DCIT, New Delhi V. M/s International Softweb Ltd., New Delhi

ITA 2818/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6759 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: SSH K SAMPATH
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SH. I.C. SUDHIR , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO . 2818/DEL/2011 ASSESSMENT YEAR: 2006 - 07 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11(1), ROOM NO. 312, C.R. BUILDING, NEW DELHI VS. M/S. INTERNATIONAL SOFTWEB LTD., 283, AGCR ENCLAVE, KARKARDOOMA, NEW DELHI (PAN: AAACI7636P ) (APPELLANT) (RESPONDENT) APPELLANT BY SH. T. VASANTHAN, SR.DR RESPONDENT BY S/SH. K. SAMPATH & V. RAJA KUMAR, ADVOCATES DATE OF HEARING 20.01.2016 DATE OF PRONOUNCEMENT 26.02.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL OF THE R EVENUE IS PREFERRED AGA INST THE ORDER DATED 30.03.2011 OF LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) - XXX, NEW DELHI, RAISING FOLLOWING GROUND S : I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE PENALTY OF ADDITION OF RS. 77,75,000/ - U/S 271D OF THE ACT. II. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOV E AT THE TIME OF HEARING. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY ACCEPTED A LOAN/ADVANCE OF RS. 77,75,000/ - F ROM M/S. SONA SOFTWEB (P) LTD., A COMPANY UNDER THE SAME GROUP OF MANAGEMENT, THROU GH ACCOUNT PAYEE CHEQUE DATED 04 .05.2005 . 2 ITA NO. 2818/DEL/2011 AY: 2006 - 07 SUBSEQUENTLY, ON 05.05.2005, D IRECTORS OF THE BOTH THE COMPANIES AGREED AND SQUARED UP THE ACCOUNT OF M/S. SONA SOFTWEB (P.) LTD. IN THE BOOKS OF THE ASSESSEE COMPANY BY PASSING A JOURNAL ENTRY THROUGH WHICH ACCOUNT OF M/S SONA SOFTWEB PVT. LTD. WAS DEBITE D AND INDIVIDUAL ACCOUNTS OF THE THREE DIRECTORS OF THE ASSESSEE COMPANY, NAMELY, SH. L.D. MITTAL, SH. A.S. MITTAL AND SH. DEEPAK MITTAL WERE CREDITED . THE ASSESSEE COMPANY UTILIZED THE LOAN AMOUNT FOR THE PURPOSE OF MAKING APPLICATION WITH NOIDA AUTHOR ITIES FOR ALLOTMENT OF LAND. THE NOIDA AUTHORITIES REFUNDED THE MONEY TO THE ASSESSEE COMPANY ON 04.08.2005 DUE TO NON - ALLOTMENT OF PLOT TO THE ASSESSEE COMPANY. THEREAFTER , THE AMOUNT OUTSTANDING TO THE CREDIT OF THE ACCOUNT OF THE DIRECTOR WAS REPAID BY ACCOUNT PAYEE CHEQUES. FROM THE ABOVE FACTS OF THE CASE, THE ASSESSIN G OFFICER WAS OF THE VIEW THAT LOANS HAVE BEEN ACCEPTED BY THE ASSESSEE COMPANY BY WAY OF JOURNAL ENTRIES FROM THE DIRECTORS OF THE COMPANY, WHICH ARE LOAN S /DEPOSIT S OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE, WHICH BEING IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT, LIABL E FOR PENALTY UNDER SECTION 271D OF THE ACT. A SHOW - CAUSE NOTICE DATED 16.12.2008 ISSUED BY THE ADDITIONAL COMMISSIONER OF INCOME - TAX ASKING THE ASSESSEE AS TO W HY THE PENALTY UNDER SECTION 271D SHOULD NOT BE IMPOSED, WAS NOT COMPLIED BY THE ASSESSEE. HE ISSUED AN ANOTHER NOTICE DATED 08.06.2009 FIXING THE HEARING ON 16.06.2009 BUT THAT WAS ALSO NOT COMPLIED. LOOKING TO THE NON - COMPLIANCE THE ADDITIONAL COMMISSION ER OF INCOME - TAX LEVIED THE PENALTY OF RS. 77,75,000/ - UNDER SECTION 271D OF THE ACT HOLDING THAT LOAN FROM THE THREE DIRECTORS WERE ACCEPTED IN 3 ITA NO. 2818/DEL/2011 AY: 2006 - 07 CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) SUBMITTING THE FACTS OF THE CASE. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE SUBMITTED THAT DUE COMPLIANCE OF ALL THE NOTICES WERE MADE BY THE ASSESSEE AND THE ADDITIONAL COMMISSIONER WAS NOT CORRECT IN HOLDING THAT NO COMPLIANCE OF THE NOTICES WERE MADE. AS REGARD THE MERIT OF THE CASE, THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 269SS WERE INTRODUCED TO CURB THE TRANSACTIONS OF BLACK MONEY AND NOT FOR TARGETING GENUINE TRANSFER OF MONEY THROUGH THE JOURNAL ENTRIES. THE ASSESSEE RELIED ON THE VARIOUS DECISIONS OF THE HON BLE SUPREME COURT AND HIGH COURTS AND SUBMITTED THAT THERE WAS NO ACTUAL TRANSACTION IN CASH, T HEREFORE, THE PROVISIONS OF SECTION 269SS OF THE ACT WERE NOT APPLICABLE. THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DELETED THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE R EVENUE IS BEFORE THE TRIBUNAL . 3. THE SOLE GROUND RAISED BY THE REVENUE IS IN RESPECT OF DELETING OF PENALTY OF RS. 77,75,000/ - UNDER SECTION 271D OF THE ACT BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE L EARNED SENIOR DEPARTMENTAL REPRESENTATI VE ( SR DR) RELYING ON THE ORDER OF THE ADDITIONAL COMMISSIONER OF INCOME - TAX SUBMITTED THAT THE PENALTY MAY BE CONFIRMED, WHERE AS ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT BOTH THE COMPANIES ARE BELONGING T O THE SAME GROUP OF MANAGEMENT AND NO CASH WAS 4 ITA NO. 2818/DEL/2011 AY: 2006 - 07 TRANSFERRED BETWEEN THE DIRECTORS OF THE ASSESSEE COMPANY AND THE ASSESSEE AND INSTEAD OF TRANSFER OF CHEQUES FROM THE LENDERS COMPANY DIRECTORS, T HE ASSESSEE HAS TRANSFERRED THE AMOUNT THROUGH JOURNAL ENTRIES TO THEIR CREDIT . THE L EARNED AUTHORIZED REPRESENTATIVE IN THIS RESPECT RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX VS. NOIDA TOLL BRIDGE CO. LTD., 262 ITR 260. 5. WE HAVE HEARD THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. IN THE CASE, THE ASSESSEE HAS RECEIVED DEPOSITS OF RS. 77,75,000/ - BY WAY OF JOURNAL ENTRIES FROM THE FOLLOWING THREE DIRECTORS OF THE ASSESSEE COMPANY. DIRECTORS AMOUNT (I) SH. L.D. MITTAL RS. 25,95,000/ - (II) SH. A.S. MITTAL RS. 25,90,000/ - (III) SH. DIPAK MITTAL RS. 25,90,000/ - 6. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NOIDA TOLL BRIDE (SUPRA) , THE HON BLE HIGH COURT HAS CLEARLY HELD THAT THE PROVISIONS OF SECTION 269SS ARE NOT ATTRACTED IN CASE OF RECEIPT OF LOAN THROUGH JOURNAL ENTRIES . THE RELEVANT PARA OF THE JUDGMENT IS REPRODUCED AS UNDER: 5. AGGRIEVED, THE ASSESSED PREFERRED APPEAL TO THE COMMISSIONER OF INCOME - TAX (APPEALS) BUT WITHOUT ANY SUCCESS. THE ASSESSED CARRIED THE MATTER IN FURTHER APPEAL TO THE TRIBUNAL. BY THE IMPUGNED ORDER, THE TRIBUNAL HAD DELETED THE SAID PENALTY. WHILE HOLDING THAT THE PROVISIONS OF SECTION 269SS OF THE ACT WERE NOT ATTRACTED, THE TRIBUNAL HAS NOTICED THAT: (I) IN THE INSTANT CASE, THE TRANSACTION WAS BY AN ACCOUNT PAYEE CHEQUE, (II) NO PAYMENT ON ACCOUNT WAS MADE IN CASH EITHER BY THE ASSESSED OR ON ITS BEHALF, (III) NO LOAN WAS ACCEPTED BY THE AS SESSED IN CASH, AND (IV) THE PAYMENT OF RS. 4.85 CRORES MADE BY THE ASSESSED THROUGH IL & FS, WHICH HOLDS MORE THAN 30 PER CENT. OF THE PAID - UP CAPITAL OF THE ASSESSED, BY JOURNAL ENTRY IN THE BOOKS OF ACCOUNT OF THE ASSESSED BY CREDITING THE ACCOUNT OF IL & FS. 6. HAVING REGARD TO THE AFORENOTED FINDINGS, WHICH ARE ESSENTIALLY FINDINGS OF FACT, WE ARE IN COMPLETE AGREEMENT WITH THE TRIBUNAL THAT THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED ON THE FAC TS OF THE CASE. ADMITTEDLY, NEITHER THE ASSESSED NOR IL & FS HAD 5 ITA NO. 2818/DEL/2011 AY: 2006 - 07 MADE ANY PAYMENT IN CASH. THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW. 7. WE ACCORDINGLY DECLINE TO ENTERTAIN THE APPEAL. DISM ISSED. ( EMPHASIS SUPPLIED ) 7. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NOIDA TOLL BRIDGE ( SUPRA) , WE HOLD THAT THE DECISION OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON TH E ISSUE IN DISPUTE IS WELL REASONED AND NO INTERFERENCE IS REQUIRED BY US , THUS , W E UPHOLD THE SAME AND DISMISS THE GROUND OF APPEAL OF THE REVENUE . 8. THE GROUND NO. 2 RAISED BY THE REVENUE BEING GENERAL IN NATURE, IT IS NOT REQUIRED BY US TO ADJUDICAT E UPON. 9. IN THE RESULT , THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 2 6 T H FEBRUARY , 2016 . S D / - S D / - ( I.C. SUDHIR ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 6 T H FEBRUARY , 2016 . RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI