Shri Sanjaykumar Haribhai Patel , Ahmedabad V. Addl. CIT, Range-4(1), Ahmedabad

ITA 1762/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2298 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 27-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETTA
• Keywords: Principle of natural justice; Bonafide belief; Corroborative evidences
• Section: 273B; 271E

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1762/AHD/2019 / ASSTT. YEAR: 2014-2015 SANJAYKUMAR HARIBHAI PATEL, 401, SHUBHAM COMPLEX, OPP. NAVRANGPURA, AHMEDABAD-380009. PAN: ALQPP3785L VS. A.C.I.T, RANGE-4(1), AHMEDABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETTA, A.R REVENUE BY : SHRI VINOD TANWANI, CIT.D.R /DATE OF HEARING : 16/09/2021 /DATE OF PRONOUNCEMENT: 25/10/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-8, AHMEDABAD, DATED 24/10/2019 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 271E OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2014-2015. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.1762/AHD/2019 ASSTT. YEAR 2014-15 2 1.1 THE ORDER PASSED U/S.250 ON 24-10-2019 FOR A.Y.2014-15 BY CIT(A)-8 , ABAD UPHOLDING THE PENALTY OF RS.25 LAKHS IMPOSED BY ADDL. CIT U/S 271T FOR ALLEGED VIOLATION OF SECTION-269T OF THE ACT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED PENALTY. 2.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.25 LAKHS IMPOSED BY ADDL. CIT U/S 271E FOR ALLEGED VIOLATION OF SECTION-269T OF THE ACT. 2.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE PENALTY OF RS.25 LAKHS IMPOSED BY ADDL. CIT U/S 271E FOR ALLEGED VIOLATION OF SECTION-269T OF THE ACT. 2.4 THE LD. C1T(A) HAS FAILED TO APPRECIATE THERE WAS SUFFICIENT CAUSE U/S 273B IN AS MUCH AS BONAFIDE BELIEF ABOUT PASSING BOOK ENTRY TO SETTLE TWO ACCOUNTS AND THE TRANSACTIONS WERE FOUND UNDISPUTEDLY GENUINE. IT IS, THEREFORE, PRAYED THAT THE PENALTY OF RS. 25 LACS UPHELD BY THE C1T(A) MAY KINDLY BE DELETED. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271E OF THE ACT ON ACCOUNT OF THE VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. 4. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS REDUCED THE AMOUNT OF LOAN LIABILITY BY RS. 25 LACS BY WAY OF PASSING OF JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS. AS PER THE AO ANY REPAYMENT FOR LOAN CAN BE MADE THROUGH THE BANKING CHANNEL/ACCOUNT PAYEE CHEQUE ONLY AS PROVIDED UNDER THE PROVISION OF SECTION 269T OF THE ACT. BUT THE ASSESSEE FAILED TO DO SO. ACCORDINGLY, THE AO INVOKED THE PROVISION OF SECTION 271E OF THE ACT AND LEVIED THE PENALTY FOR A SUM OF RS. 25,00,000/- ONLY. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE AO. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1762/AHD/2019 ASSTT. YEAR 2014-15 3 7. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 34 AND CONTENDED THAT THERE CANNOT BE ANY PENALTY ON ACCOUNT OF REPAYMENT OF LOAN THROUGH THE JOURNAL ENTRIES. 8. ON THE OTHER HAND THE LD. DR, VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE IN THE PRESENT HAS SHOWN A LOAN OF 44.70 LAKHS AS OPENING BALANCE AS ON 1 ST APRIL 2013 AS EVIDENT FROM THE COPY OF THE LEDGER OF SHRI MILAP JADEJA WHICH IS PLACED ON PAGE NUMBERS 24 OF THE PAPER BOOK. 9.1 THE IMPUGNED AMOUNT OF LOAN WAS REDUCED BY THE ASSESSEE BY WAY OF PASSING THE JOURNAL ENTRY AS ON 1 APRIL 2013 BY 25 LAKHS. IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAS PURCHASED A PIECE OF LAND FOR 50 LAKHS JOINTLY WITH SHRI MILAP- JADEJA IN EQUAL PROPORTION. FURTHERMORE, THE ENTIRE PAYMENT OF 50 LAKHS WAS PAID BY HIM (THE ASSESSEE) TO THE TRANSFEREE NAMELY SHRI BHIMJIBHAI B PATEL THROUGH BANKING CHANNEL. FOR THIS PURPOSE, THE LEARNED AR DREW OUR ATTENTION ON PAGES 26 OF THE PAPER BOOK WHERE DETAIL OF PAYMENT TO SHRI BHIMJIBHAI B PATEL FOR 50 LAKHS WAS PLACED. THUS, IT WAS CONTENDED BY THE LEARNED AR FOR THE ASSESSEE THAT THE ADJUSTMENT ENTRY WAS MADE IN BOOKS OF ACCOUNTS OF THE ASSESSEE FOR THE LAND PURCHASED JOINTLY IN EQUAL PROPORTION. ACCORDINGLY, THERE WAS NO CONTRAVENTION OF THE PROVISIONS OF SECTION 269T OF THE ACT SO AS TO ATTRACT THE PENALTY PROVISION AS SPECIFIED UNDER SECTION 271E OF THE ACT. IT WAS ALSO CONTENTED THAT IN COMMERCIAL WORLD, THE PAYMENT THROUGH THE ADJUSTMENT OF ACCOUNTING ENTRIES ARE VALID MODE OF PAYMENTS WHICH ARE INEVITABLE UNDER THE SPECIFIC CIRCUMSTANCES. FURTHERMORE, THE ADJUSTMENTS THROUGH THE ACCOUNTING ENTRIES HAVE BEEN ACCEPTED BY THE HONBLE COURTS I.E. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BOMBAY CONDUCTORS & ELECTRICALS LTD REPORTED IN 301 ITR 328 HAS ACCEPTED THE ACCOUNTING ENTRIES BY WAY ADJUSTMENTS AS A VALID MODE OF PAYMENT AND THEREFORE THE GENUINENESS OF THE ITA NO.1762/AHD/2019 ASSTT. YEAR 2014-15 4 TRANSACTION CANNOT BE DOUBTED. ACCORDINGLY, THERE CANNOT BE ANY PENALTY UNDER THE PROVISIONS OF SECTION 271E IN PURSUANCE TO THE PROVISIONS OF SECTION 273B OF THE ACT. 9.2 LIKEWISE, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD. REPORTED IN 367 ITR 433 HAS HELD AS UNDER: A PLAIN READING OF THE SECTION 269SS INDICATES THAT IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR A LOAN IS ACCEPTED BY AN ASSESSEE, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. THE AMBIT OF THE SECTION IS CLEARLY RESTRICTED TO TRANSACTION INVOLVING ACCEPTANCE OF MONEY AND NOT INTENDED TO AFFECT CASES WHERE A DEBT OR A LIABILITY ARISES ON ACCOUNT OF BOOKS ENTRIES. THE OBJECT OF THE SECTION IS TO PREVENT TRANSACTIONS IN CURRENCY. THIS IS ALSO CLEARLY EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO SECTION 269SS WHICH DEFINES LOAN OR DEPOSIT TO MEAN 'LOAN OR DEPOSIT OF MONEY'. THE LIABILITY RECORDED IN THE BOOKS OF ACCOUNT BY WAY OF JOURNAL ENTRIES, I.E. CREDITING THE ACCOUNT OF A PARTY TO WHOM MONIES ARE PAYABLE OR DEBITING THE ACCOUNT OF A PARTY FROM WHOM MONIES ARE RECEIVABLE IN THE BOOKS OF ACCOUNT, IS CLEARLY OUTSIDE THE AMBIT OF THE PROVISION OF SECTION 269SS, BECAUSE PASSING SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. IN THE PRESENT CASE, ADMITTEDLY NO MONEY WAS TRANSACTED OTHER THAN THROUGH BANKING CHANNELS. PACL MADE CERTAIN PAYMENTS THROUGH BANKING CHANNELS TO LAND OWNERS. THIS PAYMENT MADE ON BEHALF OF THE ASSESSEE WAS RECORDED BY THE ASSESSEE IN ITS BOOKS BY CREDITING THE ACCOUNT OF PACL. IN VIEW OF THIS ADMITTED POSITION, NO INFRINGEMENT OF SECTION 269SS IS MADE OUT. [PARA 8] 9.3 IN VIEW OF THE ABOVE THE LD. AR SUBMITTED THAT THERE CANNOT BE ANY VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT PROVIDED THAT THE TRANSACTION WAS GENUINE. ACCORDINGLY, THE IMMUNITY WAS AVAILABLE TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 273B THE ACT. 9.4 NOW COMING TO THE CASE ON HAND, THERE APPEARS NO DISPUTE WITH RESPECT TO THE ACCOUNTING ENTRIES MADE BY THE ASSESSEE IN THE ACCOUNTS WHICH HAS REDUCED THE LOAN LIABILITY BY 25 LAKHS STOOD IN THE NAME OF SHRI MILAP JADEJA. HOWEVER, WE FIND THAT THE GENUINENESS OF THE TRANSACTION WAS NOT ACCEPTED BY THE LEARNED CIT (A). IN SIMPLE WORDS, THE LEARNED CIT (A) HELD THAT THERE WAS NO DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE JUSTIFYING THAT THE ASSESSEE HAS PURCHASED ANY PIECE OF LAND. THE RELEVANT FINDING OF THE LEARNED CIT (A) STANDS AS UNDER: ON CAREFUL CONSIDERATION, I FIND THAT APPELLANT HAS REPAID THE LOAN OF RS.25 LAC TO SHRI MILAP JADEJA OTHERWISE THEN A/C PAYEE CHEQUE, A/C PAYEE DEMAND DRAFT OR ELECTRONIC CLEARING SYSTEM. ADMITTEDLY, THE APPELLANT HAVE PAID A SUM OF RS.25 LAC TO SHRI BHIMJIBHAI PATEL FOR WHICH APPELLANT CONTENDED THAT THE SAME WAS ADVANCED ITA NO.1762/AHD/2019 ASSTT. YEAR 2014-15 5 FOR PURCHASE OF LAND BELONGING TO SHRI BHIMJIBHAI PATEL AS WELL AS SHRI MILAP JADEJA. NO CORROBORATIVE EVIDENCE OR THE AGREEMENT / DEED ETC., WAS FURNISHED. APPELLANT HAS GIVEN A GENERAL EXPLANATION THAT THE REPAYMENT WAS TOWARDS ADVANCE FOR PURCHASE OF LAND ON FACTS EXCEPT THE UNCORROBORATED GENERAL EXPLANATION THAT THE SUM OF RS.25 LAC WAS PAID TO SUM BHIMJI PATEL AS REPAYMENT OF LOAN OBTAINED FROM SHRI MIILAP JADEJA, APPELLANT HAS NOT BEEN ABLE TO OFFER ANY PLAUSIBLE EXPLANATION AS TO WHY SUCH REPAYMENT WAS NOT MADE TO SHRI MILAP JADEJA BY THE PRESCRIBED MODES. ADMITTEDLY, THE LATTER HAS GIVEN LOANS TO APPELLANT FROM HIS ACCOUNT AS WELL AS FROM ACCOUNT OF HIS PROPRIETORSHIP CONCERN VIZ. M/S. SHIV CASTING; HE IS A BUSINESSMAN HAVING BANK ACCOUNTS AND APPELLANT HAS REGULAR DEALING OF LOANS THEREON THEIR RESPECTIVE ACCOUNTS WITH SHRI MILAP JADEJA. NO CORROBORATIVE EVIDENCES OF THE LAND DEAL I.E. AGREEMENT WERE FURNISHED. 9.5 ON THE STRENGTH OF THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BOMBAY CONDUCTORS & ELECTRICALS LTD (SUPRA), THE ASSESSEE CANNOT BE GIVEN THE IMMUNITY FROM THE PENALTY PROVISIONS AS SPECIFIED UNDER PROVISIONS OF SECTION 271E OF THE ACT. IT IS FOR THE REASON THAT THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED BY THE ASSESSEE BY FILING THE NECESSARY DETAILS IN ESTABLISHING THE FACT THAT THE ADJUSTMENT ENTRY WAS MADE BY THE ASSESSEE FOR THE PURCHASE OF THE LAND. IN THE ABSENCE OF, THE NECESSARY DETAILS WE ARE NOT ABLE TO PERSUADE OURSELVES WITH THE CONTENTION OF THE LEARNED AR FOR THE ASSESSEE. 9.6 BEFORE PARTING, WE NOTE THAT ALL THE ENTRIES WERE DULY REFLECTED BY THE ASSESSEE IN ACCOUNTS OF THE PARTIES INVOLVED IN THE IMPUGNED TRANSACTION OF LOAN AND PURCHASE OF THE LAND. IN OUR CONSIDERED VIEW, THE GENUINENESS OF THE TRANSACTIONS FOR THE PURCHASE OF LAND CANNOT BE PROVED WITHOUT FILING THE NECESSARY DETAILS. HOWEVER, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE ARE INCLINED TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION. IF IT IS PROVED, THERE WILL NOT BE ANY PENALTY UNDER THE PROVISIONS OF SECTION 271E OF THE ACT. ACCORDINGLY, WE ARE SETTING ASIDE THE ISSUE ON HAND THE FILE OF THE AO FOR FRESH ITA NO.1762/AHD/2019 ASSTT. YEAR 2014-15 6 ADJUDICATION AS PER THE PROVISIONS OF LAW. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR THE STATISTICAL PURPOSES. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 25/10/2021 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 25/10/2021 MANISH