ACIT, Panchkula V. Sh. Suresh Kumar Seengal, Panchkula

ITA 245/CHANDI/2014

• Counselvise Citation: 24521514 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Reasonable cause
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NOS. 244 & 245/CHD/2014 ASSESSMENT YEAR: 2009-10 THE ACIT, VS. SH. SURESH KUMAR SEENGAL PANCHKULA CIRCLE, PANCHKULA PANCHKULA PAN NO. ATAXPS3071M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. MITTAL RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 10.09.2015 DATE OF PRONOUNCEMENT : 21.10.2015 ORDER PER H.L.KARWA, VP THESE TWO APPEALS FILED BY THE REVENUE RELATING TO ASSESSMENT YEAR 2009- 10 WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF B Y THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE WILL TAKE UP ITA NO. 244/CHD/2014. T HIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.12. 2013 OF CIT(A), PANCHKULA IN CANCELLING THE PENALTY OF RS. 4.16 CRORES IMPOSED BY THE ASSESSING OFFICER U/S 271D OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT ') FOR ASSESSMENT YEAR 2009- 10. 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ADDL. CIT , PANCHKULA (HEREINAFTER ASSESSING OFFICER) OBSERVED THAT THE ASSESSEE HAD ACCEPTED CASH DEPOSITS AMOUNTING TO RS. 4.16 CRORES IN VIOLATION TO THE PROVISIONS OF SECTION 269SS OF THE ACT. A SURVEY U/S 133(6) OF THE ACT WA S CARRIED OUT IN THE CASE OF COMPUTER DISC INDIA LTD. ON 29.3.2009 IN WHICH THE ASSESSEE IS A MANAGING DIRECTOR. DURING THE COURSE OF SURVEY, THE COMPANY HAD MADE A DISCLOSURE OF RS. 5 CRORES AS UNDER;_ (I) DIFFERENT IN CASH - RS. 14 LAKHS (II) DIFFERENCE IN INVESTMENT IN THE BUILDING - RS. 70 LAKHS AT BADDI & SAHA (III) PAYMENT OF IMPREST ACCOUNT - RS. 4,16,00,000/- THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAD RECEIVED A CASH OF RS. 4.16 CRORES AND HE HAD DEPOSITED THE CASH IN HIS BANK AC COUNT MAINTAINED WITH THE HDFC BANK, MANIMAJRA AND TRANSACTED IN SHARES BUSIN ESS. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSESSEE HAD DEPOSITED RS. 19.85 LAKHS AND RS. 18 LAKHS IN HIS SAVING BANK ACCOUNT MAINTAINED WITH THE AFORESA ID BANK. AS REGARDS THE AMOUNT OF RS. 4.16 CORES, THE ASSESSEE STATED THAT HE HAD RECEIVED ADVANCE FROM HIS COMPANY COMPACT DISC INDIA LIMITED AND THE SAID AMOUNT WAS REALIZED BY HIM DEPOSITING THE CASH IN HIS BANK ACCOUNT AND ALS O UTILIZED THE SAME IN THE INVESTMENT IN THE SHARES. AS PER BOOKS OF A ACCOUNT , THE COMPANY HAD DEBITED A SUM OF RS. 4.16 CRORES OUT OF THE SURRENDERED AMOUN T AS ADVANCE IN THE ACCOUNT OF THE ASSESSEE. DURING THE COURSE OF PENALTY PROCE EDINGS, THE ASSESSEE DID NOT FILE ANY EVIDENCE TO SHOW THAT WHAT WAS NEED FOR EN TERING INTO SUCH A TRANSACTION IN CASH. THE ASSESSING OFFICER CAME TO THE CONCLUSI ON THAT IT WAS A LOAN OR A DEPOSIT WHICH THE ASSESSEE UTILIZED DEPOSITING IN B ANK AND UTILIZED FOR HIS OWN BUSINESS TRANSACTIONS. CONSEQUENTLY, THE ASSESSING OFFICER IMPOSED A PENALTY OF RS. 4.16 CORES WHICH WAS EQUAL TO THE AMOUNT OF LO AN / DEPOSIT RECEIVED IN CASH. 3 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A). THE MAIN CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT A SUM OF RS. 4.16 CRORES WAS LYING WITH HIM BEING A DIRECTOR OF THE COMPANY, UNDER IMPREST ACCOUNT. AT TIMES, CERT AIN INVESTMENTS / EXPENSES WAS REQUIRED TO BE INCURRED ON BEHALF OF THE COMPAN Y AND TO MEET SUCH EXIGENCY, THE AMOUNT WAS TRANSFERRED AS IMPREST WITH THE ASSE SSEE. ACCORDINGLY, IT WAS SUBMITTED THAT THE IMPREST ACCOUNT BEING MAINTAINED BY THE ASSESSEE IS NOT HIT BY THE PROVISIONS OF SECTION 269 SS OF THE ACT AND THU S THE PENALTY U/S 271D OF THE ACT WAS NOT LEVIABLE. THE NEXT CONTENTION OF THE AS SESSEE WAS THAT THERE WAS A REASONABLE CAUSE AS THE ASSESSEE WAS MAIN DIRECTOR OF THE COMPANY AND WAS HOLDING THE IMPREST ACCOUNT. THIS ACCOUNT WAS BEING UTILIZED TO MEET THE DAY TO DAY EXPENSES OF THE BUSINESS. THE ASSESSEE FURTHER SUBMITTED THAT THE COMPANY IS A SEPARATE LEGAL ENTITY BUT THE AFFAIRS OF THE COMP ANY ARE HANDLED AND OPERATED BY ITS DIRECTORS WHO ARE THE OFFICERS OF THE COMPANY F OR MANAGING ITS AFFAIRS. THEREFORE, DIRECTORS OF THE COMPANY ARE CUSTODIAN O F ITS ASSETS AND PROPERTIES. IT WAS ALSO SUBMITTED THAT CASH KEPT AS IMPREST BY ANY DIRECTOR IS JUST IN THE CAPACITY OF THE CUSTODIAN OF THE FUNDS ON BEHALF OF THE COMPANY. THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS NO MALAFIDE INTENT ION ON HIS PART AND THERE WAS NO INTENT OF VIOLATING THE LAW. 5. THE LD. CIT(A) CANCELLED THE IMPUGNED PENALTY, OBSERVING AS UNDER:- 6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT. THE ADDL. CIT I MPOSED THE PENALTY FOR VIOLATION OF PROVISIONS OF SECTION 269T ON THE GROUND THAT THE AMOUNT OF RS.2,06,66.289/- WAS REPAID IN C ASH OUT OF A LOAN OR A DEPOSIT WITH COMPANY. WHEREAS, THE APPELL ANT HAS SUBMITTED THAT AN AMOUNT OF RS.4.16 CRORES WAS DECL ARED DURING THE COURSE OF SURVEY ON ACCOUNT OF 'PAYMENT OF IMPR EST ACCOUNT'. THE APPELLANT WAS MAINTAINING AN IMPREST ACCOUNT WI TH THE 4 COMPANY AND THIS FACT WAS STATED IN THE STATEMENT R ECORDED DURING THE COURSE OF SURVEY. THE APPELLANT HAS REPE ATEDLY SUBMITTED THAT NO AMOUNT HAS BEEN GIVEN AND RETURNE D AS A LOAN OR DEPOSIT BY THE ASSESSEE. IT WAS THE IMPREST ACCO UNT WHICH WAS MAINTAINED BY THE APPELLANT AND THE AMOUNT WAS LYIN G WITH THE APPELLANT FOR SAFE CUSTODY AND WAS RETURNED TO THE COMPANY AS AND WHEN REQUIRED. AT TIMES CERTAIN INVESTMENTS/EXP ENSES WAS TO BE INCURRED ON BEHALF OF THE COMPANY AND MEET SUCH EXIGENCY THE AMOUNT WAS TRANSFERRED AS IMPREST WITH THE APPE LLANT. AFTER CONSIDERING THE RIVAL SUBMISSION AND PERUSAL OF STA TEMENT RECORDED AT THE TIME OF SURVEY, IT IS WORTHWHILE TO QUOTE THE RELEVANT QUESTIONS AND ANSWERS RECORDED IN THE STAT EMENT. Q. 30 I AM SHOWING YOU DIARIES (ANN. I TO V I) IN WHICH CERTAIN PAYMENT TO THE TUNE OF APPROXIMATELY RS.4.25 CRORES HAS BEEN PAID TO DIRECTORS AND THEIR FAMILY MEMBERS IN CASH. PLEASE EXPLAIN ABOVE ENTRIES. ANS. WE ARE PROVIDING YOU CDIL CASH BOOK AND LEDGER BOOKS IN WHICH AMOUNT TO THE TUNE OF ABOUT RS. 9 LACS HAS BEEN DULY ACCOUNTED FOR. HOWEVER, REST OF THE AMOUNT OF RS. 4.16 CRORES, I AM NOT IN A POSITION TO EXPALIN THE SAME. THESE PAYMENTS MIGHT BE PAYMENTS ON IMPRESNT ACCOUNT OF DIRECTORS. Q. 31 PLEASE PROVIDE RELATED BILLS/VOUCHERS IN SUPPORT OF YOUR CLAIM OF AMOUNT OF RS. 4.16 CRORE ON DIRECTORS IMPREST ACCOUNT. ANS. WE ARE NOT IN POSITION TO PROVIDE RELATED BILLS/VOUCHERS, HOWEVER, TO AVOID LITIGATION AND T O BUY PEACE OF MIND I HEREBY SURRENDER THE SAME (I.E. RS.4.16 CRORE) IN THE HANDS OF CDIL WITH THE CONDITION THAT DIRECTORS WD NOT BE RESPONSIBLE FO R THIS ACCOUNT IN THEIR INDIVIDUAL CAPACITY.' 5 ON PERUSAL OF ABOVE STATEMENT, IT IS GATHERED TH AT THERE WAS DIARY WHERE UNACCOUNTED PAYMENTS TO DIRECTOR AND TH EIR FAMILY MEMBERS IN CASH WAS RECORDED AND THE APPELLANT REPL IED THAT THESE PAYMENTS ARE ON ACCOUNT OF IMPREST ACCOUNT OF THE DIRECTOR. SUBSEQUENTLY, THE AMOUNT SURRENDERED BY APPELLANT O N BEHALF OF CDIL VIDE LETTER DATED 27.03.2009 SHOWS A SURRENDER OF RS.4.16 CRORE ON ACCOUNT OF 'PAYMENT ON IMPREST ACCOUNT'. IT WAS ALSO SUBMITTED IN THE LETTER THAT NECESSARY ENT RIES IN THE BOOKS OF ACCOUNT RELEVANT TO ASSESSMENT YEAR WILL B E MADE AND SURRENDER OF RS.5 CRORE WILL BE INCLUDED IN THE RET URN OF INCOME OF CDIL FOR A Y 2009-10 OVER AND ABOVE THE NORMAL P ROFIT OF THE BUSINESS. THE AUDITED BALANCE SHEET OF CDIL AS ON 3 1.03.2009 RELEVANT TO THE A.Y. 2009-10 SHOWS RS 4 16 CRORES I N SCHEDULE-1 UNDER OTHER CURRENT ASSETS AS 'ADVANCE - DIRECTOR' RELATED TO DISLOSED AMOUNT WHICH HAS BEEN TAKEN ON RECORD WHIL E PASSING THE ASSESSMENT ORDER U/S 143(3) OF CDIL. 6.1 NOW THE QUESTION ARISES WHETHER THE PAYMENT O N IMPREST ACCOUNT WOULD BE IN THE NATURE OF A LOAN OR A DEPOS IT. HERE, IT IS RELEVANT TO REFER TO THE APPLICABLE PROVISIONS OF S ECTIONS 269SS AND 269T OF THE ACT. SECTION 269SS OF THE ACT PROVI DES FOR THE MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEPOS ITS. SECTION 269T OF THE ACT PROVIDES FOR THE MODE OF REPAYMENT OF CERTAIN LOANS AND DEPOSITS. THESE SECTIONS STIPULATES THAT NO PERSON SHALL TAKE OR ACCEPT OR REPAY FROM/TO ANY OTHER PER SON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQU E OR BANK DRAFT IF THE AMOUNT OF SUCH LOAN OR DEPOSIT IS RS.2 0,000/- OR MORE. THE EXPLANATION (III) TO SECTION 269T STIPULA TES 'LOAN OR DEPOSIT' MEANS ANY LOAN OR DEPOSIT OF MONEY WHICH I S REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD. FURTHER, THE DEFINITION OF DEPOSIT AS PER RULE 2(B)(IX) OF COMPANIES (ACCEP TANCE OF DEPOSITS) RULES, 1975 STATES THAT DEPOSIT DOES NOT INCLUDE ANY AMOUNT RECEIVED FROM A PERSON WHO AT THE TIME OF RE CEIVED THE SAME WAS DIRECTOR, RELATIVE OF DIRECTOR OR MEMBER B Y A PRIVATE COMPANY. 6 6.2 IN THE INSTANT CASE, THE ADDL.CIT HAS NOT BROU GHT ANY ADDITIONAL FACT ON RECORD THAT THE TRANSACTIONS BET WEEN THE APPELLANT OR CDIL AS PER THE ENTRIES RECORDED IN TH E DIARIES WERE IN THE NATURE OF LOAN OR DEPOSIT. DURING THE P ENALTY PROCEEDINGS, THE ADDL, CIT NOTED ON THE BASIS OF AS SESSEE'S REPLY DATED 21.12.2011 BEFORE THE ASSESSING OFFICER AT TH E TIME OF ASSESSMENT PROCEEDINGS BY WAY OF CONFIRMATION AS UN DER :- 'COMPACT DISC INDIA LTD. HAD ADVANCED RS.4.16 CRORES TO MR. S.K.SEENGAL, MANAGING DIRECTOR OF THE COMPANY, AS DECLARED IN SURVEY CONDUCTED B Y INCOME TAX DEPARTMENT.' 'AS PER THE BOOKS OF ACCOUNT THE COMPANY HAD DEBITED A SUM OF RS.4.16 CRORES (RUPEES FOUR CRORE SIXTEEN LAC ONLY) OUT OF SURRENDERED AMOUNT AS ADVANCED IN ACCOUNT OF MR. SURESH KUMAR SEENGAL, MANAGING DIRECTOR.' SO, THE APPELLANT HAS SUBMITTED THAT THE AMOUNT WAS ADVANCED BY THE COMPANY TO ITS MANAGING DIRECTOR. THE ADDL.CIT HAS ALSO EMPHASIZED ON THE WORD 'ADVANCE' THE SAME AS IN THE NATURE OF LOAN OR DEPOSIT. THE ADDL. CIT HAS ALSO NOT VERIFIE D WHETHER IT WAS A LOAN OR DEPOSIT AS BOTH THE WORDS HAVE DIFFER ENT MEANINGS. THE EXPLANATION GIVEN BELOW SECTION 269T CLARIFIES THAT THE LOAN OR DEPOSIT ARE IN THE NATURE OF MONEY WHICH IS REPA YABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD. SUCH CONDITIONS WERE NOT AVAILABLE IN THE APPELLANT CASE. 6.3 ON PERUSAL OF AUDITED BALANCE SHEET OF COMP ACT DISC INDIA LTD. AS ON 31.03.2009, IT IS NOTICED THAT THE AMOUNT OF RS.4.16 CRORES IS SHOWN IN SCHEDULE-1 UNDER OTHER C URRENT ASSETS AS 'ADVANCE - DIRECTORS'. THIS SHOWS THAT TH OUGH AT THE TIME OF SURVEY PROCEEDINGS, THE APPELLANT STATED TH AT THE AMOUNT OF RS.4.16 CRORES WAS ON ACCOUNT OF 'PAYMENT OF IMP REST ACCOUNT'. HOWEVER, THE AUDITED BALANCE SHEET SHOWS THE AMOUNT AS ADVANCED TO THE DIRECTOR. THE APPELLANT MAY NOT BE AWARE 7 ABOUT THE DIFFERENCE IN THE WORDS ' IMPREST' AND ' ADVANCE' BUT THE AUDITORS WHO HAVE AUDITED THE ACCOUNT OF THE CO MPANY ON A LATER DATE HAVE RIGHTLY PLACED THE AMOUNT UNDER THE HEAD 'ADVANCE - DIRECTOR' 6.4 THE HON'BLE TRIBUNAL-'B' BENCH, KOLKATA WHI LE DECIDING THE ISSUE OF INTER COOPERATE DEPOSIT IN. THE CASE O F IFB AGRO INDUSTRIES LTD. A.Y. 2009-10 FOR ITA NO. 1721/KOL/2 012 HAVE DISCUSSED AT LENGTH ON THE MEANINGS OF WORDS USED A S 'LOAN', 'DEPOSIT' OR 'ADVANCE'. THE HON'BLE ITAT HAS DISCUS SED IN ITS ORDER THAT THE PROVISIONS OF SECTION 2(22)(E) OF TH E ACT REFERS TO ONLY 'LOANS' AND 'ADVANCES' AND DOES NOT TALK OF 'D EPOSIT'. THE FACT THAT THE TERM 'DEPOSIT' CANNOT MEAN A 'LOAN' A ND THAT THE TWO TERMS 'LOAN' AND THE 'DEPOSIT 1 ARE TWO DIFFERENT DISTINCT TERMS IS EVIDENT FROM THE EXPLANATION TO SECTION 269T AND ALSO SECTION 269SS OF THE ACT WHERE BOTH THE TERMS ARE USED. FUR THER, THE SECOND PROVISO TO SECTION 269SS OF THE ACT RECOGNIZ ED THE TERMS 'LOAN' TAKEN OR 'DEPOSIT' ACCEPTED. SO, IT IS ACCEP TED FACT THAT THE TERMS 'LOAN' AND 'DEPOSIT' ARE TWO DISTINCT TERMS WHICH HAS DISTINCT MEANING THEN ONLY THE TERM 'LOAN' IS USED IN A PARTICULAR SECTION, THE 'DEPOSIT' RECEIVED BY AN ASSESSEE CANN OT BE TREATED AS A 'LOAN' FOR THAT SECTION. FURTHER, ORDINARILY A N 'ADVANCE' IS THE PAYMENT BEFOREHAND AND IT DOES NOT CONNOTE, THE IDEA OF REPAYMENT. IT IS ADJUSTED WHEN THE ACTION FOR WHICH THE MONEY IS ADVANCED IS COMPLETED. THE TERM 'ADVANCE' HAS NOT B EEN SPECIFICALLY DEFINED UNDER THE ACT. FURTHER, REFERE NCE IS MADE TO THE PROVISIONS OF SECTION 2(22)(E) WHERE BOTH THE T ERMS 'ADVANCE' OR IOAN' TO A SHARE HOLDER HAVE BEEN WRITTEN. IT MA Y MEAN THAT THE TERMS 'ADVANCE' AND MOAN* MAY HAVE DIFFERENT ME ANINGS OTHERWISE BOTH THE TERMS WOULD NOT HAVE BEEN USED I N THE SAME SUB CLAUSE OF THE SECTION. IT IS TRITE LAW THAT NO TAX CAN BE IMPOSED ON THE SUBJECT WITHOUT THE WORDS IN THE ACT . NO TAX CAN BE IMPOSED BY INFERENCE OR ANALOGY. THE CARDINAL PR INCIPLE OF INTERPRETATION OF FISCAL LAW IS THAT IT SHOULD BE C ONSIDERED STRICTLY. 8 6.5 IN VIEW OF ABOVE DISCUSSION IN PARAS 6.1 T O 6.4. THE PAYMENTS RECORDED IN THE DIARIES AND DECLARED AS PA YMENTS OF IMPREST ACCOUNT AT THE TIME OF SURVEY AND CONFIRMED AS ADVANCE BEFORE THE ASSESSING OFFICER AS WELL AS WRITTEN IN THE AUDITED BALANCE SHEET, CANNOT BE CONSTRUED AS A 'LOAN' OR ' DEPOSIT'. THESE FINDINGS LEAD TO THE CONCLUSION THAT THE AMOU NT WAS IN THE NATURE OF 'ADVANCE' AS ALSO ACCEPTED BY THE APPELLA NT IN ITS SUBMISSIONS BEFORE THE ASSESSING OFFICER AS WELL AS RIGHTLY POINTED BY THE AUDITORS. 6.6 IN A DECISION GIVEN BY HON'BLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF CIT VS. KHARATI LAI & CO. 144 TAXMAN 178 UPHOLDING THE FINDINGS RECORDED BY TRIBUNAL THAT CE RTAIN AMOUNT RECEIVED AS 'ADVANCE' AGAINST SALE OF TRUCK IS NOT IN THE NATURE OF LOAN OR DEPOSIT RECEIVED IN VIOLATION OF SECTION 26 9SS OF THE ACT. IN THE PRESENT CASE, THE PAYMENTS RECORDED IN THE D IARIES WHICH WERE NOT FOUND IN THE CASH BOOK OF COMPANY WERE OFF ERED FOR TAXATION IN THE HANDS OF COMPANY BY THE MANAGING DI RECTOR. THE 'ADVANCE' DOES NOT FALL WITHIN THE MEANING OF L OAN OR DEPOSIT AS PER EXPLANATION GIVEN BELOW SECTION 269T OF THE ACT. THEREFORE, IN VIEW OF DISCUSSION IN ABOVE PARAS, I AM OF THE VIEW THAT THE PROVISIONS OF SECTION 269SS ARE NOT APPLIC ABLE TO THE FACTS OF THE PRESENT CASE AND NO PENALTY U/S 271D I S LEVIABLE O THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE PE NALTY IMPOSED BY ADDL. CIT OF RS. 4.16 CRORES IS CANCELLED. 6. BEFORE US, SHRI S.K. MITTAL, LD. DR SUBMITTED TH AT THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE DURING THE PENALTY PROCEEDINGS TO SHOW AS TO WHY HE HAD RECEIVED RS. 4.16 CORES IN CASH WHICH IS NOT DENIED BY HIM. ACCORDING TO LD. DR, SECTION 269SS OF THE ACT READ WITH SECTION 271D PRO VIDES THAT IF A PERSON TAKES OR ACCEPT ANY LOAN OR DEPOSIT IN CASH IN CONTRAVENT ION TO SECTION 269SS, A PENALTY IS LEVIABLE EQUAL TO THE AMOUNT OF DEPOSIT U/S 271 D OF THE ACT. SHRI S.K.MITTAL LD. DR VEHEMENTLY ARGUED THAT AMOUNT OF RS. 4.16 CR ORES RECEIVED BY THE 9 ASSESSEE WAS A LOAN OR A DEPOSIT WHICH THE ASSESSE E UTILIZED FOR DEPOSITING IN BANK AND FOR HIS OWN BUSINESS TRANSACTION ALSO. THE LD. DR SUBMITTED THAT THE TRANSACTION IN QUESTION IS IN THE NATURE OF LOAN OR DEPOSIT AND NOT ANYTHING ELSE. THEREFORE, THE PENALTY U/S 271D HAS RIGHTLY BEEN IM POSED BY THE ASSESSING OFFICER. HE THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 7. ON THE OTHER HAND, SHRI TEJ MOHAN SINGH, LD. COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. HE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE CIT IS CORRE CT AND IN ACCORDANCE WITH LAW, AND, THEREFORE, THE SAME MAY BE CONFIRMED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SECTION 268SS OF THE ACT PRESCRIBES THE MODE OF TAKING OR ACCEPTING THE LOAN OR DEPOSITS. IT IS MEN TIONED THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT FOR AN AMOUNT MORE THAN RS. 20,000/- OTHERWISE THEN BY ACCOUNT PAYEE CHEQUE / O R ACCOUNT PAYEE BANK DRAFT. THE OBJECT OF INTRODUCING SECTION 269SS WAS TO ENSU RE THAT A TAX PAYER IS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUN TED MONEY AND IF HAS HE GIVEN FALSE ENTRIES IN ITS ACCOUNTS, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. IT IS WELL SETTLED THAT THE LOAN OR DE POSIT ARE NOT IDENTICAL IN MEANING. IT IS TRUE THAT BOTH IN THE CASE OF A LOAN AND IN THE CASE OF A DEPOSIT THERE IS A RELATIONSHIP OF A DEBTOR AND A CREDITOR BETWEEN THE PARTY GIVING MONEY AND THE PARTY RECEIVING MONEY. BUT IN THE CASE OF A DEPOSIT, THE DELIVERY OF MONEY IS USUALLY AT THE INSTANCE OF THE GIVER AND I T IS FOR THE BENEFIT OF THE PERSON WHO DEPOSITS THE MONEY. IN THE CASE OF A LOAN, IT I S THE BORROWER AT WHOSE INSTANCE AND FOR WHOSE NEEDS THE MONEY IS ADVANCED. DEPOSITS COULD ALSO BE FOR 10 SAFE KEEPING OR AS A SECURITY FOR THE PERFORMANCE O F AN OBLIGATION UNDERTAKEN BY THE DEPOSITOR. IN THE CASE OF A LOAN THE DEBTOR HA S TO REQUEST THE CREDITOR TO ADVANCE CERTAIN AMOUNT FOR MEETING HIS REQUIREMENT FOR USING THE AMOUNT. IN THE INSTANT CASE, THE CIT(A) HAS CONCLUDED THAT THE TRA NSACTIONS BETWEEN THE ASSESSEE AND THE COMPANY WERE NOT IN THE NATURE OF LOAN OR DEPOSIT BUT WERE IN THE NATURE OF ADVANCE, AND THEREFORE, THERE WAS NO VIOLATION O F PROVISIONS OF SECTION 269SS OF THE ACT. IT IS AN ADMITTED FACT THAT ASSESSEE I S A MAIN DIRECTOR OF THE COMPACT DISC INDIA LTD. DURING THE COURSE OF SURVEY AT THE PREMISES OF THE COMPANY, A SUM OF RS. 5 CRORES WAS SURRENDERED WHICH INCLUDED RS. 4.16 CRORES BEING IMPREST WITH THE ASSESSEE. THE ASSESSEE WAS MAINTAINING AN IMPREST ACCOUNT WITH THE COMPANY. THIS FACT WAS STATED IN THE STATEMENTS REC ORDED AT THE TIME OF SURVEY. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AFORESAID FACT WAS STATED IN THE REPLY FURNISHED BEFORE THE ASSESSING OFFICER . IT APPEARS THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE REPLY OF THE ASSESSE E AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SE CTION 269SS OF THE ACT AND SECTION 269T OF THE ACT AND INITIATED PENALTY PROCE EDINGS U/S 271D AND 271E OF THE ACT. IT IS ALSO RELEVANT TO OBSERVE HERE THAT D URING THE COURSE OF SURVEY, THE COMPANY HAS MADE A DISCLOSURE OF RS. 5 CRORES WHICH INCLUDED RS. 4.16 CRORES UNDER THE HEAD PAYMENT OF IMPREST ACCOUNT. THUS, IT IS CLEAR THAT THE REVENUE HAS ACCEPTED THAT THE ASSESSEE AS DIRECTOR OF THE C OMPANY AND WAS HOLDING THE IMPREST ACCOUNT. THE LD. CIT(A) HAS OBSERVED THAT IN THE AUDITED BALANCE SHEET OF THE COMPANY ON 31.3.2009, THE AMOUNT OF RS. 4.16 CORES WAS SHOWN IN SCHEDULE I UNDER CURRENT ASSETS AS ADVANCE DIRE CTORS. IN THIS REGARD, THE LD. CIT(A) HAS STATED THAT IF THE ASSESSEE MIGHT N OT BE AWARE ABOUT THE DIFFERENCE IN WORDS IMPREST AND ADVANCE BUT THE AUDITORS WHO HAVE AUDITED THE ACCOUNTS OF THE COMPANY HAVE RIGHTY PLACED THE AMOU NT UNDER THE HEAD ADVANCE- DIRECTOR. TAKING INTO CONSIDERATION THE DECISION O F THE HON'BLE JURISDICTIONAL HIIGH COURT IN THE CASE OF CIT VS. KHARAITI LAL & CO. [2005], ( 144 TAXMAN 178 (P&H), THE ADVANCE DOES NOT FALL WITHIN THE MEANI NG OF LOAN OR DEPOSIT, AND 11 THEREFORE, THERE IS NO VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. IN OUR CONSIDERED VIEW, THE LD. CIT(A) HAS RIGHTY HELD TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271D OF T HE ACT FOR VIOLATION OF THE PROVISIONS OF 269SS OF THE ACT. ACCORDINGLY, WE UPH OLD THE ORDER OF LD. CIT(A) AND DEISMS THE APPEAL FILED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO. 245/CHD/2014 10. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF CIT(A), PANCHKULA DATED 16.12.2013 IN CANCELLING THE PENALT Y OF RS. 2,06,66,289/- IMPOSED U/S 271E OF THE INCOME-TAX ACT, 1961 (IN S HORT 'THE ACT'). 11. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT ADD.L CIT (HEREINAFTER REFERRED AS ASSESSING OFFICER) NOTED THAT THE ASSESSEE HAS REPAID CASH ADVANCE AMOUNTING TO RS. 2,06,66,289/- IN VIOLATION TO THE PROVISIONS OF SECTION 269T OF THE ACT. THE RELEVANT FACTS OF THE CASE HAS ALREADY BEEN MENTION ED IN ITA NO. 244/CHD/2014 (SUPRA). IT IS STATED THAT THE ASSESSEE HAD RECEIV ED CASH OF RS. 4.16 CRORES AND HE HAD DEPOSITED THE CASH IN HIS BANK ACCOUNT MAINTAIN ED WITH HDFC BANK, MANIMAJRA AND ALSO TRANSACTED IN SHARE BUSINESS. TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RETURNED BACK THE ADVANCE AM OUNTING TO RS. 2,06,66,289/- IN CASH AND THE AMOUNT OF RS. 2,09,33,711/- WAS OUT STANDING AGAINST HIM. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E RETURNED THE ADVANCE IN CASH, AND HENCE THERE IS A VIOLATION OF PROVISIONS OF SEC TION 269T OF THE ACT. THE ASSESSING OFFICER CONCLUDED THAT IT WAS A LOAN OR A DEPOSIT WHICH THE ASSESSEE UTILIZED FOR DEPOSITING IN BANK AND UTILIZED FOR HI S OWN BUSINESS TRANSACTION AND BASED ON OUTSTANDING BALANCE, IMPOSED A PENALTY OF RS. 2,06,66,289/- U/S 271E OF THE ACT WHICH WAS EQUAL TO THE AMOUNT / DEPOSIT REP AID IN CASH. 12 12. ON APPEAL, LD. CIT(A) CANCELLED THE PENALTY, OB SERVING AS UNDER:- 6.7 FURTHER, THE ADDL. CIT NOTED THAT AS ON 31.12.2011, THE BALANCE OUTSTANDING AGAINST DIRECTO R ADVANCED ACCOUNT WAS RS.2,09,33,711/- AND DREW THE INFERENCE THAT THE APPELLANT HAD RETURNED BACK THE ADVANCE AMOUNTING TO RS.2,06,66,289/- IN CASH AS NO DETAILS FOR PAYMENT BY CHEQUES WERE FILED. SO THE FINDING OF AD DL. CIT IS NOT BASED ON THE ENTRIES OF ANY LOAN OR DEPOSIT RECORDED IN THE BOOKS OF ACCOUNT RATHER IT IS ON THE BASIS O F BALANCING FIGURE AS PER THE BALANCE SHEET OF COMPAN Y. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS PRODUCED BALANCE SHEET OF CDIL WHERE THE BALANCE UN DER HEAD 'ADVANCE - DIRECTORS' AS ON 31.03.2009 IS RS.4.16 CRORES. THE ADDL. CIT HAS HIMSELF NOTED THE BALANCI NG FIGURE AS ON 31.12.2011 FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271E. THE ADDL. CIT HAS IMPOSED PENALTY RELEVANT TO ASSESSMENT YEAR 2009-10 BUT DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2009-10 THERE WAS N O REPAYMENT OF AMOUNT OF ADVANCE BY DIRECTOR TO CDIL. THE BALANCE NOTED BY THE ADDL. CIT AS ON 31.12.2011 PER TAINS TO A.Y. 2012-13. THEREFORE, PENALTY U/S 271E FOR VI OLATION OF PROVISION OF SECTION 269T IS NOT LEVIABLE FOR A. Y. 2009- 10. 6.8 THEREFORE, I AM OF THE VIEW THAT THE PROVISIO NS OF SECTION 269T ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND NO PENALTY U/S 271E IS LEVIABLE ON THE FAC TS OF PRESENT CASE. MOREOVER, THE PENALTY U/S 27IE IS NOT LEVIABLE FOR A.Y. 2009-10. ACCORDINGLY, THE PENALTY IMPOSED BY THE AO OF RS.2,06,66,289/- IS CANCELLED. 13. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY CANCELLED THE IMPUGNED PENALTY. IN THIS CASE, THE 13 ASSESSING OFFICER IMPOSED PENALTY RELEVANT TO ASSES SMENT YEAR 2009-10 BUT DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 200 9-10, THERE WAS NOT REPAYMENT OF AMOUNT OF ADVANCE BY THE DIRECTOR TO COMPACT DIS C. INDIA LTD. IT IS APPARENT FROM THE RECORDS THAT THE BALANCE NOTED BY THE ASS ESSING OFFICER AS ON 31.12.2011 PERTAINED TO ASSESSMENT YEAR 2012-13, TH EREFORE, NO PENALTY U/S 271E OF THE ACT IS LEVIABLE ON THE ASSESSEE FOR ALLEGED VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. THE APPEAL IS WITHOUT ANY MERIT AND, HENCE, WE DISMISS THE SAME. 14. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.2015 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 21 ST OCTOBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 14