Balagam Srinivas, Visakhapatnam V. THE Addl.CIT, , RANGE-5, Visakhapatnam

ITA 148/VIZ/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0231 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Section: 143(3)

Judgement Text

ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.148/VIZAG/2013 ( / ASSESSMENT YEAR : 2005-06 ) BALAGAM SRINIVAS VISAKHAPATNAM VS. ADDL. CIT, RANGE-5 VISAKHAPTNAM [ PAN: AHFPB 4925M ] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI G.V.N. HARI, AR -., / / RESPONDENT BY : SMT. D. KOMALI KRISHNA, DR / 3 / DATE OF HEARING : 23.09.2015 / 3 / DATE OF PRONOUNCEMENT : 29.10.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE CIT(A), VISAKHAPATNAM DATED 12.2.2013. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIVIDU AL FILED HIS RETURN OF INCOME ADMITTING RS.1,05,400/-. THE ASSESSEE DU RING THE YEAR UNDER ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 2 CONSIDERATION OBTAINED A DEMAND DRAFT FROM FEW PERS ONS FOR THE PURPOSE OF APPLYING FOR EXCISE LICENSE. THE ASSESS EE HAS RECEIVED CASH FROM THE PERSONS AND THE SAME WAS DEPOSITED IN HIS BANK ACCOUNT AND PURCHASED THE DEMAND DRAFTS FROM BANK THROUGH HIS A CCOUNT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO CA LLED THE ASSESSEE AND ASKED TO EXPLAIN THE SOURCE OF THE FUNDS RECEIV ED. THE ASSESSEE HAS PRODUCED THE PARTIES FROM WHOM HE RECEIVED THE PAYMENTS AND SUBMITTED THAT THE AMOUNTS ARE RECEIVED TO BUY DEM AND DRAFTS FOR THE PURPOSE OF APPLYING FOR EXCISE LICENSE. HOWEVER, T HE A.O. HAS NOT ACCEPTED THE SUBMISSIONS MADE BY THE ASSESSEE AND A DDITION WAS MADE. 3. ON APPEAL, THE CIT(A) DELETED THE ADDITION MADE BY THE AO. THE SAME WAS CONFIRMED BY THE INCOME TAX APPELLATE TRIB UNAL. SUBSEQUENTLY, THE AO HAS INITIATED PENALTY PROCEEDI NGS U/S 271D OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS ACT) BY ISSUING A NOTICE DATED 23.9.2010. THE ASSESSEE HAS SUBMITTED BEFORE THE AO THAT THE MONEY RECEIVED WITH REGARD TO THE DEMAND DRAFTS NEV ER BELONG TO HIM AND THE SAID AMOUNT WAS NEITHER A LOAN NOR A DEPOSI T AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 271D OF THE ACT. H OWEVER, THE A.O. HAS NOT AGREED WITH THE SUBMISSIONS OF THE ASSESSEE AND PENALTY WAS LEVIED. ON APPEAL THE CIT(A) CONFIRMED THE SAME. ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 3 4. ON BEING AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE ASSESSEE ACTED AS AN AGENT ON BEHALF OF THE 18 PERSONS AND H IS BANK ACCOUNT WAS UTILISED FOR THE PURPOSE OF OBTAINING EXCISE LICENS E. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE VERY ADDITI ON MADE BY THE AO WAS DELETED BY CIT(A) AND THE SAME WAS CONFIRMED BY THE INCOME TAX APPELLATE TRIBUNAL AND NO PENALTY CAN BE LEVIED. L D. D.R. HAS RELIED ON THE ORDERS OF THE AO. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORDS , GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS CARRYING ON THE BUSINESS OF RUNNING A HOTEL, TOURIST COTTAGE AND A KALYANA MANDAPAM. ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ADMITTING TOTAL INCOME OF RS.1,05,400/-. THE RETUR N FILED BY THE ASSESSEE WAS INITIALLY PASSED U/S 143(1) OF THE ACT . AFTER DUE PROCESS, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT THE ASSE SSEE HAS DEPOSITED RS.19 LAKHS IN HIS BANK ACCOUNT AND OBTAINED DEMAND DRAFTS WORTH RS.19 LAKHS AND HENCE CALLED FOR THE EXPLANATION FR OM THE ASSESSEE. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFF ICER THAT THE AMOUNT DEPOSITED BY HIM IN HIS BANK ACCOUNT WAS NOT HIS MONEY BUT IT ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 4 IS THE MONEY OF THE OTHER PARTIES WHO WANTED TO BUY DEMAND DRAFTS FOR THE PURPOSE OF OBTAINING EXCISE LICENSES. HE HAS S UBMITTED THAT HE ONLY FACILITATED THE TRANSACTION. HOWEVER, THE ASSESSIN G OFFICER HAS NOT ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE. AC CORDINGLY, ADDITION WAS MADE. ON APPEAL THE LD. CIT(A) DELETED THE ADD ITION MADE BY THE AO. ON FURTHER APPEAL, THE INCOME TAX APPELLATE TR IBUNAL HAS DELETED THE ADDITION AND CONFIRMED THE ORDER OF THE CIT(A) AND OBSERVED AS UNDER:- WE NOTICE THAT THE ASSESSEE HAS FILED CONFIRMATION L ETTERS FROM ALL THE 18 PERSONS ON WHOSE BEHALF THE DDS WERE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE. SUBSEQUENTLY THE ASSESS EE HAS ALSO PRODUCED 17 PERSONS AND THE AO HAS RECORDED STATEME NT FROM THEM. IN THE SWORN STATEMENT ALSO ALL THE 17 PERSONS HAVE CO NFIRMED THE SUBMISSION OF THE ASSESSEE. THERE IS ALSO NO DISPU TE WITH REGARD TO THE FACT THAT THE DDS WERE UTILIZED BY THESE 18 PERSONS ONLY FOR THEIR OWN PURPOSE, I.E. FOR MAKING APPLICATION IN THEIR RESPE CTIVE NAMES. WE WERE ALSO INFORMED THAT THE REVENUE DID NOT CAUSE ANY IN QUIRY WITH REGARD TO THE DEMAND DRAFTS IN THE INDIVIDUAL HANDS OF THE 18 PERSONS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ONCE INDIVIDUAL PERSONS HAVE ADMITTED THAT THE DDS WERE PURCHASED ON THEIR BEHALF AND THAT THEY HAVE ONLY USED THEM FOR THEIR OWN PURPOSE, THE ONUS PLACED UPON THE ASSESSEE GETS DISCHARGED. IN SUCH A SITUATION THE REVENUE MAY EXAMINE THE FINANCIAL STATUS OF THE IND IVIDUAL PERSONS AND THE ADDITION, IF ANY, IS CALLED FOR IN THEIR RESPEC TIVE HANDS. WE NOTICE THAT THE LD. CIT(A) HAS ANALYSED THE ISSUE IN RIGHT PERSPECTIVE AND HAS RENDERED HIS DECISION ON A CONSPECTUS OF MATTER. H ENCE WE DO NOT FIND ANY NECESSITY TO INTERFERE IN HIS DECISION. 7. SUBSEQUENTLY AO HAS ISSUED A NOTICE DATED 23.9.2 010 AND CALLED FOR THE EXPLANATION FROM THE ASSESSEE THAT WHY PROC EEDINGS U/S 271D OF THE ACT CANNOT BE INITIATED. IN RESPONSE TO THE LE TTER, THE ASSESSEE HAS ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 5 SUBMITTED DETAILED REPLY DATED 23.9.2010, WHEREIN H E HAS STATED THAT HE HAD TAKEN 19 BANKER CHEQUES/DDS OF RS.1 LAKH EACH F ROM STATE BANK OF INDIA, BHIMILI BRANCH, VISAKHAPATNAM DRAWN IN FAVOU R OF PROHIBITION AND EXCISE SUPERINTENDENT, VISAKHAPATNAM ON BEHALF OF 1 9 PERSONS OUT OF WHICH, ONLY ONE DEMAND DRAFT OF RS.1 LAKH WAS BELON GING TO HIM. THE MONEY WAS ACTUALLY SPENT FOR OBTAINING THE DDS/BANK ERS CHEQUES FOR THE REMAINING 18 OTHER PERSONS BELONGING TO EACH ON E OF THEM ONLY. HE ALLOWED THEM TO DEPOSIT THEIR MONEY IN HIS BANK ACC OUNT AND OBTAINED THE DEMAND DRAFTS. HE ONLY FACILITATED THE TRANSAC TION AND HE NEITHER ACCEPTED THE LOANS NOR DEPOSITED AND THERE IS NO VI OLATION OF PROVISIONS OF SECTION 269 SS OF THE ACT AND SUBMITTED THAT NO PENALTY CAN BE LEVIED U/S 271D OF THE ACT. HOWEVER, THE AO WAS NOT SATIS FIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND CAME TO A CON CLUSION THAT THE ASSESSEE HAS ACCEPTED CASH FROM THE THIRD PARTIES A ND DEPOSITED THE SAME IN HIS BANK ACCOUNT, OBTAINED THE DEMAND DRAFT S IN CONTRAVENTION TO THE SECTION 269SS OF THE ACT AND PENALTY WAS LEV IED U/S 271D OF THE ACT. 8. AFTER CAREFUL CONSIDERATION OF THE ORDERS OF THE AUTHORITIES BELOW AND THAT THE ORDER OF THE INCOME TAX APPELLATE TRIB UNAL DATED 13.11.2009 THE TRIBUNAL GAVE A CATEGORICAL FINDING THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE DDS WERE U TILISED BY THOSE 18 ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 6 PERSONS ONLY FOR THEIR OWN PURPOSE I.E. FOR MAKING AN APPLICATION IN THEIR RESPECTIVE NAMES. WE FIND THAT THE ASSESSEE HAS FAC ILITATED THE TRANSACTION BY ALLOWING THE THIRD PARTIES TO DEPOSI T THE AMOUNTS IN HIS BANK ACCOUNT AND OBTAINED DEMAND DRAFTS FOR THE PUR POSE OF EXCISE LICENSES. IN OUR OPINION, THE ASSESSEE NEITHER ACC EPTED ANY LOAN NOR DEPOSIT. WHATEVER HE HAS RECEIVED WAS ONLY FOR THE BENEFIT OF THIRD PARTIES FOR THE PURPOSE OF OBTAINING DDS TO THEM. IN OUR OPINION, THE ASSESSEE HAS NOT VIOLATED SECTION 269SS OF THE ACT. THEREFORE, NO PENALTY CAN BE IMPOSED U/S 271D OF THE ACT. HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. IP INDIA (P) LIMITED 343 ITR 353 HAS HELD THAT SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN CASH FOR PURCHASE OF SHARES DID NOT AMOUNT TO EITHER LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269SS OF THE ACT. HENCE, NO PENALTY COULD BE LEVIED U/S 271D OF THE ACT. KEEPING IN VIEW OF THE FACTS AND CIRCUMST ANCES OF THE CASE AND ALSO FOLLOWING THE DECISION OF THE HONBLE DELHI HI GH COURT (SUPRA) THE PENALTY IMPOSED BY THE AO DESERVE TO BE DELETED. A CCORDINGLY, WE REVERSE THE ORDER PASSED BY THE CIT(A) AND THE APPE AL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.148/VIZAG/2013 BALAGAM SRINIVAS, VISAKHAPATNAM 7 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH OCT15. SD/- SD/- ( (( ( . . . . ) ( ) ( ) ( ) ( . .. . ) )) ) ( (( ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 6 / DATED : 29.10.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT BALAGAM SRINIVAS, C/O KALINGA HOTEL, OLD BUS STAND, BHIMILI, VISAKHAPATNAM. 2. -., / THE RESPONDENT THE ACIT, RANGE-5, VISAKHAPATNAM . 3. ; / THE CIT-1, VISAKHAPATNAM 4. ; () / THE CIT(A), VISAKHAPATNAM 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // AB ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM