The ITO, Ward-5(2), RAJKOT-GUJARAT V. M/s. Delta Corporation, RAJKOT-GUJARAT

ITA 367/RJT/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56710 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 23-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR ADHIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) ITA NO.367/RJT/2011 (ASSESSMENT YEAR 2005-06) ITO, WD.5(2) VS M/S DELTA CORPORATION RAJIOT DHEBAR ROAD (SOUTH) ATIKA, NR. RAMESHWAR CHOWK RAJKOT (APPELLANT) (RESPONDENT) DATE OF HEARING : 24-10-2011 DATE OF PRONOUNCEMENT : 24-10-2011 APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI DR ADHIA O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF CIT(A)-IV, RAJKOT DATED 2005-06 WHEREBY THE CIT(A) DELETED THE PENALTY OF RS.3,69,970 LEVIED BY THE ASSESSING OFFICER U/S 271D OF THE ACT . 2. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFICE R, IN THE COURSE OF ASSESSMENT PROCEEDINGS, HAS NOTICED THAT THE ASSESS EE ACCEPTED AMOUNT EXCEEDING RS.20,000 IN CASH OTHERWISE THAN BY ACCOU NT PAYEE CHEQUE OR DRAFT. THE ASSESSING OFFICER STATED THAT THE AMOUNTS AGGRE GATING RS. 3,69,970 TOWARDS FACTORY RENT AND INTEREST WERE CREDITED THROUGH JOU RNAL ENTRIES AND NOT THROUGH ACCOUNT PAYEE CHEQUE ACCORDING TO THE ASSESSING O FFICER, FORM 3CD QUALIFIED SO. ACCORDINGLY THE ASSESSING OFFICER IMPOSED PENA LTY OF THE EQUIVALENT AMOUNT OF RS.3,69,970 U/S 271D OF THE ACT. ON APPEAL, THE ASSESSEE EXPLAINED BEFORE ITA 367/RJT/2011 2 CIT(A) THAT THE AUDITOR HAS NOT MADE ANY SUCH QUALI FICATION AS ALLEGED BY THE ASSESSING OFFICER. IN SUPPORT, THE ASSESSEE HAD FI LED A COPY OF FORM 3CD REPORT. IT WAS ALSO SUBMITTED BEFORE CIT(A) THAT THE ASSESS EE HAS CREDITED RS.30,000 EACH IN THE LEDGER ACCOUNT OF CO-OWNERS OF THE PRE MISES FROM WHICH THE ASSESSEE CARRIED ON HIS MANUFACTURING ACTIVITIES AN D ON THE OUTSTANDING INTEREST WAS CREDITED AS FOLLOWS: 1. ANUBEN BHARATBHAI PATEL RS. 87,972 2. JYOTIBEN HIMANSHU BAMROLIA RS. 1,06,720 3. KANCHANBEN GIRDHARLAL AMARANIA RS. 85,278 THE ASSESSEE THEREFORE SUBMITTED BEFORE THE CIT(A) THAT THERE IS NO ACCEPTANCE OF LOAN OR DEPOSITS FROM THE CO-OWNERS IN ANY WAY A ND THE ENTRIES ARE JUST TRANSFER ENTRIES FOR EXPENSES TOWARDS RENT AND INTE REST AND THERE WAS NO INTRODUCTION OF CASH OR MONEY IN ANY FORM. IT WAS ALSO SUBMITTED THAT THE PRE- REQUITE FOR APPLYING PROVISIONS OF SECTION 269SS IS THAT THERE SHOULD BE INVOLVEMENT OF TRANSFER OF MONEY, WHICH DID NOT EXI ST IN THE CASE OF THE ASSESSEE. FOR THIS PROPOSITION THE ASSESSEE RELIED UPON THE D ECISIONS IN THE CASES ACIT VS LALA MURALI LAL & SONS (2004) 2 SOT 543 (L UCK) CIT VS BOMBAY CONDUCTORS & ELECTRICALS LTD (20-08) 301 ITR 328 (GUJ) ACIT VS GUJARAT AMBUJA PROTEINS LTD (2004) 3 SOT 8 11 (AHD) CIT VS NOIDA TOLL BRIDGE CO LTD (2003) 262 ITR 260 (DEL) ITA 367/RJT/2011 3 THE CIT(A) FOUND THAT THE LEDGER ACCOUNTS OF THE CO -OWNERS WERE CREDITED WITH RENT AND ON ACCOUNT OF NON PAYMENT OF DUES THE INTE REST WAS ALSO CREDITED AT THE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMEN T YEAR UNDER CONSIDERATION. THE CIT(A) ALSO FOUND THAT IT IS NOT A CASE WHERE A CONSTRUCTIVE PAYMENT OF LOAN IN CASH OR SO WAS RECEIVED BY A THIRD PARTY ON BEHA LF OF THE ASSESSEE AND THAT IT IS A SIMPLE CASE OF CREDITING THE ACCOUNTS OF LICEN SERS ON ACCOUNT OF RENT AND INTEREST PAYABLE TO THEM. THE CIT(A), THEREFORE, H ELD THAT THE CREDITING OF THE LOAN / DEPOSIT ACCOUNTS OF CO-OWNERS BY THE JOURNAL ENTRY ON ACCOUNT OF RENT AND INTEREST DID NOT AMOUNT TO ACCEPTANCE OF LOAN OR DE POSIT FOR THE PURPOSE OF SECTION 269SS OF THE ACT AND THAT IN CLAUSE (III) O F EXPLANATION TO SECTION 269SS, IT IS CLARIFIED THAT FOR THE PURPOSE OF SECTION 269 SS THE CREDIT ENTRY OR ACCEPTANCE OF LOAN / DEPOSIT SHOULD BE DEPOSIT OF MONEY. FOR THIS PROPOSITION THE CIT(A) FOUND SUPPORT FROM THE JUDGMENT OF THE GUJARAT HIGH COURT IN CIT VS BOMBAY CONDUCTORS & ELECTRICALS LTD (2008) 301 ITR 328 (GU J). ACCORDINGLY THE PENALTY OF RS. 3,69,970 WAS DELETED BY THE CIT(A). UPON HE ARING THE PARTIES AND ON GOING THROUGH THE WRITTEN SUBMISSIONS ,NO NEW FACTS BEING BROUGHT TO MY NOTICE, I AM UNABLE TO ARRIVE AT A DIFFERENT CONCLUSION THAN THE ONE ARRIVED AT BY THE CIT(A). THEREFORE, I HAVE TO NECESSARILY UPHOLD TH E ORDER OF CIT(A). THE ORDER OF CIT(A) IS UPHELD AND THE APPEAL FILED BY THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING. SD/- ( A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 24-10-2011 PK/- ITA 367/RJT/2011 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV, RAJKOT 4. THE CIT-III, RAJKOT 5. THE DR (TRUE COPY) BY ORDER SR. PS, ITAT, RAJKOT BENCH