ACIT, New Delhi V. Sh. Inderpal Singh Wadhawan, New Delhi

ITA 3084/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86532 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL; B R R KUMAR
• Keywords: Additional evidence; Reasonable cause; Commercial expediency
• Section: 40A(3); 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 2253/DEL/2013 & 2259/DEL/2013 2253/DEL/2013 & 2259/DEL/2013 2253/DEL/2013 & 2259/DEL/2013 2253/DEL/2013 & 2259/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007 - -- - 08 0808 08 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIR CIRCIR CIRCLE CLECLE CLE- -- -33(1), 33(1), 33(1), 33(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S VARDA M/S VARDA M/S VARDA M/S VARDA A AA A N FASHION, N FASHION, N FASHION, N FASHION, E EE E- -- -1/7, 2 1/7, 2 1/7, 2 1/7, 2 ND NDND ND FLOOR, FLOOR, FLOOR, FLOOR, EAST PATEL NAGAR, EAST PATEL NAGAR, EAST PATEL NAGAR, EAST PATEL NAGAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 008. 110 008. 110 008. 110 008. PAN : AACFV0423H. PAN : AACFV0423H. PAN : AACFV0423H. PAN : AACFV0423H. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO S.2252/DEL/2013, 2258/DEL/2013, 3084/DEL/2013 & 308 5/DEL/2013 S.2252/DEL/2013, 2258/DEL/2013, 3084/DEL/2013 & 308 5/DEL/2013 S.2252/DEL/2013, 2258/DEL/2013, 3084/DEL/2013 & 308 5/DEL/2013 S.2252/DEL/2013, 2258/DEL/2013, 3084/DEL/2013 & 308 5/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2007 2007 2007 2007 - -- - 08, 2008 08, 2008 08, 2008 08, 2008 - -- - 09, 2008 09, 2008 09, 2008 09, 2008 - -- - 09 & 2008 09 & 2008 09 & 2008 09 & 2008 - -- - 09 0909 09 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -33(1), 33(1), 33(1), 33(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, E EE E- -- -1/7, 2 1/7, 2 1/7, 2 1/7, 2 ND NDND ND FLOOR, FLOOR, FLOOR, FLOOR, EAST PATEL NAGAR, EAST PATEL NAGAR, EAST PATEL NAGAR, EAST PATEL NAGAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 008. 110 008. 110 008. 110 008. PAN : AARPS6904L. PAN : AARPS6904L. PAN : AARPS6904L. PAN : AARPS6904L. (APPELLANT) (RESPONDENT) APPEL LANT BY : SHRI R.I.S. GILL, CIT - DR AND SHRI B.R.R. KUMAR, SR.DR. RESPONDENT S BY : SHRI AJAY WADHWA, ADVOCATE. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : ITA NO.3085/DEL/2013 : ITA NO.3085/DEL/2013 : ITA NO.3085/DEL/2013 : ITA NO.3085/DEL/2013 :- -- - THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXVI, NEW DELHI DATED 13 TH FEBRUARY, 2013 FOR THE AY 2008-09. ITA-2253/D/2013 & 5 OTHERS 2 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL READS AS UNDER:- THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.5,85,70,875/- LEVIED BY THE AO U/S 271D FOR VIOL ATION OF PROVISIONS OF SECTION 269SS OF THE I.T. ACT 1961 . 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S ECTION 143(3), THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD ACC EPTED LOAN OR DEPOSIT AMOUNTING TO `5,85,70,875/- OTHERWISE THAN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THE DETAILS OF SUCH LOAN ACCEPTED OTHERWISE THAN ACCOUNT PAYEE CHEQUE/BANK DRAFT ARE AS UNDER:- NAME OF THE LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUES OR AN ACCOUNT PAYEE BANK DRAFT GMS REAL ESTATE (P) LTD. 4/2/2008 190000 GODSONS SHOES 4/2/2008 970000 GODSONS BROS. 4/2/2008 3900000 M.S. APPREAL PVT.LTD. 1/4/2007 4000000 VARDAAN FASHION 14/11/2007 250000 VARDAAN F ASHION 19/11/2007 612175 VARDAAN FASHION 18/3/2008 612175 VARDAAN FASHION 18/1/2008 612175 VARDAAN FASHION 18/2/2008 612175 VARDAAN FASHION 1/2/2008 2100000 VARDAAN FASHION 1/2/2008 140000 VARDAAN FASHION 7/12/2007 3000000 VARDAAN FASHION 2/2/2008 1 300000 VARDAAN FASHION 1/2/2008 10000000 VARDAAN FASHION 15/3/2008 27050000 TOTAL 58570875 ITA-2253/D/2013 & 5 OTHERS 3 4. DURING PENALTY PROCEEDINGS, IT WAS EXPLAINED BY THE LEARNED COUNSEL THAT ALL THE ABOVE CREDIT ENTRIES IN THE AS SESSEES BOOKS OF ACCOUNT ARE ONLY BY JOURNAL ENTRY AND NO MONETARY T RANSACTION HAD ACTUALLY TAKEN PLACE BETWEEN THE ASSESSEE AND THE A BOVE MENTIONED LENDERS. SINCE THE ASSESSEES EXPLANATION WITH REG ARD TO EACH AND EVERY LENDER IS MORE OR LESS SIMILAR, IT WOULD BE A PPROPRIATE TO REPRODUCE THE ASSESSEES EXPLANATION WITH REGARD TO THE CREDIT ENTRY IN THE NAME OF GMS REAL ESTATE (P) LTD. (HEREINAFTER R EFERRED TO AS GMS):- (I) THE ASSESSEE IS A PARTNER OF M/S DNK. M/S DNK RECEIVED/PAID CHEQUE FROM/TO GMS REAL ESTATE TIME T O TIME ON BEHALF OF THE ASSESSEE FOR THE ADVANCE FOR PROPERTY. ON 4/2/2008 THE NET AMOUNT FROM G M REAL ESTATE TRANSFERRED TO INDERPAL SINGH ACCOUNT. THUS , THE ASSESSEE HAS NOT RECEIVED ANY LOAN/ADVANCE OTHERWIS E THAN BY ACCOUNT PAYEE CHEQUE/ACCOUNT PAYEE BANK ORDER. IT WOULD NOT BE OUT OF PLACE TO MENTION THA T ALL THE PAYMENTS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES ONLY FROM GM REAL ESTATE. A PARTNERSHIP FI RM CAN RECEIVE PAYMENT ON THE BEHALF OF THE PARTNER. M/S DNK RECEIVED THE ADVANCE FOR PROPERTY ON THE BEHALF OF THE ASSESSEE, WHICH IS NOT CONTRADICTORY TO THE PRO VISION OF SECTION 269SS READ WITH SECTION 271D OF THE INCO ME TAX ACT, 1961. COPY OF LEDGER ACCOUNT OF GMS REAL ESTATE (P) LTD. AND DNK IN THE BOOKS OF THE ASSESSE E AND LEDGER ACCOUNT OF GMS REAL ESTATE & INDERPAL SI NGH IN THE BOOKS OF THE M/S DNK ARE ENCLOSED HEREWITH A S ANNEXURE-B. 5. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSE ES CONTENTION WITH THE FOLLOWING FINDING:- THE CONTENTIONS OF THE ASSESSEE HAVE BEEN EXAMINED . THE LOAN HAS BEEN TAKEN BY THE ASSESSEE WHICH IS QU ITE CLEAR FROM THE LEDGER ACCOUNT OF GMS REAL ESTATE IN THE BOOKS OF THE ASSESSEE INDERPAL SINGH WHEREIN GMS RE AL ESTATE ACCOUNT HAS BEEN CREDITED DATED 4.2.2008 BY RS.1,90,000/-. IT IS NOT THE CASE OF THE ASSESSEE THAT THE ITA-2253/D/2013 & 5 OTHERS 4 ASSESSEE HAS TAKEN LOAN FROM GMS REAL ESTATE BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE ASSESSEE. THAT MAKES IT C LEAR THAT HE HAS TAKEN LOAN FROM GMS REAL ESTATE OTHERWI SE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE ASSESSEE. NOW IN THE FACTS OF THE CASE IT IS CLEAR THAT THE ASSESSEE HAS TAKEN LOAN FROM GMS REAL ESTATE OTHERWISE THAN BY A N ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE ASSESSEE AND IS USING ARTI FICE TO CAMOUFLAGE THIS TRANSACTION. THIS CAMOUFLAGING TRANSACTION IS MERELY A COLOURABLE DEVICE TO HIDE T HE ORIGINAL TRANSACTION WHICH IS QUITE CLEAR FROM THE LEDGER ACCOUNT OF GMS REAL ESTATE IN THE BOOKS OF THE ASSESSEE INDERPAL SINGH WHEREIN GMS REAL ESTATES ACCOUNT HAS BEEN CREDITED DATED 4.2.2008 BY RS.1,90,000/-. THUS IT IS QUITE CLEAR THAT THE ASS ESSEES CONTENTION HAS NO FORCE IN IT. 6. ACCORDINGLY, THE ASSESSING OFFICER LEVIED THE PE NALTY OF `5,85,70,875/- WHICH IS DELETED BY THE LEARNED CIT( A). HENCE, THIS APPEAL BY THE REVENUE. 7. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED DR THAT THERE IS NO DISPUTE THAT THERE IS A CREDIT ENT RY IN THE ASSESSEES BOOKS OF ACCOUNT IN THE NAME OF ABOVE MENTIONED PER SONS. AS PER SECTION 269SS, THE ASSESSEE IS SUPPOSED TO ACCEPT L OAN OR DEPOSIT EITHER BY ACCOUNT PAYEE CHEQUE OR BY ACCOUNT PAYEE BANK DRAFT. ADMITTEDLY, THE ABOVE CREDIT ENTRIES BY THE ASSESSE E WERE ACCEPTED NEITHER BY ACCOUNT PAYEE CHEQUE NOR BY BANK DRAFT A ND THEREFORE, THERE IS CLEAR VIOLATION OF SECTION 269SS AND ASSES SING OFFICER RIGHTLY LEVIED PENALTY UNDER SECTION 271D. THE CIT(A) CANC ELLED THE PENALTY WITHOUT PROPERLY APPRECIATING THE FACTS. THEREFORE , HIS ORDER SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE R ESTORED. ITA-2253/D/2013 & 5 OTHERS 5 8. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STATED THAT THE ASSESSEE IS A PARTNERSHIP OF M/S DNK. M/S DNK RECEIVED/PAID CHEQUES FROM/TO GMS FROM TIME TO TIME ON BEHALF OF THE ASSESSEE FOR ADVANCE FOR PROPERTY. IN THE ASSESSEES BOOKS OF A CCOUNT, A JOURNAL ENTRY IS PASSED IN RESPECT OF NET AMOUNT OF `1,90,0 00/- BY WHICH THE ACCOUNT OF GMS WAS CREDITED AND THE ACCOUNT OF M/S DNK WAS DEBITED. THERE WAS NO MONETARY TRANSACTION BETWEEN THE ASSES SEE AND GMS. THE MONETARY TRANSACTION WAS ONLY BETWEEN M/S DNK A ND GMS FROM TIME TO TIME AND ALL THOSE TRANSACTIONS WERE BY ACC OUNT PAYEE CHEQUES. WHEN THERE WAS NO MONETARY TRANSACTION BE TWEEN M/S DNK AND GMS, THE QUESTION OF ACCEPTING THE MONEY BY ACC OUNT PAYEE CHEQUE/BANK DRAFT DID NOT ARISE. HE FURTHER SUBMIT TED THAT THIS ISSUE HAS BEEN CONSIDERED BY VARIOUS COURTS AND THE TRIBU NAL AND THEY HAVE TAKEN THE UNANIMOUS VIEW THAT PROVISIONS OF SECTION 269SS CANNOT BE SAID TO HAVE BEEN VIOLATED IN THE CASE OF BOOK ENTR Y. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: - (I) CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD. [201 4] 367 ITR 433 (DELHI). (II) CIT VS. NATIONAL CLOTHING CO. ITA NO.221/2003 VID E ORDER DATED 12 TH DECEMBER, 2014, HON'BLE DELHI HIGH COURT. (III) CIT VS. NOIDA TOLL BRIDGE CO.LTD. [2003] 262 ITR 260. (IV) SUNFLOWER BUILDERS (P) LTD. VS. DCIT [1997] 61 ITD 227 (ITAT-PUNE BENCH). (V) ACIT VS. RUCHIKA CHEMICALS & INVESTMENT (P) L TD. [2004] 88 TTJ 85 (ITAT-DELHI BENCH). (VI) ACIT VS. GUJARAT AMBUJA PROTEINS LTD. [2004] 89 TTJ 324 (ITAT-AHMEDABAD BENCH). ITA-2253/D/2013 & 5 OTHERS 6 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AD MITTEDLY, IN THE CASE OF THE ASSESSEE, FOR THE YEAR UNDER CONSIDERAT ION, IN RESPECT OF ALL THE CREDIT ENTRIES AMOUNTING TO `5,85,70,875/-, THE CREDIT WAS BY WAY OF JOURNAL ENTRIES AND NOT ON ACCOUNT OF RECEIPT OF ANY CASH MONEY BY THE ASSESSEE FROM THE LENDERS. SO FAR AS CREDIT IN THE ACCOUNT OF GMS IS CONCERNED, M/S DNK, WHICH IS A PARTNERSHIP FIRM IN WHICH ASSESSEE IS A PARTNER, RECEIVED/PAID CHEQUE FROM GMS TIME TO TI ME ON BEHALF OF THE ASSESSEE. IN RESPECT OF THE NET AMOUNT, A JOUR NAL ENTRY WAS PASSED BY CREDITING TO GMS AND DEBITING TO M/S DNK. SIMIL ARLY, M/S DNK ALSO RECEIVED CHEQUE FROM GODSONS SHOES ON BEHALF OF THE ASSESSEE AND THEN BY WAY OF JOURNAL ENTRY IN THE ASSESSEES BOOK S OF ACCOUNT. GODSONS SHOES WAS CREDITED WITH DEBIT TO M/S DNK. IN THE CASE OF GODSONS BROS., THERE WAS A TRANSACTION BY CHEQUE BE TWEEN VARDAAN FASHION, A PARTNERSHIP FIRM IN WHICH ASSESSEE IS A PARTNER AND GODSONS BROS. AND IN THE BOOKS OF THE ASSESSEE, THERE WAS O NLY A JOURNAL ENTRY. IN THE CASE OF M.S. APPREAL PVT.LTD., THE JOURNAL E NTRY WAS PASSED ONLY AS A RECTIFICATION ENTRY. THESE FACTS WERE DULY ST ATED BEFORE THE ASSESSING OFFICER DURING PENALTY PROCEEDINGS AND TH E ASSESSEES SUBMISSION WHICH IS REPRODUCED BY THE ASSESSING OFF ICER IN THE PENALTY ORDER IS REPRODUCED BELOW FOR READY REFERENCE:- (V) THE ASSESSEE HAS WRONGLY CREDITED THE CHEQUE RECEIVED FROM M.S. APPREAL PVT.LTD. IN THE LEDGER O F MR. MANJINDER SINGH, WHO IS A DIRECTOR OF M.S. APPREAL PVT.LTD. DATED 16/1/2007. WHEN MISTAKE BECAME KNOWN A RECTIFICATION ENTRY HAS BEEN MADE IN THE YE AR UNDER CONSIDERATION. THE ASSESSEE HAS NOT RECEIVED LOAN/ADVANCE AMOUNTING TO RS.40,00,000/- FROM M.S. APPREAL PVT.LTD. DURING THE FINANCIAL YEAR 2007-08. ALL LOAN/ADVANCES AMOUNTS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE ONLY. THE ASSESSEE HAS WRONGLY BY MISTAKE REDUCED THE LOAN/ADVANCE AMOUNT OF G.S. BAT RA DURING THE FINANCIAL YEAR 2006-07 BY WRONGLY ENTERI NG A ITA-2253/D/2013 & 5 OTHERS 7 CHEQUE RECEIVED FROM M.S. APPREAL PVT.LTD. COPY OF LEDGER ACCOUNT OF M.S. APPREAL PVT.LTD. AND SH. MAJ INDER SINGH IN THE BOOKS OF ASSESSEE AN LEDGER ACCOUNT OF THE SHRI MAHINDER SINGH FOR THE FINANCIAL YEAR 2006-07 IN THE BOOKS OF THE ASSESSEE ARE ENCLOSED HEREWITH AS ANNEXURE-F. 10. SIMILAR IS THE POSITION FOR CREDIT IN THE NAME OF VARDAAN FASHION. M/S VARDAAN FASHION IS THE PARTNERSHIP FIRM IN WHIC H ASSESSEE IS A PARTNER. M/S VARDAAN FASHION MADE PAYMENT ON BEHAL F OF THE ASSESSEE TO OTHERS BY ACCOUNT PAYEE CHEQUES AND IN THE BOOKS OF THE ASSESSEE, ONLY THE JOURNAL ENTRY IS PASSED CREDITIN G THE ACCOUNT OF M/S VARDAAN FASHION AND DEBITING THE ACCOUNT OF THE PER SON TO WHOM THE PAYMENT IS MADE BY M/S VARDAAN FASHION. THE REVENU E HAS ALSO NOT DISPUTED THAT ALL THE ABOVE CREDIT ENTRIES ARE BY W AY OF JOURNAL ENTRIES BUT THEIR CONTENTION IS THAT AS PER SECTION 269SS, ASSESSEE IS SUPPOSED TO ACCEPT LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT. SINCE THERE IS A CREDIT ENTRY IN THE A SSESSEES BOOKS OF ACCOUNT WHICH IS NEITHER BY ACCOUNT PAYEE CHEQUE NO R BY BANK DRAFT, THEREFORE, THERE WAS VIOLATION OF SECTION 269SS AND CONSEQUENTLY, THE PENALTY IS LEVIABLE UNDER SECTION 271D. WE ARE UNA BLE TO ACCEPT THIS CONTENTION OF THE REVENUE. SECTION 269SS AND EXPLA NATIONS THERETO READ AS UNDER:- [MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEPOSITS. 269SS. NO PERSON SHALL, AFTER THE 30 TH DAY OF JUNE, 1984, TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFT ER IN THIS SECTION REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT [OR USE OF ELECTRONIC CLEA RING SYSTEM THROUGH A BANK ACCOUNT] IF, - (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUCH LOAN AND DEPOSIT; OR ITA-2253/D/2013 & 5 OTHERS 8 (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARL IER BY SUCH PERSON FROM THE DEPOSITOR IS REMAINING UNPA ID (WHETHER REPAYMENT HAS FALLEN DUE OR NOT), THE AMOU NT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGAT E AMOUNT REFERRED TO IN CLAUSE (B), IS [TWENTY] THOUSAND RUPEES OR MORE : PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM , OR ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED BY, - (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 (1 OF 1956); (E) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE C ENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITI NG, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE : [PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTI ON SHALL NOT APPLY TO ANY LOAN OR DEPOSIT WHERE THE PERSON F ROM WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED AND T HE PERSON BY WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCEPTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABLE TO TAX UNDER THIS ACT.] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, - [(I) BANKING COMPANY MEANS A COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 (10 OF 1949), APPL IES AND INCLUDES ANY BANK OR BANKING INSTITUTION REFERR ED TO IN SECTION 51 OF THAT ACT;] ITA-2253/D/2013 & 5 OTHERS 9 (II) CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (III) LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF MONEY.]. 11. AS PER SECTION 269SS, NO PERSON IS SUPPOSED TO TAKE OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. THE TERM LOAN OR DEPOSIT HAS ALSO BEEN DEFINED BY WAY OF EXPLANATIO N BY WHICH LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF MONEY LOAN OR DEPOSIT OF MONEY LOAN OR DEPOSIT OF MONEY LOAN OR DEPOSIT OF MONEY. THUS, FOR THE PURPOSE O F SECTION 269SS, LOAN OR DEPOSIT OF MONEY ONLY IS TO BE CONSIDERED. NOW, IN THE CASE OF ALL THE CREDIT ENTRIES IN THE A CCOUNTS OF THE ASSESSEE WHICH ARE CONSIDERED FOR LEVY OF PENALTY U NDER SECTION 271D, WE FIND THAT THERE IS NO MONETARY TRANSACTION BETWE EN THE ASSESSEE AND THE CREDITORS. THE MONETARY TRANSACTION HAD TA KEN PLACE BETWEEN THE CREDITORS AND SOME THIRD PARTY WHICH WERE ALL B Y ACCOUNT PAYEE CHEQUES. IN THE BOOKS OF THE ASSESSEE, THERE IS ON LY A JOURNAL ENTRY BY DEBITING THE ACCOUNT OF SOME OTHER PARTY AND CREDIT ING TO THE ACCOUNT OF THE CREDITOR. IN THESE CIRCUMSTANCES, IN OUR OP INION, WHEN THERE IS NO MONETARY TRANSACTION BETWEEN THE ASSESSEE AND CR EDITOR, IT CANNOT BE SAID THAT ASSESSEE ACCEPTED LOAN OR DEPOSIT FROM THE CREDITOR IN VIOLATION OF SECTION 269SS. 12. WE ALSO FIND THAT HON'BLE JURISDICTIONAL HIGH C OURT HAS CONSIDERED THIS ISSUE IN THE CASE OF NOIDA TOLL BRIDGE CO.LTD. (SUPRA) AND HELD AS UNDER:- WHERE THE TRIBUNAL HAD NOTICED THAT (I) THE TRANSA CTION WAS BY AN ACCOUNT PAYEE CHEQUE, (II) NO PAYMENT ON ACCOUNT WAS MADE IN CASH EITHER BY THE ASSESSEE OR ON ITS BEHALF, (III) NO LOAN WAS ACCEPTED BY THE ASSES SEE IN ITA-2253/D/2013 & 5 OTHERS 10 CASH, AND (IV) THE PAYMENT OF RS.4.85 CRORES WAS MA DE BY THE ASSESSEE THROUGH ILFS, WHICH HELD MORE THAN 30 PER CENT, OF THE PAID-UP CAPITAL OF THE ASSESSEE, B Y JOURNAL ENTRY IN THE BOOKS OF ACCOUNT OF THE ASSESS EE BY CREDITING THE ACCOUNT OF ILFS : HELD, THAT THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961, WERE NOT ATTRACTED AND PENALT Y COULD NOT BE IMPOSED. 13. IN THE CASE OF WORLDWIDE TOWNSHIP PROJECTS LTD. (SUPRA), HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- A PLAIN READING OF SECTION 269SS OF THE INCOME-TAX ACT, 1961, INDICATES THAT THE IMPORT OF THE PROVISIONS I S LIMITED. IT APPLIES TO A TRANSACTION WHERE A DEPOS IT OR A LOAN IS ACCEPTED BY AN ASSESSEE OTHERWISE THAN BY A N ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. TH E AMBIT OF THE SECTION IS CLEARLY RESTRICTED TO A TRA NSACTION INVOLVING ACCEPTANCE OF MONEY AND NOT INTENDED TO AFFECT CASES WHERE A DEBT OR A LIABILITY ARISES ON ACCOUNT OF BOOK ENTRIES. THE OBJECT OF THE SECTION IS TO P REVENT TRANSACTIONS IN CURRENCY. THIS IS ALSO CLEARLY EXP LICIT FROM CLAUSE (III) OF THE EXPLANATION TO SECTION 269 SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY. THE LIABILITY RECORDED IN THE B OOKS OF ACCOUNT BY WAY OF JOURNAL ENTRIES, I.E., CREDITI NG THE ACCOUNT OF A PARTY TO WHOM MONIES ARE PAYABLE OR DEBITING THE ACCOUNT OF A PARTY FROM WHOM MONEYS AR E RECEIVABLE IN THE BOOKS OF ACCOUNT, IS CLEARLY OUTS IDE THE AMBIT OF THE PROVISIONS OF SECTION 269SS OF THE ACT BECAUSE PASSING SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. 14. IN THE CASE OF NATIONAL CLOTHING CO. (SUPRA), H ON'BLE JURISDICTIONAL HIGH COURT REITERATED THE SAME VIEW AND HELD AS UND ER:- THE ISSUE IN QUESTION IS COVERED BY DECISION OF TH IS COURT DATED 20.11.2014 IN ITA NO.33/2002 TITLED COMMISSIONER OF INCOME TAX VS. M/S RUCHIKA COMMERCIALS AND INVESTMENT PVT.LTD. THIS DECISION FOLLOWS TWO EARLIER DECISIONS OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. NOIDA TOLL BRIDGE CO.LTD. [2003] 262 ITR 260 (DELHI) AND COMMISSIONER OF ITA-2253/D/2013 & 5 OTHERS 11 INCOME TAX-VI VS. WORLDWIDE TOWNSHIPS PROJECT LTD. [2014] 367 ITR 433 (DELHI). IN THE SAID DECISIONS, IN VIEW OF THE LANGUAGE OF EXPLANATION TO SECTION 269S S, IT HAS BEEN HELD THAT THE PROVISION WOULD APPLY TO LOA N OR DEPOSIT OF MONEY, AND NOT MERE FORMAL ENTRIES RESUL TING IN DEBIT OR CREDIT. OTHER REASONS AND GROUNDS HAVE BEEN ELUCIDATED. 15. THUS, HON'BLE JURISDICTIONAL HIGH COURT HAS CON SISTENTLY HELD THAT SECTION 269SS IS NOT APPLICABLE IN THE CASE OF CRED IT BY WAY OF JOURNAL ENTRY OR BOOK ENTRY. WE, THEREFORE, RESPECTFULLY F OLLOWING THE ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, HOL D THAT THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PENALT Y LEVIED UNDER SECTION 271D OF THE ACT. HIS ORDER IS UPHELD AND REVENUES APPEAL IS DISMISSED. ITA NO.2258/DEL/2013 : ITA NO.2258/DEL/2013 : ITA NO.2258/DEL/2013 : ITA NO.2258/DEL/2013 :- -- - 16. THE ONLY GROUND RAISED IN THIS APPEAL BY THE RE VENUE READS AS UNDER:- THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.3,26,97,283/- MADE BY THE AO U/S 271E FOR VIOLAT ION OF PROVISIONS OF SECTION 269T OF THE I.T. ACT 1961. 17. THE ASSESSING OFFICER HAD LEVIED THE PENALTY UN DER SECTION 271E IN RESPECT OF FOLLOWING PAYMENTS MADE BY THE ASSESS EE :- NAME OF LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT REPAID OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT REMARKS BHARAT SEEDS PVT LTD. 10.8.2006 25,00,000 AMOUNT PAID FROM VARDAAN FASHION AND TRANSFER ENTRY ITA-2253/D/2013 & 5 OTHERS 12 MADE MANLEEN TRADING CO. 8.9.2006 12,50,000 JOURNAL ENTRY FROM MAJIND ER SINGH SATVINDER SINGH 1.4.2006 3,95,283 JOURNAL ENTRY PASSED AND CREDIT IN DLF PROPERTY ACCOUNT SATVINDER SINGH 19.12.2006 49,00,000 NON ACCOUNT PAYEE PO 738698 (AGAINST CH.NO. 603714) GOD SONS SALES 23.3.2007 23,72,000 JOURNAL ENTRY PASSED AND CREDIT IN DNK ACCOUNT SIMRAN SINGH 23.5.2006 5,00,000 NON ACCOUNT PAYEE PO 915109 FROM PNB ARUN TEXTILES 15.12.2006 30,00,000 NON ACCOUNT PAYEE PO 738462 FROM PNB ARUN TEXTILES 6.3.2007 70,00,000 NON ACCOUNT PAYEE PO GOD SONS BROTHERS 8.3.2007 70,00,000 NO N ACCOUNT PAYEE PO 740615 FROM PNB SHREE HANUMAN ENTERPRISES 16.12.2006 37,80,000 NON ACCOUNT PAYEE PO 738613 3,26,97,283 18. THE PENALTY LEVIED HAS BEEN CANCELLED BY THE LE ARNED CIT(A). HENCE, THIS APPEAL BY THE REVENUE. 19. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. SO FAR AS THE DEBIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THROUGH BOOK ENTRY IS CONCE RNED, OUR DISCUSSION IN PARAGRAPH NOS.10 TO 15 ABOVE WOULD BE APPLICABLE AND FOR THE DETAILED DISCUSSION THEREIN, WE HOLD THAT W HEN THERE IS NO MONETARY TRANSACTION BETWEEN THE ASSESSEE AND THE P ERSON WHOSE ACCOUNT IS CREDITED AND THERE IS ONLY JOURNAL ENTRY , IT CANNOT BE SAID THAT THERE IS VIOLATION OF SECTION 269T. ITA-2253/D/2013 & 5 OTHERS 13 20. SO FAR AS THE PAYMENTS BY PAY ORDERS IS CONCERN ED, WE FIND THAT THE CIT(A) DELETED THE PENALTY IN RESPECT OF PAYMEN T THROUGH PAY ORDERS WITH THE FOLLOWING FINDING:- 6. PENALTY OF RS.1,91,80,000/- ON REPAYMENT THROUG H PAY ORDERS (I) THAT IN RESPECT OF PENALTY OF RS.1,91,80,000/-, THE APPELLANT IN THE WRITTEN SUBMISSION DATED 25.11.201 1 PAGE 13 HAS EXPLAINED THAT THE PAYMENTS WERE MADE THROUGH PAY ORDER/BANK DRAFT IN WHICH THE NAME OF T HE PAYERS WERE MENTIONED AND AGAINST EACH NAME THE WORD ONLY, WERE WRITTEN. IT MEANS, THE PAY ORDER W AS NOT TRANSFERABLE/NEGOTIABLE AND SUCH PAY ORDERS ISS UED TO THE PARTIES WERE ACCOUNT PAYEE ONLY. (II) THAT A CERTIFICATE DATED 10.06.2010 ISSUED BY THE PNB, PUNJABI BAGH, NEW DELHI WAS ENCLOSED AS ANNEXURE-3 OF THE WRITTEN SUBMISSION. ON GOING THROUGH THE CERTIFICATE, YOUR GOODSELF WILL APPRECI ATE THAT THE BANK HAS CONFIRMED THAT THE IMPUGNED PAY ORDERS WERE NEITHER NEGOTIABLE NOR TRANSFERABLE BY WRITING THE WORD ONLY AND THE PAYMENTS WERE MADE IN THE A/C OF THE PAYEES ONLY. THE BANKER HAS ALSO CERTIFIED THAT THE PAYMENT HAS GONE TO THE ACCOUNT OF THE RESPECTIVE PAYEES. (III) THAT IN THE REMAND REPORT, PAGE 14-15 THE LD. AO HAS REPORTED THE LETTER DATED 10.06.2010 FROM PUNJAB NATIONAL BANK DOES NOT ANYWHERE SAY THAT RE- PAYMENT OF LOAN EXCEEDING TWENTY THOUSAND RUPEES HA S NOT BEEN MADE OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT AND ACCORDINGLY, THE ASSESSEES CONTENTION ARE ENTIRELY BEREFT OF FORCE . AS IS CLEAR FROM THE ABOVE, THE LD.AO HAS MADE NO COMMENTS ON THE ACCOUNT PAYEE PAY ORDERS BUT HAS ONLY STATED THAT THEY ARE NOT ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE DRAFTS. HIS REPORT IS BASELESS WITHO UT HAVING ANY EVIDENCE. (IV) THAT THE ACCOUNT PAYEE PAY ORDERS THAT HAVE BE EN ISSUED BY THE APPELLANT SERVE THE SAME PURPOSE AS A N ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THE APPELLANT HAS MADE THE PAYMENT TO THE SUPPLIERS ITA-2253/D/2013 & 5 OTHERS 14 THROUGH PAY ORDERS IN WHICH THE NAMES OF THE PAYEES WERE MENTIONED BY WRITING THE WORD ONLY AGAINST THE NAME OF THE EACH PAYEE. IT MEANS, THE PAY ORDERS W ERE NOT TRANSFERABLE/NEGOTIABLE AND SUCH PAY ORDERS ISS UED TO THE SUPPLIERS WERE IN THE NATURE OF ACCOUNT PAYE E ONLY. (V) THAT IN RESPECT OF LD.AOS ABOVE REPORT, IT IS BROUGHT TO YOUR KIND NOTICE THAT SINCE THE PAYMENTS WERE MADE TO LOCAL PARTIES, THE PAY ORDERS WERE OBTAINED AND THE BANK HAS MENTIONED THE WORD ONLY ON SUCH PAY ORDERS. THE ISSUING BANK OF THE PAY OR DERS, I.E. PUNJAB NATIONAL BANK VIDE CERTIFICATE DATED 10.06.2010 HAS CERTIFIED THAT THE PAYMENT WAS SUPPOSED TO BE MADE IN THE BANK ACCOUNT OF THE PAYE E BY WRITING THE WORD ONLY. THE OBJECTIVE OF THE ACCOUNT PAYEE CHEQUE/BANK DRAFT IS TO CREDIT THE AMOUNT IN THE ACCOUNT OF THE PAYEE AND NOT TO ENCAS H THE SAME ON THE COUNTER. THE PAY ORDER BEING BANKE RS CHEQUE ISSUED BY THE BANK BY WRITING THE WORD ONLY IS EQUIVALENT TO ACCOUNT PAYEE CHEQUE/ACCOUNT PAYEE BANK DRAFT. HENCE, IN THE CASE OF APPELLANT THERE IS NO VIOLATION OF ANY PROVISION OF SECTION 271E OF THE I T ACT, 1961. (VI) THAT THE APPELLANTS CONTENTION IS SUPPORTED B Y THE DECISION OF THE HONBLE ITAT, BENCH A, LUCKNOW IN T HE CASE OF M/S DEVLOK HATCHERIES VS. THE ITO 1(1), ITA NO.544(LKW) 2010. THE COPY OF THE CASE LAW IS ENCLOSED AS ANNEXURE-2. THE RELEVANT PORTION OF TH E DECISION IS REPRODUCED BELOW: GROUND NO.2 OF THE APPEAL READS AS UNDER : 2. TH AT THE LEARNED LOWER COURT ERRED IN FACTS AND LEGAL AS PECTS OF THE CASE IN TREATING AMOUNT OF RS.27,674 PAID BY ACCOUNT PAYEE PAY ORDER (WHICH IS BANKERS CHEQUE) A S CASH AND DISALLOWING 20% OF THE SAME U/S 40A(3). THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUYING D AY OLD CHICKS, GROWING THEM AND THEN PRODUCING THE CHI CKS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE MADE PAYMENT OF RS.27,674 O N 27.10.2004 (PAY ORDER) OTHERWISE THAN ACCOUNT PAYEE CHEQUE/DRAFT TO M/S RAM SARAN RAKESH SARAN. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED THAT NO ITA-2253/D/2013 & 5 OTHERS 15 CASH PAYMENT HAS BEEN MADE TO PARTY FOR RS.27,674. THE AO, THEREFORE DISALLOWED 20% OF THE SAME UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT). ON APPEAL, THE LD.CIT(A) CONFIRMED THE ADDITION. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI PRAKASH NARAIN, ADVOCATE AND SHRI S.D. SETH, ADVOCATE, LD. COUNSELS FOR THE ASSESSEE SUBMITTED THAT PAYMENT MADE TO M/S RAM SARAN RAKESH KUMAR, AS THE AO HAS HIMSELF STATED, WAS MADE BY PAY ORDER. SHRI PRAKAS H NARAIN, ADVOCATE AND SHRI S.D. SETH, ADVOCATE, LD.COUNSELS FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE FAILED TO UNDERSTAND THE FAC T THAT PAY ORDER IS A BANKER CHEQUE AND IS ACCOUNT PA YEE ONLY AND PROVISIONS OF SECTION 40A(3) DO NOT APPLY TO PAYMENT BY PAY ORDER. IN VIEW OF THE ABOVE SUBMISSIONS OF SHRI PRAKASH NARAIN, ADVOCATE AND SHRI S.D. SETH, ADVOCATE, LD. COUNSELS FOR THE ASSESSEE, WE ALLOW GROUND NO.2 OF THE APPEAL. (VII) THAT THE FINDING OF THE LD. ITAT, LUCKNOW IN THE AFORESAID CASE IS APPLICABLE IN THE APPELLANTS CAS E BEING SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, YOUR GOODSELF IS REQUESTED TO KINDLY DELETE THE PENALTY OF RS.1,91,80,000/- WHICH IS WRONGLY LEVIED UNDER SECTION 271E OF THE IT ACT, 1961. 21. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SID ES AND THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE AB OVE FINDING OF THE LEARNED CIT(A). THE ASSESSEE HAD CLAIMED BEFORE TH E CIT(A) THAT ON ALL THE PAY ORDERS, AFTER THE NAME OF THE PAYEE, THE WO RD ONLY HAS BEEN USED AND THEREFORE, THE SAID PAY ORDERS WERE NEITHE R NEGOTIABLE NOR TRANSFERABLE. IN SUPPORT OF HIS CONTENTION, THE CE RTIFICATE DATED 10 TH JUNE, 2010 ISSUED BY PUNJAB NATIONAL BANK WAS FILED . THE CIT(A) CALLED THE REMAND REPORT OF THE ASSESSING OFFICER IN WHICH ASSESSING OFFICER REITERATED THEIR EARLIER STAND I.E. THE PAYMENT WAS NOT BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THE CIT(A) RE JECTED THE ITA-2253/D/2013 & 5 OTHERS 16 OBJECTION OF THE ASSESSING OFFICER ON THE GROUND TH AT THE PAY ORDER IS NOTHING BUT BANKERS CHEQUE AND WHEN IN THE PAY ORDE R AFTER THE NAME OF THE PAYEE, THE WORD ONLY IS USED, THEN THE PAY ORDER BECOMES EQUIVALENT TO ACCOUNT PAYEE CHEQUE WHICH IS PAYABLE TO THE PERSON NAMED IN THE PAY ORDER AND NOT TO ANY OTHER PERSON. THE BANK IN THE SAID CERTIFICATE HAS ALSO CONFIRMED THAT THE PAYMEN TS WERE ACTUALLY MADE TO THE ACCOUNT OF THE PAYEES ONLY. THE CIT(A) HAS ALSO RELIED UPON THE DECISION OF ITAT, LUCKNOW BENCH IN THE CAS E OF M/S DEVLOK HATCHERIES VIDE ITA NO.544/LKW/2010. IN THE SAID C ASE, THE ITAT WAS CONSIDERING THE APPLICABILITY OF SECTION 40A(3) WHE REIN CERTAIN EXPENDITURE IF PAID OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAY BANK DRAFT IS TO BE DISALLOWED. THE IT AT HELD THAT THE PAY ORDER IS A BANKERS CHEQUE AND WHEN IN THE PAY ORDER , ONLY IS MENTIONED, THE PROVISIONS OF SECTION 40A(3) DO NOT APPLY TO PAYMENT BY SUCH PAY ORDER. IN OUR OPINION, THE RATIO OF TH E ABOVE DECISION WOULD BE SQUARELY APPLICABLE IN RESPECT OF LEVY OF PENALTY UNDER SECTION 271E ALSO AND LEARNED CIT(A), RIGHTLY APPLY ING THE ABOVE DECISION, DELETED THE PENALTY. IN VIEW OF ABOVE FA CTS AND THE DECISION OF THE ITAT, LUCKNOW BENCH, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF LEARNED CIT(A). THE SAME IS UPHELD AND REVENUES A PPEAL IS DISMISSED. ITA NO.2253/DEL/2013 : ITA NO.2253/DEL/2013 : ITA NO.2253/DEL/2013 : ITA NO.2253/DEL/2013 :- -- - 22. IN THIS APPEAL BY THE REVENUE, FOLLOWING GROUND S HAVE BEEN RAISED:- 1. THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.2,45,59,221/- LEVIED BY THE AO U/S 271D FOR VIOL ATION OF PROVISION OF SECTION 269SS OF THE I.T. ACT 1961. 2. THE CIT(A) HAS ERRED IN HOLDING THAT PARTNER AND PARTNERSHIP FIRM ARE NOT DIFFERENT FROM EACH OTHER AND ITA-2253/D/2013 & 5 OTHERS 17 THE PROVISIONS OF SECTION 269SS CANNOT BE MADE APPLICABLE BETWEEN THE TRANSACTION OF THE PARTNER A ND THE FIRM. 3. THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A WHICH WERE NOT PRODUCED BEFORE THE AO DESPITE PROVIDING TWO OPPORTUNITIES. 23. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSING OFFICER HAD LEVIED THE PENALTY OF `2, 45,59,221/- FOR ACCEPTING LOAN OR DEPOSIT OTHERWISE THAN THROUGH AC COUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. THE DETAILS OF LOAN OR DEPOSIT TAKEN OR ACCEPTED OTHERWISE THAN BY ACCOUNT PAYEE C HEQUE OR ACCOUNT PAYEE BANK DRAFT ARE AS UNDER:- NAME OF LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT REMARKS SHREE HANUMAN ENTERPRISES 06/04/2006 5,00,000/ - RECD IN INDERPAL SINGH ACCOUNT AND JOURNAL ENTRY PASSED RUPS CRAFT INC 04/11/2006 4,50,000/ - RECD IN INDERPAL SINGH ACCOUNT AND JOURNAL ENTRY PASSED RUPS CRAFT INC 25/11/2006 24,80,000/ - NON ACCOUNT PAYEE PO 738076 RUPS CRAFT INC 29/11/2006 45,00,000/ - NON ACCOUNT PAYEE PO 738234 KARTIK AG ENCIES 29/09/2006 20,00,000/ - NON ACCOUNT PAYEE PO 919194 KARTIK AGENCIES 14/10/2006 19,95,000/ - NON ACCOUNT PAYEE PO 918964 INDER PAL SINGH 04/04/2006 10,00,000/ - JOURNAL ENTRY AS CHEQUE RECEIVED FROM DNK ITA-2253/D/2013 & 5 OTHERS 18 CREATION INDER PAL SINGH 16/05/2006 15,00,000/ - JOURNAL ENTRY AS CHEQUE RECEIVED FROM WADHAWAN DESIGNS INDER PAL SINGH 06/06/2006 3,00,000/ - CASH INDER PAL SINGH 18/09/2006 3,54,221/ - PO 724690 INDER PAL SINGH 05/10/2006 15,00,000/ - PO 919286 INDER PAL SINGH 18/10/2006 4,00,000/ - CASH INDER PAL S INGH 19/10/2006 4,00,000/ - CASH INDER PAL SINGH 11/11/2006 24,80,000/ - PO INDER PAL SINGH 11/12/2006 30,00,000/ - PO 738528 INDER PAL SINGH 21/01/2007 5,00,000/ - CASH INDER PAL SINGH 23/01/2007 5,00,000/ - CASH INDER PAL SINGH 09/03/2007 7,00,000/ - CASH TOTAL 2,45,59,221/ - 24. LEARNED CIT(A) CANCELLED THE PENALTY. HENCE, T HIS APPEAL BY THE REVENUE. 25. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AFTER GOING TH ROUGH THE ARGUMENTS OF BOTH THE SIDES AND PERUSAL OF THE ORDER OF AUTHO RITIES BELOW, WE FIND THAT THE CREDIT ENTRIES IN THE BOOKS OF ACCOUNT CAN BE DIVIDED IN THREE CATEGORIES :- (I) WHERE THERE IS A CREDIT BY WAY OF JOURNAL ENTRY (BOOK ENTRY). (II) WHERE THERE IS A CREDIT ON ACCOUNT OF RECEIPT OF PAY ORDER. (III) CREDIT BY WAY OF CASH RECEIPT. 26. SO FAR AS THE CREDIT BY WAY OF JOURNAL ENTRY IS CONCERNED, THIS ISSUE HAS BEEN DISCUSSED BY US IN DETAIL WHILE CONS IDERING THE PENALTY ITA-2253/D/2013 & 5 OTHERS 19 IN THE CASE OF SHRI INDERPAL SINGH WADHAWAN. FOR T HE DETAILED DISCUSSION IN PARAGRAPH NOS.10 TO 15 ABOVE, WE ARE OF THE OPINION THAT ON ACCOUNT OF CREDIT BY JOURNAL ENTRY (BOOK ENTRY), THERE IS NO VIOLATION OF SECTION 269SS AND THEREFORE, PENALTY UNDER SECTI ON 271D IS NOT LEVIABLE. 27. SO FAR AS THE CREDIT BY WAY OF PAY ORDERS IS CO NCERNED, THIS ISSUE HAS ALSO BEEN DISCUSSED BY US WHILE CONSIDERING PEN ALTY IN THE CASE OF SHRI INDERPAL SINGH WADHAWAN. AT THE TIME OF HEARI NG BEFORE US, IT WAS ADMITTED BY THE PARTIES THAT THE FACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL TO THE FACTS IN THE CASE OF SHRI INDERPAL SINGH WADHAWAN. THEREFORE, OUR FINDING IN THIS REGARD IN THE CASE O F SHRI INDERPAL SINGH WADHAWAN VIDE PARAGRAPH NOS.20 AND 21 ABOVE WOULD B E SQUARELY APPLICABLE AND FOR THE DETAILED DISCUSSION THEREIN, WE FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) WHEREIN HE CANCELLED THE PENALTY UNDER SECTION 271D LEVIED IN RESPECT OF CREDIT BY WAY OF RECEIPT OF PAY ORDERS. 28. SO FAR AS THE RECEIPT BY WAY OF CASH IS CONCERN ED, IT WAS ARGUED BY THE LEARNED COUNSEL THAT THE ASSESSEE M/S VARDAA N FASHION IS A PARTNERSHIP FIRM AND SHRI INDERPAL SINGH WADHAWAN I S THE PARTNER OF THE ASSESSEE FIRM. THERE WAS A CASH TRANSACTION OF RECEIPT OF MONEY AS WELL AS PAYMENT BETWEEN THE PARTNERSHIP FIRM AND SHRI INDERPAL SINGH WADHAWAN. MONEY WAS CREDITED AS WELL AS DEBI TED TO HIS CAPITAL ACCOUNT. THUS, THE RECEIPT OF MONEY FROM SHRI INDE RPAL SINGH WADHAWAN WAS NOT BY WAY OF LOAN OR ADVANCE BUT IT W AS A CAPITAL CONTRIBUTION. THEREFORE, IT WAS NOT IN THE NATURE OF LOAN AND ADVANCE. HE FURTHER STATED THAT THE FIRM IS NOT A LEGAL PERS ON THOUGH FOR THE PURPOSE OF INCOME TAX, IT HAS BEEN CONSIDERED AS A SEPARATE ASSESSEE. BUT, THE RECEIPT OF MONEY FROM THE PARTNERS CANNOT BE SAID TO BE LOAN ITA-2253/D/2013 & 5 OTHERS 20 BY THE PARTNER TO THE FIRM. IN SUPPORT OF HIS CONT ENTION, HE RELIED UPON THE FOLLOWING DECISIONS:- (I) CIT, MADRAS VS. R.M. CHIDAMBARAM PILLAI, ETC. [1977] 106 ITR 292 (SC). (II) CIT VS. LOKHPAT FILM EXCHANGE (CINEMA) [2008 ] 304 ITR 172 (RAJ). (III) SHREPAK ENTERPRISES VS. DCIT [1998] 60 TTJ ( AHD) 199. 29. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT FOR THE PURPOSE O F INCOME TAX, FIRM AND PARTNER ARE SEPARATE ASSESSABLE UNITS AND THERE FORE, ACCEPTANCE OF MONEY BY THE PARTNERSHIP FIRM FROM THE PARTNER IS I N THE NATURE OF LOAN AND ADVANCE BY THE PARTNER TO THE FIRM. 30. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT HONBLE APEX COURT HAS CONSIDERED THE NATURE OF PARTNERSHIP FIRM AS WELL AS PARTNERS UNDER THE GENERAL LAW AS WELL AS UNDER THE INCOME-TAX ACT IN THE CASE OF R.M. CHIDAMBARAM PILLAI (SUPRA). IN TH E ABOVE CASE, THE PARTNERSHIP FIRM CLAIMED THE DEDUCTION OF SALARY PA ID TO THE PARTNER AND IN THAT CONTEXT, THEIR LORDSHIPS CONSIDERED THE RELATIONSHIP BETWEEN THE FIRM AND THE PARTNERS UNDER THE GENERAL LAW VIS-A-VIS UNDER THE INCOME-TAX ACT. THE RELEVANT OBSERVATION S OF THEIR LORDSHIPS AT PAGE 295 OF 106 ITR READ AS UNDER:- HERE THE FIRST THING THAT WE MUST GRASP IS THAT A FIRM IS NOT A LEGAL PERSON EVEN THOUGH IT HAS SOME ATTRIBUT ES OF PERSONALITY. PARTNERSHIP IS A CERTAIN RELATION BET WEEN ITA-2253/D/2013 & 5 OTHERS 21 PERSONS, THE PRODUCT OF AGREEMENT TO SHARE THE PROF ITS OF A BUSINESS. FIRM IS A COLLECTIVE NOUN, A COMPENDIOUS EXPRESSION TO DESIGNATE AN ENTITY, NOT A PERSON. IN INCOME-TAX LAW A FIRM IS A UNIT OF ASSESSMENT, BY SPECIAL PROVISIONS, BUT IS NOT A FUL L PERSON WHICH LEADS TO THE NEXT STEP THAT SINCE A CONTRACT OF EMPLOYMENT REQUIRES TWO DISTINCT PERSON S, VIZ., THE EMPLOYER AND THE EMPLOYEE, THERE CANNOT B E A CONTRACT OF SERVICE, IN STRICT LAW, BETWEEN A FIRM AND ONE OF ITS PARTNERS. 31. SIMILAR OBSERVATIONS WERE MADE AT PAGE 299 WHIC H READ AS UNDER:- THE NECESSARY INFERENCE FROM THE PREMISE THAT A PARTNERSHIP IS ONLY A COLLECTIVE OF SEPARATE PERSON S AND NOT A LEGAL PERSON IN ITSELF LENDS TO THE FURTHER CONCLUSION THAT THE SALARY STIPULATED TO BE PAID TO A PARTNER FROM THE FIRM IS IN REALITY A MODE OF DIVIS ION OF THE FIRMS PROFITS, NO PERSON BEING HIS OWN SERVANT IN LAW SINCE A CONTRACT OF SERVICE POSTULATES TWO DIFF ERENT PERSONS. 32. THUS, THEIR LORDSHIPS OF THE APEX COURT CLEARLY HELD THAT THE PARTNERSHIP FIRM IS ONLY A COLLECTIVE NAME OF SEPAR ATE PERSONS AND NOT A LEGAL PERSON IN ITSELF AND THEREFORE, A PARTNER C ANNOT BE A SERVANT OF THE FIRM BECAUSE NO PERSON CAN BE HIS OWN SERVANT I N LAW. THE RATIO OF THE ABOVE DECISION WOULD BE SQUARELY APPLICABLE IN THE CASE UNDER APPEAL BEFORE US. SIMILAR TO THE CONTRACT FOR EMPL OYMENT WHERE TWO DISTINCT PERSONS EMPLOYEE AND EMPLOYER ARE REQUIRED , FOR THE PURPOSE OF GIVING AND ACCEPTANCE OF LOAN OR DEPOSIT ALSO, T WO DIFFERENT PERSONS ARE REQUIRED (I) THE LENDER AND (II) THE DEBTOR I. E. THE BORROWER. AS PER HONBLE APEX COURT, FIRM AND PARTNER ARE NOT TW O DIFFERENT PERSONS, THEREFORE, CREDIT IN THE BOOKS OF FIRM IN THE ACCOU NT OF PARTNER, IT CANNOT BE SAID THAT FIRM HAS TAKEN LOAN OR DEPOSIT FROM PARTNER. ADMITTEDLY, IN THE ASSESSEES BOOKS OF ACCOUNT, THE AMOUNT HAS BEEN ITA-2253/D/2013 & 5 OTHERS 22 CREDITED IN THE CAPITAL ACCOUNT OF SHRI INDERPAL SI NGH WADHAWAN. THE FIRM AND PARTNERS HAVE ALSO TREATED THE TRANSACTION AS OF CONTRIBUTION OF CAPITAL FROM THE PARTNER TO THE FIRM AND NOT AS A LOAN BY AN INDIVIDUAL TO THE PARTNERSHIP FIRM. 33. THAT HONBLE RAJASTHAN HIGH COURT IN THE CASE O F LOKHPAT FILM EXCHANGE (CINEMA) (SUPRA) HAS CONSIDERED THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271D AND 271E IN RESPECT OF CASH TRAN SACTIONS BETWEEN THE FIRM AND THE PARTNERS, AND THEIR LORDSHIPS HELD AS UNDER:- HELD, DISMISSING THE APPEALS, THAT THE ASSESSEE HA D ACTED BONA FIDE AND ITS PLEA THAT INTER SE TRANSACT IONS BETWEEN THE PARTNERS AND THE FIRM WERE NOT GOVERNED BY THE PROVISIONS OF SECTIONS 269SS AND 269T WAS A REASONABLE EXPLANATION. PENALTY COULD NOT BE IMPOSE D. 34. THE ITAT, AHMEDABAD BENCH IN THE CASE OF SHREPA K ENTERPRISES (SUPRA) HELD AS UNDER:- THEREFORE, THE PAYMENT OF THE AMOUNT MADE BY A PARTNER TO A FIRM IS THE PAYMENT ITSELF TO SELF AND DOES NOT PARTAKE THE CHARACTER OF LOAN OR DEPOSIT IN GEN ERAL LAW. THEREFORE, THE PROVISIONS OF S. 269SS ARE NOT APPLICABLE TO THE FACTS OF THE CASE, AND NO PENALTY IS IMPOSABLE UNDER S. 271D. THE ASSESSEE COULD BE UND ER GENUINE IMPRESSION THAT ADVANCING OF LOAN BY A PART NER TO FIRM IS NOT A TRANSFER FROM ONE PERSON TO THE AN OTHER AND HENCE, THERE IS NO VIOLATION OF PROVISIONS OF S . 269SS. IN VIEW OF THE ABOVE, THE PENALTY IS CANCEL LED. 35. THE RATIO OF THE ABOVE DECISION OF ITAT, AHMEDA BAD BENCH, HONBLE RAJASTHAN HIGH COURT AND HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER APPEAL BEFORE US. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT LEARNED CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PENALTY LEVIED UNDER SECTION 271D IN RESPECT OF CAPITAL ITA-2253/D/2013 & 5 OTHERS 23 CONTRIBUTION BY THE PARTNER TO THE FIRM. ACCORDING LY, THE REVENUES APPEAL IS DISMISSED. IT ITIT ITA NO.2259/DEL/2013 : A NO.2259/DEL/2013 : A NO.2259/DEL/2013 : A NO.2259/DEL/2013 :- -- - 36. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEA L READ AS UNDER:- 1. THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.1,70,70,000/- LEVIED BY THE AO U/S 271E FOR VIOL ATION OF PROVISION OF SECTION 269T OF THE I.T. ACT 1961. 2. THE CIT(A) HAS ERRED IN HOLDING THAT PARTNER AND PARTNERSHIP FIRM ARE NOT DIFFERENT FROM EACH OTHER AND THE PROVISIONS OF SECTION 269T CANNOT BE MADE APPLICABLE BETWEEN THE TRANSACTION OF THE PARTNER A ND THE FIRM. 37. THE ASSESSING OFFICER HAD LEVIED PENALTY UNDER SECTION 271E AMOUNTING TO `1,70,70,000/- IN RESPECT OF THE FOLLO WING DEBIT IN THE ASSESSEES BOOKS OF ACCOUNT:- NAME OF LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT REPAID OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT RE MARKS RUPS CRAFT INC 03/11/2006 15,45,000/ - CASH INDER PAL SINGH 07/06/2006 4,00,000/ - CASH INDER PAL SINGH 08/06/2006 4,00,000/ - CASH INDER PAL SINGH 17/06/2006 4,00,000/ - CASH INDER PAL SINGH 02/11/2006 25,00,000/ - JOURNAL ENTRY AS CHEQUE RECEIVED FROM DNK CREATION INDER PAL SINGH 15/12/2006 7,00,000/ - JOURNAL ENTRY AS CHEQUE RECEIVED FROM DNK CREATION INDER PAL SINGH 15/01/2007 50,00,000/ - PO 311712 ITA-2253/D/2013 & 5 OTHERS 24 INDER PAL SINGH 31/01/2007 24,50,000/ - JOURNAL ENTRY AS CHEQUE RECEIVED FROM DNK INDER PAL SINGH 07/02/2007 3,00,000/ - CASH INDER PAL SINGH 21/02/2007 12,75,000/ - CASH INDER PAL SINGH 01/03/2007 10,00,000/ - CASH INDER PAL SINGH 02/03/2007 5,00,000/ - CASH INDER PAL SINGH 08/03/2007 4,00,000/ - CASH INDER PAL SINGH 22/03/2007 2,00,000/ - CASH TOTAL 1,70,70,000/ - 38. LEARNED CIT(A) CANCELLED THE PENALTY. HENCE, T HIS APPEAL BY THE REVENUE. 39. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. FROM THE ANALY SIS OF THE DEBIT ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNT, THE SAM E CAN BE DIVIDED IN FOUR CATEGORIES (I) DEBIT BY JOURNAL ENTRY, (II) D EBIT BY PAY ORDER, (III) DEBIT FOR PAYMENT IN CASH TO PARTNER AND (IV) DEBIT IN CASH IN THE NAME OF RUPS CRAFT INC. 40. SO FAR AS FIRST THREE DEBITS ARE CONCERNED, I.E ., DEBIT BY WAY OF JOURNAL ENTRY (BOOK ENTRY), PAY ORDER AS WELL AS PA YMENT TO THE PARTNER IS CONCERNED, IDENTICAL ISSUE IS CONSIDERED BY US I N ASSESSEES OWN CASE FOR THE SAME ASSESSMENT YEAR WHILE DEALING WIT H THE PENALTY LEVIED UNDER SECTION 271D. OUR OBSERVATIONS AND FI NDING IN RESPECT OF CREDIT BY WAY OF JOURNAL ENTRY (BOOK ENTRY), PAY OR DER AS WELL AS CREDIT FROM THE PARTNERS WOULD BE SQUARELY APPLICABLE IN R ESPECT OF DEBIT BY WAY OF JOURNAL ENTRY, PAY ORDER AND PAYMENT TO THE PARTNERS WHICH IS DEBITED IN THEIR CAPITAL ACCOUNT. THEREFORE, FOR T HE DETAILED DISCUSSION IN ASSESSEES OWN CASE, WHILE CONSIDERING THE PENAL TY LEVIED UNDER SECTION 271D, WE ARE OF THE OPINION THAT THE LEARNE D CIT(A) WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED UNDER SE CTION 271E FOR DEBIT ITA-2253/D/2013 & 5 OTHERS 25 BY WAY OF JOURNAL ENTRY, DEBIT BY WAY OF PAY ORDER AS WELL AS DEBIT ON ACCOUNT OF PAYMENT TO PARTNER DEBITED TO CAPITAL AC COUNT. 41. WITH REGARD TO DEBIT OF CASH IN THE ACCOUNT OF M/S RUPS CRAFT INC, THE LEARNED CIT(A) WHILE DELETING PENALTY LEVIED UN DER SECTION 271D OBSERVED AS UNDER :- 11.3 REGARDING THE REPAYMENT OF RS.15,45,000/- TO M/S RUPS CRAFT INC. I FIND THAT THE ASSESSING OF FICER IS OBSERVATION THAT THERE WAS A VIOLATION OF THE PROVI SIONS OF SECTION 269T IS NOT CORRECT. IN FACT THE APPELL ANT WAS DOING BUSINESS WITH THE M/S RUPS CRAFT INC AND ALL THE TRANSACTIONS WITH THIS PARTY RELATED TO BUSINESS ON LY AND THERE WAS NO TRANSACTION OF LOAN OR DEPOSIT. I ALS O FIND THAT IN THE COURSE OF BUSINESS SH. INDERPAL SINGH, PARTNER OF THE APPELLANT FIRM HAD PAID RS.15,45,000 /- THOUGH AN ACCOUNT PAYEE CHEQUE NO.57308 TO M/S RUPS CRAFT INC ON BEHALF OF THE APPELLANT AND CONSEQUENT LY A JOURNAL ENTRY DATED 3.11.2006 WAS PASSED BY INCREAS ING THE CAPITAL OF SH. INDERPAL SINGH AND REDUCING THE CREDIT BALANCE OF RS.7,64,292/- WHICH WAS ALREADY APPEARIN G IN HIS NAME. IN VIEW OF THESE FACTS SINCE THE REPA YMENT WAS NOT IN RESPECT OF ANY LOAN OR DEPOSIT BUT RELAT ED TO BUSINESS TRANSACTIONS THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE INCOME-TAX ACT, 1 961. 42. AT THE TIME OF HEARING BEFORE US, THE ABOVE FAC TUAL FINDING RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTED. THE CIT(A) HAS CLEARLY RECORDED THE FINDING THAT THERE WAS THE BUS INESS TRANSACTION BETWEEN THE ASSESSEE FIRM AND M/S RUPS CRAFT INC. A ND ALL THE TRANSACTIONS WITH THE SAID PARTY WERE BUSINESS TRAN SACTIONS ONLY AND THERE WAS NO TRANSACTION OF LOAN OR DEPOSIT. IT WA S ALSO OBSERVED THAT IN FACT THERE WAS NO CASH PAYMENT. ON THE OTHER HA ND, THE PAYMENT OF `15,45,000/- WAS MADE BY ACCOUNT PAYEE CHEQUE NO.57 308 TO M/S RUPS CRAFT INC. BY SHRI INDERPAL SINGH WADHAWAN, PA RTNER OF THE FIRM AND CONSEQUENTLY, THE ENTRY WAS PASSED IN THE ASSES SEES BOOKS OF ITA-2253/D/2013 & 5 OTHERS 26 ACCOUNT. THEREFORE, THERE WAS NO CASH TRANSACTION. BOTH THESE FINDINGS RECORDED BY THE CIT(A) REMAINED UNCONTROVE RTED BEFORE US. WE, THEREFORE, FIND NO JUSTIFICATION TO INTERFERE W ITH THE ORDER OF LEARNED CIT(A) IN THIS REGARD. THE SAME IS SUSTAINED AND T HE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.3084/DEL/2013 : ITA NO.3084/DEL/2013 : ITA NO.3084/DEL/2013 : ITA NO.3084/DEL/2013 :- -- - 43. THE ONLY GROUND RAISED IN THIS APPEAL BY THE RE VENUE READS AS UNDER:- THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.4,04,79,453/- LEVIED BY THE AO U/S 271E FOR VIOL ATION OF PROVISIONS OF SECTION 269T OF THE I.T. ACT 1961. 2. THE CIT(A) HAS ERRED IN HOLDING THAT PARTNER AND PARTNERSHIP FIRM IS ONE AND THE SAME PERSON IN THE EYES OF LAW AND PROVISION OF SECTION 269T ARE NOT APPLIC ABLE ON THE TRANSACTION ENTERED BY THE PARTNER WITH THE FIRM. 44. THE ASSESSING OFFICER HAD LEVIED THE PENALTY UN DER SECTION 271E IN RESPECT OF THE FOLLOWING DEBIT ENTRIES IN THE AS SESSEES BOOKS OF ACCOUNT HOLDING THE SAME TO BE THE REPAYMENT OF LOA N OR DEPOSIT IN VIOLATION OF SECTION 269T OF THE ACT:- NAME OF THE LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT REPAID OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUES OF AN ACCOUNT PAYEE BANK DRAFT. DNK CREATION DEEPAK FABRIC 7/5/2007 1950000 INDIVIDUAL A/C DEWANA DIARY 14/11/2007 250000 DEWANA DIARY 7/12/2007 300000 DEWANA DIARY 1/2/2008 2100000 ITA-2253/D/2013 & 5 OTHERS 27 DEWANA DIARY 1/2/200 8 140000 B.K. BROTHERS 14/5/2007 1500000 GODSONS BROS. 1/2/2008 1000000 GODSONS BROS. 13/2/2008 500000 GODSONS BROS. 13/2/2008 500000 MOLYCODDLE FASHION PVT.LTD. 45. LEARNED CIT(A) CANCELLED THE PENALTY. HENCE, T HIS APPEAL BY THE REVENUE. 46. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. WITH REGARD TO REPAYMENT OF `19,50,000/- IN THE NAME OF M/S DEEPAK FABRICS, THE CIT(A) HAS RECORDED THE FOLLOWING FINDING:- 6.9 ENTRY DATED 7.5.2007 OF RS.19,50,000/- IN THE NAME OF M/S DEEPAK FABRICS : IN THIS CASE, I FIND THAT T HE APPELLANT WAS DOING BUSINESS WITH M/S DEEPAK FABRIC S AS PROPRIETOR OF M/S DNK CREATION. IT WAS ON ACCOU NT OF BUSINESS TRANSACTION THAT THE APPELLANT HAD PAID RS.19,50,000/- VIDE AN ACCOUNT PAYEE CHEQUE NO.344561 DATED 7.5.2007 TO M/S DEEPAK FABRICS ON BEHALF OF THE PROPRIETARY CONCERN M/S DNK CREATIONS . DURING THE COURSE OF PENALTY PROCEEDINGS, THESE FAC TS WERE DULY BROUGHT TO NOTICE OF THE ASSESSING OFFICE R ALONG WITH THE COPY OF ACCOUNT OF M/S DNK CREATIONS IN THE BOOKS OF THE APPELLANT, COPY OF ACCOUNT OF M/S DEEPAK FABRICS AND COPY OF ACCOUNT OF THE APPELLANT IN THE BOOKS OF M/S DNK CREATION. THE OBSERVATION OF THE ASSESSING OFFICER THAT THIS PAYMENT WAS MADE TO A LENDER AND WAS NOT A BUSINESS TRANSACTION WAS MEREL Y BASED ON THE REPORT OF THE SPECIAL AUDITOR. ON THE CONTRARY, THE APPELLANT HAD FILED COPIES OF THE ACC OUNTS WHICH CLEARLY SHOWED THAT THE TRANSACTION WITH M/S DEEPAK FABRICS WAS A BUSINESS TRANSACTION AND NOT A REPAYMENT OF LOAN AS HELD BY THE ADDL. CIT. NO INDEPENDENT FINDING WAS GIVEN BY THE ADDL. CIT TO S TATE THAT THIS IS A REPAYMENT OF LOAN. SINCE, THE TRANS ACTION ITA-2253/D/2013 & 5 OTHERS 28 IN QUESTION IS NOT A REPAYMENT OF LOAN THE PROVISIO NS OF SECTION 269T READ WITH SECTION 271E ARE NOT APPLICA BLE AGAINST THIS TRANSACTION. 47. THUS, THE CIT(A) HAS RECORDED THE FINDING THAT THE APPELLANT WAS DOING THE BUSINESS OF CLOTHES IN THE PROPRIETARY CO NCERN NAMED M/S DNK CREATIONS. M/S DNK CREATIONS, PROPRIETARY CONC ERN OF THE ASSESSEE HAD THE BUSINESS TRANSACTIONS WITH M/S DEE PAK FABRICS. THE ASSESSEE MADE THE PAYMENT OF `19,50,000/- BY ACCOUN T PAYEE CHEQUE TO M/S DEEPAK FABRICS ON BEHALF OF THE PROPRIETARY CONCERN M/S DNK CREATIONS. THUS, THE CIT(A) HAS RECORDED THE FINDI NG THAT IT WAS NOT THE REPAYMENT OF LOAN WITHIN THE PROVISIONS OF SECTION 269T. THE ABOVE FINDING OF FACT RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTED BEFORE US. FROM THIS FINDING, IT IS EVIDENT THAT THERE WA S A BUSINESS TRANSACTION BETWEEN M/S DNK CREATIONS, THE PROPRIET ARY CONCERN OF THE ASSESSEE AND M/S DEEPAK FABRICS. THE PAYMENT WAS M ADE IN FURTHERANCE TO SUCH BUSINESS TRANSACTIONS AND MOREO VER, THE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE. THUS, THERE WAS NEITHER THE CASH PAYMENT NOR THERE WAS REPAYMENT OF THE LOAN OR DEPO SIT SO AS TO LEVY PENALTY UNDER SECTION 271E OF THE ACT. 48. WITH REGARD TO ENTRY RELATING TO M/S DEWANA DAI RY, THE CIT(A) HAS RECORDED THE FINDING IN PARAGRAPH NOS.6.10 AND 6.11 OF HIS ORDER WHICH READ AS UNDER:- 6.10 ENTRY DATED 14.11.2007 OF RS.25,00,000/- IN THE NAME OF M/S DEWANA DAIRY : THE FACTS IN THIS RE GARD ARE THAT M/S VARDAAN FASHION, A PARTNERSHIP FIRM IN WHICH THE APPELLANT WAS A PARTNER, PAID RS.25,00,00 0/- VIDE AN ACCOUNT PAYEE CHEQUE NO.498989 DATED 14.11.2007 TO M/S DEWANA DAIRY ON BEHALF OF THE APPELLANT. THESE TRANSACTIONS WERE BUSINESS TRANSACTIONS AND TO PROVE IT THE APPELLANT HAD FILE D COPY OF ACCOUNT OF M/S VARDAAN FASHION AND M/S DEWANA ITA-2253/D/2013 & 5 OTHERS 29 DAIRY IN THE BOOKS OF THE APPELLANT AND THE LEDGER ACCOUNT OF THE APPELLANT IN THE BOOKS OF M/S VARDAA N FASHION. UNDER THE INDIAN PARTNERSHIP ACT, THE PARTNERSHIP FIRM IS NOT A JURISTIC PERSON AND IT WO RKS THROUGH ITS PARTNERS. ANY PAYMENT MADE BY THE FIRM AMOUNTS TO THE PAYMENT MADE BY THE PARTNER. SINCE, THE PARTNER AND HIS PARTNERSHIP FIRM IS ONE AND THE SAME PERSON IN THE EYE OF LAW, THERE IS NO LEGALITY IN MAKING THE PAYMENT BY THE FIRM ON BEHALF OF HIS PARTNER. HENCE, THE PROVISIONS OF SECTION 269T DO NOT APPLY TO THE TRANSACTION IN QUESTION. THE AR OF TH E APPELLANT IN SUPPORT OF HIS CASE RELIED ON THE JUDG MENTS OF THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. LOKHPAT FILM EXCHANGE (CINEMA) (2008) 304 ITR 1 72 AND OF THE ITAT A-BENCH AHMEDABAD IN THE CASE OF SHREPAK ENTERPRISES VS. DEPUTY COMMISSIONER OF INCOME-TAX (1998) 60 TTJ 199. EVEN OTHERWISE, THER E WAS NO CONTRAVENTION OF THE PROVISIONS OF SECTION 2 69T AS THE REPAYMENT WAS MADE ONLY THROUGH AN ACCOUNT PAYEE CHEQUE. 6.11 ENTRIES DATED 7.12.2007, 1.2.2008 AND 1.2.2008 OF RS.30,00,000/-, RS.21,00,000/- AND RS.1,40,000/- IN THE NAME OF M/S DEWANA DAIRY : THE NATURE OF ALL THESE ENTRIES WAS SAME AS DISCUSSED ABOVE WHILE DEALING W ITH ENTRY OF RS.25,00,000/- AS ALL THESE PAYMENTS HAVE BEEN MADE BY M/S VARDAAN FASHION, A PARTNERSHIP FIR M IN WHICH THE APPELLANT IS A PARTNER, ON BEHALF OF T HE APPELLANT THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE , AS DISCUSSED ABOVE THE PROVISIONS OF SECTION 269T R EAD WITH SECTION 271E ARE NOT APPLICABLE TO THESE TRANSACTIONS. 49. FROM THE ABOVE, IT IS EVIDENT THAT ALL THESE PA YMENTS WERE MADE BY M/S VARDAAN FASHION, A PARTNERSHIP FIRM IN WHICH ASSESSEE IS A PARTNER. ALL THE PAYMENTS WERE MADE BY ACCOUNT PAY EE CHEQUE AND IN THE ASSESSEES BOOKS OF ACCOUNT, THERE WAS ONLY A J OURNAL ENTRY (BOOK ENTRY). WE HAVE ALREADY DISCUSSED AT LENGTH IN PAR AGRAPH NOS.10 TO 15 ABOVE THAT IN RESPECT OF BOOK ENTRY, THE PROVISIONS OF SECTION 269SS/269T CANNOT BE SAID TO HAVE BEEN VIOLATED. F OR THE DETAILED DISCUSSION THEREIN, WE UPHOLD THE ORDER OF LEARNED CIT(A) WHEREIN HE ITA-2253/D/2013 & 5 OTHERS 30 CANCELLED THE PENALTY RELATING TO DEBIT IN THE NAME OF M/S DEWANA DAIRY, BY JOURNAL ENTRY (BOOK ENTRY). 50. THE DEBIT RELATING TO M/S B.K. BROS. IS ALSO BY WAY OF BOOK ENTRY. SIMILAR IS THE DEBIT IN THE NAME OF M/S GOD SONS BR OS. THE FINDING OF FACT RECORDED BY THE LEARNED CIT(A) THAT THE DEBIT IN THE NAME OF M/S B.K. BROS. AND M/S GOD SONS BROS. WERE BY BOOK ENTR Y ONLY HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. THEREF ORE, FOR THE DETAILED DISCUSSION IN PARAGRAPH NOS.10 TO 15 ABOVE , WE HOLD THAT THE PROVISIONS OF SECTION 269T CANNOT BE SAID TO HAVE B EEN VIOLATED IN RESPECT OF BOOK ENTRY. 51. WITH REGARD TO DEBIT OF `10,75,000/- IN THE NAM E OF M/S MOLYCODDLE FASHION PVT.LTD., THE CIT(A) HAS RECORDE D THE FINDING THAT THE APPELLANT PAID AN ACCOUNT PAYEE CHEQUE OF `10,7 5,000/- ON 1.2.2007 TO M/S MOLYCODDLE FASHION PVT.LTD. BUT WRO NGLY DEBITED TO ESTATE OFFICER, HUDA. WHEN THE MISTAKE WAS REALIZE D, A JOURNAL ENTRY WAS PASSED ON 25.5.2007 BY CREDITING THE ACCOUNT OF ESTATE OFFICER, HUDA AND DEBITING TO M/S MOLYCODDLE FASHION PVT.LTD . THUS, THE DEBIT ENTRY IN THE CASE OF M/S MOLYCODDLE FASHION PVT.LTD . WAS ONLY BY WAY OF BOOK ENTRY AND FOR SUCH DEBIT ENTRY, THE PROVISIONS OF SECTION 269T CANNOT BE SAID TO HAVE BEEN VIOLATED. 52. THE DEBIT OF `4,00,000/- ON 15.3.2008 IN THE NA ME OF M/S MOLYCODDLE FASHION PVT.LTD. WAS AS SHARE APPLICATIO N MONEY. ADMITTEDLY, WHEN AN ASSESSEE APPLIES FOR ALLOTMENT OF SHARES IN SOME COMPANY, THE PAYMENT IS NOT LOAN OR ADVANCE TO THAT COMPANY. THE FACTUAL FINDING RECORDED BY THE CIT(A) THAT THE PAY MENT WAS FOR SHARE APPLICATION MONEY HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. THEREFORE, THE SAME IS ACCEPTED AND WE HAVE NO HESITATION IN ITA-2253/D/2013 & 5 OTHERS 31 HOLDING THAT PAYMENT FOR ALLOTMENT OF SHARES AS SHA RE APPLICATION MONEY CANNOT BE SAID TO BE REPAYMENT OF LOAN OR ADV ANCE SO AS TO VIOLATE PROVISIONS OF SECTION 269T. 53. SO FAR AS TRANSACTION WITH M/S VARDAAN FASHION IS CONCERNED, WE HAVE ALREADY DISCUSSED SIMILAR ISSUE IN PARAGRAPH N OS.30 TO 35 ABOVE. THE ASSESSEE IS A PARTNER IN M/S VARDAAN FASHION AN D THE TRANSACTION BETWEEN THE PARTNER AND THE FIRM I.E. WHEN THE ASSE SSEE MAKES A CAPITAL CONTRIBUTION TO THE FIRM OR WITHDRAWS THE M ONEY FROM HIS CAPITAL ACCOUNT, IT CANNOT BE SAID TO BE EITHER LOAN OR ADV ANCE BY THE PARTNER TO THE FIRM OR THE REPAYMENT OF LOAN OR ADVANCE BY THE FIRM TO THE PARTNER. THEREFORE, FOR THE DETAILED DISCUSSION IN PARAGRAPH NOS.30 TO 35 ABOVE, WE HOLD THAT IN RESPECT OF PAYMENT BY THE ASSESSEE TO THE PARTNERSHIP FIRM M/S VARDAAN FASHION, IT CANNOT BE SAID THAT THERE IS VIOLATION OF SECTION 269T. 54. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T THE CIT(A) RIGHTLY CANCELLED THE PENALTY LEVIED UNDER SECTION 269T AMO UNTING TO `4,04,79,453/-. ACCORDINGLY, WE UPHOLD THE ORDER O F LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ITA NO.2252/DEL/2013 : ITA NO.2252/DEL/2013 : ITA NO.2252/DEL/2013 : ITA NO.2252/DEL/2013 :- -- - 55. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEA L READ AS UNDER:- 1. THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.95,25,000/- MADE BY THE AO U/S 271D FOR VIOLATIO N OF PROVISIONS OF SECTION 269SS OF THE I.T. ACT 1961. 2. THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A WHICH WERE NOT PRODUCED BEFORE THE AO DESPITE PROVIDING TWO OPPORTUNITIES. ITA-2253/D/2013 & 5 OTHERS 32 56. THE ASSESSING OFFICER HAD LEVIED THE PENALTY UN DER SECTION 271D AMOUNTING TO `95,25,000/- IN RESPECT OF THE FOLLOWI NG CREDIT ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNT:- NAME OF LENDER DATE OF ENTRY AMOUNT OF LOAN OR DEPOSIT TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT REMARKS SATVINDER SINGH 15/12/2006 15,00,000/ - JOURNAL ENTRY PASSED AND DEBIT 5/83 PROPERTY ACCOUNT NIRUPAMA WADHAWAN 02/06/2006 5,00,000/ - CASH NIRUPAMA WADHAWAN 12/10/2006 5,00,000/ - CASH NIRUPAMA WADHAWAN 25/10/2006 5,00,000/ - CASH NIRUPAMA WADHAWAN 19/01/2007 5,00,000/ - CASH NIRUPAMA WADHAWAN 19/03/2007 4,00,000/ - CASH NIRUPAMA WADHAWAN 20/03/2007 6,50,000/ - CASH SATVINDER SINGH 15/11/2006 24,85,000/ - JOURNAL ENTRY AS PAYMENT MADE TO DNK CREATION DIRECTLY GOD SONS SALES 05/02/2007 24,90,000/ - JOURNAL ENTRY PASSED AS PAYMENT RECEIVED BY VARDAAN FASHION TOTAL 95,25,000/ - 57. LEARNED CIT(A) CANCELLED THE PENALTY. HENCE, T HIS APPEAL BY THE REVENUE. 58. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. SO FAR AS CRED IT ENTRY BY WAY OF JOURNAL ENTRY (BOOK ENTRY) IS CONCERNED, WE HAVE CO NSIDERED THIS ISSUE IN DETAIL IN ASSESSEES OWN CASE IN PARAGRAPH NOS.1 0 TO 15 AND HAVE TAKEN THE VIEW THAT THERE IS NO VIOLATION OF PROVIS IONS OF SECTION 269SS WHEN THERE IS A CREDIT ENTRY BY WAY OF JOURNAL ENTR Y (BOOK ENTRY). ITA-2253/D/2013 & 5 OTHERS 33 59. SO FAR AS THE ACCEPTANCE OF CASH MONEY FROM NI RUPAMA WADHAWAN IS CONCERNED, THE CIT(A) HAS DELETED THE P ENALTY WITH THE FOLLOWING FINDING:- 7.8 AS REGARDS THE CASH RECEIVED FROM SMT. NIRUPAM A WADHAWAN, WIFE OF THE APPELLANT, I FIND THAT THE APPELLANT HAD RECEIVED THIS CASH AGGREGATING TO RS.30,50,000/- ON SIX DIFFERENT DATES. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT HE ALONG WITH HIS W IFE, SMT. NIRUPAMA WADHAWAN, WERE INTENDING TO JOINTLY PURCHASE A HOUSE PROPERTY AND FOR THIS PURPOSE HE H AD TAKEN THE CASH TOTALING TO RS.30,50,000/- FROM HIS WIFE WHICH WAS AVAILABLE WITH HER. IT WAS EXPLAINED THA T SINCE THE DEAL COULD NOT BE MATERIALIZED, THE SAID AMOUNT WAS REFUNDED TO HER THROUGH CHEQUES. IT WAS SUBMITTED THAT THE SAID RECEIPT OF RS.30,50,000/- F ROM SMT. NIRUPAMA WADHAWAN DURING THE PERIOD 2.6.2006 TO 31.3.2007 WAS NEITHER THE LOAN NOR DEPOSIT AS OBSERVED BY THE ADDL. CIT WHEREAS ON THE CONTRARY T HE FUNDS WERE TAKEN FROM HER WITH THE INTENTION TO PURCHASE THE PROPERTY IN A JOINT VENTURE. IT WAS A LSO SUBMITTED THAT THE AMOUNT IN QUESTION TAKEN FROM WI FE WAS A BONA FIDE ACT WITH COMMERCIAL EXPEDIENCY. 7.9 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DR. P.G. PANDA VS. CIT (2000) 111 TAXMAN 86 HELD THAT WHERE THE ASSESSEE OBTAINED CERTAIN LOAN FROM HIS W IFE IN CASH FOR CONSTRUCTION OF HOUSE PROPERTY WHICH WA S NATURALLY A JOINT VENTURE FOR PROSPERITY OF THE FAM ILY AND THE TRANSACTION DID NOT INVOLVE ANY INTEREST ELEMEN T AND THERE WAS NO PROMISE TO RETURN THE AMOUNT WITH OR WITHOUT INTEREST, IT COULD BE SAID THAT THERE WAS A REASONABLE CAUSE FOR NOT COMPLYING WITH SECTION 269 SS. 7.10 IN THE CASE OF ITO VS. TARLOCHAN SINGH (2003) 128 TAXMAN 20 (ASR)(SMC), IT HAS BEEN HELD THAT WHERE T HE ASSESSEE HAD RECEIVED A LOAN OF RS.70,000/- IN CASH FROM HIS WIFE FOR INVESTMENT IN ACQUISITION OF IMMO VABLE PROPERTIES, AND THE ASSESSEE WAS UNDER THE BONA FID E BELIEF THAT THE AMOUNT WAS NOT TO BE REFUNDED, NO PENALTY WAS LEVIABLE. ITA-2253/D/2013 & 5 OTHERS 34 7.11 IN THE FOLLOWING CASES, THE AHMEDABAD BENCH OF THE HONBLE ITAT HAVE ALSO CANCELLED THE PENALTIES LEVIED U/S 271D EVEN WHERE LOANS/DEPOSITS WERE TAKE N IN CASH. A) SHREENATHJI CORPORATION VS. ACIT 58 TTJ 611. B) GANESH WOODEN INDUSTRIES ITA NO.1626AHD/1997, BENCH SMC ORDER DATED 8.7.2002. 7.12 IN VIEW OF THE FACTS OF THE CASE AND THE NATUR E OF THE TRANSACTIONS AND ALSO RESPECTFULLY FOLLOWING TH E ABOVE DECISIONS AND THE DECISIONS CITED BY THE AR O F THE APPELLANT I HOLD THAT THERE WAS A REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER WA S THEREFORE NOT JUSTIFIED IN IMPOSING PENALTY U/S 271 D IN RESPECT OF CASH RECEIVED BY THE APPELLANT FROM HIS WIFE. 60. AFTER CONSIDERING THE FACTS OF THE CASE AND TH E ARGUMENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF LEARNED CIT(A). SMT. NIRUPAMA WADHAWAN IS THE WIFE OF THE ASSESSEE WHO HAD SOME SURPLUS CASH WHICH SHE GAVE TO THE ASSESSEE BECAUSE THE ASSESSEE AND HIS WIFE INTENDED TO JOINTLY PURCHASE A HOUSE PROPE RTY. SMT. NIRUPAMA WADHAWAN HAD GIVEN THE SURPLUS CASH AVAILABLE WITH HER FOR THE PURPOSE OF PURCHASE OF SUCH HOUSE PROPERTY. HOWEVE R, WHEN THE DEAL FOR PURCHASE OF THE HOUSE PROPERTY COULD NOT BE MAT ERIALIZED, THE SAID AMOUNT WAS REFUNDED TO HER THROUGH CHEQUE. WE FIND THAT THE SIMILAR ISSUE WAS CONSIDERED BY ITAT, AMRITSAR BENCH IN THE CASE OF ITO VS. TARLOCHAN SINGH [2003] 128 TAXMAN 20 (MAG.). IN T HE SAID CASE, THE HUSBAND HAD TAKEN THE CASH OF `70,000/- FROM HIS WI FE FOR THE PURPOSE OF INVESTMENT IN THE ACQUISITION OF IMMOVABLE PROPE RTY. THE ASSESSING OFFICER HAD LEVIED THE PENALTY UNDER SECTION 271D W HICH WAS CANCELLED BY THE ITAT HOLDING AS UNDER :- ITA-2253/D/2013 & 5 OTHERS 35 EVEN KEEPING IN VIEW THE CONTENTS OF THE DEPARTMEN TAL CIRCULAR NO.387, IT WAS NEVER THE INTENTION OF THE LEGISLATURE TO PUNISH A PARTY INVOLVED IN A GENUINE TRANSACTION. THEREFORE, BY TAKING A LIBERAL VIEW I N THE INSTANT CASE, THE ASSESSEE HAD A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273D. THUS, KEEPING IN VIEW THE ENTIRE FACTS OF THE INSTA NT CASE, AND ALSO KEEPING IN VIEW THE INTENTION OF THE LEGISLATURE IN ENACTING THE PROVISIONS OF SECTION 2 69SS, IT WAS TO BE HELD THAT THE ASSESSEE WAS PREVENTED B Y SUFFICIENT CAUSE FROM RECEIVING THE MONEY BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. IN THE INSTANT CASE, THE ASSESSEE WAS OF THE OPINIO N THAT THE AMOUNT IN QUESTION DID NOT REQUIRE TO BE RECEIV ED BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THUS, THERE WAS A REASONABLE CAUSE AND NO PENALTY SHOULD HAVE BEEN LEVIED. FROM THE ABOVE, IT WOULD BE CLEAR THAT THE ASSESSEE HAD TAKEN PLEA THAT FIRSTLY THERE WAS NO VIOLATION OF T HE PROVISIONS OF SECTION 269SS. SECONDLY, THERE WAS A REASONABLE CAUSE. THIRDLY, THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT HE WAS NOT REQUIRED TO RECEIV E THE AMOUNT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. AS AN ALTERNATIVE SUBMISSION, IT WAS CONTENDED THAT THE DEFAULT COULD BE CONSIDERED EITHER TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF LAW AND, THEREFORE, NO PENALTY UNDER SECTION 271D WAS LEVIABLE. IN VIEW OF THE ABOVE DISCUSSION, NO PENALTY UNDER SECTION 271D WAS LEVIABLE. IT IS WELL-SETTLED THAT PENALTY PROVISION SHOULD BE INTERPRETED AS IT STAND S AND, IN CASE OF DOUBT, IN A MANNER FAVOURABLE TO TH E TAXPAYER. IF THE COURT FINDS THAT THE LANGUAGE IS AMBIGUOUS OR CAPABLE OF MORE MEANING THAT THE ONE, THEN THE COURT HAS TO ADOPT THE PROVISION WHICH FAV OURS THE ASSESSEE, MORE PARTICULARLY WHERE THE PROVISION S RELATE TO THE IMPOSITION OF PENALTY. IN VIEW OF THE ABOVE, THE PENALTY SUSTAINED BY THE COMMISSIONER (APPEALS) WAS CANCELLED. ITA-2253/D/2013 & 5 OTHERS 36 61. THAT THE RATIO OF THE ABOVE DECISION OF ITAT, A MRITSAR BENCH WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE AS SESSEES CASE. HERE ALSO, THE WIFE HAD GIVEN THE MONEY TO THE HUSBAND F OR ACQUISITION OF A PROPERTY WHICH WAS SUPPOSED TO BE PURCHASED JOINTLY . IT IS A DIFFERENT MATTER THAT ULTIMATELY THE DEAL COULD NOT MATERIALI ZE. HOWEVER, THE CLAIM OF THE ASSESSEE THAT AMOUNT WAS TAKEN BY THE ASSESSEE FROM HER WIFE FOR PURCHASE OF THE PROPERTY HAS NOT BEEN DISP UTED BY THE REVENUE. THEREFORE, THE RATIO OF THE ABOVE DECISIO N OF ITAT, AMRITSAR BENCH WOULD BE SQUARELY APPLICABLE TO THE APPEAL UN DER CONSIDERATION BEFORE US. 62. IN THE CASE OF CIT VS. SUNIL KUMAR GOEL [2009 ] 315 ITR 163, HON'BLE PUNJAB & HARYANA HIGH COURT HELD AS UNDER:- A FAMILY TRANSACTION, BETWEEN TWO INDEPENDENT ASSESSEES, BASED ON AN ACT OF CASUALNESS, SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF WAS CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAD NO TAX EFFEC T, ESTABLISHED REASONABLE CAUSE UNDER SECTION 273B O F THE ACT. SINCE THE ASSESSEE HAD SATISFACTORILY ESTABLISHED REASONABLE CAUSE UNDER SECTION 273B O F THE ACT, HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIENT CAUSE FOR NOT INVOKING THE PENAL PROVISI ONS OF SECTIONS 271D AND 271E OF THE ACT AGAINST HIM. THE DELETION OF PENALTY BY THE TRIBUNAL WAS VALID. 63. THAT THE RATIO OF THE ABOVE DECISION OF HON'BL E PUNJAB & HARYANA HIGH COURT WOULD ALSO BE SQUARELY APPLICABLE IN RES PECT OF CASH TRANSACTION BETWEEN THE ASSESSEE AND HIS WIFE. NO CONTRARY DECISION OF ANY HIGH COURT OR THE TRIBUNAL HAS BEEN BROUGHT TO OUR KNOWLEDGE. ADMITTEDLY, THE TRANSACTION WAS BETWEEN THE HUSBAND AND WIFE WITH THE INTENTION TO PURCHASE A PROPERTY JOINTLY. WHEN THE DEAL FOR PURCHASE OF THE PROPERTY COULD NOT MATERIALIZE, THE HUSBAND I.E. THE ASSESSEE REFUNDED THE AMOUNT TO HIS WIFE. THUS, IN OUR OPINION, THE ITA-2253/D/2013 & 5 OTHERS 37 ACCEPTANCE OF THE CASH BY THE HUSBAND FROM HIS WIFE CANNOT BE SAID TO BE TAKING OF THE LOAN OR ADVANCE IN STRICT SENSE OF SECTION 269SS. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF LEARNE D CIT(A) WHEREIN HE CANCELLED THE PENALTY LEVIED UNDER SECTION 271D FOR THE ACCEPTANCE OF CASH BY THE ASSESSEE FROM HIS WIFE. WE, THEREFORE, UPHOLD THE ORDER OF LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 64. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- ( (( ( H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 16.01.2015 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -33(1), NEW DELHI. 33(1), NEW DELHI. 33(1), NEW DELHI. 33(1), NEW DELHI. 2. RESPONDENT : M/S VARD M/S VARD M/S VARD M/S VARDAAN FASHION AND AAN FASHION AND AAN FASHION AND AAN FASHION AND SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, SHRI INDERPAL SINGH WADHAWAN, E EE E- -- -1/7, 2 1/7, 2 1/7, 2 1/7, 2 ND NDND ND FLOOR, EAST PATEL NAGAR, FLOOR, EAST PATEL NAGAR, FLOOR, EAST PATEL NAGAR, FLOOR, EAST PATEL NAGAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 008. 110 008. 110 008. 110 008. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR