ACIT, New Delhi V. Sh. Satvinder Singh Washawan, New Delhi

ITA 3082/DEL/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9670 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 31-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Reasonable cause
• Section: 273B; 143(3); 271D; 271E; 27; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3081 & 3082/DEL/2013 ASSESSMENT YEAR: 2008-09 ACIT, CIRCLE 33(1), ROOM NO. 1505, 15 TH FLOOR, DR. SHYAMA PRASAD MUKHERJEE MARG, CIVIC CENTRE, NEW DELHI VS. SH. SATVINDER SINGH WADHAWAN, 78, PACHIMI MARG, VASANT VIHAR, NEW DELHI 110 057 (PAN: AAAPW4845M) (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM THESE 02 APPEALS ARE FILED BY THE REVENUE AGAINST T HE RESPECTIVE ORDERS PASSED BY THE LD. CIT(A)-XXVI, NEW DELHI REL ATING TO ASSESSMENT YEAR 2008-09. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE RELATING TO SAME ASSESSMENT YEAR I.E. 2008-09, HENCE, THE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUND RAISED IN ITA NO. 3081/DEL/2013 (AY 2 008-09 IS THAT LD. CIT(A) HAS ERRED IN DELETING THE PENALTY RS. 1 ,59,86,750/- LEVIED BY DEPARTMENT BY SH. N.K. BANSAL, SR. DR ASSESSEE BY SH. MANOJ PATWARI, MS. SHILPA MITTAL, CA 2 THE AO U/S. 271E OF I.T. ACT FOR VIOLATION OF PROV ISIONS OF SECTION 269T OF THE I.T. ACT, 1961. 3. THE GROUNDS RAISED IN ITA NO. 3082/DEL/2013 (AY 2008-09) IS THAT LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS . 2,32,70,664/- LEVIED BY THE AO U/S. 271D FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE I.T. ACT, 1961. ITA NO. 3081/DEL/2013 (AY 2008-09) 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT ACT) VIDE ORDER DATED 24.6.2011, AFTER A SPECIAL AUDIT WAS CA RRIED OUT IN THIS CASE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBS ERVED THAT THE ASSESSEE HAD REPAID LOANS OR DEPOSITS AMOUNTING TO RS. 1,59,86,750/- OTHERWISE, OTHER THAN BY AN ACCOUNT PAYEE CHEQUES O R AN ACCOUNT PAYEE BANK DRAFT IN VIOLATION TO THE PROVISION O SECTION 269T OF THE I.T. ACT, 1961. ACCORDINGLY, PENALTY PROCEEDINGS U/S. 271E OF THE ACT WERE INITIATED AND A SHOW CAUSE NOTICE DATED 9.12.2011 W AS ISSUED TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S. 271E OF THE INCOME TAX ACT, 1961 BE NOT IMPOSED AND IN RESPONSE TO THE SAM E, THE AR OF THE ASSESSEE FILED THE WRITTEN SUBMISSIONS AND AFTER C ONSIDERING THE SAME, THE AO OBSERVED THAT THERE IS NO FORCE IN HIS WRITT EN SUBMISSION AND HAS VIOLATED THE PROVISIONS U/S. 269T OF THE ACT AND AC CORDINGLY, IMPOSED A PENALTY OF RS. 1,59,86,750/- U/S. 271E OF THE ACT, A SUM EQUAL TO REPAYMENT OF LOAN VIDE ORDER DATED 30.5.2012. AGGR IEVED WITH THE 3 PENALTY ORDER DATED 30.5.2012, ASSESSEE APPEALED BE FORE THE LD. CIT(A) WHO VIDE HER ORDER DATED 13.2.2013 HAS DELETED THE ADDITION IN DISPUTE AND ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST T HE IMPUGNED ORDER DATED 13.2.2013 ASSESSEE IS IN APPEAL BEFORE US. 5. LD. SR. DR HAS RELIED UPON THE ORDER OF THE ASSE SSING OFFICER AND REITERATED THE CONTENTIONS RAISED IN THE GROUND OF APPEAL. HE STATED THAT THE SPECIAL AUDIT REPORT CLEARLY SHOWS THAT THE ACC OUNT OF VARDAAN FASHION IN THE BOOKS OF SATVINDER SINGH THE ASSESSE E (WHICH IS PART OF THE SPECIAL AUDIT REPORT) HAS AN OPENING CREDIT BALANCE OF RS. 11,65,000/-. IT WAS FURTHER SUBMITTED THAT THE VARDAAN FASHION HAS AN OPENING CREDIT BALANCE IN THE BOOKS OF ASSESSEE MAKES IT CLEAR THA T LOAN HAS BEEN TAKEN FROM VARDAAN FASHION AND THUS THE ASSESSES CONTENT IONS HAVE NO FORCE IN THEM. ACCORDINGLY, THERE IS A FAILURE ON THE PART O F THE ASSESSEE, BECAUSE NO REASONABLE CAUSE HAS BEEN PROVED BY THE ASSESSEE . IT WAS FURTHER SUBMITTED THAT ACCORDING TO SECTION 269T OF THE AC T NO BRANCH OF A BANKING COMPANY OR A COOPERATIVE BANK AND NO OTHER COMPANY OR COOPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON SHA LL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT P AYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE P ERSON WHO HAS MADE LOAN TO DEPOSIT IF (A) THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE THEREON, OR (B) THE A GGREGATE AMOUNT OF THE LOANS OR DEPOSITS HELD BY SUCH PERSON WITH THE BRAN CH OF THE BANKING COMPANY OR COOPERATIVE BANK OR, AS THE CASE MAY BE, THE OTHER COMPANY OR COOPERATIVE SOCIETY OR THE FIRM, OR OTHER PERSON EITHER IN HIS OWN NAME 4 OR JOINTLY WITH ANY OTHER PERSON ON THE DATE OF S UCH REPAYMENT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE ON SUCH LOANS OR DEPOSITS, IS TWENTY THOUSAND RUPEES OR MORE.. HOWEVER, IN THE PRESE NT CASE THE ASSESSEE HAS MADE REPAYMENT OF LOAN OTHERWISE THAN BY AN ACC OUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT, HENCE, AO HAS RIGHTLY HE LD THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T OF THE ACT AND ACCORDINGLY, MADE THE PENALTY OF RS. 1,59,86,750/- U/S. 271-E OF THE ACT, A SUM EQUAL TO REPAYMENT OF LOAN. IN VIEW OF ABOVE, IT IS REQUEST ED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED. 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER, WHICH DOES NOT NEED ANY INTERFERENC E ON OUR PART. HE FURTHER SUBMITTED THAT ON IDENTICAL FACTS AND CIRCU MSTANCES OF THE CASE IN ASSESSEES LENDERS CASE I.E. ACIT VS. VARDAAN FASHI ON AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, THE ITAT, C BENCH, NEW D ELHI VIDE ITS ORDER DATED 16.1.2015 IN ITA NO. 2253 & 2259/DEL/2013 (AY 2007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/2013 (AYRS. 20 07-08 TO 2008-09) HAS UPHELD THE ACTION OF THE LD. CIT(A) IN DELETIN G THE SIMILAR PENALTY AND FILED THE COPY OF THE SAID DECISION AND REQUEST ED TO FOLLOW THE SIMILAR DECISION OF THE BENCH. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE IMPUGNED ORDER OF THE LD. CIT(A) AS WELL AS THE TRIBUNALS ORDER DATED 16.1.2015 IN ASSESSEES LENDERS CASE I.E. ACI T VS. VARDAAN FASHION 5 AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, THE ITAT, C BENCH, NEW DELHI DECIDED IN ITA NO. 2253 & 2259/DEL/2013 (AY 2 007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/2013 (AYRS. 2007-0 8 TO 2008-09). WE FIND THAT LD. CIT(A) HAS ELABORATELY DISCUSSED T HE ISSUE IN DISPUTE VIDE PARA NO. 5 TO 7.2 AT PAGE NO. 12 TO 18 OF HIS IMPUGNED ORDER. FOR THE SAKE OF CLARITY, WE ARE REPRODUCING THE SAID RE LEVANT FINDING OF THE LD. CIT(A) AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE, WRITTE N SUBMISSIONS OF THE APPELLANT, AND THE FINDINGS OF THE ASSESSING OFFICER. I HAVE ALSO PERUSED THE CASE LAW S RELIED UPON BY THE AR OF THE APPELLANT IN THE COURSE OF PE NALTY PROCEEDINGS AS WELL AS IN THE COURSE OF PROCEEDINGS BEFORE ME AS ALSO THE SUBMISSIONS MADE BY THE APPELLANT BE FORE THE ADDL. CIT THE COURSE OF PENALTY PROCEEDINGS, A COPY OF WHICH HAS BEEN FILED BEFORE ME BY THE AR OR TIE APP ELLANT. ON CONSIDERING THE FACTS OF THE CASE AND THE NATURE OF EACH TRANSACTION, I FIND THAT THE PROVISIONS OF SECTION 269T ARE NOT APPLICABLE IN THIS CASE. I ALSO FIND THAT IN RE SPECT MOST OF THE TRANSACTIONS, THE ASSESSING OFFICER HAS ONLY GIVEN A FINDING STATING THAT THIS CAMOUFLAGING TRANSACTION IS MERELY A COLOURABLE DEVICE TO HIDE THE ORIGINAL TRA NSACTION WITHOUT APPRECIATING THE NATURE OF INDIVIDUAL TRANS ACTION. THE PROVISIONS REGULATING THE MODE ACCEPTING OR TAK ING LOANS OR DEPOSITS AND MODE OF REPAYMENT OF CERTAIN LOANS OR DEPOSITS ARE CONTAINED IN SECTIONS 269SS AND 269 T OF THE INCOME-TAX ACT, 1961 LAYS DOWN THE MODE OF REPAYMENT OF LOAN OR DEPOSIT AS UNDER:- 'SECTION 269T OF INCOME TAX ACT PROVIDES THAT ANY B RANCH OF A BANKING COMPANY OR A COOPERATIVE SOCIETY, FIRM OR 6 OTHER PERSON SHALL NOT REPAY ANY LOAN OR DEPOSIT OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BA NK DRAFT DRAWN IN THE NAME OF THE PERSON, WHO HAS MADE THE LOAN OR DEPOSIT, IF [1] THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WIT H INTEREST IS RS 20000 OR MORE, OR (2) THE AGGREGATE AMOUNT OF LOANS OR DEPOSITS HELD BY SUCH PERSON, EITHER IN HIS OWN NAME OR JOINTLY W ITH OTHER PERSON ON THE DATE OF SUCH REPAYMENT TOGETHER WITH INTEREST, IS RS 20000 OR MORE. FOR EXAMPLE IF X IS HAVING LOAN OF RS. 30000 OUTST ANDING TO Y. THEN X CANNOT REPAY SUCH LOAN IN CASH TO Y. EXEMPTIONS FROM SECTION 269T. THE FOLLOWING PERSONS ARE EXEMPTED FROM THE PURVIEW OF SECTION 269T: (A) GOVERNMENT; (B) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK O R CO-OPERATIVE BANK, (C) ANY CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PROVINCIAL ACT, (D) ANY GOVERNMENT COMPANY AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (E) OTHER NOTIFIED INSTITUTIONS 6. THERE ARE ALSO CONSEQUENCES OF CONTRAVENTION OF SECTION 269T. SECTION 271E OF THE IT ACT, 1961, PROVIDES TH AT IF A LOAN OR DEPOSIT IS REPAID IN CONTRAVENTION TO THE P ROVISIONS OI SECTION 269T THEN A PENALTY EQUIVALENT TO THE AM OUNT OF SUCH LOAN OR DEPOSIT WOULD BE LEVIED BY THE JOINT COMMISSIONER OF INCOME-TAX. IT MAY NOT BE OUT OF PL ACE TO 7 MENTION THAT NO PENALTY TO BE LEVIED U/S 271D OR 27 1E IF THERE WAS A REASONABLE CAUSE. AS PER SECTION 273B O F THE IT ACT, 1961 NO PENALTY SHALL BE LEVIED IF THE FAIL URE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS OR 269T IS DUE TO SOME REASONABLE CAUSE. NOW THE QUESTION ARISES A S TO WHAT CAN BE A REASONABLE CAUSE TO JUSTIFY THE VIOLA TION OF THE PROVISION OF SECTION 269SS AND 269T? SOME OF TH E REASONABLE CAUSES BASED UPON THE JUDICIAL DECISION ARE PROVIDED AS UNDER: 6.1 REPAYMENT OR RECEIPT OF AMOUNT TO PARTNERS: IF A PARTNER INTRODUCES CAPITAL IN CASH IN THE FIRM OR W ITHDRAWS THE SAME TO THE TUNE OF RS 20000 OR IN EXCESS OF RS 20000, THEN PROVISIONS OF SECTION 269SS OR 269T SHA LL NOT BE ATTRACTED AS THE INTRODUCTION OF CAPITAL OR WITH DRAWAL FROM FIRM CANNOT BE CALLED AS LOANS OR DEPOSITS. AMOUNT PAID BY FIRM TO PARTNERS OR VICE VERSA- IS P AYMENT TO SELF AND DOES NOT PA/TAKE THE CHARACTER OF LOAN OR DEPOSITS IN GENERAL LAW. PROVISIONS OF SECTION 269S S ARE NOT APPLICABLE TO SUCH FACTS (CIT V. LOKHPAT FILM ( CINEMA) (2008) 304 ITR 172 (RAJ.) 6.2 DEPOSIT ASSESSED AS INCOME, NO PENALTY CAN BE IMPOSED U/S 271D IN SUCH CASE: IT WAS HELD BY JODHP UR TRIBUNAL IN BAJRANG TEXTILES V. ADDITIONAL CIT [200 9] (JD.) 190 THAT WHERE THE A.O HAVING TREATED THE IMPUGNED AMOUNT OF DEPOSIT AS INCOME, HE IS PRECLUDED FROM T REATING THE SAME AMOUNT AS DEPOSIT OR LOAN FOR THE PURPOSE OF SECTION S' LEVY PENALTY U/S 271D. THE PENALTY OUGHT TO BE CANCELLED. 6.3 ACCEPTANCE OR REPAYMENT THROUGH JOURNAL ENTRY DO NOT ATTRACT SECTION 269SS OR 269T: ACCEPTANCE OR 8 REPAYMENT THROUGH JOURNAL ENTRY WOULD NOT COME WITH IN THE AMBIT OF THE WORDS 'LOANS OR DEPOSITS-SECTION 269SS APPLIES ONLY WHERE MONEY PASSES FROM ONE PERSON TO ANOTHER BY WAY OF 'LOAN OR DEPOSIT[CIT V. NOIDA TO LL BRIDGE CO. LTD. 262 ITR 260 (DEL.)] A GENUINE TRANSACTION MADE IN AN EMERGENCY, DOES NO T ATTRACT PENALTY U/S 271D: HELD IN MRS RUPALI R. DES AI V. ACIT 88 ITD 76 (MUM.). IN ITO V. SHREE MAHAVEER INDUSTRIES 82 TTJ 549 (JD.) IT WAS HELD THAT CASH P AID TO MEET MEDICAL TREATMENT EXPENDITURE IN EMERGENCY, DO ES NOT ATTRACT PENALTY U/S 271D. IN ITO V. PRABHULAL SAHU [2006] 99 TTJ (JD.) 177 IT WAS HELD THAT ASSESSEE WAS NOT AWARE OF PROVISIONS OF S ECTION 269SS OR 269T. HIS COUNCEL DID NOT APPRISE HIM ABOU T THE PROVISIONS. NO PENALTY U/S 271D SHALL BE ATTRACTED. WHERE DEPOSITORS RESIDING IN RURAL AREAS ARE NOT HA VING ACCESS TO BANKING FACILITY AND ARE IGNORANT OF RELE VANT PROVISIONS OF LAW, IT WOULD CONSTITUTE BONA FIDE RE ASONS FOR PAYMENT IN CASH. (ACLTV. VINMAN FINANCE & LEASING L TD. [2008] 306 ITR (AT) 377 (VISAKHA.) 6 4 LOAN GIVEN BY RELATIVES ON SUNDAY FOR SAFE CUST ODY AND FOR USE IN BUSINESS. NO CONTRAVENTION OF SECTION 26 9SS TAKES PLACE- ITO V. T.R. RANGARAJAN [2005] 279 ITR 587 (MAD.) 6.5 CASH TRANSACTION MADE ON SUNDAY. NO PENALTY COU LD BE IMPOSED IN SUCH A CASE, IW V. NARSING RAM ASHOK KUMAR[1993] 47 ITD 38(PAT) TRANSFER OF MONEY EXCEEDING RS. 20000 BY WAY OF BAN K VOUCHER INSTEAD OF A/C PAYEE CHEQUE OR DRAFT DOES N OT 9 ATTRACT PENALTY U/S 271D AS THE TRANSACTION ARE THR OUGH BANKING CHANNELS ONLY HELD IN ASST. CIT V. JAG VIJA Y AUTO FINANCE (P) LTD.[2000] 68 TTJ (JP) 44 LOAN IN CASH UNDER COMPELLING CIRCUMSTANCES HAVE BE EN HELD TO BE REASONABLE CAUSE: INDUSTRIAL ENTERPRISES V. DCIT[2000] 68 TTJ (HYD) 373. 6.6 WHERE THE LENDERS DID NOT HAVE ANY BANK ACCOUNT WHICH COMPELLED THE ASSESSEE TO ACCEPT THE LOAN IN CASH. THIS HAS BEEN CONSIDERED AS REASONABLE CAUSE IN BAL AJI TRADERS V. DCIT [2001] 73 TTJ (PUNE) 246 ALTHOUGH THE PROVISIONS OF SECTION 269SS AND 269T H AVE BEEN ENACTED WITH A VIEW TO PREVENT THE INCREASE IN BLACK MONEY AND TO STOP THE TAX EVASION. 6.7 THEREFORE, THE PROVISIONS OF SECTION 269SS AND 269T MUST BE APPLIED IN THE CONTEXT OF PROMOTING TH E PURPOSE FOR WHICH THE SAID PROVISIONS WERE INTRODUC ED. THE BASIC PURPOSE OF THESE SECTIONS IS TO PROHIBIT AND MONITOR THE TRANSACTIONS OF UNACCOUNTED MONEY. THUS, WHEN T HE ACCOUNTED MONIES ARE BROUGHT INTO THE BOOKS BY WAY OF JOURNAL ENTRIES, THE PROVISIONS OF SECTION 269SS AN D 269T CANNOT BE APPLIED. THE HONBLE MADRAS HIGH COURT IN THE CASE OF KUMARI A.B. SHANTI VS. ADI 197 ITR 330 WHIL E CONSIDERING THE CONSTITUTIONAL VALIDITY OF SECTION 269SS AND 269T HELD THAT THE OBJECTIVE WAS TO CURB THE CIRCUL ATION OF BLACK MONEY AND PUT AN EFFECTIVE CHECK UPON IT. EVE N OTHERWISE, AS DECIDED BY THE HONBLE ITAT IN HERPAL SINGH JASWANTSINGH VS. ITO 82 TAXMAN 81, A BONA FIDE BELI EF COUPLED WITH GENUINENESS OF TRANSACTION WOULD CONST ITUTE A REASONABLE CAUSE FOR NOT INVOKING PROVISIONS OF SEC TIONS 271D AND 271E. 10 6.8 THEREFORE, IN VIEW OF THE ABOVE, THE FACTS OF THE CASE AND NATURE OF EACH ENTRY AGAINST WHICH THE PEN ALTY U/S 271E WAS IMPOSED ARE DISCUSSED ONE BY ONE AS UN DER: 6.9 ENTRY DATED 7.6.2007 OF RS.35.00.000/- IN THE NAME OF SH. G.S. BATRA: ON PERUSAL OF THIS TRANSACT ION, I FIND THAT THIS AMOUNT WAS REPAID BY SH. INDERPAL SI NGH, BROTHER OF THE APPELLANT TO SH. G.S. BATRA VIDE CHE QUE NO.495429 DATED 7.6.2007 AND CONSEQUENTLY THE BANK ACCOUNT OF SH. INDERPAL SINGH WITH IOB BANK(BANK AC COUNT NO.32212) WAS DEBITED BY SHOWING THE SAID PAYMENT I N THE NAME OF SH. G.S. BATRA. FURTHER, THE APPELLANT HAD DEBITED THE ACCOUNT OF SH. G.S. BATRA AND CREDITED THE ACCOUNT OF SH. INDERPAL SINGH BY RS.35,00,000/- IN HIS BOOKS OF ACCOUNTS. THEREFORE, THE PAYMENT OF RS.35,00,000/- BY SH. INDERPAL SINGH, BROTHER OF TH E APPELLANT WAS MADE THROUGH AN ACCOUNT PAYEE CHEQUE AND NOT BY WAY OF CASH AS OBSERVED BY THE ASSESSING OFF ICER. THUS, THERE WAS NO VIOLATION OF THE PROVISIONS OF S ECTION 269T IN THIS CASE AND PENALTY U/S 271E IS NOT ATTRA CTED. 6.10 ENTRY DATED 2.4.2007 OF RS.15.00.000/- IN THE NAME OF SH. HARVINDER SINGH: THE NATURE OF THE TRANSACTION WAS THAT THE APPELLANT RECEIVED A SUM O F RS. 15,00,000/- VIDE CHEQUE NO.91837 DATED 31.1.2007 FR OM SH. AVTAR SINGH BUT IT WAS WRONGLY CREDITED TO THE ACCOUNT OF SARDAR AVTAR SINGH. THE APPELLANT HAD FILED COPI ES OF THE ACCOUNT OF SH HINDER SINGH AND SH. AVTAR SINGH FOR ASSESSMENT YEARS 200,08 A. 200,09 AND COPY OF BANK STATEMENT O, THE APPELLANT BEFORE THE ASSESSING OFF ICER IN THE COURSE OF PENALTY PROCEEDINGS AND ALSO BEFORE ME IN THE COURSE OF APPELLATE PROCEEDINGS IN SUPPORT OF SUBMISSION. THESE FACTS CLEARLY REVEAL THAT THE LOA N OF RS. 11 15,00,000/- WAS RECEIVED ON 31-1-2007 I E. IN THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR AVTAR SINGH BUT DURING THE YEAR UNDER CONSIDERATION ONLY ADJUSTMENT ENTRIES, WHICH WERE RECTIFICATORY IN NAT URE, WERE PASSED. THUS, THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE INCOME-TAX ACT. 1 961 TO ATTRACT PENALTY U/S 271E. 6.11 ENTRY DATED 2.4.2007 OF RS.30,00,000/- IN THE NAME OF SH. HARVINDER SINGH: THE FACTS OF THIS TRAN SACTION ARE THAT THE APPELLANT RECEIVED A SUM OF RS.30,00,0 00/- THROUGH AN ACCOUNT PAYEE CHEQUE WHICH WAS CREDITED IN HIS BANK ACCOUNT NO. 1501000101301687 WITH PUNJAB NATIONAL BANK, PUNJABI BAGH, NEW DELHI ON 12.1.2007 AFTER DISCOUNTING AT RS.29,94,886/- FROM SH. G.S. BATRA. HOWEVER, THE AMOUNT WAS WRONGLY CREDITED TO THE ACC OUNT OF SH. HARVINDER SINGH INSTEAD OF SH. G.S. BATRA. L ATERON, WHEN THE MISTAKE WAS NOTICED A JOURNAL ENTRY WAS PA SSED ON 2.4.2007 BY DEBITING THE ACCOUNT OF SH. HARVINDE R SINGH AND CREDITING THE ACCOUNT OF SH. G.S. BATRA. THE APPELLANT HAD FILED COPIES OF ACCOUNT OF SH. HARVIN DER SINGH AND SH. G.S. BATRA FOR THE ASSESSMENT YEARS 2 007- 08 AND 2008-09 ALONG WITH COPY OF HIS BANK STATEMEN T BEFORE THE ASSESSING OFFICER IN THE COURSE OF PENAL TY PROCEEDINGS AND ALSO BEFORE ME IN THE COURSE OF APP ELLATE PROCEEDINGS IN SUPPORT OF HIS SUBMISSIONS. SINCE, T HIS IS ONLY AN ADJUSTMENT ENTRY IN THE YEAR UNDER CONSIDER ATION, THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISI ONS OF SECTION 269T READ WITH SECTION 271E OF THE INCOME-T AX ACT, 1961 BY THE ASSESSING OFFICER. 6.12 ENTRY DATED 22.6.2007 OF RS.90,000/- IN THE NAME OF SH. INDERPAL SINGH. THIS TRANSACTION REPRES ENTED 12 THE AMOUNT REPAID BY THE APPELLANT TO M/S. DNK CREA TIONS VIDE CHEQUE NO.321103 DATED 22.6.2007 ON BEHALF OF SH. INDERPAL SINGH WHO IS PROPRIETOR OF M/S. DNK CREATI ONS. THE APPELLANT HAD SUBMITTED THAT SINCE THERE WAS NO REPAYMENT BY WAY OF CASH, THE APPLICATION OF PROVIS IONS OF SECTION 269T READ WITH SECTION 271E WERE NOT JUSTIF IED. 6.13 ENTRY DATED 2.4.2007OF RS.67,31,750/- IN THE NAME OF M/S. SWAY EXPORT.: THE FACTS AS SUBMITTED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE ME ARE THAT THE APPELLANT IS A PARTNER IN M/S. SWAY EXPORT AND HE U SED TO MAINTAIN TWO ACCOUNTS WITH THIS PARTNERSHIP FIRM, O NE AS CURRENT ACCOUNT AND SECOND AS CAPITAL ACCOUNT UPTO FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, TO AVOID THE COMPLEXITY OF MAINTAINING TWO ACCOUNTS, THE APPELLANT STARTED MAINTAINING ONLY ONE CAPITAL ACCOUNT FROM THE FINAN CIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09. I T WAS EXPLAINED THAT DURING THE YEAR THE APPELLANT HAD A OPENING CREDIT BALANCE OF RS.67,31,750/- IN THE BOOKS OF M/ S. SWAY EXPORT. IT WAS THUS BY DEBITING THE LOAN OF ACCOUNT OF RS.67,31,750/-, THE APPELLANT HAD CREDITED HIS INVE STMENT ACCOUNT IN THE BOOKS OF ACCOUNT M/S. SWAY EXPORT WH ICH WAS A MERE MERGER ENTRY FROM TWO ACCOUNTS INTO ONE ACCOUNT AND NOT A REPAYMENT OF LOAN. THE APPELLANT HAD FILED A COPY OF LEDGER ACCOUNT OF M/S. SWAY EXPORT I.E. INVESTMENT ACCOUNT AND CAPITAL ACCOUNT IN THE BOOKS OF THE APPELLANT AND APPELLANTS CAPITAL ACCOUNT IN THE BO OKS OF M/S. SWAY EXPORT IN SUPPORT OF THE SUBMISSION. IT W AS ALSO SUBMITTED THAT EVEN THE OPENING CREDIT BALANCE OF RS.67,31,750/- DURING THE YEAR WAS NOT A LOAN OR AD VANCE BUT IT RELATED TO BUSINESS TRANSACTION HELD IN EARL IER YEARS. 13 IN THE LIGHT OF THESE FACTS, I FIND THAT THE PROVIS IONS OF SECTION 269T ARE NOT APPLICABLE IN THIS CASE AS THE ENTRY WAS ONLY ADJUSTMENT/MERGER ENTRY. 6.14 ENTRY DATED 2.4.2007 OF RS.11,65,000/- IN NAME OF M/S. VARDAAN FASHION: THE FACTS OF THIS TRANSACT ION ARE ALSO THE SAME AND DISCUSSED ABOVE IN THE CASE OF M/ S. SWAY EXPORT HERE ALSO THE ENTRY HAD TO BE PASSED FO R AVOIDING COMPLEXITIES OF MAINTAINING TWO ACCOUNTS T HE APPELLANT HAD MADE THE SAME SUBMISSIONS AND FILED T HE SIMILAR EVIDENCES AS IN THE CASE OF M/S. SWAY EXPOR T. THEREFORE, THE SAME REASONS THE PROVISIONS OF SECTI ON 269T CANNOT BE ATTRACTED IN THIS CASE ALSO. 7. THE FACTS OF THE APPELLANTS CASE AND THE SUBMIS SIONS MADE ARE ALSO SUPPORTED BY THE FOLLOWING JUDGMENTS RELIED UPON BY THE APPELLANT: A) ACIT VS. RUCHIKA CHEMICAL & INVESTMENT PVT. LTD. (2004) 88 TTJ (DEL) 85 B) CIT VS. NOIDA TOLL BRIDGE CO. LTD. (2003) 262 IT R 260(DEL). C) INCOME TAX OFFICER VS. M/S RAJKOT BUILDWELL PVT. LTD. ITA NO.3069/DEL/2011 ORDER DATED 31/01/2012 D) CIT VS. BOMBAY CONDUCTORS AND ELECTRICAL LTD. (2 008) 301 ITR 328 E) ACIT VS. GUJRAT AMBUJA PROTEINS LTD. (2004) 89 T TJ (AHD.) 324 F) ITO VS. AMAR NATH SHIVRAJ (HUF) (2004) 1 SOT 346 (AGRA) G) SUNFLOWER BUILDERS PVT. LTD. VS. DCIT (1997) 61 ITD 14 227 (PUNE) H) CIT VS. SUNIL KUMAR GOYAL (2009) 315 ITR 163 (P& H) I) RAMLAL & ORS. VS. REWA COALFIELDS LTD. AIR 1962 SC 361 J) S. R. KOSHTI VS. CIT (2005) 276 ITR 165 (GUJ.) K) CIT VS. LOKHPAT FILM EXCHANGE (CINEMA) (2008) 3 04 ITR 172 (RAJ.) 7.1 IN THE FOLLOWING CASES, THE AHMEDABAD BENCH OF THE HON'BLE ITAT HAVE ALSO CANCELLED THE PENALTIES LEV, ED U/S 271D EVEN WHERE LOANS/DEPOSITS WERE TAKEN IN CASH. A) SHREENATHJI CORPORATION VS. ACIT 58 TTJ 611 B) GANESH WOODEN INDUSTRIES ITA NO.1626/AHD./1997, BENCH SMC' ORDER DATED 8.7.2002. IN THE LIGHT OF THE ABOVE DISCUSSION MADE IN CASE O F EACH TRANSACTION AND ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND THE LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENT S RELIED UPON BY THE APPELLANT, I HOLD THAT NO PEN ALTY U/S 271E CAN BE LEVIED IN THIS CASE. BESIDES THE ABOVE, THE ASSESSING OFFICER HAS NOT BROUGHT ANY AD VERSE MATERIAL ON RECORD AND GAVE A CLEAR FINDING THAT TH E ABOVE MENTIONED TRANSACTIONS CONSTITUTE REPAYMENT OF LOAN S AND DEPOSITS AND NOT BUSINESS TRANSACTIONS WHICH ARE SU BJECTED TO JOURNAL ENTRIES. IN THE ABSENCE OF ANY SUCH FIND ING GIVEN BY THE ASSESSING OFFICER, THE PENALTY LEVIED BY THE ADDL. COMMISSIONER OF INCOME-TAX U/S 271E CANNOT BE SUSTAINED. ACCORDINGLY, THE PENALTY LEVIED BY THE A DDL. CIT, RANGE-33, NEW DELHI IS HEREBY DELETED. 8. IN THE RESULT, THE APPEAL IS ALLOWED. 7.1 WE FURTHER FIND THAT ON SIMILAR ISSUE, THE ITAT , C BENCH, NEW DELHI 15 VIDE ITS ORDER DATED 16.1.2015 IN ITA NO. 2253 & 22 59/DEL/2013 (AY 2007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/ 2013 (AYRS. 2007- 08 TO 2008-09) IN ASSESSEES LENDERS CASE I.E. ACI T VS. VARDAAN FASHION AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, HAS UPHEL D THE ACTION OF THE LD. CIT(A) IN DELETING SIMILAR PENALTY. 7.2 AFTER PERUSING THE FINDING OF THE LD. CIT(A) IN THE PRESENT CASE AS WELL AS FINDING OF THE TRIBUNAL, AS AFORESAID AND THE CASE LAWS CITED IN THE IMPUGNED ORDER, WE ARE OF THE CONSIDERED VIEW THAT NO PENALTY U/S 271E OF THE ACT CAN BE LEVIED IN THIS CASE. BESIDES THE ABOVE, THE ASSESSING OFFICER HAS NOT BROUGHT ANY ADVERSE MATER IAL ON RECORD AND GAVE A CLEAR FINDING THAT THE ABOVE MENTIONED TRANS ACTIONS CONSTITUTE REPAYMENT OF LOANS AND DEPOSITS AND NOT BUSINESS TR ANSACTIONS WHICH ARE SUBJECTED TO JOURNAL ENTRIES. IN THE ABSENCE OF ANY SUCH FINDING GIVEN BY THE ASSESSING OFFICER, THE PENALTY LEVIED BY THE AD DL. COMMISSIONER OF INCOME-TAX U/S 271E CANNOT BE SUSTAINED. ACCORDINGL Y, THE PENALTY LEVIED BY THE ADDL. CIT, RANGE-33, NEW DELHI WAS RIGHTLY D ELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OU R PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY IN DISPUTE AND REJECT THE GROUND RAISED IN THE REVENUES APPEAL. IN THE RESULT, THE REVENUES APPEAL NO. 3081/DEL/2013 (AY 2008-09) ST ANDS DISMISSED. ITA NO. 3082/DEL/2013 (AY 2008-09) 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT ACT) VIDE 16 ORDER DATED 24.6.2011, AFTER A SPECIAL AUDIT WAS CA RRIED OUT IN THIS CASE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBS ERVED THAT THE ASSESSEE HAD ACCEPTED LOANS OR DEPOSITS AMOUNTING T O RS. 2,33,21,717/- EITHER IN CASH OR OTHERWISE, OTHER THAN THROUGH AN ACCOUNT PAYEE CHEQUES OR AN ACCOUNT PAYEE BANK DRAFT IN VIOLATION TO THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT, 1961. ACCORDINGLY, PENALTY P ROCEEDINGS U/S. 271D OF THE ACT WERE INITIATED AND A SHOW CAUSE NOTICE D ATED 9.12.2011 WAS ISSUED TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENA LTY U/S. 271D OF THE INCOME TAX ACT, 1961 BE NOT IMPOSED AND IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE FILED THE WRITTEN SUBMISSIONS A ND AFTER CONSIDERING THE SAME, THE AO OBSERVED THAT THERE IS NO FORCE I N HIS WRITTEN SUBMISSION AND HAS VIOLATED THE PROVISIONS U/S. 271 D OF THE ACT AND ACCORDINGLY, IMPOSED A PENALTY OF RS. 2,32,70,644 /- U/S. 271D OF THE ACT, A SUM EQUAL TO AMOUNT OF THE LOAN OR DEOSIT SO TAKEN OR ACCEPTED, VIDE ORDER DATED 30.5.2012. AGGRIEVED WITH THE PEN ALTY ORDER DATED 30.5.2012, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HER ORDER DATED 13.2.2013 HAS DELETED THE ADDITION IN DISPUTE AND ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNED ORDE R DATED 13.2.2013 ASSESSEE IS IN APPEAL BEFORE US. 9. LD. SR. DR HAS RELIED UPON THE ORDER OF THE ASSE SSING OFFICER AND REITERATED THE CONTENTIONS RAISED IN THE GROUND OF APPEAL. HE STATED THAT ASSESSEE HAD ACCEPTED LOAN OR DEPOSIT AMOUNTING T O RS. 2,33,21,717/- EITHER IN CASH OR OTHERWISE THANE THROUGH ACCOUNT P AYEE CHQUES OR ACCOUNT PAYEE BANK DRAFTS. ACCORDINGLY, THERE IS A FAILURE ON THE PART OF 17 THE ASSESSEE, BECAUSE NO REASONABLE CAUSE HAS BEEN PROVED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ACCORDING T O SECTION 269SS OF THE ACT NO PERSON SHALL AFTER THE 30 TH DAY OF JUNE, 1983 TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREINAFTER IN THIS SECTION REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY A N ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF- (A) THE AMOU NT OF SUCH LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUCH LOAN AND D EPOSIT; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR DEPOSIT, A NY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FROM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT IS FALLEN DUE OR NOT), TH E AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR (C) THE AMOUN T OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (B), IS TWE NTY THOUSAND RUPEES OR MORE.. HOWEVER, IN THE PRESENT CASE THE ASSESSE E HAS ACCEPTED LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQU E OR AN ACCOUNT OF PAYEE DRAFT, HENCE, AO HAS RIGHTLY HELD THAT ASSES SEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT AND ACCORDIN GLY, MADE THE PENALTY OF RS. 2,32,70,644/- U/S. 271-D OF THE ACT, A SUM E QUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. IN VIEW OF ABOVE, IT IS REQUESTED THAT THE ORDER OF THE LD. CIT(A) MAY BE C ANCELLED. 10. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER, WHICH DOES NOT NEED ANY INTERFERENC E ON OUR PART. HE FURTHER SUBMITTED THAT ON IDENTICAL FACTS AND CIRCU MSTANCES OF THE CASE IN 18 ASSESSEES LENDERS CASE I.E. ACIT VS. VARDAAN FASHI ON AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, THE ITAT, C BENCH, NEW D ELHI VIDE ITS ORDER DATED 16.1.2015 IN ITA NO. 2253 & 2259/DEL/2013 (AY 2007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/2013 (AYRS. 20 07-08 TO 2008-09) HAS UPHELD THE ACTION OF THE LD. CIT(A) IN DELETIN G THE SIMILAR PENALTY AND FILED THE COPY OF THE SAID DECISION AND REQUEST ED TO FOLLOW THE SIMILAR DECISION OF THE BENCH. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER OF THE LD. CIT(A) AS WELL AS THE TRIBUNALS ORDER DATED 16.1.2015 IN ASSESSEES LENDERS CASE I.E. ACI T VS. VARDAAN FASHION AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, THE ITAT, C BENCH, NEW DELHI DECIDED IN ITA NO. 2253 & 2259/DEL/2013 (AY 2 007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/2013 (AYRS. 2007-0 8 TO 2008-09). WE FIND THAT LD. CIT(A) HAS ELABORATELY DISCUSSED T HE ISSUE IN DISPUTE VIDE PARA NO. 5 TO 6.3 AT PAGE NO. 17 TO 22 OF HIS IMPUGNED ORDER. FOR THE SAKE OF CLARITY, WE ARE REPRODUCING THE SAID RE LEVANT FINDING OF THE LD. CIT(A) AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE, WRITTE N SUBMISSIONS OF THE APPELLANT, AND THE FINDINGS OF THE ASSESSING OFFICER. I HAVE ALSO PERUSED THE CASE LAW S RELIED UPON BY THE AR OF THE APPELLANT IN THE COURSE OF PE NALTY PROCEEDINGS AS WELL AS IN THE COURSE OF PROCEEDINGS BEFORE ME AS ALSO THE SUBMISSIONS MADE BY THE APPELLANT BE FORE THE ADDL. CIT IN THE COURSE OF PENALTY PROCEEDINGS , A COPY OF WHICH HAS BEEN FILED BEFORE ME BY THE AR OR TIE 19 APPELLANT. ON CONSIDERING THE FACTS OF THE CASE AND THE NATURE OF EACH TRANSACTION, I FIND THAT THE PROVISI ONS OF SECTION 269SS ARE NOT APPLICABLE IN THIS CASE. I AL SO FIND THAT IN RESPECT MOST OF THE TRANSACTIONS, THE ASSES SING OFFICER HAS ONLY GIVEN A FINDING STATING THAT THIS CAMOUFLAGING TRANSACTION IS MERELY A COLOURABLE DE VICE TO HIDE THE ORIGINAL TRANSACTION WITHOUT APPRECIATING THE NATURE OF INDIVIDUAL TRANSACTION. THEREFORE, IT WOU LD BE APPROPRIATE TO DISCUSS THE FACTS AND NATURE OF EACH ENTRY AGAINST WHICH THE PENALTY U/S. 271D WAS IMPOSED. ACCORDINGLY, THE FACTS AND NATURE OF EACH ENTRY IS DISCUSSED ONE BY ONE AS UNDER:- 5.1 ENTRY DATED 2.4.2007 OF RS. 30,00,000/- IN THE NAME OF GS BATRA : THE FACTS OF THIS TRANSACTION AR E THAT THE APPELLANT RECEIVED AN AMOUNT OF RS. 30,00,000/- BY WAY OF AN ACCOUNT PAYEE CHEQUE FROM GS BATRA IN THE PRECEDING ASSESSMENT YEAR 2007-08 BUT IT WAS WRONGL Y CREDITED IN THE ACCOUNT OF HARVINDER SINGH. HOWEVER , WHEN THIS MISTAKE WAS NOTICED DURING THE YEAR UNDER CONSIDERATION, THE SAME WAS RECTIFIED ON 2.4.2007 I .E. IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDE R CONSIDERATION BY CREDITING THE AMOUNT OF RS.30,00,0 00/- TO SH. G.S. BATRA AND DEBITING THE SAME TO SH. HARVIND ER SINGH. THE APPELLANT HAD FILED COPY OF ACCOUNT OF S H. G.S. BATRA AND SH. HARVINDER SINGH FOR THE ASSESSMENT YE AR 2007-08 AND 2008-09 AND COPY OF BANK STATEMENT OF T HE APPELLANT IN THE COURSE OF PENALTY PROCEEDINGS, WHI CH HAVE AGAIN BEEN FILED BEFORE ME IN THE COURSE OF APPELLA TE PROCEEDINGS. ON PERUSAL OF THE SAME, I FIND THAT TH E ASSESSING OFFICER HAD REJECTED THE APPELLANTS VERS ION WITHOUT APPRECIATING THE NATURE OF THE TRANSACTION. 20 THEREFORE, ON CONSIDERING THE FACTS OF THE CASE, I FIND THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 269SS AND THEREFORE PENALTY U/S 271D OF THE ACT IS NOT AT TRACTED. 5 2 ENTRY DATED 23.4.2007 OF RS.4,00,000/- IN THE N AME OF SH. INDERPAL SINGH: IN THIS TRANSACTION ALSO, CONSI DERING THE EXPLANATION OF THE APPELLANT FILED BEFORE ME AS WELL AS BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDIN GS, I FIND THAT THE PROVISIONS OF SECTION 271D ARE NOT AP PLICABLE. AFTER EXAMINING THE DETAILS, IF THE EXPLANATION OF THE APPELLANT WAS NOT ACCEPTABLE TO THE ASSESSING OFFIC ER THAT IT WAS A GIFT, EVEN THEN THE BONA FIDE OF THE TRANS ACTION BETWEEN THE TWO BROTHERS CANNOT BE DOUBTED. PERTAIN ING TO THIS TRANSACTION, THE APPELLANTS CASE IS COVERED B Y THE FOLLOWING JUDICIAL DECISIONS BY VARIOUS COURTS. A. ACIT VS. RUCHIKA CHEMICALS & INVESTMENTS PVT. LT D. (2004) 88 TTJ (DEL.) 85. B. CIT VS. BOMBAY CONDUCTORS AND ELECTRICAL LTD. (2 008) 301 ITR 328. C. ACIT VS. GUJRAT AMBUJA PROTEINS LTD. (2004) 89 T TJ (AHD.) 324. D. CIT VS. SUNIL KUMAR GOYAL (2009) 315 ITR 163 (P & H). E. SR KOSHTI VS. CIT (2005) 276 ITR 165 GUJRAT. F. CIT VS. NOIDA TOLL BRIDGE CO. LTD. (2003) 262 IT R 260 (DEL). G. ITO VS. M/S RAJKOT BUILDWELL PVT. LTD. ITA NO. 3069/DEL/2011 ORDER DATED 31.1.2012. 5.3 ENTRY DATED 8.5.2007 OF RS. 12,50,000/- IN THE NAME OF 21 INDERPAL SINGH ON PERUSAL OF THIS TRANSACTION, I F IND THAT THE APPELLANT HAD RECEIVED THIS AMOUNT FROM SH. ABHINAV ARYA THROUGH VIDE CHEQUE NO. 444731 DATED 8.5.2007 ON BE HALF OF HIS ELDER BROTHER SH. INDERPAL SINGH WADHAWAN ON A SALE CONSIDERATION OF JOINT PROPERTY HELD BY THEM. THE APPELLANT HAD FILED A COPY OF BANK ACCOUNT OF THE APPELLANT, COPY OF ACCOUNT OF MR. ABHINAV ARYA AND COPY OF THE APPELL ANT IN THE BOOKS OF SH. INDERPAL SINGH TO SHOW THAT THE APPELL ANT HAD RECEIVED THIS AMOUNT OF RS. 12,50,000/- THROUGH AN ACCOUNT PAYEE CHEQUE ON BEHALF OF HIS BROTHER SH. INDERPAL SINGH. FROM THE NATURE OF TRANSACTIONS IT IS CLEAR THAT TH ERE WAS NO VIOLATION TO THE PROVISIONS OF SECTION 269SS AND HE NCE PROVISIONS OF SECTION 271D OF THE INCOME-TAX ACT, 1 961 FOR IMPOSING PENALTY ON THIS TRANSACTION WAS NOT JUSTIF IED AS THERE WAS NO CASH TRANSACTION INVOLVED AS ALLEGED BY THE ASSESSING OFFICER. 5.4 ENTRY DATED 7.6.2007 OF RS.35,00,000/- IN THE N AME OF SH. INDERPAL SINGH : ON PERUSAL OF THIS TRANSACTIO N, IT IS SEEN THAT SH. INDERPAL SINGH, THE BROTHER OF THE APPELLA NT PAID RS.35,00,000/- VIDE CHEQUE NO.495429 DATED 7.6.2007 ON BEHALF OF THE APPELLANT TO SH. G.S. BATRA. CONSEQUE NTLY, THE APPELLANT PASSED AN ENTRY IN HIS BOOKS CREDITING SH . INDERPAL SINGH AND DEBITING SH. G.S. BATRA. DURING THE COUR SE OF PENALTY PROCEEDINGS THE APPELLANT FILED A COPY OF A CCOUNT OF SH. INDERPAL SINGH AND SH. G.S. BATRA IN THE BOOKS OF APPELLANT AND ALSO A COPY OF ACCOUNT OF THE APPELLA NT IN THE BOOKS OF SH. INDERPAL SINGH AND BANK STATEMENT OF SH. INDERPAL SINGH AND EXPLAINED THE ABOVE ENTRY WITHOU T APPRECIATING THE NATURE OF TRANSACTION, THE ASSESSI NG OFFICER WAS NOT JUSTIFIED TO HOLD THIS TRANSACTION AS A LOA N FROM SH. INDERPAL SINGH OTHERWISE THAN BY AN ACCOUNT PAYEE C HEQUE. 22 THEREFORE, IN THESE CIRCUMSTANCES, THERE IS NO CASE OF THE VIOLATION OF THE PROVISIONS OF SECTION 269SS AND TH EREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING PER 271D IN RESPECT OF THIS TRANSACTION. 5.5 ENTRY DATED 12.2.2008 OF RS. 14,71,479/- IN THE NAME OF SH. INDER PAL SINGH : THE FACTS OF THIS TRANSACT ION ARE THAT SH. INDERPAL SINGH HAD REPAID THE LOAN OF RS. 14,71 ,479/- THROUGH AN ACCOUNT PAYEE CHEQUE NO.852014 DATED 12.2.2008 TO HDFC BANK ON BEHALF OF THE APPELLANT. SH. INDERPAL SINGH AS MENTIONED ABOVE IS THE BROTHER OF THE APPELLANT CONSEQUENTLY, THE APPELLANT IN HIS BOOKS OF ACCOUNT CREDITED THE ACCOUNT OF SH. INDERPAL SINGH THOUGH SAID AMOUNT WAS NOT WAS NOT ACTUALLY RECEIVED BY HIM. TO EXPLAIN THESE TRANSACTIONS THE APPELLANT HAD FILED COPIES O F HIS ACCOUNT AND THE ACCOUNT OF SH. INDERPAL SINGH AND A LSO HIS OWN BANK STATEMENT AND THE BANK STATEMENT OF SH. IN DERPAL SINGH. ON PERUSAL OF THE COPIES OF ACCOUNT AND BAN K STATEMENT, I FIND THAT THE AOS OBSERVATIONS ARE FA CTUALLY INCORRECT. THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 269SS AND HENCE PENALTY U/S. 271D IS NOT ATTRACTED . 5.6 ENTRY DATED 1.3.2008 OF RS. 1.00.00,000/- IN TH E NAME OF SH. INDEROAL SINGH: ON PERUSAL OF THE DETAILS, IT I S SEEN THAT THE APPELLANT ALONG WITH HIS BROTHER SH. INDERPAL S INGH HAD PURCHASED A PROPERTY AT 2, UDYOG NAGAR, NEW DELHI I N WHICH BOTH HAVE 50% SHARE EACH. IT WAS IN THE COURSE OF T HIS PURCHASE DEAL, THE APPELLANT ADVANCED AN AMOUNT OF RS.2,00,00,000/- TOWARDS THE PURCHASE OF THE PROPER TY. LATER ON, THE APPELLANTS BROTHER SH. INDERPAL SINGH PAID RS. 1,00,00,000/- TO THE APPELLANT BEING HIS 50% SHARE IN THE SAID PROPERTY. THIS PAYMENT WAS MADE BY TRANSFERRIN G THE AMOUNT OF RS. 1,00,00,000/- FROM M/S. VARDAAN FASHI ON IN 23 WHICH THE APPELLANT AS WELL AS HIS BROTHER SH. INDE RPAL SINGH WERE PARTNERS. THE APPELLANT HAD ALSO FILED HIS OWN AS WELL AS SH. INDERPAL SINGHS COPY OF ACCOUNT IN THE BOOKS O F M/S. VARDAAN FASHION AND THE BANK STATEMENT BEFORE THE ASSESSING OFFICER, WHICH WERE AGAIN FILED BEFORE ME TO EXPLAIN THE TRANSACTION. HAVING CONSIDERED THE FACTS OF THI S TRANSACTION, I DO NOT FIND ANY VIOLATION OF THE PRO VISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961, AND HENC E PENALTY PROVISIONS LAID DOWN IN SECTION 271D ARE NO T ATTRACTED. ' 5.7 ENTRIES DATED 2.8.2007. 13.10.2007. 14.12.2007 AND 9.2.2008 OF RS.80.000/-. RS. 1,81,800/-, RS.1,94,36 5/- AND RS. 1,93.000/- IN THE NAME OF M/S. DNK RESPECTIVELY : THE FACTS OF THIS CASE ARE THAT THE APPELLANTS WIFE SM T. PREETI WADHAWAN HAD TAKEN LOAN FROM SYNDICATE BANK. IN THE SAME BANK M/S. DNK A PARTNERSHIP FIRM IN WHICH THE APPEL LANT IS A PARTNER, WAS ALSO HAVING OD ACCOUNT. THEREFORE, M/S . DNK HAD PAID THESE AMOUNTS TOWARDS INSTALLMENT ON BEHAL F OF THE APPELLANTS WIFE AS SUFFICIENT FUNDS WERE NOT AVAIL ABLE IN THE ACCOUNT OF THE APPELLANTS WIFE. M/S. DNK HAD THERE FORE, DEBITED THE ABOVE FOUR AMOUNT IN THE ACCOUNTS OF TH E APPELLANT AND IN TURN THE APPELLANT CREDITED THE SA ID AMOUNT IN HIS BOOKS IN THE NAME OF M/S. DNK. SIMILARLY, SM T. PREETI WADHAWAN CREDITED THE ACCOUNT OF SH. SATVINDER SING H FOR SUCH AMOUNTS IN HER BOOKS. THESE ARE THEREFORE, A M ERE THE ADJUSTMENT ENTRIES AND IN FACT THE APPELLANT HAD NO T RECEIVED ANY LOAN OR ADVANCE AS OBSERVED BY THE ASSESSING OF FICER. THERE WAS THUS NO VIOLATION OF THE PROVISIONS OF SE CTION 269SS IN THIS CASE ALSO. 5.8 ENTRY DATED 2.4.2007 OF RS.15.00.000/- IN THE N AME OF S. AVATAR SINGH: PERTAINING TO THIS TRANSACTION ALS O THE 24 ASSESSING OFFICER WITHOUT APPRECIATING THE NATURE O F TRANSACTION INVOKED THE PROVISIONS OF SECTION 269SS . THE FACT OF THE TRANSACTION ARE THAT THE APPELLANT RECEIVED A SUM OF RS. 15,00,000/- VIDE CHEQUE NO.918371 DATED 31.1.20 07 DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSES SMENT YEAR 2007-08 BUT THIS AMOUNT WAS WRONGLY CREDITED T O HIS SONS ACCOUNT. HOWEVER, WHEN THIS MISTAKE WAS REALI ZED A CONTRA ENTRY WAS PASSED ON 2.4.2007 I.E. IN THE YEA R UNDER CONSIDERATION BY DEBITING RS. 15,00,000/- TO ACCOUN T OF SH. HARVINDER SINGH AND CREDITING THE SAID AMOUNTS IN T HE ACCOUNT OF SARDAR AVATAR SINGH. THESE ARE THEREFORE , MERELY AN ADJUSTMENT ENTRY TO RECTIFY THE EARLIER MISTAKE. APPLICATION OF PROVISIONS OF SECTION 269SS TO SUCH AN ADJUSTMEN T ENTRY WAS NOT JUSTIFIED. 5.9 ENTRY DATED 2.4.2007 OF RS. 15,00,000/- IN THE NAME OF S. AVATAR SINGH: THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS AS DISCUSSED IN THE ABOVE ENTRY. HERE, THE APPELLAN T RECEIVED A SUM OF RS.15 00,000/- VIDE CHEQUE NO.318364 DATED 21.11.2006 I.E. IN THE FINANCIAL YEAR RELEVANT TO A SSESSMENT YEAR 2007-08 FROM SH. AVATAR SINGH BUT THE SAME WAS WRONGLY CREDITED TO M/S. VARDAAN FASHION. IN THIS C ASE ALSO, AS IN THE ABOVE CASE, A CONTRA ENTRY WAS PASSED ON 2.4.2007 I.E. IN THE YEAR UNDER CONSIDERATION BY DEBITING T HE ACCOUNT OF M/S. VARDAAN FASHION AND CREDITING THE SAID AMOU NT TO S. AVATAR SINGH. THIS IS ALSO AN ADJUSTMENT ENTRY MADE ON ACCOUNT OF RECTIFICATION OF THE MISTAKE AND THEREFO RE, THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 269SS , AND HENCE PENALTY U/S 271D IS NOT ATTRACTED. 6. THE FACTS OF THE APPELLANTS CASE AND THE SUBMIS SIONS MADE ARE ALSO SUPPORTED BY THE FOLLOWING JUDGMENTS: 25 A) ACIT VS. RUCHIKA CHEMICAL & INVESTMENT PVT. LTD. (2004) 88 TTJ (DEL) 85 B) CIT VS. NOIDA TOLL BRIDGE CO. LTD. (2003) 262 IT R 260(DEL). C) INCOME TAX OFFICER VS. M/S RAJKOT BUILDWELL PVT. LTD. ITA NO.3069/DEL/2011 ORDER DATED 31/01/2012 D) CIT VS. BOMBAY CONDUCTORS AND ELECTRICAL LTD. (2 008) 301 ITR 328 E) ACIT VS. GUJRAT AMBUJA PROTEINS LTD. (2004) 89 T TJ (AHD.) 324 F) ITO VS. AMAR NATH SHIVRAJ (HUF) (2004) 1 SOT 346 (AGRA) G) SUNFLOWER BUILDERS PVT. LTD. VS. DCIT (1997) 61 ITD 227 (PUNE) H) CIT VS. SUNIL KUMAR GOYAL (2009) 315 ITR 163 (P& H) I) RAMLAL & ORS. VS. REWA COALFIELDS LTD. AIR 1962 SC 361 J) S. R. KOSHTI VS. CIT (2005) 276 ITR 165 (GUJ.) K) CIT VS. LOKHPAT FILM EXCHANGE (CINEMA) (2008) 30 4 ITR 172 (RAJ.) I) SHREPAK ENTERPRISES VS. DCIT (1998) 60 TTJ (AHD. ) 199 6.1 THE APPELLANT HAS ALSO PLACED RELIANCE ON THE C BDT CIRCULAR NO.387 DATED 6.7.1984 WHEREIN THE OBJECTIV ES OF SECTION 269SS HAVE BEEN DISCUSSED. IN THIS CONTEXT, THE APPELLANT HAS SUBMITTED AS UNDER: 1. THAT ACCORDING TO CBDT CIRCULAR NO. 387 DATED 6.7.2984 INTRODUCED BY FINANCE ACT, 1984 THE PROVIS ION OF 26 SECTION 269SS WAS INTRODUCED WITH THE PURPOSE TO P LUG THE LOOP HOLE IN CASES, WHERE UNACCOUNTED CASH FOUN D DURING COURSE OF SEARCH WAS SOUGHT TO BE EXPLAINED BY THE TAX PAYERS. IT MEANS, THE PROVISION OF SECTION 269 SS IS APPLICABLE, WHEREVER THE ACTION U/S. 132 WAS TAKEN. SINCE THE ACTION U/S. 132 WAS NOT TAKEN IN APPELLANT CASE , ACCORDING TO CIRCULAR NO. 387 DATED 6.7.84, THE PRO VISION OF SECTION 269SS IS NOT APPLICABLE. 2. THAT LD. DELHI ITAT HAS DEALT IN DETAIL THIS CIR CULAR IN SAID INCOME TAX OFFICER VS. M/S RAJKOT BUILDWELL PV T. LTD. (SUPRA) WHILE DELETING THE PENALTY LEVIED UNDER SEC TION 271D. THUS, IN THE LIGHT OF DELHI ITAT DECISION A ND DBDT CIRCULAR, YOUR GOODSELF IS REQUESTED TO KINDLY DELE TE THE PENALTY LEVIED U/S. 271D OF THE I.T. ACT, 1961. 6.2 IN THE FOLLOWING CASES, THE AHMEDABAD BENCH OF THE HONBLE ITAT HAVE ALSO CANCELLED THE PENALTIES LEV IED U/S. 271D EVEN WHERE LOANS / DEPOSITS WERE TAKEN IN CASH. A) SHREENATHJI CORPORATION VS. ACIT 58 TTJ 611. B) GANESH WOODEN INDUSTRIES ITA NO. 1626/AHD/1997, BENCH, SMC ORDER DATED 8.7.2002. 6.3 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE A BOVE DECISIONS CITED AND RELIED UPON BY THE AR OF THE APPELLANT, I HOLD THAT NO PENALTY U/S. 271D FOR VIO LATION OF THE PROVISIONS OF SECTION 269SS IS LEVIABLE IN T HIS CASE. ACCORDINGLY, THE PENALTY LEVIED BY THE ADDL. CIT RANGE-33, NEW DELHI IS DELETED. 11.1 WE FURTHER FIND THAT ON SIMILAR ISSUE, THE ITA T, C BENCH, NEW DELHI VIDE ITS ORDER DATED 16.1.2015 IN ITA NO. 2253 & 22 59/DEL/2013 (AY 27 2007-08) AND ITA NOS. 2252, 2258, 3084 & 3085/DEL/ 2013 (AYRS. 2007- 08 TO 2008-09) IN ASSESSEES LENDERS CASE I.E. ACI T VS. VARDAAN FASHION AND ACIT VS. SH. INDERPAL SINGH WADHAWAN, HAS UPHEL D THE ACTION OF THE LD. CIT(A) IN DELETING SIMILAR PENALTY. 12. AFTER PERUSING THE FINDING OF THE LD. CIT(A) I N THE PRESENT CASE AS WELL AS FINDING OF THE TRIBUNAL, AS AFORESAID AND THE CASE LAWS CITED IN THE IMPUGNED ORDER, WE ARE OF THE CONSIDERED VIEW THAT NO PENALTY U/S 271D OF THE ACT CAN BE LEVIED IN THIS CASE. ACCORDINGLY , THE PENALTY LEVIED BY THE ADDL. CIT, RANGE-33, NEW DELHI WAS RIGHTLY DELE TED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY I N DISPUTE AND REJECT THE GROUND RAISED IN THE REVENUES APPEAL. IN THE RESU LT, THE REVENUES APPEAL NO. 3082/DEL/2013 (AY 2008-09) STANDS DISMI SSED. 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE STAND DISMISSED. ORDER PRONOUNCED ON 21-06-2019. SD/- SD/- [B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:21/06/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, AR, ITAT, NEW DELHI