAT THE APPEL LANT COMPANY HAS VIOLATED THE ABOVE MENTIONED PROVISIONS OF SEC. 269SS BY ACCEPTING A LOAN OF ` `50 LAC IN CASH, THE PROVISIONS OF SEC. 271D I.E. P ENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SEC.269SS ARE APPLICA BLE IN ITS CASE. SEC. 2 71D STATES AS UNDER:- 271D :- [1] IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOS IT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, HE SHALL BE LIA BLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. [2] ANY PENALTY IMPOSABLE UNDER SUB-SECTION (1 ) SHALL BE IMPOSED BY THE JT. COMMISSIONER [PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269T.] JT. COMMISSIONER HAS LEVIED A PENALTY OF ` 50 LAC U/S. 271D VIDE HIS ORDER 14/07/2011. I FIND FROM THE SUBMISSION THAT TH E APPELLANT COMPANY HAS NOT GIVEN ANY REASONABLE CAUSE FOR BORROW ING /ACCEPTING THE LOAN OF ` 50 LAC IN CASH. THE APPELLANT HAS ALSO FAILED TO BRI NG ON 14 RECORD THAT THERE WAS AN IMMEDIATE NEED FOR CASH OR T HE READILY AVAILABLE CASH WOULD HAVE GIVEN ANY ADVANTAGE IN ITS BUSINESS NEGOTIATIONS WITHOUT ANY LOSS OF TIME. THE APPELLAN T HAS ALSO FAILED TO PROVE THAT THE CASH LOAN WAS OBTAINED IN THE BEST IN TEREST OF BUSINESS TO EXPEDITE ANY BUSINESS DEAL OR THE CASH LOAN WAS TAKEN ON THE GROUND OF BUSINESS EXPEDIENCY. THE PROVISIONS OF S EC. 269SS AND 269T WERE INTRODUCED TO CURB CIRCULATION OF BLACK MONEY IN THE BUSINESS. IN THIS CASE SHRI SATISHCHAND G. MITTAL USED HIS UNACC OUNTED MONEY IN GIVING A CASH LOAN OF ` 50 LAC TO THE APPELLANT. SHRI SATISHCHAND G. MITTA L COULD NOT EXPLAIN THE SOURCE OF THIS CASH AND DISCLOSED THE SA ME AS HIS ADDITIONAL INCOME FOR A.Y. 2008-09. BOTH SHRI MITTA L AS WELL AS THE APPELLANT COMPANY DID NOT RECORD THE TRANSACTIONS IN THEIR REGULAR BOOKS OF ACCOUNTS. CONDUCT OF THE APPELLANT CLEARLY S HOWS THAT IT HAS VIOLATED THE PROVISIONS OF SEC. 269SS OF THE ACT. THE VERY FACT THAT THE TRANSACTION WAS NOT REFLECTED IN THE REGULAR BOOKS BY EITHER OF THE PERSON, PROVE MALAFIDE NATURE OF THE LOAN TRANSACTIO N. HAD THE INTENTION BEEN BONAFIDE, THE TRANSACTION WOULD HAVE BEEN ROUTED THROUGH THE BANK ACCOUNTS. THE SOLE PURPOSE WAS TO HIDE THE USE OF UNACCOUNTED MONEY FROM THE DEPARTMENT AND TO EVADE TAX ON INTEREST INCOME AND UNACCOUNTED INVESTMENT ON THE PART OF LE NDER AND USE OF BLACK MONEY IN THE BUSINESS ON THE PART OF LOANEE. THE SAID UNDISCLOSED CASH LOAN OF ` 50 LAC HAS NOT BEEN TAXED IN THE HANDS OF THE APPELL ANT COMPANY AS UNDISCLOSED INCOME OR IN ANY OTHER FORM WHA TSOEVER. IT HAS BEEN TAKEN INTO CONSIDERATION FOR LEVY OF PENALT Y U/S.271D FOR VIOLATING THE PROVISIONS OF SEC. 269SS OF THE ACT. 7. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCE S OF THE CASE IT IS HELD THAT THE APPELLANT COMPANY HAS BREACHED THE STATUTORY PROVISION OF SEC.269SS OF THE ACT BY BORROWING A LOAN OF ` 50 LAC IN CASH ON INTEREST ON 01/04/2007 FROM SHRI SATISHCHAND G. MITTA L. IT IS FURTHER HELD THAT THE APPELLANT HAS BEEN UNABLE TO JUSTIFY TH E EXISTENCE OF ANY REASONABLE CAUSE FOR THE DEFAULT, COMMITTED BY IT IN TERMS OF THE PROVISION OF SEC.271D OF THE ACT. THE ACTION OF JCIT IN LEVYING A PENALTY OF ` 50 LAC BEING EQUAL TO THE AMOUNT OF CASH LOAN TAKEN, IS THIS FOUND TO BE IN ORDER AND ITS ACCORDINGLY CONFIRMED. 11. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.5 0.00 LACS LEVIED BY THE LD. ASSESSING OFFICER U/S.271D OF THE I.T. ACT, 1 961, WITHOUT APPRECIATING THE FACT THAT THE SAID ALLEGED LOAN WAS NOT OBTAINED BY THE APPELLANT COMPANY BUT WAS OBTAINED BY ITS DIRECTOR M R. KANTILAL MOTILAL JAIN IN HIS PERSONAL CAPACITY. IN THE CIRCUM STANCES THE IMPUGNED PENALTY BE DELETED. 2. THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ALLEG ED LOAN OF RS.50.00 LACS WAS OBTAINED BY THE APPELLANT COMPANY, W ITHOUT APPRECIATING THE FACT THAT THE DIRECTOR MR. KANTIAL AL MOTILAL JAIN HAD ADMITTED THAT THE SAID LOAN WAS OBTAINED BY HIM IN HI S PERSONAL CAPACITY BY MISTAKENLY USING THE LETTER HEAD AND STAMP OF THE APPELLANT COMPANY. IN THE CIRCUMSTANCES IT MAY PLEASE BE HELD THAT THE SAID ALLEGED LOAN WAS NOT OBTAINED BY THE APPELLA NT COMPANY AND CONSEQUENTLY THE IMPUGNED PENALTY MAY PLEASE BE DELET ED. 15 12. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALL ENGED THE ORDER OF THE CIT(A). HE SUBMITTED THAT ALTHOUGH SHRI KAN TILAL MOTILAL JAIN HAS ACKNOWLEDGED THE RECEIPT OF THE LOAN ON THE LET TER HEAD OF THE COMPANY THE OTHER DIRECTOR NAMELY SHRI DEEPAK KUMAR JAIN HAS CATEGORICALLY DENIED TO HAVE RECEIVED ANY SUCH LOAN BY THE ASSESSEE COMPANY AND HE HAS STATED BEFORE THE ASSESSING OFFI CER THAT SHRI KANTILAL JAIN MIGHT HAVE RECEIVED THE MONEY IN HIS INDIVIDUAL CAPACITY. UNDER THESE CIRCUMSTANCES, THE LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE DEPARTMENT CANNOT SIMPLY BRUSH A SIDE THE STATEMENT OF THE OTHER DIRECTOR. HE SUBMITTED THAT ALTHOUGH THE PRINCIPLES OF EVIDENCE ACT DOES NOT APPLY TO THE I.T. PROCEEDINGS , HOWEVER, THE SAME CANNOT BE OVERLOOKED. REFERRING TO SECTION 31 OF THE INDIAN EVIDENCE ACT, 1872 HE SUBMITTED THAT ADMISSIONS ARE NOT CONCLUSIVE PROOF OF THE MATTERS ADMITTED BUT THEY MAY OPERATE AS ESTOPPELS UNDER THE PROVISIONS. HE SUBMITTED THAT NOTHING PREVENTE D THE DEPARTMENT IN NOT TAKING ANY ACTION AGAINST THE DIRECTOR WHO HAS RECEIVED THE MONEY IN HIS INDIVIDUAL CAPACITY. HE ACCORDINGLY SUBMITT ED THAT IN ABSENCE OF ANY POSITIVE EVIDENCE THE STATEMENT OF THE OTHER DIRECTOR NAMELY SHRI DEEPAK KUMAR JAIN CANNOT BE IGNORED AND THEREF ORE THE PENALTY SO LEVIED BY THE ADDL.CIT AND UPHELD BY THE CIT(A) SHOULD BE DELETED. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE LD.CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE AND REJECTED TH E CONTENTIONS ADVANCED BY THE ASSESSEE BEFORE HIM. SINCE THE LD. COUNSEL FOR THE ASSESSEE COULD NOT BRING ANY FRESH MATERIAL SO AS T O TAKE A DIFFERENT 16 VIEW THAN THE VIEW TAKEN BY LD.CIT(A), THEREFORE, H E SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT THE DOCUMENTS RELATING TO RECEIPT OF CASH LOAN OF RS.50 LAKHS BY THE ASSESSEE COMPANY WAS FOUND FROM THE RE SIDENCE OF SHRI SATISHCHAND G. MITTAL DURING SEARCH WHICH WAS DULY ACKNOWLEDGED BY ONE OF THE DIRECTORS SHRI KANTILAL JAIN ON THE LETT ER HEAD OF THE ASSESSEE COMPANY WITH THE SEAL OF THE COMPANY ON REVENUE STA MP. THERE IS ALSO NO DISPUTE TO THE FACT THAT SHRI SATISHCHAND G . MITTAL IN HIS STATEMENT RECORDED U/S.132(4) ON 24-11-2007 HAS CAT EGORICALLY STATED THAT HE HAS GIVEN THE LOAN TO M/S. NIKI AGRO PRODUC TS PVT. LTD. FOR WHICH DIRECTOR SHRI KANTILAL JAIN HAS SIGNED/ACKNOW LEDGED FOR SUCH LOAN. FURTHER, SHRI SATISHCHAND G. MITTAL IN HIS S TATEMENT ON OATH BEFORE THE ASSESSING OFFICER ON 20-12-2010 HAS AGAI N CONFIRMED THE ABOVE FACT THAT THE LOAN WAS GIVEN TO THE COMPANY A ND NOT SHRI KANTILAL JAIN. UNDER THESE CIRCUMSTANCES, THE JCIT LEVIED PENALTY OF RS.50 LAKHS U/S.271D WHICH HAS BEEN UPHELD BY THE C IT(A). 14.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT ANOTHER DIRECTOR SHRI DEEPAK KUMAR JAIN HAS STATED THAT THE CASH LOAN WAS NOT RECEIVED BY THE COMPANY, THAT THE LOAN MIGH T HAVE BEEN RECEIVED BY THE OTHER DIRECTOR IN HIS INDIVIDUAL CA PACITY AND THAT STATEMENT OF THE OTHER DIRECTOR CANNOT BE BRUSHED A SIDE AND THAT THE DEPARTMENT SHOULD HAVE TAKEN ACTION AGAINST THE DIR ECTOR SHRI KANTILAL 17 JAIN AND NOT THE ASSESSEE COMPANY. WE DO NOT FIND ANY MERIT IN THE ABOVE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. AS STATED EARLIER, THE PAPER WAS FOUND AT THE RESIDENC E OF SHRI SATICHAND G. MITTAL WHICH CONTAINS RECEIPT OF RS.50 LAKHS BY THE ASSESSEE COMPANY DULY STAMPED ON THE LETTER HEAD OF THE ASSE SSEE COMPANY WITH THE SEAL OF THE COMPANY ON REVENUE STAMP AND S IGNED BY THE DIRECTOR. SHRI SATISHCHAND G. MITTAL HAD ALSO CATE GORICALLY STATED IN HIS STATEMENT RECORDED U/S.132(4) AS WELL AS STATEM ENT ON OATH BEFORE THE AO THAT HE HAS GIVEN THE LOAN TO THE ASSESSEE C OMPANY. NOTHING WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER OR CIT(A) OR EVEN BEFORE US TO SUBSTANTIATE THAT THE LOAN WAS INFACT RECEIVED BY SHRI KANTILAL JAIN IN HIS INDIVIDUAL CAPACITY AND NOT FO R THE ASSESSEE COMPANY. THE SUBSEQUENT STATEMENT BY THE DIRECTOR WHO IS SON OF THE OTHER DIRECTOR, IN OUR OPINION, IS AN AFTERTHOUGHT AND SELF-SERVING STATEMENT IN ABSENCE OF ANY CONTRARY MATERIAL BROUG HT TO OUR NOTICE. AT NO POINT OF TIME, THE ASSESSEE HAS SHOWN HIS DES IRE TO CROSS EXAMINE SHRI SATISH CHAND G. MITTAL TO THE PROPOSIT ION THAT THE MONEY WAS INFACT GIVEN TO SHRI KANTILAL JAIN IN HIS PERSO NAL CAPACITY AND NOT TO THE ASSESSEE COMPANY. UNDER THESE CIRCUMSTANCE S, IT IS PROVED BEYOND DOUBT THAT THE LOAN WAS RECEIVED BY THE ASSE SSEE COMPANY IN CASH IN CONTRAVENTION OF PROVISIONS OF SECTION 269S S. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISCUSSION B Y THE LD.CIT(A) CONFIRMING THE PENALTY LEVIED U/S.271D WE FIND NO I NFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD. THE GROUN DS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 18 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31-12-2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 31 ST DECEMBER, 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE