The Income Tax Officer, Ward-2(2), Panaji., Panaji V. M/s Sai Prasad Properties Ltd., Panaji

ITA 237/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1493 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMRITI BHARDWAJ LD
• Assessee Lawyers: NARENDRA PATEL
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 40A(3); 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 164/PNJ/2015 : (A.Y 2010 - 11) SAI PRASAD PROPERTIES LTD. 402, 4 TH FLOOR, SAI PLAZA, OPP. GOMANTAK TIMES, PANAJI, GOA. PAN : AAMCS2738N (APPELLANT) VS. JT. COMMISSIONER OF INCOME TAX, RANGE - 2, PANAJI, GOA (RESPONDENT) ITA NO. 237/PNJ/2015 : (A.Y 2010 - 11) INCOME TAX OFFICER, WARD - 2(2), PANAJI, GOA (RESPONDENT) VS. SAI PRASAD PROPERTIES LTD. 402, 4 TH FLOOR, SAI PLAZA, OPP. GOMANTAK TIMES, PANAJI, GOA. PAN : AAMCS2738N (RESPONDENT) ASSESSEE BY : NARENDRA PATEL, CA REVENUE BY : SMT. SMRITI BHARDWAJ, LD. DR DATE OF HEARING : 05/08/2015 DATE OF PRONOUNCEMENT : 05/08/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 164/PNJ/2015 IS AN APPEAL FILED BY THE ASSESSEE AND ITA NO. 237/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT( A), PANAJI - 1 IN ITA NOS. 314/PNJ/13 - 14 & 332/PNJ/14 - 15 DT. 20.2.2015 FOR THE A.Y 2010 - 11. SHRI NARENDRA PATEL, CA REPRESENTED ON BEHALF OF THE ASSESSEE AND SMT. SMRITI BHARDWAJ, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) 2. THE ASSESSEE HAD FILED AN ADJOURNMENT LETTER STATING THAT THE ASSESSEES COUNSEL, SHRI ARVIND SONDE COULD NOT ATTEND DUE TO SOME PRE - FIXED MATTERS AT ITAT, MUMBAI. HOWEVER, IT IS NOTICED THAT SHRI ARVIND SONDES VAKALATNAMA IS NOT AVAILABLE ON RECORD. CONSEQUENTLY, THE ADJOURNMEN T APPLICATION FILED BY THE ASSESSEE WAS REJECTED AND THE APPEALS HEARD. 3. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE IS A COMPANY WHICH IS DOING BUSINESS OF BUYING AND SELLING OF PROPERTIES AND REAL ESTATE. IT WAS THE SUBMISSION THAT AS THE ASSESS EE HAD VIOLATED THE PROVISIONS OF SEC. 269SS BY ACCEPTING DEPOSITS IN CASH IN EXCESS OF THE PRESCRIBED LIMIT OF RS. 20,000/ - , A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE BY THE JT. COMMISSIONER OF INCOME TAX, RANGE - 2, PANAJI. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD SUBMITTED ABOUT THE NATURE OF RECEIPT BY THE COMPANY THAT IT HAD NOT TAKEN ANY LOANS OR DEPOSITS BUT THE SAME WERE RECEIPTS OF PARTICIPATION VALUE IN RESPECT OF THE JOINT VENTURE. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD SUBMITTED THA T THE ASSESSEE ENTERED INTO PROJECT PARTICIPATION AGREEMENTS AND PROJECT PARTICIPATION ADVANCES ARE RECEIVED AFTER CONSIDERING THE CONVENIENCE OF THE INVESTORS. IT WAS THE SUBMISSION THAT THE PROJECT PARTICIPATION VALUE IS SHOWN UNDER THE HEAD CURRENT LI ABILITIES IN THE BALANCE - SHEET. IT WAS THE SUBMISSION THAT AS PER THE BALANCE - SHEET OF THE ASSESSEE ITSELF THE SO CALLED PROJECT PARTICIPATION ADVANCES WERE EITHER LOANS OR DEPOSITS. THE LD. DR FURTHER DREW OUR ATTENTION TO THE FINDINGS OF THE CBI AS ME NTIONED IN THE ORDER DT. 13.7.2012 PASSED BY THE HON'BLE HIGH COURT OF MADHYA PRADESH, GWALIOR BENCH WHEREIN IT HAS BEEN SPECIFICALLY MENTIONED THAT THIS INDICATES THAT BOTH THE COMPANIES, SPPL AND SAI PRASAD FOOD LTD., A GROUP COMPANY OF SPPL ARE SIMPLY COLLECTING DEPOSITS FROM THE INVESTORS WITHOUT ANY REGISTRATION WITH THE RESERVE BANK OF INDIA . ON THE BASIS OF THE REPORT FILED BY THE CBI, THE HON'BLE HIGH COURT HAD VIDE ITS ORDER DT. 13.7.2012 OBSERVED THAT THE AUTHORITIES OF THE ORGANIZATIONS ARE AT 3 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) LIBERTY TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH LAW. IT WAS THE FURTHER SUBMISSION THAT EVEN THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) HA D INITIATED PROCEEDINGS AGAINST THE ASSESSEE FOR ILLEGAL COLLECTION OF MONEY FROM THE PUBLIC. IT WAS T HE FURTHER SUBMISSION THAT THE VARIOUS SCHEMES CLEARLY SHOWED THAT MONIES WERE TAKEN ONLY AS DEPOSITS OR LOANS AND THE REPAYMENT WAS BEING CALCULATED BY INCLUDING INTEREST. IT WAS THE SUBMISSION THAT THE ASSESSEE, OTHER THAN GIVING WRITTEN REPLY, DID NOT PRODUCE ANY EVIDENCE BEFORE THE AO OR THE JT. COMMISSIONER OF INCOME TAX TO SUBSTANTIATE ITS CASE IN REGARD TO THE CLAIM THAT THE CASH HAD BEEN TAKEN AS THE JOINT VENTURE PARTNERS, MORE SO, THE DEPOSITORS WERE FROM RURAL AREAS WHERE BANKING TRANSACTIONS WE RE NOT POSSIBLE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ON THE BASIS OF AN AFTERTHOUGHT STORY RAISED BY THE ASSESSEE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE DEPOSITORS WERE FROM RURAL AREAS AND BANKING OPERATIONS WERE NOT POSSIBLE. IT WAS ALSO THE SUBMISSION THAT THE ASSESSEE HAD NOT PRODUCED ANY DETAILS BEFORE THE AO. HOWEVER, THE LD. CIT(A) WENT ON TO HOLD THAT THE JT. COMMISSIONER OF INCOME TAX HAD KEPT INSISTING THAT THE ONUS IS ON THE APPELLANT TO PROVE IN 100% CASES (NUMBER S OF PEOPLE BEING IN LACS) THAT THEY DID NOT POSSESS BANK ACCOUNT KNOWING FULLY WELL THAT PRODUCING SUCH A LARGE NUMBER OF CONFIRMATIONS WOULD REQUIRE ENORMOUS AMOUNT OF TIME AND RESOURCES AND PRACTICALLY IMPOSSIBLE . IT WAS THE SUBMISSION THAT THE AMOUNT INVO LVED IS RS.96 CRORES AND EVEN TAKING THE MINIMUM PRESCRIBED AMOUNT FOR VIOLATION OF SEC. 269SS AT RS. 20,000/ - , THE NUMBER OF PERSONS WOULD AT THE MAXIMUM BE ONLY ABOUT 48,000 PERSONS AND WOULD IN NO CASE RUN INTO LACS. IT WAS THE FURTHER SUBMISSION THAT BEFORE THE LD. CIT(A) THE AO HAD SPECIFICALLY REQUESTED FOR VERIFICATION OF THE DEPOSITORS WHICH WAS ALSO NOT DONE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HELD THAT IN PENAL PROCEEDINGS THE ONUS IS ON THE OFFICER TO PROVE THAT THE ASSESSEE HAS COMMITTE D AN OFFENCE WITHOUT REASONABLE CAUSE WHICH DESERVES LEVY OF PENALTY. IT WAS THE SUBMISSION THAT NO EVIDENCE BEING 4 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) PRODUCED BEFORE THE AO, BEING THE JT. COMMISSIONER OF INCOME TAX IN THE PRESENT CASE, WHEN THE AO HAD SPECIFICALLY REQUESTED FOR VERIFICATIO N OF THE DETAILS AND SAME HAVING NOT BEEN DONE BY THE LD. CIT(A), THE FINDING OF THE LD. CIT(A), IN FACT, IS LEADING THE WAY FOR THE ASSESSEE, WHO DOES NOT PRODUCE DETAILS, TO ESCAPE FROM THE LEVY OF PENALTY. IT WAS THE SUBMISSION THAT WITHOUT ANY DETAILS THE AO COULD NEVER HAVE DONE ANY VERIFICATION. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAS HELD THAT THE ASSESSEE HAS FURNISHED MANY JV PARTICIPATION FORMS AND THE COPIES OF THE SAME WERE FORWARDED TO THE AO BUT THE AO DID NOT VERIFY ANY OF THEM. IT W AS THE SUBMISSION THAT THE APPEAL BEFORE THE LD. CIT(A) WAS INSTITUTED ON 27.2.2014 ORIGINALLY AND WAS DISPOSED OFF VIDE ORDER DT. 28.8.2014. THE SAME WAS THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL WHICH HAD PASSED ITS ORDER IN ITA NOS. 214/PNJ/2014 AND 286/PNJ/2014 VIDE ORDER DT. 26.9.2014 AND THE APPEALS WERE RESTORED TO THE FILE OF THE LD. CIT(A) FOR RE - ADJUDICATION AFTER GRANTING THE AO ADEQUATE OPPORTUNITY OF BEING HEARD. THE SET ASIDE APPEALS CAME TO BE HEARD OF 5.2.2015 AND THE ORDER CAME TO BE PASSED ON 20.2.2015. C ONSEQUENTLY , THE FINDINGS OF THE LD. CIT(A) THAT THE AO DID NOT VERIFY ANY OF THE DETAILS WHICH WERE FORWARDED TO HIM WAS ABSOLUTELY UNFOUNDED. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAS BLINDLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITHOUT DOING ANY BASIC VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED TO THE EXTENT THAT RELIEF HAS BEEN GRANTED TO THE ASSESSEE. 4. IN REPLY, THE LD. A R SUBMIT TED THAT THE DETAILS OF THE DEPOSITORS HAD BEEN PRODUCED BEFORE THE LD. CIT(A) BUT DUE TO THE PAUCITY OF TIME THE AO MIGHT NOT HAVE BEEN ABLE TO VERIFY THE DETAILS. IT WAS, HOWEVER, THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) GRANTING RELIEF WAS ON TH E BASIS OF EVIDENCES FILED AND SHOULD NOT BE DISTURBED. IT WAS THE FURTHER SUBMISSION THAT THE LD. CIT(A) 5 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) HAVING FOUND THAT THE ASSESSEE HAD A REASONABLE CAUSE FOR ACCEPTING THE CASH DEPOSIT SHOULD HAVE DELETED THE PENALTY IN ITS ENTIRETY. 5. WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, A PERUSAL OF THE ORDER OF THE LD. CIT(A) CLEARLY SHOWS THAT THE LD. CIT(A) HAS BLINDLY FOLLOWED THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SAHARA INDIA REPORTED IN 26 TAXMANN.CON 269 (DEL.) (2012) . THE LD. CIT(A) FAILED TO APPRECIATE THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SAHARA INDIA ( SUPRA ) RELATED TO THE PERIOD 1996 TO 20 0 1 - 0 2 WHEN BANKING FACILITY IN RURAL AREAS WERE NOT FULLY AVAILABLE AND THE ASSESSMENT YEAR IN RESPECT OF THE ASSESSEE IS 2010 - 11 WHEN THE BANKING FACILITIES ARE AVAILABLE EVEN IN RURAL AREAS. SURPRISINGLY, THE LD. CIT(A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE RURAL PERSONS WOULD FIND IT DIFFICULT TO USE THE BANKING CHANNELS. THOUGH THE LD. CIT(A) HAS MENTIONED THAT THE ASSESSEE - COMPANY WAS UNDER THE BELIEF THAT THE PROVISIONS OF SEC. 269SS DID NOT APPLY IN THE ASSESSEES CASE AND THEREFORE IT HAD NEVER INSI STED FOR MAKING CHEQUE PAYMENTS, THE SAME DOES NOT HOLD TO REASON BECAUSE EVEN ASSUMING THAT THE ASSESSEE HAD RECEIVED CASH IN EXCESS OF RS. 20,000/ - , THEN, THE PROVISIONS OF SEC. 40A(3) STOOD VIOLATED. IF THIS IS SO, THEN, WHY THE ASSESSEE HAS RECEIVED RS. 20,000/ - IN CASH FROM THE SAME PERSON ON THE SAM E DATE AND RECORDED IT AS MULTIPLE ENTRIES OF RS. 20,000/ - EACH. THEREFORE, THE SAID BONA FIDE CLAIM IS NOTHING BUT AN AFTERTHOUGHT. THE FACT THAT THE ASSESSEE HAS SHOWN THESE AMOUNTS UNDER THE HEAD CURRENT LIABILITIES ALSO CLEARLY SHOWS THAT THE ASSES SEE KNEW THAT IT WAS TAKING LOANS AND DEPOSITS. A PERUSAL OF THE VARIOUS SCHEMES BEING PLAN AP FOR 54 MONTHS, PLAN EP FOR 66 MONTHS, PLAN HP FOR 72 MONTHS, PLAN IP FOR 72 MONTHS AND THE METHODOLOGY OF THE ALLOTMENT OF THE NUMBER OF UNITS, THE PARTICIPATIO N AND THE EXPECTED REFUND OF PARTICIPATION CLEARLY SHOWS THAT THE SCHEMES ARE ONE OF TAKING LOANS AND DEPOSITS AT SPECIFIED INTEREST. IN FACT, IN THE 6 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) ONE - TIME PAYMENT PLAN REPRESENTING PLAN EP FOR 66 MONTHS YOU DEPOSIT RS. 3,000/ - AND THE EXPECTED RETURN OF PARTICIPATION IS RS.6,000/ - , YOU DEPOSIT RS. 90,000/ - AND YOUR EXPECTED RETURN IS RS. 1,80,000/ - AFTER 66 MONTHS. FOR 54 MONTHS UNDER PLAN AP, RS.6,000/ - BECOMES RS.8,250/ - . SIMILARLY, FOR OTHER PLANS ALSO. ASSUMING AND ACCEPTING THE CONTENTION OF TH E ASSESSEE THAT THIS IS A JOINT VENTURE PROGRAMME, HOW IS THE ASSESSEE - COMPANY QUANTIFYING THE RETURN ON INVESTMENT AT THE END OF THE PRESCRIBED PERIOD. WHY THE PERIOD ? A PERUSAL OF THE JOINT VENTURE AGREEMENT SHOWS THAT THE ASSESSEE IS PROVIDING SECURI TY IN THE FORM OF IMMOVEABLE PROPERTY. IN A JOINT VENTURE, WHAT IS THE REQUIREMENT OF SUCH A SECURITY BEING PROVIDED ? BEFORE THE HON'BLE HIGH COURT OF MADHYA PRADESH, THE ASSESSEE , ON BEING QUESTIONED AS TO WHY NO SALE HAS TAKEN PLACE IN RESPECT OF THE JOINT VENTURE PROPERTIES WHICH HAVE BEEN PROVIDED AS SECURITY , THE ASSESSEE HAS REPLIED THAT THE SALE IS TO BE DONE ONLY IF THE ASSESSEE IS UNABLE TO HONOUR THE COMMITMENT OF REFUND OF THE AGREED AMOUNT TO THE CUSTOMERS AT THE END OF THE AGREEMENT PERIOD. THUS, CLEARLY THE SCHEMES ARE NOTHING BUT FINANCIAL ARRANGEMENTS IN THE NATURE OF LOANS AND DEPOSITS. THE ASSESSEES CONDUCT CLEARLY SHOWS ITS CONTUMACIOUS ACT AND ITS CLAIM OF BONA FIDE CLEARLY FAILS. A PERUSAL OF THE PROVISIONS OF SEC. 269SS SHOWS THE WORDS USED THEREIN IS SHALL. THIS IS A CLEAR BAR FROM TAKING CASH IN EXCESS OF THE PRESCRIBED LIMIT. THIS PROVISION HAS BEEN INTRODUCED TO BLOCK THE USE OF BLACK MONEY. SEC. 271D IS THE PENALTY LEVIABLE FOR VIOLATIONS OF THE PROVISIONS OF SEC. 269SS. SEC. 273B PROVIDES FOR NON - LEVY OF PENALTY IF THE ASSESSEE IS ABLE TO SHOW REASONABLE CAUSE FOR SUCH FAILURE. THUS FOR EVERY VIOLATION U/S 269SS, FOR THE NON - LEVY OF PENALTY U/S 271D, THE ASSESSEE HAS TO PROVE THE REASONABLE CAUSE U/S 273B. A GENERAL S TATEMENT WOULD NOT SUFFICE. EACH VIOLATION WILL HAVE TO BE CONSIDERED SEPARATELY AND INDEPENDENTLY. THIS CLEARLY HAS NOT BEEN DONE. 7 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) 6. COMING TO THE ISSUE OF EVIDENCES WHICH HAVE BEEN PRODUCED BEFORE THE LD. CIT(A) AND WHICH THE LD. CIT(A) ALLEGES THAT THE AO HAS NOT EXAMINED, A PERUSAL OF THE PAPER BOOK SHOWS THAT PAGES 1 TO 11 ARE THE KYC PAPERS IN RESPECT OF ONE SHRI PRAMOD A. CHAVAN. THE SAID PERSON HAS A PAN CARD . T HE CO - VENTURE APPLICATION FORM DOES NOT CONTAIN THE SIGNATURE OF THE SAID PERSON NOR HIS PHOTOGRAPH. HOWEVER, IN THE TERMS AND CONDITIONS OF SAID FORM IS SIGNED AND THERE IS AN INTIMATION LETTER IN RESPECT OF THE JOINT VENTURE AGREEMENT ADDRESSED TO SAID SHRI PRAMOD A. CHAVAN. THEN, THERE IS AN AGREEMENT FOR PROJECT PARTICIPATION MADE AND EXECUTED AT PUNE, SIGNED ON THE LAST PAGE ONLY AND CERTIFICATE AND ALLOCATION LETTER AT PAGES 10 & 11 OF THE PAPER BOOK. THE NEXT BATCH OF EVIDENCE WHICH HAVE BEEN FILE D BEFORE THE LD. CIT(A) IS A LIST OF 50 PARTICIPANTS, MORE SO DEPOSITORS, WHICH IS FOUND AT PAGES 48 & 49 OF THE ORDER OF THE LD. CIT(A). ALONGWITH THIS IN THE PAPER BOOK AT PAGES 257 & 258 THERE IS ANOTHER CHART OF VARIOUS PERSONS ON TOP OF WHICH IS RECO RDED AS EXISTING DATA SUBMITTED BEFORE AO DURING 143(3) AND 271D PROCEEDINGS. INTERESTINGLY, THIS CHART AT PAGES 257 & 258 SHOWS THE NAMES OF SOME PERSONS MULTIPLE TIMES FOR HAVING RECEIVED AMOUNTS OF RS. 20,000/ - ON THE SAME DAY IN EACH CASE , AND ON WH ICH , THE FILTERING IN RESPECT OF ADDRESS AND THE GOOGLE MAP DISTANCES ARE RECORDED WHICH ADMITTEDLY SEEMS TO BE ONE OF THE PAPERS WHICH WAS SUBMITTED BEFORE THE LD. CIT(A) IN RESPECT OF THE GOOGLE MAP SAMPLING , WHICH HAS BEEN USED BY THE LD. CIT(A) FOR GRA NTING RELIEF TO THE ASSESSEE. THE LIST AT PAGES 257 & 258 AND THE LIST AT PAGES 48 & 49 OF THE ORDER OF THE LD. CIT(A) DO NOT TALLY IN ANY WAY IN RESPECT OF THE NAMES. THOUGH THE LD. AR HAS SUBMITTED THAT THE SAID LIST AT PAGES 257 & 258 CONTAIN ADDRESS OF THE VARIOUS DEPOSITORS, THE SAID ADDRESS, AS SHOWN IN THE CHART, IS IN RESPECT OF THE FILTERS APPLIED, BEING ADDRESS LINE 1 AND ADDRESS LINE 2 AND IT DOES NOT GIVE ANY DETAILS OF A PROPER ADDRESS THROUGH WHICH THE SAID DEPOSITORS CAN BE EVEN CONTACT ED FOR VERIFICATION, MUCH LESS THEIR PAN CARD NUMBER, IF ANY. THUS, CLEARLY THE EVIDENCES WHICH HAVE 8 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) BEEN PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A) ARE, IN FACT, NO EVIDENCES AT ALL WHICH ONLY SHOWS THE CONTUMACIOUS CONDUCT OF THE ASSESSEE. CLEARLY, THE ASSESSEE HAS BEEN ATTEMPTING TO EVADE PRODUCTION OF THE DETAILS BEFORE THE LOWER AUTHORITIES. IN FACT, EVEN THE AGREEMENTS ENTERED INTO BY THE ASSESSEE REPRESENTING THE APPLICATION FORMS, INTIMATION LETTER AND THE AGREEMENTS DO NOT GIVE ANY CLEAR ADD RESS AT ALL THROUGH WHICH COMMUNICATION CAN BE DONE. THE CO - VENTURE APPLICATION FORM ADMITTEDLY HAS A TELEPHONE NUMBER AND PAN CARD DETAILS BUT IT IS NOTICED THAT THESE DETAILS WERE NEVER PRODUCED BEFORE THE LOWER AUTHORITIES. THE CO - VENTURE APPLICATION FORM ALSO DEMANDS A CERTIFIED PHOTO - ID REPRESENTING PAN CARD, DRIVING LICENCE, VOTER ID, PASSPORT AND A CERTIFIED ADDRESS PROOF REPRESENTING THE DRIVING LICENCE, PASSPORT, RATION CARD ETC. THESE ARE CONSPICUOUS BY THEIR ABSENCE IN THE EVIDENCE PRODUCED. A PERUSAL OF THE TERMS AND CONDITIONS OF THE CO - VENTURE APPLICATION FORM, MORE SPECIFICALLY ITEM NO. 7 CLEARLY SPECIFIES IF THE TOTAL AMOUNT OF JV PARTICIPATION EXCEEDS RS. 200/ - AND REMITTED THROUGH DEMAND DRAFT/BANKERS CHEQUE, COMPANY WILL BEAR THE ACT UAL BANK CHARGES . CLEARLY, WITH THIS CLAUSE THERE IS NO REASON FOR ANYBODY TO PAY CASH OR FOR THE ASSESSEE - COMPANY TO ACCEPT CASH. WHAT IS SURPRISING IS WHY THE ASSESSEE IS ACCEPTING CASH FROM THE SAME PERSON IN EXCESS OF RS. 20,000/ - REPEATEDLY IN CASH . EVEN IF THE FIRST PAYMENT OF RS. 20,000/ - IS ACCEPTED AND CONSIDERED AS EXCUSABLE, WHY THE SUBSEQUENT PAYMENTS ARE BEING ACCEPTED IN CASH. HOW ARE THESE RURAL PERSONS CARRYING SO MUCH OF CASH TO THE ASSESSEES PREMISES ? IF THE ASSESSEES PERSON IS GO ING TO THE RURAL AREAS TO COLLECT THE CASH, HAS THE SAID REPRESENTATIVE DEPOSITED THE CASH SO COLLECTED IN THE BANK IN THE RURAL AREA OR HAS HE ALSO TRANSPORTED THE SAME TO THE ASSESSEES PREMISES ? IF YES, HOW AND WHY ? AS IS NOTICED FROM THE ONE SAMPLE PRODUCED BY THE ASSESSEE IN THE PAPER BOOK, MR. PRAMOD A. CHAVAN HAS A PAN CARD. HE MUST ALSO HAVE A BANK ACCOUNT. THEN WHY CASH ? FURTHER, IN CLAUSE 19 OF THE TERMS AND CONDITIONS, THE ASSESSEE - COMPANY SPECIFICALLY CONFIRMS THAT THE 9 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) REFUND OF THE PARTICIPATION AMOUNT WILL BE PAID BY CHEQUE ONLY OR THROUGH BANK TRANSFER . IN CLAUSE 20, THE ASSESSEE - COMPANY HAS CONFIRMED THAT T HE PAYMENTS WOULD BE PAID ONLY AFTER COMPLETED KYC AS PER THE GOVERNMENT NORMS AT THE TIME OF DISBURSEMENT . THIS CLEARLY SHOWS THAT IT IS NOT AS IF THE ASSESSEE DID NOT UNDERSTAND WHAT IT WAS DOING OR THAT IT HAD ANY DOUBT , TO BE TERMED AS A BONA FIDE BELIEF. THE EVIDENCES PRODUCED ALSO ARE CONVENIENTLY INCOMPLETE. THUS, CLEARLY THE FACT IN RESPECT OF THE DEPOSITORS IDENT ITY AND THE REASONABLENESS FOR PAYMENT IN CASH HAS NOT BEEN FULLY PLACED BY THE ASSESSEE BEFORE THE AO. IN THESE CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) IS SET ASIDE IN ITS ENTIRETY AND THE ISSUE IN REGARD TO LEVY OF PENALTY U/S 271D IS RESTORED TO THE FILE OF THE AO FOR RE - VERIFICATION AND THE VIOLATION, IF ANY, U/S 269SS. THOUGH INITIALLY WE ARE INCLINED TO ALLOW THE REVENUES APPEAL AND DISMISS THE ASSESSEES APPEAL, IN THE INTEREST OF JUSTICE, AND MORE SPECIFICALLY NATURAL JUSTICE, JUST SO THAT THE ASSESSEE MUST BE GRANTED ADEQUATE AND SUBSTANTIAL OPPORTUNITY TO PROVE ITS BONA FIDES AND SO THAT THE ASSESSEE GETS THE FULL OPPORTUNITY TO SUBSTANTIATE ITS REASONABLE CAUSE FOR ITS FAILURE TO COMPLY WITH THE PROVISIONS OF SEC. 269SS AND THE CONSEQUENTIAL PENALTY U/S 271D, THE ISSUES IN BOTH THE APPEALS, I.E THE APPEAL OF THE REVENUE AND THE APPEAL OF THE ASSESSEE, ARE RESTORED TO THE FILE OF THE AO FOR RE - ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CASE. THE ASSESSEE SHALL PRODUCE EACH AND EVERY DEPOSITOR/INVESTOR/PARTICIPANT BEFORE THE AO ALONGWITH ALL SUCH EVIDENCES IN RESPECT OF SUCH DEPOSITOR/INVESTOR/ PARTICIPANT AS REQUIRED BY THE AO AND AS REQUIRED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. IF THE ASSESSEE FAI LS TO COMPLY WITH THE REQUISITION OF THE AO OR IF THE ASSESSEE FAILS TO PRODUCE SUCH DEPOSITOR/INVESTOR/PARTICIPANT AS CALLED FOR BY THE AO, THE AO IS AT LIBERTY TO DRAW ADVERSE INFERENCE IN RESPECT OF DEPOSITS IN RESPECT OF SUCH DEPOSITOR/INVESTOR/PARTICI PANT. THE ASSESSEE SHALL NOT DUMP PAPERS ON THE AO AND ASK THE AO FOR DOING THE VERIFICATION. THE ASSESSEE SHALL CO - OPERATE WITH 10 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) THE AO AND PRODUCE ALL SUCH DOCUMENTS AND EVIDENCES AS REQUIRED BY THE AO. THE DATE FOR INITIATING THE SET ASIDE PROCEEDINGS BEFORE THE AO SHALL COMMENCE AS EARLY AS POSSIBLE AS THE EVIDENCES AND THE NUMBER OF PERSONS TO BE EXAMINED ARE SUBSTANTIAL. THE AO SHALL NOT WAIT TILL THE LAST MINUTE FOR COMPLYING WITH THE VERIFICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE AS WELL AS THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 5 /08/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 0 5 /08/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 11 ITA NOS. 164 & 237/PNJ/2015 (A.Y : 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 05/08/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06/08/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 06/08/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 06/08/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 06/08/2015 SR.PS 6. DATE OF PRONOUNCEMENT 05/08/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 06/08/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER