Vasan Medical Centre (India) P Ltd., Trichy V. Addl.CIT Centrla Range 2, CHENNAI

ITA 2204/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1712 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 23-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Peak credit; Reasonable cause; Commercial expediency; Liquidation
• Section: 273B; 271D; 271E; 72; 13; 22; 20

Judgement Text

13 ITA NO.2194 TO 2205/18 , , IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH : CHENNAI , . ! , ' #$% BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NOS.2194 TO 2197/CHNY/2018 . / ASSESSMENT YEARS : 2014-2015 & 2015-2016. M/S.VASAN HEALTHCARE P. LTD, FOURTH FLOOR , LANCOR WEST MINISTER, NO.70, DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 600 004. VS. THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE 2, CHENNAI. [PAN AACCV 7028E] ./ I.T.A. NOS.2198 TO 2205/CHNY/2018. / ASSESSMENT YEARS : 2012-2013 TO 2015-2016. M/S.VASAN MEDICAL CENTRE (INDIA) P. LTD, 15A, THILLAINAGAR TIRUCHIRAPALLI 620 018. VS. THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE 2, CHENNAI. [PAN AADCV 3057G] (PETITIONER ( &'( /RESPONDENT) PETITIONER BY : SHRI.S. SRIDHAR, ADVOCATE RESPONDENT BY : DR.SRINIVASA RAO, CIT D.R /DATE OF HEARING : 12-11-2018 !' /DATE OF PRONOUNCEMENT : 26-11-2018 $) / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER ITA NOS.2194 TO 2197/CHNY/2018 ARE APPEALS FILED B Y THE ASSESSEE IN THE CASE OF M/S. VASAN HEALTHCARE P. LTD AND ITA N OS.2198 TO 2205/CHNY/2018 ARE APPEALS FILED BY THE ASSESSEE IN THE CASE OF M/S. V ASAN MEDICAL CENTRE (INDIA) P. LTD. ITA NOS.2149 TO 2205/18 :- 2 - : SINCE BOTH ASSESSEES ARE RELATED PARTIES AND THE I SSUES IN ALL THESE APPEALS ARE INTER-CONNECTED, THESE APPEALS ARE DISPOSED OFF THR OUGH A COMMON ORDER. 2. ITA NOS.2194 & 2196/CHNY/2018 FOR ASSESSMENT YE ARS 2014-15 & 2015-16 ARE THE APPEALS AGAINST THE COMMON ORDER OF LD.CIT( A) IN ITA NOS.265 & 266/17-18 DATED.25.06.2018, AND ITA NOS.2198, 2200, 2202 & 22 04/CHNY/2018 FOR ASSESSMENT YEARS 2012-13 & 2015-16 ARE DIRECTED AGAINST THE CO MMON ORDER OF LD.CIT(A) IN ITA NOS.259 TO 262/17-18 DATED 25.06.2018 CONFIRMING TH E LEVY OF PENALTY U/S.271D OF THE ACT MADE BY LD. ASSESSING OFFICER. 2.1 ITA NOS.2195 & 2197/CHNY/2018 FOR ASSESSMENT Y EARS 2014-15 & 2015-16 ARE THE APPEALS AGAINST THE COMMON ORDER OF LD.CIT( A) IN ITA NOS.263 & 264/17-18 DATED.25.06.2018, AND ITA NOS.2199, 2201, 2203 & 22 05/CHNY/2018 FOR ASSESSMENT YEARS 2012-13 & 2015-16 ARE DIRECTED AGAINST THE CO MMON ORDER OF LD.CIT(A) IN ITA NOS.255, 256, 257 & 258/17-18 DATED 25.06.2018 CONF IRMING THE LEVY OF PENALTY U/S.271E OF THE ACT MADE BY LD. ASSESSING OFFICER. 3. SHRI S.SRIDHAR REPRESENTED ON BEHALF OF THE ASS ESSEE, AND DR.SRINIVASA RAO REPRESENTED ON BEHALF OF THE REVEN UE. 4. THE FACTS IN ALL THE APPEALS ARE IDENTICAL AND CONSEQUENTLY, IT WAS SUBMITTED BY LD.A.R THAT IN REGARD TO LEVY OF PENALTY U/S.271 D OF THE ACT, THE APPEAL IN ITA NO.2198/CHNY/2018 CAN BE TAKEN AS A SAMPLE AND IN R EGARD TO LEVY OF PENALTY U/S.271E OF THE ACT, THE APPEAL IN ITA NO.2199/CHNY/2018 CAN BE TAKEN AS A SAMPLE. ITA NOS.2149 TO 2205/18 :- 3 - : ITA NO.2198/CHNY/2018 SEC.271D 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE IS A COMPANY. IT WAS A SUBMISSION THAT THERE WAS A SEARCH CONDUCTED AT THE PREMISES OF ONE SHRI J. DINAKARAN, WHO WAS DOING THE BUSINESS OF FINANCE. C ONSEQUENT TO THE SEARCH IN THE CASE OF SHRI J. DINAKARAN, A SEARCH WAS CONDUCTED IN THE CASE OF ASSESSEES AND DR. A.M ARUN, WHO IS ONE OF THE PROMOTER SHAREHOLDERS AND DIRECTO R OF THE ASSESSEE COMPANIES AND WHO HAD RECEIVED LOANS IN CASH FROM SHRI J. DINAKA RAN AND GIVEN THE SAME TO THE ASSESSEE COMPANY. IT WAS SUBMITTED BY LD.A.R THAT T HE LD. ASSESSING OFFICER HAD HELD THAT THERE WAS A VIOLATION OF PROVISIONS OF THE SEC TION 269SS OF THE ACT IN SO FAR AS THE CASH LOANS HAD BEEN RECEIVED BY THE ASSESSEE COMPAN Y FROM ITS DIRECTOR, DR. A.M ARUN. IT WAS A SUBMISSION THAT A SHOW-CAUSE NOTICE WAS IS SUED TO THE ASSESSEE AND THE ASSESSEE HAD RESPONDED THAT THE ASSESSEE HAD NOT DE ALT WITH SHRI J. DINAKARAN AND THE TRANSACTIONS WERE ONLY WITH ITS DIRECTOR, DR. A.M A RUN. IT WAS A SUBMISSION THAT DR. A.M ARUN HAD BORROWED THE MONIES IN HIS INDIVIDUAL CAPA CITY, AND INTRODUCED THE SAME THROUGH HIS RUNNING ACCOUNT WITH THE ASSESSEE COMPA NY FOR THE PURPOSE OF MEETING BUSINESS EXIGENCIES. IT WAS A FURTHER SUBMISSION TH AT THE ASSESSEE COMPANY HAVING BEEN PROMOTED BY DR. A.M ARUN, AND AS THE ASSESSEE COMPA NY WAS UNDERGOING VARIOUS FINANCIAL CRUNCHES AND ECONOMIC DOWNTURN, TO MEET T HE VARIOUS EMERGENCY REQUIREMENTS, SUCH AS THE EXPENSES OF THE COMPANY I N THE FORM OF MONTHLY SALARY TO THE EMPLOYEES, DOCTOR PROFESSIONAL FEES AND RENTAL PAYM ENTS AND STATUTORY PAYMENTS ETC., AT VARIOUS BRANCHES, THE CASH WAS TAKEN BY DR. A.M ARU N AS A LOAN FROM SHRI J. DINAKARAN AND FUNDS INTRODUCED IN CASH IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE FIRST WEEK ITA NOS.2149 TO 2205/18 :- 4 - : OF THE MONTH. SIMILARLY, DURING THE LAST WEEK OF TH E MONTH ALSO, FOR THE PURPOSE OF REPAYMENT OF LOANS, WHICH FALL DUE, DR. A.M ARUN WO ULD TAKE CASH LOANS FROM SHRI J. DINAKARAN AND DEPOSIT IT IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY, FROM WHICH VARIOUS EXPENSES HAVE BEEN MET. LD.A.R DREW OUR ATT ENTION TO PAGE-2 OF THE PENALTY ORDER, WHEREIN THE REPLY OF THE ASSESSEE HAS BEEN E XTRACTED. IT WAS A SUBMISSION THAT THE DETAILED STATEMENT OF THE AMOUNTS RECEIVED BY T HE ASSESSEE COMPANY HAS BEEN PRODUCED BEFORE THE A.O. IT WAS A SUBMISSION THAT T HE DETAILED STATEMENT OF THE AMOUNTS RECEIVED BY THE ASSESSEE COMPANY FROM DR. A.M ARUN AND THE UTILIZATION OF THE SAME BETWEEN VARIOUS PAYMENTS AND REPAYMENTS OF THE LOANS WERE PRODUCED BEFORE THE LD. ASSESSING OFFICER. IT WAS A SUBMISSION THAT THE ASSESSEE COMPANY NEVER PAID DR. A.M ARUN ANY INTEREST. IT WAS A SUBMISSION THAT P RIMA FACIE THE ASSESSEE HAD SHOWN THE REASONABLE CAUSE FOR TAKING THE FUNDS IN CASH F ROM DR. A.M ARUN, WHO HAD IN TURN TAKEN THE LOAN IN CASH FROM SHRI J. DINAKARAN. IT W AS A SUBMISSION THAT THE FACT THAT THE ASSESSEE HAS NOT PAID ANY INTEREST TO DR. A.M ARUN, CLEARLY SHOWED THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE DR. A.M ARUN WAS IN T HE FORM OF RUNNING ACCOUNT. IT WAS A SUBMISSION THAT DR. A.M ARUN WOULD WITHDRAW THE CASH FROM THE ASSESSEE COMPANYS CURRENT BANK ACCOUNT AND REPAY THE SAME TO SHRI J. DINAKARAN. IT WAS A SUBMISSION THAT THE ASSESSEE BEING A COMPANY, COULD NOT TAKE A LOAN FROM SHRI J. DINAKARAN DIRECTLY AS TAKING OF THE LOAN WAS SPECIFICALLY BARRED FROM IND IVIDUALS. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SHOWN REASONABLE CAUSE FOR TAKING OF T HE CASH FROM DR. A.M ARUN AND IN VIEW OF THE PROVISIONS OF THE SECTION 273B OF THE A CT, PENALTY LEVIED U/S.271D WAS NOT EXIGIBLE AND THE SAME WAS LIABLE TO BE DELETED. ITA NOS.2149 TO 2205/18 :- 5 - : 5.1 IT WAS AN ALTERNATE PRAYER THAT THE TOTAL OF T HE TRANSACTIONS IN CASH BETWEEN THE ASSESSEE AND DR. A.M ARUN, THE DIRECTOR OF THE ASSESSEE COMPANY WAS TO MEET THE EXPENDITURE OF G143.25 CORES, BUT THE PEAK OF THE C ASH DEPOSITS WAS ONLY G22.2 CRORES, BEING THE MAXIMUM AMOUNT OUTSTANDING AT ANY POINT O F TIME FOR THE THREE YEARS. IT WAS A SUBMISSION THAT IF THE ASSESSEES PRAYER FOR ITS REASONABLE CAUSE IS NOT ACCEPTABLE, THEN THE PENALTY MAY BE RESTRICTED TO THE PEAK OF THE CA SH DEPOSITS. IT WAS A FURTHER SUBMISSION BY THE LD.A.R THAT MONIES HAD BEEN TAK EN ON LOAN BY DR. A.M ARUN FROM SHRI J. DINAKARAN AND GIVEN TO THE ASSESSEE. IN TH E SAME MANNER ON THE REPAYMENT OF THE LOAN BY DR. A.M ARUN TO SHRI J. DINAKARAN, THE MONIES HAD BEEN DRAWN IN CASH FROM THE ACCOUNTS OF THE ASSESSEE AND PAID TO SHRI J. DI NAKARAN. CONSEQUENTLY, PENALTY U/S.271D OF THE ACT HAS BEEN LEVIED ON THE ASSESSEE -COMPANIES FOR TAKING THE LOAN IN CASH FROM ITS DIRECTOR, DR. A.M ARUN AND PENALTY U/ S.271E OF THE ACT HAS BEEN LEVIED FOR REPAYMENT OF THE SAID LOAN BY THE ASSESSEE-COMPANIE S TO DR. A.M ARUN. PENALTY U/S.271D OF THE ACT HAS BEEN LEVIED ON DR. A.M ARUN ALSO FOR TAKING THIS LOAN IN CASH FROM SHRI J. DINAKARAN AND PENALTY U/S.271E OF THE ACT HAS BEEN LEVIED FOR THE REPAYMENT OF THE LOAN TO SHRI J. DINAKARAN BY DR. A .M ARUN. IT WAS A SUBMISSION THAT THUS, ON THIS PEAK CASH LOAN OF 22.3 CRORES TAKEN B Y DR. A.M ARUN FROM FINANCIER, SHRI J. DINAKARAN FOR GRAVE EMERGENCY PURPOSES FOR BUSINESS AND THE REPAYMENT OF THE SAME RESULTING IN AN AGGREGATE TRANSACTIONS AMOUNTING TO NEARLY ` 143 CRORES, PENALTIES UNDER SECTIONS 271D AND 271E OF THE ACT HAVE BEEN LEVIED ON DR. A.M ARUN AND THE ASSESSEE- COMPANY RESULTING IN DEMAND OF MORE THAN ` 570 CRORES [I.E. 4 X 143]. ITA NOS.2149 TO 2205/18 :- 6 - : 5.2 IT WAS A SUBMISSION THAT THE PENALTIES IN THE CASE OF DR. A.M ARUN WERE PENDING IN SEPARATE PROCEEDINGS, AND ONLY PENALTIES IN THE CASE OF ASSESSEE-COMPANIES WERE BEFORE THE BENCH, NOW.THE LD.A.R READ THROUGH THE ASSESSEES EXPLANATION GIVEN BEFORE THE LD. ASSESSING OFFICER AS EXTRACTED IN TH E PENALTY ORDER. IT WAS A SUBMISSION THAT THE LD. ASSESSING OFFICER BY RELYING UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NANDHI DHALL MILL VS. CIT REPORTED IN [2015] 373 ITR 510, AS ALSO THE DECISION OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF P.MUTHUKARUPPAN VS. JCIT REPORTED IN 375 ITR 243(MAD.), HELD THAT THE A SSESSEE WAS LIABLE TO PAY THE PENALTY U/S.271D OF THE ACT. IT WAS A SUBMISSION THAT ON AP PEAL, BEFORE THE LD.CIT(A) THE ASSESSEE HAD ALSO RELIED UPON THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.IDHAYAM PUBLICATIONS LTD., REPORTED IN [2006] 285ITR 221(MAD.) WHEREIN THE HONBLE MADRAS HIGH COURT HAD HELD THAT THE DIR ECTOR HAVING DEPOSITED FUNDS IN THE FORM OF CASH IN THE CURRENT ACCOUNT OF AN ASSESSEE- COMPANY AND ALSO WITHDRAWING THE SAME FROM THE CURRENT ACCOUNT, THE SAME CANNOT BE T REATED AS LOAN OR DEPOSIT. IT WAS A SUBMISSION THAT THE LD.CIT(A) WITHOUT CONSIDERING ANY OF THE EXPLANATION SUBMITTED BY THE ASSESSEE, CONFIRMED THE LEVY OF PENALTY U/S.271 D OF THE ACT. IT WAS A SUBMISSION THAT PROVISIONS OF THE SECTION 271D CLEARLY SHOWS THAT T HE SAME WAS FOR CONTRAVENTION TO PROVISIONS OF THE SECTION 269SS AND PERUSAL OF THE PROVISIONS OF THE SECTION 269SS SHOWED THAT IT WAS UNDER CHAPTER-XXB OF THE INCOME TAX ACT, 1961, WHICH WAS FOR THE PURPOSE OF COUNTERACTING EVASION OF TAX. IT WAS A SUBMISSION THAT THERE WAS NO UNACCOUNTED TRANSACTIONS IN THE PRESENT CASE AND IN FACT, NO ADDITIONS ON ACCOUNT OF UNACCOUNTED TRANSACTIONS HAVE BEEN MADE IN THE CASE OF ASSESSEE-COMPANIES, OR IN THE CASE OF DR. A.M ARUN. IT WAS A SUBMISSION THAT ALL THE TRANSACTIONS WERE GENUINE AND ACCOUNTED TRANSACTIONS, THE DETAILS HAVE ALSO BEEN PRODUCED BEFORE THE LD. ASSESSING ITA NOS.2149 TO 2205/18 :- 7 - : OFFICER ALSO AND IT WAS ONLY UNDER EXIGENCY CIRCUMS TANCES AND ON ACCOUNT OF COMMERCIAL EXPEDIENCY, WHICH REQUIRED CASH FOR MEETING THE IMM EDIATE AND EMERGENCY SHORT FALL OF FUNDS IN THE CASE OF ASSESSEE-COMPANY, THE LOANS HA D BEEN TAKEN IN CASH BY THE DIRECTOR OF THE ASSESSEE-COMPANY FROM SHRI J. DINAKARAN AND DEPOSITED IN THE CURRENT ACCOUNT. IT WAS A SUBMISSION THAT THE ASSESSEE COMPANY WAS UNAB LE TO DRAW ANY FURTHER LOAN TOWARDS ITS WORKING CAPITAL AS ALL ITS RESOURCES WE RE COMPLETELY STRAINED AND IF THIS CASH LOAN HAD NOT BEEN TAKEN BY DR. A.M ARUN FOR THE PUR POSE OF MEETING EMERGENCY FINANCIAL REQUIREMENTS OF THE ASSESSEE COMPANY, THE ASSESSEE- COMPANY WOULD HAVE GONE INTO LIQUIDATION ITSELF. IT WAS A PRAYER THAT THE PENALT Y LEVIED UNDER SECTION 271D MAY BE DELETED. 6. IN REPLY, LD.D.R SUBMITTED THAT A SEARCH WAS CO NDUCTED IN JANUARY, 2015 IN THE CASE OF SHRI J. DINAKARAN, WHO WAS A MONEY LEND ER IN CHENNAI. THE ASSESSEE BEING ONE OF THE VASAN GROUP COMPANIES, HAD BEEN SEARCHE D IN DECEMBER, 2015, AND IT IS BASED IN TRICHY. IT WAS A SUBMISSION THAT THE CLAIM THAT THE ASSESSEE THAT IT IS HAVING A RUNNING ACCOUNT WITH ITS DIRECTOR, IS NOT CORRECT I N SO FAR AS NO COMMERCIAL TRANSACTIONS HAVE BEEN ROUTED THROUGH THIS ACCOUNT. IT WAS A SU BMISSION THAT THE SAID ACCOUNT WAS A CHANNEL FOR MEETING THE EXPENSES OF THE ASSESSEE CO MPANY FROM UNACCOUNTED SOURCES, OR FROM CHANNELS, WHICH ARE NOT SANCTIONED BY LAW. IT WAS A SUBMISSION THAT THE ASSESSEE COMPANY ADMITTEDLY CANNOT BORROW FROM PRIV ATE INDIVIDUALS, UNLESS IT IS SANCTIONED BY NECESSARY REGULATORY AUTHORITIES. IT WAS A SUBMISSION THAT THUS, THE SUBMISSION THAT THE TRANSACTIONS BETWEEN THE ASSESS EE AND ITS DIRECTOR DR. A.M ARUN WAS A RUNNING ACCOUNT, IS NOT CORRECT, BUT IT WAS A LOA N ACCOUNT BETWEEN THE ASSESSEE ITA NOS.2149 TO 2205/18 :- 8 - : COMPANY AND THE DIRECTOR AND PROVISIONS OF THE SECT ION 269SS DID APPLY AND THE VIOLATIONS OF THE SAME HAD RIGHTLY LED TO LEVY OF P ENALTY U/S.271D OF THE ACT. THE LD.D.R DREW OUR ATTENTION TO THE PROVISIONS OF THE SECTION 269SS OF THE ACT TO SAY THAT THE QUESTION OF PEAK CREDIT WOULD NOT APPLY IN SO FAR A S THE SAID PROVISIONS DID NOT PROVIDE FOR THE SAME. IT WAS A SUBMISSION THAT IF THE ASSE SSEE HAD ALREADY TAKEN A CASH LOAN OF ` 15,000/- ON ONE OCCASION AND ON SUBSEQUENT OCCASIO N TAKEN ANOTHER ` 5,000/- IN CASH, THEN THE PROVISIONS OF THE SECTION 269SS STOOD VIOL ATED AND PROVISIONS OF THE SECTION 271D OF THE ACT WAS EXIGIBLE. LD.D.R DREW OUR ATTEN TION TO THE PROVISIONS OF THE SECTION 269SS(C) TO SAY THAT THE WORDS USED WERE THE AMOUN T OR THE AGGREGATE AMOUNT REFERRED TO CLAUSE (A) OR (B). IT WAS A SUBMISSION THAT EACH TRANSACTION WAS TO BE CONSIDERED NOT INDIVIDUALLY, BUT IN AGGREGATE AND T HUS, THE ALTERNATE PRAYER OF THE ASSESSEE IN RESPECT OF THE PEAK CREDIT OF THE LOANS COULD NOT BE AGREED TO. IT WAS A FURTHER SUBMISSION THAT THE CLAIM OF ASSESSEE THAT THE DIRECTOR OF THE ASSESSEE COMPANY, DR. A.M ARUN HAS BEEN PENALIZED FOR THE SAME AMOUNT , AND THEREFORE, THE ASSESSEE COMPANY SHOULD NOT BE PENALIZED, WOULD NOT BE ACCEP TABLE IN SO FAR AS THE COMPANY IS A DIFFERENT ENTITY FROM DR. A.M ARUN, WHO IS AN ASSES SEE IN HIS INDIVIDUAL CAPACITY. IT WAS A SUBMISSION THAT NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT DR. A.M ARUN HAD TAKEN THE LOAN FROM SHRI J. DINAKARAN ON BEHALF OF THE ASSESSEE COMPANY, OR THAT DR. A.M ARUN ACTED ON BEHALF OF THE ASSESSEE COMPANY. T HE REVENUE WAS ABSOLUTELY CORRECT IN LEVYING THE PENALTY UNDER SECTIONS 271D AND 271E OF THE ACT IN RESPECT OF THE ASSESSEE FOR HAVING TAKEN THE LOANS AND REPAID THE LOANS FROM AND TO DR. A.M ARUN RESPECTIVELY AND DR. A.M ARUN FOR HAVING LEVIED PEN ALTY U/S.271D & U/S.271E OF THE ACT IN RESPECT OF TAKING LOAN IN CASH, AND REPAYING TH E LOAN IN CASH TO SHRI J. DINAKARAN RESPECTIVELY. IT WAS A SUBMISSION THAT OFFENCE OF B OTH THE ASSESSEE COMPANY AND DR. A.M ITA NOS.2149 TO 2205/18 :- 9 - : ARUN WAS SEPARATE AND INDEPENDENT AND WAS TO CONSID ERED INDEPENDENTLY. IT WAS A SUBMISSION THAT THE PENALTY HAS NOT BEEN LEVIED FOR THE SAME OFFENCE, BUT HAS BEEN LEVIED ON THE SAME AMOUNT. THE LD.D.R DREW OUR ATT ENTION TO THE PENALTY ORDER AT PAGES 7 & 8 TO SUBMIT THAT IN PARA-2, THE LD. ASSESSING O FFICER HAS CATEGORICALLY STATED THAT THE ASSESSEE HAS NOT DONE DAY TO DAY MATCHING OF THE RE CEIPTS AND EXPENSES AND THE CASH FLOW SUBMITTED IN RESPECT OF END-USE OF THE CASH LO ANS TAKEN LACK CLARITY. IT WAS A SUBMISSION THAT THUS, THE SUBMISSION THAT THE CLAIM ON REASONABLE CAUSE MADE BY THE ASSESSEE WAS ALSO UNSUBSTANTIATED. IT WAS A SUBMISS ION THAT THE PENALTY AS LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A ) RELYING UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF P.MUTHUKAR UPPAN VS. JCIT REFERRED TO SUPRA, WAS LIABLE TO BE UPHELD. 7. IN REPLY, THE LD.A.R SUBMITTED THAT SHRI J. DINA KARAN IS AN UNCONNECTED THIRD PARTY AND THE ASSESSEE COMPANY COULD NOT TAKE A LOA N AS IT DID NOT HAVE NECESSARY SECURITY FOR TAKING THE LOAN. IT WAS A SUBMISSION T HAT THE DECISION RELIED UPON BY THE LD. ASSESSING OFFICER AND THE LD.CIT(A) WAS NOT APPLICA BLE IN SO FAR THAT ASSESSEE IN THOSE CASES, THE CASH LOANS HAD BEEN TAKEN FROM UNCONNECT ED PERSONS AND THE TRANSACTIONS WERE ALSO COMPLETELY UNACCOUNTED. IN THE ASSESSEES CASE, IT WAS SUBMITTED THAT NONE OF THE TRANSACTIONS WERE UNACCOUNTED AND NO ADDITION O N ACCOUNT OF ANY ALLEGATION OF UNACCOUNTED TRANSACTIONS HAS BEEN MADE IN THE CASE OF ASSESSEE, OR DR. A.M ARUN AND THE DECISION RELIED UPON IN THE CASE OF CIT VS.IDHA YAM PUBLICATIONS LTD. REFERRED TO SUPRA APPLIED TO THE TRANSACTIONS BETWEEN THE ASSES SEE AND ITS DIRECTOR, WHO WAS ALSO THE PROMOTER SHAREHOLDER AND WHO HAD DEEP INTEREST IN THE ASSESSEE COMPANY, AND ITS ITA NOS.2149 TO 2205/18 :- 10 -: SURVIVAL AND ON ACCOUNT OF THE FACT THAT NO INTERES T HAS BEEN CHARGED. IT WAS SUBMITTED THAT PENALTY WAS NOT EXIGIBLE U/S.271D OF THE ACT. SECTION 271E OF THE ACT . 8. IN RESPECT OF PENALTY LEVIED U/S.271E OF THE AC T, IT WAS SUBMITTED BY LD.A.R THAT THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF THE WITHDRAWAL IN CASH BY DR. A.M ARUN FOR THE PURPOSE OF REPAYMENT TO SHRI J . DINAKARAN IN RESPECT OF LOAN TAKEN BY DR. A.M ARUN ON BEHALF OF THE ASSESSEE COM PANY. IT WAS A SUBMISSION THAT DR. A.M ARUN HAS ALSO BEEN PENALIZED FOR REPAY MENT OF THE LOAN AND CLEARLY THE PENALTY HAS BEEN LEVIED MULTIPLE TIMES FOR THE SAME AMOUNT. IT WAS A SUBMISSION THAT THE PROVISIONS OF THE SECTION 269SS AND 269T OF THE ACT WAS FOR THE PURPOSE OF CURTAILING UNACCOUNTED TRANSACTIONS WHEREAS IN THE PRESENT CASE, THE TRANSACTIONS WERE FULLY ACCOUNTED AND HAD BEEN DONE ONLY ON ACCOUNT OF COMMERCIAL EXIGENCIES. IT WAS A SUBMISSION THAT AS THE AMOUNTS HAD BEEN TAKEN IN CASH BY DR. A.M ARUN FROM SHRI J. DINAKARAN, THE SAME HAD TO BE REPAID IN CASH ITSELF, AS THAT WAS THE CONDITION UNDER WHICH THE L OANS HAD BEEN TAKEN BY DR. A.M ARUN FROM SHRI J. DINAKARAN. IT WAS A SUBMISSION TH AT CONSEQUENTLY THE FUNDS HAD BEEN WITHDRAWN FROM ASSESSEES BANK ACCOUNT FOR THE REPAYMENT OF THE LOAN BY DR. A.M ARUN TO SHRI J. DINAKARAN. ITA NOS.2149 TO 2205/18 :- 11 -: 9. IN REPLY, THE LD.D.R SUBMITTED THAT NOTHING HAS BEEN BROUGHT ON RECORD TO JUSTIFY THE REPAYMENT OF THE LOAN IN CASH. IT WA S A SUBMISSION THAT THE PRAYER OF THE LD.A.R THAT THE PENALTIES UNDER SECTIONS 271 D & 271E OF THE ACT WAS LIABLE TO BE DELETED AND IT WAS REPLIED BY LD.D.R THAT THE PENALTIES AS LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A), WERE LIABLE TO CONFIRMED. 10. TO EXAMINE AS TO WHETHER THERE HAS BEEN ANY AD DITIONS IN THE COURSE OF ASSESSMENTS ON ACCOUNT OF THE ALLEGED UNACCOUNTED T RANSACTIONS IN RESPECT OF THE SAID FUNDS DEPOSITED IN THE ASSESSEES BANK ACCOUNT BY DR. A.M ARUN, OR IN RESPECT OF THE TRANSACTIONS WHEREIN DR. A.M ARUN HA S WITHDRAWN FUNDS FOR REPAYMENT TO FINANCIER SHRI J. DINAKARAN, THE LD.D. R WAS DIRECTED TO PRODUCE THE COPY OF ASSESSMENT ORDERS IN THE CASE OF BOTH THE A SSESSEES HEREIN, AS ALSO THE ASSESSMENT ORDERS IN THE CASE OF DR. A.M ARUN FOR T HE RELEVANT PERIOD. THE LD.D.R WAS ALSO DIRECTED TO PRODUCE THE COPY OF ASSESSMENT ORDERS IN THE CASE OF FINANCIER SHRI J. DINAKARAN FOR THE RELEVANT PERIOD . ON 13.11.2018, THE ASSESSEE PRODUCED BEFORE US THE COPY OF ASSESSMENT ORDERS PA SSED U/S.143(3) RW.S.153C R.W.S.153A OF THE ACT FOR ASSESSMENT YEARS 2014-15 & 2015-16 IN THE CASE OF M/S. VASAN HEALTHCARE P. LTD., AND THE ASSESSMENT ORDE RS PASSED U/S.143(3) R.W.S.147 FOR ASSESSMENT YEARS 2012-13, 2013-14, 20 14-15 & 2015-16 IN THE CASE OF M/S. VASAN MEDICAL CENTRE (INDIA) P. LTD., AS AL SO THE ASSESSMENT ORDERS U/S.143(3) R.W.S.153A OF THE ACT FOR ASSESSMENT YEA RS 2012-13,2013-14,2014-15 ITA NOS.2149 TO 2205/18 :- 12 -: & 2015-16 IN THE CASE OF DR. A.M ARUN ALONG WITH TH E COPY OF MEMORANDUM OF ASSOCIATION OF BOTH THE ASSESSEES HEREIN I.E. M/S. VASAN HEALTHCARE P. LTD. AND M/S. VASAN MEDICAL CENTRE (INDIA) P. LTD. THE ASSES SEE HAS ALSO PLACED BEFORE US THE BREAK-UP OF THE CASH RECEIVED FROM DR. A.M ARUN IN THE BOOKS OF M/S. VASAN HEALTHCARE P. LTD. AND M/S. VASAN MEDICAL CENTRE ( INDIA) P. LTD., AS ALSO THE UTILIZATION OF THE AMOUNTS RECEIVED FROM DR. A.M AR UN, WHICH HAD BEEN FILED BEFORE THE LD. ASSESSING OFFICER. THE LD.D.R PLACED BEFORE US A COPY OF THE SEARCH ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.153B OF TH E ACT FOR ASSESSMENT YEARS 2012-13, 2013-14, 2014-15 AND 2015-16 IN THE CASE O F SHRI J. DINAKARAN. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE PERUSED THE ASSESSMENT ORDERS IN THE CASE OF TWO ASSESSEES HERE IN AS ALSO ASSESSMENT ORDERS IN THE CASE OF DR.A.M.ARUN AND SHRI J.DINAKA RAN. WE HAVE ALSO PERUSED THE DETAILS PRODUCED BEFORE THE AO IN RESPECT OF TH E CASH PAYMENT MADE BY DR.A.M.ARUN TO THE TWO ASSESSEES HEREIN. THE UTI LIZATION DETAILS GIVEN BEFORE THE AO SHOWS BREAK-UP OF THE PURPOSES FOR WHICH THE AMO UNT RECEIVED FROM DR.A.M.ARUN HAS BEEN USED. THE FIRST PAGE OF THE C ASH FLOW CHART IS ATTACHED HEREWITH AS FOLLOWS: 13 ITA NO.2194 TO 2205/18 UTILIZATION OF PAYMENT OF AMOUNT RECEIVED FROM DINA KARAN DATE AMOUNT RECEIVED BY DR.AM ARUN BANKS/NBFC- LOAN REPAYMENTS VASAN DENTA L HOSPI TAL SALARY EMPLOYEES SALARY DOCTORS PROFESSIONAL FEES CRITICAL VENDORS PAYMENTS HOSPITAL RENT PAYMENT STATUTORY PAYMENT TOTAL OPENING BANK BALANCE INCLUDING OPERATIONAL CASH BALANCE AMOUNT RECEIVED FROM JD TOTAL ALL BANK BALANCE TOTAL PAYMENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 3 - JAN.12 1,200,000 - - -- - - - - - 15,943,936 1,200,000 17 ,143,936 17,048,320 4.JAN.12 700,000 - -- - - - 11,378,596 700,000 12,078,59 6 3,430,639 5.JAN.12 1,100,000 - - 10,239,034 38,08,734 - - 48,322,771 41,861,189 1,100,000 42,961,189 124,020,848 9.JAN.12 2,500,000 - - - - - 4,467,535 - 4,467,538 22,714,6 72 2,500,000 25,214,674 10,829,391 10.JAN.12 1.,500,000 - - - - - - - - 20,801,266 1,500,000 22 ,301,266 12,238,531 11.JAN.12 1,500,000 5,400,000 - - - - - - 5,400,004 17,681,5 97 1,500,000 19,181,597 12,255,115 12.JAN.12 9,000,000 5,400,000 - - - - - - 5,400,005 11,698,2 41 9,000,000 20,698,241 19,582,749 13.JAN.12 7,500,000 10,700,000 - - - - - - 10,700,006 13,476 ,130 7,500,000 20,976,130 12,107,890 14.JAN.12 1,500,000 15,548,905 - - - - - - 15,548,912 13,491 ,099 1,500,000 14,991,099 29,017,357 18.JAN.12 4,882,519 6,775,000 - - - - - - 6,775,008 19,194,6 63 4,882,519 24,077,182 23,274,832 19.JAN.12 10,951,511 10,800,000 - - - - - - 10,800,00-9 23,6 61,823 10,951,511 34,613,334 29,177,941 19.JAN.12 - -- - - - - - - - - -- - - 20.JAN.12 - 5,400,000 - - - - - - 5,400,010 16,548,764 -- 16 ,548,764 31,013,144 21JAN.12 1,350,000 4,913,438 - - - - - - 4,913,449 20,863,4 14 1,350,000 22,213,414 19,328,993 - 11.JUL.12 700,000 8,660,040 - - - - - - 8,660,052 43,911,298 700,000 44,611,298 33,133,406 12.JUL.12 1,200,000 - - 508,488 - - - - 508,501 44,119,189 1 ,200,000 45,319,189 29,258,914 12.JUL.12 - - - - - - - - - - - - 13.JUL.12 4,400,000 - - - - 4,596,233 - - 4,596,247 35,774,8 11 4,400,000 40,174,811 27,230,560 14,JUL.12 1,200,000 - - 1,611,508 - - - - 1,611,523 27,370,1 77 1.200,000 28,570,177 33,047,512 14.JUL.12 - - - - - - - - - - - - - 16.JUL.12 4,600,000 - - - - 3,663,498 - - 3,663,514 35,001,8 45 4,600,000 39,601,845 40,959,307 17.JUL.12 16,700,00 - - - 3,926,657 - - 331,231 4,257,905 24 ,709,560 16,700,000 41,409,560 38,571,855 18 JUL 12 - - - - 3,793,938 - - 214,067 4,008,025 24,440,754 - 24,440,754 38,196,538 20 JUL 12 - 6,758,288 - - - - - - - 23,908,567 30,334,515 25 MAR 13 3,200,366 8,355,450 - - - - - - 8,355,472 32,797,0 55 3,200,366 35,997,421 34,346,258 26 MAR 13 1,000,000 - - - - - - - - 15,789,039 1,000,000 16, 787,039 26,700,698 27 MAR 13 1,655,375 - - - - - - - - 21,712,350 1,655,376 23, 367,726 14,156,607 28 MAR 13 700,000 1,540,460 - - - - - - 1,540,483 15,944,962 700,000 16,644,962 33,478,156 28 MAR 13 - - - - - - - - - - - - - 30 MAR 13 2,799,367 13,933,362 - - - - - - 13,933.386 82,984 ,452 2,799,367 85,783,819 77,385,856 31 MAR 13 - 8,000,000 - - - - - - 8,000,025 27,631,869 - 27, 631,869 1,846,530 3 APR 13 - - - - - - - - - 73,704,091 - 73,704,091 199,781, 524 4 APR 13 - - - - - - - - - 151,959,631 - 151,959,631 16,827 ,794 13 ITA NO.2194 TO 2205/18 :14: 12. A PERUSAL OF THE CASH FLOW STATEMENT PRODUCED SHOWS THE AMOUNT RECEIVED BY DR.A.M.ARUN ON VARIOUS DATES AND THE PAYMENTS MA DE ON THE VARIOUS DATES. FOR EXAMPLE, AMOUNTS HAD BEEN TAKEN ON 3 RD JANUARY, AND 4 TH JANUARY OF ` 12.00 LAKHS AND ` 7.00 LAKHS RESPECTIVELY, WHEN THE ASSESSEE HAD ` 1.59 CR BANK AND CASH BALANCE ON 3 RD JANUARY. ON 5 TH JANUARY ANOTHER ` 11.00 LAKHS HAS BEEN TAKEN AND ON 11 TH JANUARY THERE IS A TOTAL OUTFLOW OF ` 1.40 CR. NOW, WHEN THE ASSESSEE ITSELF HAD OPENING BANK BALANCE OF ` 4.59 CR., WHAT WAS THE NECESSITY TO TAKE THIS CASH DEPOSIT OF NEARLY ` 30.00LAKHS BETWEEN 3 RD JANUARY AND 5 TH JANUARY FOR MEETING AN EXPENDITURE OF ` 1.40 CRORES. HERE, ONE THING THAT IS CONSPICUOUS I S THAT THE TOTAL AMOUNT MENTIONED IN COLUMN NO.10 TAL KS OF ` 4.83 CR. THIS TOTAL IS UNSUBSTANTIATED. AT FIRST BLUSH, THE PERUSAL OF TH E CASH FLOW GIVES THE IMPRESSION THAT THERE IS A MASSIVE EXPENDITURE OF ` 4.83 CR. AND THEREFORE, THERE IS NECESSITY TO TAKE THIS CASH, FAILING WHICH THERE WOULD BE A N EGATIVE CASH BALANCE. NOW TAKING THE NEXT TRANSACTION ON 9 TH JANUARY, THERE IS ANOTHER ` 25.00 LAKHS CASH TAKEN AND ` 44.67 LAKHS RENT PAYMENT IS MENTIONED. THE OPENING BANK BALANCE AS ON 5 TH JANUARY IS ` 4.18 CR., FROM THIS, WE REDUCED THE CASH TAKEN EARL IER OF ` 30.00 LAKHS, THEN WE ARE STILL LEFT WITH ` 3,88,61,000/- AND AFTER REDUCING THE EXPENSES AS ON 5 TH JANUARY OF ` 1.40 CR., THERE IS STILL A BALANCE OF ` 2.48 CRS., WHICH CLEARLY DOES NOT JUSTIFY THE REQUIREMENT OF T AKING THE CASH OF ` 25.00 LAKHS FROM DR.A.M.ARUN. THUS, CASH FLOW PRODUCED BY THE ASSESSEE ITSELF GOES AGAINST THE CLAIM OF THE ASSESSEE FOR ITS REASONABLE CAUSE. PERUSAL OF 5 TH JANUARY, 2012, ITA NOS.2149 TO 2205/18 :- 15 -: OPENING CASH & BANK SHOWS ` 4.18 CRS. CASH RECEIPTS OF RS.11.00 LAKHS AND TOTAL CLOSING BALANCE OF RS.4.29 CRS. AND TOTAL EXPENSES OF RS.12.40 CRS. HOW THIS ` 12.40 CRS. WAS MET, IS NOT COMING OUT OF THE CASH F LOW. WHAT IS THE NATURE OF THE ` 12.40 CRS EXPENDITURE? THUS, THE CASH FLOW SUBMITT ED ITSELF IS QUESTIONABLE. THUS, THE CLAIM OF REASONABLE CAUSE OF THE ASSESSEE CLEARLY STANDS UNSUBSTANTIATED. IT IS TRUE THAT IF THE ASSESSEE RE ALLY NEEDS EMERGENCY FUNDS FOR BUSINESS EXIGENCIES, TAKING OF CASH CAN BE CONSIDER ED AS A REASONABLE CAUSE BUT THAT HAS NOT BEEN ESTABLISHED HERE, CLEARLY. IN FA CT, THE CASH FLOW PRODUCED BY THE ASSESSEE CLEARLY NEGATES THE CLAIM OF BUSINESS EXIGENCIES RAISED BY THE ASSESSEE. THE SEARCH ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE HEREIN AS ALSO SEARCH ASSESSMENT ORDER IN THE CASE OF DR.A.M. ARUN WHICH HAD BEEN SUBMITTED BY THE LD.AR, THOUGH THE SAME WAS REQUEST ED FROM THE LD.DR CLEARLY NEGATES THE ARGUMENTS OF THE LD.DR THAT THE AMOUNTS WERE TAKEN BY DR.A.M.ARUN FOR THE PURPOSE OF ASSESSEE TO MEET THE UNACCOUNTED EXPENSES OF THE ASSESSEE. IN FACT, IN NEITHER OF THE ASSESSMENT ORDERS, IS TH ERE ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS OR UNACCOUNTED FUNDS/EXPENS ES. THE DEMANDS ARE ON ACCOUNT OF DISALLOWANCES OF EXPENDITURE. HOWEVER, A PERUSAL OF THE SEARCH ASSESSMENT ORDER IN THE CASE OF SHRI J.DINAKARAN AS SUBMITTED BY THE LD.DR AT THE BEHEST OF THE BENCH SHOWS THAT CERTAIN UNACCOUN TED INCOME IS BEING ASSESSED IN THE HANDS OF SHRI J.DINAKARAN. THE ASSESSMENT S EEMS TO HAVE BEEN MADE ON THE BASIS OF RE-WORKED NOTIONAL BALANCE SHEET AND S TATEMENT OF AFFAIRS PREPARED FROM THE SEIZED RECORDS. THE ASSESSMENT ORDER OF S HRI J.DINAKARAN MAKES A ITA NOS.2149 TO 2205/18 :- 16 -: MENTION OF THE LOAN GIVEN TO DR.AM.ARUN AT PAGE NO. 4 PARA NO.4 OF THE ASSESSMENT ORDER, SPECIFICALLY THE ASSESSMENT ORDER IN THE CASE OF SHRI J.DINAKARAN FOR THE AY 2015-16. THUS, UNACCOUNTED INCOMES IN RESPECT OF THESE LOAN TRANSACTIONS HAVE BEEN TRACED AS UNACCOUNTED I NCOME OF SHRI J.DINAKARAN. THUS,WHAT BECOMES CLEAR FROM THE ABOVE FACTS IS THA T THE UNACCOUNTED CASH OF SHRI J.DINAKARAN HAS BEEN ROUTED THROUGH DR.A.M.ARU N, DEPOSITED INTOTHE ACCOUNTS OF THE TWO ASSESSEES HEREIN, LAUNDERED AND THEN WITHDRAWN BY DR.A.M.ARUN AND RETURNED TO SHRI J.DINAKARAN. 13. THE PROVISIONS OF SEC.269SS AND 269T ARE UNDER CHAPTER XX-B OF THE INCOME TAX ACT TO COUNTERACT THE EVASION OF TAX. TH IS IS EXACTLY WHAT HAS BEEN DONE IN SO FAR AS THE UNACCOUNTED INCOME OF SHRI J. DINAKARAN HAS BEEN USED FOR THE BUSINESS PURPOSES OF THE ASSESSES HEREIN THOUGH NOT PROVED AND ALLEGED TO HAVE BEEN RETURNED BACK. 14. A PERUSAL OF THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF NANDHI DHALL MILLS V. CIT REPORTED [2015] 373 IT R 510 SHOWS THAT THOUGH SEVERAL DOCUMENTS HAVE BEEN SUBMITTED BY THE ASSESS E, THERE WAS NOTHING TO SHOW THAT THERE WAS URGENCY FOR THE ASSESSEE TO AVA IL THE LOAN IN VIOLATION OF SEC.269SS AND THE AO HAD GIVEN DETAILED REASONING W HY HE FOUND THAT SUCH A TRANSACTION WOULD NOT COME UNDER THE EXCEPTION CLAU SE OF SEC.271D. IN THE SAID CASE, THE AO HAD CATEGORICALLY GIVEN A FINDING THAT THE SUBMISSION OF THE ASSESSEE ITA NOS.2149 TO 2205/18 :- 17 -: WAS THAT THE LOANS HAVE BEEN TAKEN IN CASH FOR THE PURPOSE OF DEPOSITING IN THE ASSESSEES BANK ACCOUNT FOR DRAWING DEMAND DRAFTS I N THE NAME OF THE CREDITORS WAS FALSE, IN SO FAR AS, ALL THE CREDITORS WERE REG ULAR SUPPLIERS OF THE ASSESSEE AND THE ASSESSEE HAD MADE FREQUENT CREDIT PURCHASES. I N THE PRESENT CASE ALSO THE A.O HAS REJECTED THE ASSESSEES EXPLANATION IN RESP ECT OF THE CASH FLOW BY SAYING THAT IT LACKS CLARITY. HOWEVER, AS MENTIONED EARLI ER, A PERUSAL OF THE CASH FLOW CLEARLY SHOWS THAT THE CASH WAS NOT REQUIRED TO BE TAKEN AND THE ASSESSEE HAD ADEQUATE FUNDS AVAILABLE WITH IT TO MEET ITS REQUIS ITE EXPENDITURE. 15. A PERUSAL OF THE DECISION IN THE CASE OF SHRI P.MUTHUKARUPPAN V. JCIT REPORTED IN 375 ITR 243 [MADRAS] SHOWS THAT THE HON BLE JURISDICTIONAL HIGH COURT HAD HELD THAT THE ENTIRE TRANSACTION BETWEEN THE AS SESSE, A FINANCIER, AND THE FINANCIER WHO WAS ALSO FINANCING A LARGE NUMBER OF PERSONS WAS APPARENTLY TO EVADE TAX WHICH CAME TO LIGHT AFTER A SURVEY WAS CO NDUCTED AND SOME DOCUMENTS ON RECORDS WERE SEIZED. THE ASSESSEE, IN THAT CASE , HAD NOT GIVEN ANY SATISFACTORY EXPLANATION NOR APPEARED BEFORE THE AO . IN THE PRESENT ASSESSEES CASE ALSO THE UNACCOUNTED CASH OF SHRI J.DINAKARAN HAS BEEN PUMPED INTO THE BUSINESS OF THE ASSESSEE COMPANY THROUGH ITS PROMOT ERSHAREHOLDER AND DIRECTOR, DR.A.M.ARUN. THE EXPLANATION OF REASONABLE CAUSE B EING BUSINESS EXIGENCIES ALSO HAS NOT BEING SUPPORTED WITH EVIDENCE AND, IN FACT, THE CASH FLOW SUBMITTED BY THE ASSESSEE NEGATES THE CLAIM OF BUSINESS EXIGENCY . ITA NOS.2149 TO 2205/18 :- 18 -: 16. A PERUSAL OF THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF M/S.IDHAYAM PUBLICATIONS LTD., REPORTED IN 285 I TR 221 (MADRAS) RELIED UPON BY THE ASSESSEE SHOWS THAT A PRIVATE LTD. COMPANY H AD RECEIVED CASH FROM ITS DIRECTOR.CONSEQUENTLY, THE HONBLE JURISDICTIONAL H IGH COURT HAD GIVEN A FINDING THAT DEPOSIT/WITHDRAWAL OF THE MONEY FROM THE CURRE NT ACCOUNT COULD NOT BE CONSIDERED AS A LOAN OR ADVANCE. IN THE PRESENT AS SESSEES CASE, HEREIN, DR.A.M.ARUN ADMITTEDLY IS ONE OF THE PROMOTER SHARE HOLDER AND DIRECTOR OF THE ASSESSEE COMPANIES. BUT THE CASH WHICH HAS BEEN DE POSITED IN THE BANK ACCOUNT OF THE ASSESSEE COMPANIES, IS NOT THAT OF DR.A.M.AR UN, THE SHAREHOLDER AND DIRECTOR. DR.A.M.ARUN ALLEGEDLY HAS DEPOSITED THE CASH IN THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE COMPANIES MAINTAINED WITH THE CITY UNION BANK. THE CASH HAS BEEN OBTAINED BY DR.A.M.ARUN FROM SHRI J.D INAKARAN. THE FACT THAT DR.A.M.ARUN DEPOSITED THE CASH IN THE BANK ACCOUNT OF THE TWO ASSESSEE COMPANIES HEREIN ITSELF PUTS INTO QUESTION THE ISSU E OF REASONABLE CAUSE. THIS IS NOT A CASE WHERE DR.A.M.ARUN HAS TAKEN THE CASH FRO M SHRI J.DINAKARAN AND USED THE CASH FOR THE PURPOSE OF THE BUSINESS REQUIREMEN TS OF THE ASSESSEE COMPANY IN CASH. THIS IS A CASE WHERE THE CASH TAKEN BY DR.A. M.ARUN FROM SHRI J.DINAKARAN HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSES SEE COMPANIES AND THAT MONEY IS ALLEGED TO HAVE BEEN USED FOR THE BUSINESS OF THE ASSESSEE COMPANIES, THOUGH NOT PROVED WITH THE CASH FLOW. IF DR.A.M.AR UN WAS DEPOSITING CASH INTO THE BANK ACCOUNTS OF THE ASSESSE, IT WOULD HAVE BEE N EASIER FOR HIM TO DEPOSIT THE CASH INTO HIS BANK ACCOUNT AND TRANSFER IT TO T HE ASSESSE COMPANIES. WHAT ITA NOS.2149 TO 2205/18 :- 19 -: STOPPED DR.A.M.ARUN FROM DEPOSITING THE SAID CASH I N HIS BANK ACCOUNT AND THEN TRANSFERRING IT BY BANK TRANSFER TO THE BANK ACCOUN T OF THE ASSESSEE COMPANIES? TODAY, SAME BANK, MONEY TRANSFER TAKES LESS THAN A FEW SECONDS AND EVEN IF IT IS IN DIFFERENT BANKS, BANK TRANSFER WOULD TAKE THE MA XIMUM TIME OF TWO TO THREE HOURS. THE CASH FLOW SHOWS THAT THE MONEY DEPOSITE D IN CASH ON A PARTICULAR DAY AND THE EXPENDITURE COMING AFTER MORE THAN TWO DAYS . THIS BEING SO, ALONG WITH THE FACT THAT THE MONEYS DEPOSITED BY DR.A.M.ARUN I N THE ASSESSEES BANK ACCOUNT WERE UNACCOUNTED CASH OF SHRI J.DINAKARAN SHOWS THA T THE DECISION IN THE CASE OF M/S.IDHAYAM PUBLICATIONS LTD., ARE NOT APPLICABLE T O THE FACTS OF THE ASSESSEES CASE. THUS, THE ASSESSEE HAS FAILED TO PROVE WITH REASONABLE CAUSE, THE REASON FOR THE RECEIPT OF CASH FROM DR.A.M.ARUNIN VIOLATIO N OF THE PROVISIONS OF SEC.269SS LEADING TO THE CONSEQUENTIAL LEVY OF PENALTY U/S.27 1D OF THE ACT. 17. WHEN THE LANGUAGE OF THE PROVISION IS CRYSTAL CLEAR, THE OBJECT OF THE PURPOSE OF THE ENACTMENT OF THE SAID PROVISION WOUL D NO MORE HAVE ANY SAY IN THE MATTER. A PLAIN READING OF SEC.271D ESTABLISHE S THAT IT IS A MANDATORY PROVISION AND A PERSON CONTRAVENING THE PROVISIONS OF SEC.269SS OF THE ACT IN ANY MANNER CANNOT ESCAPE FROM THE PAYMENT OF THE PENALT Y OF EQUIVALENT AMOUNT SO RECEIVED AS LOAN OR DEPOSIT BY HIM, UNLESS EXCEPTIO NAL AND REASONABLE CAUSE IS PROVED. IT IS A WELL SETTLED PRINCIPLE OF INTERPRE TATION THAT THE TAXING STATUTES HAVE TO BE CONSTRUED STRICTLY AND THAT WHEN THE LANGUAGE IS CLEAR AND UNAMBIGUOUS IT ITA NOS.2149 TO 2205/18 :- 20 -: HAS TO BE CONSTRUED IN THE LITERAL SENSE BEREFT OF ANY EQUITABLE OR SOCIAL REASONS OR ANY HARDSHIP LIKELY TO BE SUFFERED. 18. THUS, AS THE ASSESSEE HAS NOT BEEN ABLE TO SUB STANTIATE ITS CLAIM FOR RECEIVING AMOUNTS IN CASH FROM DR.A.M.ARUN IN VIOLA TION OF PROVISIONS OF SEC.269SS, THE PENALTY LEVIED U/S.271D OF THE ACT A S LEVIED BY THE ADDL. COMMISSIONER AND AS CONFIRMED BY THE LD.CIT(A) STAN DS CONFIRMED. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF M/S.IDHAYAM PUBLICATIONS LTD., REFERRED TO SUPRA, HAS NO APPLICATION ON THE FACTS OF THE PRESENT CASE AND THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI P.MUTHUKARUPPAN, REFERRED TO SUPRA, AND NANDHI DHAL L MILLS, REFERRED TO SUPRA, HAVE BEEN RIGHTLY APPLIED BY THE ADDL. COMMISSIONER AND THE LD.CIT(A). 19. COMING TO THE PENALTY LEVIED U/S.271E OF THE A CT, THE ADMITTED FACT REMAINS THAT CASH HAS BEEN DEPOSITED INTO THE BANK ACCOUNT OF THE ASSESSEES HEREIN. THE FUNDS HAVING BEEN ROUTED THROUGH THE BANK ACCOUNTS, WHY WAS THE SAME WITHDRAWN IN THE CASH FOR REPAYMENT TO DR.A.M.ARUN AND SUBSEQUENTLY TO SHRI J.DINAKARAN IS NOT EXPLAINED. WHAT STOP THE BANK TR ANSFER OF THE FUNDS FROM THE ASSESSEES BANK ACCOUNT TO THE BANK ACCOUNTS OF DR. A.M.ARUN AND CONSEQUENT TRANSFER TO SHRI J.DINAKARAN. THE ASSESSMENT ORDER IN THE CASE OF SHRI J.DINAKARAN GIVES THE PICTURE THAT THE MONEYS WERE THE UNACCOUNTED CASH OF SHRI J.DINAKARAN AND IT WAS SHRI J.DINAKARANS UNAC COUNTED CASH WHICH WAS ITA NOS.2149 TO 2205/18 :- 21 -: LAUNDERED THROUGH THE ACCOUNTS OF THE TWO ASSESSEES HEREIN. IN SHORT, THE ASSESSES HEREIN HAS BEEN USED AS THE CUSTODIAN OF T HE UNACCOUNTED CASH OF J. DINAKARAN BY DEPOSITING IT IN THE BANK ACCOUNTS OF THE ASSESSES HEREIN BY THEIR SHAREHOLDER AND DIRECTOR DR.A. M. ARUN. THE ASSESSE ES HAVE NOT BEEN ABLE TO GIVE ANY EXPLANATION TO SUBSTANTIATE WITH EVIDENCE FOR T HE REPAYMENT OF THE DEPOSITS TO DR.A.M.ARUN IN CASH. AS AND WHEN J. DINAKARAN RE QUIRED THE CASH THE CASH SEEMS TO HAVE BEEN WITHDRAWN BY DR. A. M. ARUN FROM THE BANK ACCOUNTS OF THE ASSESSES HEREIN AND PAID TO J. DINAKARAN. THE QUES TION THAT HAS BEEN RAISED THAT THE MONEYS GIVEN BY THE SHAREHOLDER AND DIRECTOR TO THE PRIVATE LTD. COMPANY IS NOT A LOAN OR DEPOSIT BECAUSE NO INTEREST HAS BEEN CHARGED, WOULD NOT HOLD WELL IN SO FAR AS THE BALANCE SHEET OF THE ASSESSEES CLE ARLY SHOWS THAT DR.A.M.ARUN IS AN UNSECURED CREDITOR. THE ASSESSEE IS ALSO NOT AB LE TO GIVE A TERM TO THE MONEYS DEPOSITED AND WITHDRAWN IN THE BANK ACCOUNT OF THE ASSESSEE COMPANIES BY DR.A.M.ARUN OTHER THAN THE TERM DEPOSIT. A DE POSIT NEED NOT BE INTEREST BEARING. SO ALSO A LOAN. A DEPOSIT IS PUTTING MONE Y INTO THE ACCOUNT OF THE ASSESSEE AND THAT IS EXACTLY WHAT HAS BEEN DONE BY DR.A.M.ARUN IN THE CASE OF THE ASSESSES HEREIN AND THAT DEPOSIT HAS BEEN RETUR NED/WITHDRAWN BY DR.A.M.ARUN. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE PENALTY U/S.271E AS LEVIED BY THE ADDL. COMMISSIONER AND AS CONFIRMED B Y THE LD.CIT(A) IS ON A RIGHT FOOT AND DOES NOT CALL FOR ANY INTERFERENCE. ITA NOS.2149 TO 2205/18 :- 22 -: 20. IN THE RESULT, APPEALS FILED BY THE ASSESSEE M /S.VASAN HEALTHCARE P. LTD., IN ITA NOS.2194 TO 2197/CHNY/2018 AND THE APPEALS FILE D BY THE ASSESSEE M/S.VASAN MEDICAL CENTRE (INDIA) P. LTD., IN ITA NO S.2198 TO 2205/CHNY/2018 STAND DISMISSED. ORDER PRONOUNCED ON 26 TH NOVEMBER, 2018, AT CHENNAI. SD/- SD/- ( . ! ) (A.MOHAN ALANKAMONY) ' #$% / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) * #$% / JUDICIAL MEMBER % / CHENNAI & / DATED:- 26 TH NOVEMBER, 2018. K S SUNDARAM ' ()* + * / COPY TO: 1 PETITIONER 3. , () / CIT(A) 5. *-. (/ / DR 2. (012 / RESPONDENT 4. , / CIT 6. .3 4 / GF