The ACIT,(OSD)Circle-9, Ahmedabad V. M/s. Shyam Corporation, Ahmedabad

ITA 3098/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60237 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 19-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: A L THAKKAR
• Keywords: Block assessment

Judgement Text

ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI A.M.) SR.NO. APPEAL NO. ASSESSMENT YEAR SECTION. 1 ITA 3098/AHD/2009 1995-96 271D 2 ITA 3099/AHD/2009 1996-97 271D 3 ITA 3100/AHD/2009 1997-98 271D 4 ITA 3101/AHD/2009 1996-97 271E 5 ITA 3102/AHD/2009 1997-98 271E ASSISTANT COMMISSIONER OF INCOME TAX (OSD), CIRCLE-9, PRATYAKSHA BHAVAN, NR. PANJARA POLE, AMBAWADI, AHMEDABAD. (APPELLANT) VS. M/S. SHYAM CORPORATION 1/1 SATHADHAR NAGAR, NATIONAL HIGHWAY NO.8, BAPUNAGAR CHAR RASTA, AHMEDABAD. (RESPONDENT) PAN: AAHFS1691J APPELLANT BY : SHRI RAHUL KUMAR, SR. D.R. RESPONDENT BY : SHRI A. L. THAKKAR. ( )/ ORDER DATE OF HEARING : 5-3-2012 DATE OF PRONOUNCEMENT : 13/4/2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)-XV, AHMEDABADS ORDERS NO. CIT (A)-XV/JCIT/RANG E-CIR.9/103, 104, 105, 107 & 108/08-09 ALL DATED 15-9-2009 FOR THE A SSESSMENT YEARS 1995- 96 TO 1997-98 RESPECTIVELY U/S. 271D AND 271E OF TH E ACT. AS THE FACTS ARE ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 2 MORE OR LESS IDENTICAL, AND AS ALL THE APPEALS HAVE BEEN HEARD TOGETHER, WE DISPOSE THEM OF BY MEANS OF A CONSOLIDATED ORDER. 2. THE SOLITARY GROUND TAKEN BY THE REVENUE IS REGARDING DELETION OF PENALTIES LEVIED U/S.271D AND 271E AS DETAILED BELO W:- SR. NO. ASSTT. YEAR. PENALTY LEVIED SECTION. 1. 1995-96 67,62,971/- 271D 2. 1996-97 67,40,050/- 271D 3. 1997-98 89,22,700/- 271D 4. 1996-97 3,03,500/- 271E 5. 1997-98 1,44,77,250/- 271E 3. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE ACTION HAD TAKEN PLACE AT THE ASSESSEES PREMISES ON 21-1-1997. THE SEARCH ACTION REVEALED THAT THE GROUP ENTITIES WERE NOT ACCOUNTIN G FOR SUBSTANTIAL PART OF THE RECEIPTS ON ACCOUNT OF SALE OF HOUSE/ SHOPS. IT WAS ALSO FOUND THAT THE ASSESSEE IN ADDITION TO THE REGULAR BOOKS OF ACCOUN TS, HAD MAINTAINED SEPARATE SET OF BOOKS OF ACCOUNTS (NO. II BOOKS) IN RESPECT OF TRANSACTIONS NOT INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS. IN VIEW OF THE SEARCH ACTION, ASSESSMENT PROCEEDINGS WERE CONDUCTED AS PE R THE PROVISIONS OF CHAPTER XIV-B OF THE INCOME TAX ACT. THE ASSESSEE F ILED THE RETURN FOR BLOCK PERIOD DECLARING UNDISCLOSED INCOME OF RS.28, 55,930/-. THE ASSESSEE WAS DIRECTED TO GET ITS BOOKS OF ACCOUNTS AUDITED BY NOMINATED AUDITOR M/S. P. K. AJMERA & CO. C..AS. AND FURNISHE D AN AUDIT REPORT U/S. 142(2A). THE AUDIT REPORT U/S. 142(2A) DATED 30-3-1 999 FOR ACCOUNTING YEAR ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 3 2004-05, 2005-06 AND FOR THE PART PERIOD FROM 1-4-9 6 TO 21-1-1997 WERE FILED BY THE ASSESSEE ON 17-6-1999. SUBSEQUENTLY TH E ASSESSEE FILED A SETTLEMENT APPLICATION BEFORE INCOME TAX SETTLEMENT COMMISSION, (ITSC) MUMBAI WHICH WAS ADMITTED BY INCOME TAX SETTLEMENT COMMISSION ON 14- 5-1999. THEREAFTER, THE ITSC VIDE ITS ORDER U/S. 24 5HA DATED 22-10-2007 ABATED THE SETTLEMENT APPLICATION FILED BY THE ASSE SSEE, AS THE ASSESSEE FAILED TO FULFILL THE REQUIREMENT OF PROVISIONS CON TAINED U/S. 245D(2D) WITH A DIRECTION TO THE A.O. TO DISPOSE OF THE CASE IN ACC ORDANCE WITH THE PROVISIONS OF SUB-SECTION (2)(3) AND (4) OF SECTION 245HA OF THE ACT. IN VIEW OF THE SETTLEMENT COMMISSIONS ORDER, BLOCK ASSESSM ENT U/S. 158BC OF THE INCOME TAX ACT WAS COMPLETED ON 31-12-2007. 4. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDING S, ON GOING THROUGH THE SPECIAL AUDIT REPORT U/S. 142(2A), IT W AS OBSERVED BY ASSESSING OFFICER (A.O.) THAT THE ASSESSEE HAD ACCE PTED LOAN IN EXCESS OF RS.10,000/- AND HE CONCLUDED THAT ASSESSEE HAS VIOL ATED PROVISIONS OF SECTION 269SS OF THE I.T. ACT. IT WAS ALSO ALLEGED THAT ASSESSEE HAD REPAID LOAN IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269T. ACCORDINGLY, PENALTY PROCEEDINGS U/S. 271D/271E WERE INITIATED. 5. BEFORE THE A.O. DURING THE COURSE OF PENALTY PRO CEEDINGS, THE ASSESSEE STATED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF SMALL DWELLING UNITS. THE MONEY REC EIVED FROM ALL THE PERSONS REFERRED IS TOWARDS BOOKING ADVANCE FOR P URCHASE OF DWELLING UNITS/HOUSES/SHOPS ETC. THE RECEIPT IS NOT IN THE N ATURE OF DEPOSIT OR LOAN BUT A TRADE RECEIPT. THE AMOUNT SO RECEIVED IS DULY STATED IN THE BOOKS OF ACCOUNTS AS ADVANCE AND ON COMPLETION OF THE CONSTR UCTION WORK AND ON ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 4 ALLOTMENT OF THE HOUSE/SHOP THE ADVANCE IS TRANSFER RED TO SALES. THEREFORE, THE BOOKING ADVANCE RECEIVED IS ULTIMATELY TREATED AS SALE BY MAKING APPROPRIATE TRANSFER ENTRIES IN THE BOOKS. 6. THE ASSESSEE FURTHER CONTENDED THAT IN THE BLOCK ASSESSMENT MADE, THE BOOKING ADVANCE AS PER NO.2 BOOK HAS ALREADY BE EN ADDED AS UNDISCLOSED INCOME. ACCORDING TO THE ASSESSEE, ONCE THE BOOKING ADVANCE HAD BEEN ASSESSED AS UNDISCLOSED INCOME BY INVOKING THE PROVISIONS OF SEC. 68, THE SAME CANNOT BE CONSIDERED AS DEPOSIT/L OAN IN VIOLATION OF PROVISIONS OF SEC. 269SS. THE ASSESSEE RELIED ON TH E FOLLOWING DECISIONS:- 1) GIRISH MISHRA VS. ACIT (2004) 91 TTJ (A LL) 643 2) CIT VS. STANDARD BRANDS LTD. (2006) 285 ITR 295 (DEL) 3) DIWAN ENTERPRISES VS. CIT (2000) 246 ITR (DEL) 571 4) DCIT VS. G S ENTERTAINMENT (2007) 109 TTJ (MUM. ) 54. 7. THE CONTENTIONS OF THE ASSESSEE WERE NOT ACCEPTE D BY THE ASSESSING OFFICER. HE HELD THAT PENALTY PROCEEDINGS U/S. 271D /271E ARE INDEPENDENT OF THE BLOCK PROCEEDINGS. THESE PENALTIES ARE NOT R ELATED TO INCOME OR UNDISCLOSED INCOME. THESE ARE LEVIABLE FOR THE VIOL ATIONS AS PER SEC. 269SS OR 269T OF THE ACT AND CAN BE INITIATED/LEVIE D INDEPENDENT OF ASSESSMENT OR BLOCK ASSESSMENT PROCEEDINGS. HE FURT HER HELD THAT TILL THE TIME DEPOSITS ARE NOT TRANSFERRED TO THE SALES ACCO UNT, THE NATURE OF DEPOSITS ARE IN THE NATURE OF DEPOSITS ONLY AND SUC H DEPOSITS FALL UNDER THE AMBIT OF 269SS/269T. HE FURTHER HELD THAT THE FACTS OF THE ASSESSEES CASE ARE DIFFERENT FROM THOSE RELIED UPON BY IT AND THER EFORE THE RATIO OF THOSE JUDGMENTS ARE NOT APPLICABLE TO THE FACTS OF THE AS SESSEE. ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 5 8. THE SUBMISSIONS MADE BY THE ASSESSEE WERE THUS D ISCARDED. THE A.O. THUS CONCLUDED THAT THE ASSESSEE HAD VIOLATED PROVISIONS OF SECTION 269SS AND ACCORDINGLY LEVIED PENALTIES VIDE ORDERS DATED 29-9-2008. 9. AGAINST THE LEVY OF PENALTY BY A.O. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A). CIT(A) VIDE ORDER DATED 15- 9-2009 DELETED THE PENALTY FOR THE REASON THAT THE DEPOSITS SHOWN IN R EGULAR NO.1 BOOKS OF ACCOUNTS HAVE BEEN TREATED AS TRADE RECEIPTS BY THE APPELLANT. WITH RESPECT TO DEPOSITS SHOWN IN NO.II BOOKS, IN THE SP ECIAL AUDIT REPORT, THESE DEPOSITS HAVE BEEN TREATED AS DEEMED SALES AND CRED ITED TO PROFIT AND LOSS ACCOUNT AND THE NET PROFIT SO DETERMINED AS PE R THE SPECIAL AUDIT REPORT FOR NO. II BOOKS HAS BEEN CONFIRMED BY CIT ( A) VIDE ORDER DATED 11- 9-2009. ACCORDING TO CIT (A) SINCE THE DEPOSITS HAV E BEEN TREATED AS INCOME FOR TAXATION PURPOSES THERE IS NO CASE OF 271D EVEN WITH RESPECT TO ALLEGED DEPOSITS SHOWN IN NO. II BOOKS OF ACCOUN TS. ACCORDINGLY HE DIRECTED FOR DELETING THE PENALTY. 10. AGGRIEVED BY THE ORDER OF CIT (A), THE REVENUE HAS FILED APPEALS BEFORE US. THE LD. D.R. VEHEMENTLY ARGUED AND URGED THAT THE A O WAS RIGHT IN LEVYING THE PENALTY. HE ARGUED THAT PENALTY PROCEEDINGS U/S . 271D/271E ARE INDEPENDENT OF THE BLOCK PROCEEDINGS. THESE PENALTI ES ARE NOT RELATED TO INCOME OR UNDISCLOSED INCOME. THESE ARE LEVIABLE FO R THE VIOLATIONS AS PER SEC. 269SS OR 269T OF THE ACT AND CAN BE INITIATED/ LEVIED INDEPENDENT OF ASSESSMENT OR BLOCK ASSESSMENT PROCEEDINGS. HE ACCO RDINGLY URGED THAT THE ORDER OF THE A.O. LEVYING THE PENALTY BE UPHELD . THE LD. A.R. ON THE ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 6 OTHER HAND URGED THAT IN THE BLOCK ASSESSMENT MADE, THE BOOKING ADVANCE AS PER NO.2 BOOK HAS ALREADY BEEN ADDED AS UNDISCLO SED INCOME. ACCORDING TO THE ASSESSEE, ONCE THE BOOKING ADVANCE HAD BEEN ASSESSED AS UNDISCLOSED INCOME BY INVOKING THE PROVISIONS OF SEC. 68, THE SAME CANNOT BE CONSIDERED AS DEPOSIT/LOAN IN VIOLATION O F PROVISIONS OF SEC. 269SS. THE ASSESSEE RELIED ON THE FOLLOWING DECISIO NS:- 1) GIRISH MISHRA VS. ACIT (2004) 91 TTJ (A LL) 643 2) CIT VS. STANDARD BRANDS LTD. (2006) 285 ITR 295 (DEL) 3) DIWAN ENTERPRISES VS. CIT (2000) 246 ITR (DEL) 571 4) DCIT VS. G S ENTERTAINMENT (2007) 109 TTJ (MUM. ) 54. WE HAVE CONSIDERED SUBMISSIONS OF THE LD D.R. AND W RITTEN SUBMISSIONS FILED BY THE ASSESSEE AND HAVE ALSO PERUSED THE ORD ER OF THE ASSESSING OFFICER AND CIT (A). IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION OF HOUSES. IT HAS RECEIVED ADVANCE MONEY. THE BOOKING ADVANCE AS PER NO.2 BOOKS HAVE ALREADY BEEN TREATED AS DEEMED SALES AND CONSIDERED AS INCOME. THE BOOKIN G MONEY RECEIVED BY ASSESSEE HAS BEEN TREATED AS RECEIPTS FORMING PA RT OF SALES. THIS FACT IS ALSO NOT DISPUTED BY ASSESSING OFFICER. WE AGREE WI TH THE CONTENTION OF THE ASSESSEE, THAT ONCE THE BOOKING ADVANCE HAS BEEN AS SESSED AS UNDISCLOSED INCOME BY INVOKING PROVISIONS OF SECTIO N 68, THE SAME CANNOT BE CONSIDERED AS DEPOSIT/LOAN IN VIOLATION OF SECTI ON 269SS/269T. WE ARE THEREFORE, OF THE VIEW THAT ONCE THE AMOUNT HAS BEE N CONSIDERED AS INCOME, THE SAME CANNOT BE CONSIDERED AS DEPOSIT FO R LEVY OF PENALTY U/S. 271D & 271E. IN VIEW OF THE AFORESAID FACTS, WE FIN D NO INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE PENALTY U/S 271D & 271E. WE ACCORDINGLY DIRECT THE DELETION OF PENALTY. ITA 3098 TO 3102/AHD/09 ASSTT. YEARS 1995-96 TO 1997-98. 7 12. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 4 - 201 2. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-XV, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 7 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 29 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 29 - 3 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 13 - 4 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 13 - 4 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 - 4 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..