DCIT, New Delhi V. M/s Nirman Overseas Pvt. Ltd., New Delhi

ITA 3952/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6378 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJANA
• Assessee Lawyers: SATYAM SETHI ADV SH A T
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A .NO.3952/DEL/2013 ASSESSMENT YEAR-2006-07 DCIT, CIRCLE 13(1), NEW DELHI. VS NIRMAN OVERSEAS P. LTD. 8/23, MEHRAM NAGAR, NEW DELHI. AAACN0982D APPELLANT BY SHRI P. DAM KANUNJANA, SR. DR RESPONDENT BY SHRI SATYAM SETHI, ADV. SH. A.T. PANDA, ADV. ORDER PER BEENA A. PILLAI, JM THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE RE VENUE AGAINST THE ORDER OF THE LD. CIT(A)-XVI, DELHI VIDE ORDER DATED 28/03/2013 ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW BY ALLOWING T HE APPEAL OF THE ASSESSEE AND DELETING THE PENALTY IMP OSED U/S 271E OF THE IT ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING T HE FACT THAT THE WORD ADVANCE FALLS UNDER THE MEANING OF THE LOAN. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING T HE FACT THAT THE STATUTORY AUDITOR OF THE ASSESSEE HIMSELF HAS MENTIONED IN HIS REPORT REGARDING PAYMENT OF LOAN A ND DATE OF HEARING 08.02.2016 DATE OF PRONOUNCEMENT 09.03.2016 I.T.A. NO. 3952/D/2013 2 DEPOSITS OTHERWISE THAN ACCOUNT PAYEE CHEQUES OR DRAFTS. 4. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING THE FAC T THAT TRANSFER OF LOAN OR DEPOSIT IN THE BOOKS OF THE ASS ESSEE THAT SHALL BE EVIDENCED BY AN A/C PAYEE CHEQUE OR A N A/C PAYEE BANK DRAFT. IT WAS TO CURB THE RAMPANT CIRCULATION OF BLACK MONEY THAT SUCH A PROVISION HA S BEEN INTRODUCED IN THE ACT. 5. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME OF RS. 3,95,414/-. THE CASE WAS COMPLETED IN SCRUTINY AND ORDER U/S 143(3) WAS PASSED EXCEPTING THE RETURNED INCOME . SUBSEQUENTLY THE CASE WAS TRANSFERRED TO ACIT, CIRC LE 13(1), NEW DELHI AND THE ACIT ISSUED NOTICE FOR INITIATION OF PENALTY U/S 271E OF THE ACT ON 28/03/2011. 2.1. DURING THE PENALTY PROCEEDINGS, THE LD. AO OBS ERVED THAT THE STATUTORY AUDITOR IN FORM 3CD HAD QUALIFIED NOT ED THAT THE ASSESSEE HAD REPAID LOAN OR DEPOSIT OF RS. 4,80,71, 518/-, OTHERWISE THAN BY CROSSED CHEQUE/BANK DRAFT, WHICH IS IN VIOLATION OF THE PROVISIONS OF SEC. 269T OF THE I.T . ACT, 1961. THE LD. AO OBSERVED THAT THE ASSESSEE HAD ACCEPTED THAT THE SAID AMOUNT OF RS. 4,77,41,314.86/- FROM M/S ANSAL PROPE RTIES & INFRASTRUCTURE LTD.(APIL, BEING THE DEVELOPER), AND WERE ADJUSTMENT ENTRIES FOR THE PROPORTIONATE COST OF LA ND IN TERMS OF SUB CLAUSE (A) OF CLAUSE 8 OF THE PRINCIPAL AGREEME NT DT. 10/06/1981 INCURRED BY ASSESSEE, ON BEHALF OF APIL. THEREFORE, I.T.A. NO. 3952/D/2013 3 LD.AO OBSERVED THAT THE SAID SUM HAS BEEN REPAID OT HERWISE, THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT. 2.2. THE LD.AO NOTED THAT THOUGH THE ASSESSEE HAS C LAIMED THAT THE TRANSACTION WAS COVERED UNDER THE TERMS OF AGRE EMENT WITH THE APIL, THE ASSESSEE HAS NOT ADVANCED ANY REASONA BLE CAUSE FOR REPAYING THE IMPUGNED AMOUNT, BY MEANS OTHER TH AN ACCOUNT PAYEE CHEQUE OR DRAFT, AS PROVIDED U/S 269T OF THE ACT. THE LD.AO OBSERVED THAT COMPLIANCE WITH THE TERMS OF AG REEMENT DID NOT IN ANY WAY EXONERATE THE ASSESSEE FROM THE PROV ISIONS OF IT ACT, 1961, SINCE THE ASSESSEE REPAID A LOAN/DEPOSIT OF RS. 4,77,41,314.86/- TO APIL, OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE/DRAFT IN VIOLATION OF THE PROVISIONS OF SEC. 269T, RENDERING THE ASSESSEE LIABLE FOR PENALTY U/S 271E OF THE IT ACT FOR AN AMOUNT EQUAL TO THE AMOUNT REPAID OTHER THAN BY ACC OUNT PAYEE CHEQUE/DRAFT. ACCORDINGLY, PENALTY OF RS. 4,80,71, 519/- IS IMPOSED ON THE ASSESSEE BY THE AO U/S 271E OF THE I T ACT, 1961. 3. AGGRIEVED BY THE ORDER OF THE LD. AO THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A). 3.1. BEFORE THE LD. CIT(A) THE ASSESSEE REFERRED TO THE PRINCIPLE AGREEMENT DATED 10/06/1981 AND THE RELEVANT CLAUSES OF THE AGREEMENT THEREIN, AS WELL AS IN AGREEMENTS DATED 5 TH AUGUST, 2002 AND 16 TH MARCH, 2006 WERE REFERRED TO BY THE ASSESSEE. AFTER PERUSING THE AGREEMENTS AND THE STATEMENTS OF ACCOUNTS FILED BY THE ASSESSEE, THE LD. CIT(A) DELETED THE P ENALTY ON THE GROUND THAT THERE WAS NO VIOLATION OF SECTION 269T BY THE ASSESSEE AS THE LIABILITY RECORDED IN THE BOOKS OF ACCOUNT WERE I.T.A. NO. 3952/D/2013 4 ONLY GENERAL ENTRIES I.E. CREDITING THE ACCOUNT OF APIL BY THE MONIES WERE PAYABLE. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US NOW. 4.1. THE LD. DR SUBMITTED THAT THERE IS VIOLATION O F SECTION 269T BY THE ASSESSEE AS THE AMOUNT HAS BEEN PAID BY MEAN S OTHER THAN ACCOUNT PAYEE CHEQUES OR DRAFTS AS REQUIRED U/ S 269T. LD. DR FURTHER SUBMITTED THAT THE AUDITORS REPORT FILE D BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, HAS STAT ED THAT THE SUM OF RS. 4,80,71,518/- HAS BEEN PAID OTHER THAN B Y CROSSED CHEQUE OR DRAFT. HE SUBMITTED THAT THE ASSESSEE HA S GROSSLY VIOLATED THE REQUIREMENTS U/S 269T OF THE ACT. THE LD. DR SUPPORTED THE ORDER OF THE LD. AO. 5. ON THE CONTRARY THE LD. AR SUBMITTED THAT RS. 4, 80,71,518/- WERE ADJUSTMENT ENTRIES, FOR THE PROPORTIONATE COST OF LAND AS PER THE TERMS OF THE PRINCIPLE AGREEMENT. THE LD. AR S UBMITTED THAT THESE WERE MERELY BOOK ENTRIES AND, THEREFORE, THER E HAS BEEN NO VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. HE SUBMITTED THAT NONE OF THE ENTRIES REPRESENTED ANY REPAYMENTS OF LOANS OR DEPOSITS IN CASH OR OTHERWISE AND THAT THE SE ENTRIES WERE ONLY TRANSFERRED/ADJUSTMENT ENTRIES CARRIED OUT IN TERMS OF THE COLLABORATION AGREEMENT. 5.1. THE LD. AR SUBMITTED THAT THESE WERE ONLY ADJU STMENT ENTRIES BY WHICH THE PROPORTIONATE COST OF LAND REP RESENTED BY THE FINANCES PROVIDED BY APIL WERE ADJUSTED AGAINST THE SALE I.T.A. NO. 3952/D/2013 5 PROCEEDS BECOMING PAYABLE TO THE ASSESSEE BY APIL A S PER THE DEVELOPMENT AGREEMENT. 6. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORI TIES BELOW AND THE PAPER BOOK FILED BEFORE US. IT IS OBSERVED THAT THE LD. AO HAS NOT DISPUTED THE TRANSACTIONS, AND HAS NOT OBSE RVED ANY PART OF THE AMOUNT TO BE UNEXPLAINED MONEY. IT HAS NOWH ERE BEEN RECORDED IN THE PENALTY ORDER THAT THE TRANSACTIONS WERE UNDERTAKEN WITH A VIEW TO AVOID OR EVADE PAYMENT OF TAX. FURTHER THERE IS NOTHING ON RECORD TO SUGGEST THAT THE AMOUNT ADVANCED BY THE APIL TO THE ASSESSEE REPRESENTED UN ACCOUNTED MONEY OF APIL OR THE ASSESSEE. THE ASSESSEE HAS TE NDERED EXPLANATION IN REGARD TO THE TRANSACTIONS AND THE C IRCUMSTANCES IN WHICH THE TRANSACTIONS WERE ENTERED INTO. 6.1. THE LD. CIT(A) HAS CONSIDERED THE SUBMISSIONS VIZ-A-VIZ THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH APIL A ND HAS COME TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 26 9T WERE NOT ATTRACTED TO THE FACTS OF THE PRESENT CASE. THE LD . CIT(A) HAS ALSO OBSERVED THAT EVEN ON THE BASIS OF THE NATURE OF GE NUINENESS OF TRANSACTION, CIRCUMSTANCES OF THE CASE AND THE EXPL ANATIONS PROVIDED BY THE ASSESSEE, PENALTY U/S 271E CANNOT B E IMPOSED. 10. BEFORE US THE LD. AR PLACED HIS RELIANCE UPON T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. WORLD WIDE TOWNSHIP PROJECTS LTD. REPORTED IN 367 ITR 433 (2014). THE HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED AS U NDER: THE AMBIT OF THE SECTION IS CLEARLY RESTRICTED TO TRANSACTION INVOLVING ACCEPTANCE OF MONEY AND NOT INTENDED TO AFFECT CASES WHERE A DEBT OR A LIABILIT Y I.T.A. NO. 3952/D/2013 6 ARISES ON ACCOUNT OF BOOK ENTRIES. THE OBJECT OF T HE SECTION IS TO PREVENT TRANSACTIONS IN CURRENCY. TH IS IS ALSO CLEARLY EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO SECTION 269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY. THE LIABILITY RECORDED IN THE BOOKS OF ACCOUNTS BY WAY OF JOURNAL ENTRIES, I.E. CREDITING THE ACCOUNT OF A PARTY TO WHOM MONIES ARE PAYABLE OR DEBITING THE ACCOUNT OF A PARTY FROM WHOM MONIES ARE RECEIVABLE IN THE BOOKS OF ACCOUNTS, IS CLEARLY OUTSIDE THE AMBIT OF THE PROVISION OF SECTION 269SS OF THE ACT, BECAUSE PASSING SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. 11. THE LD. AO LEVIED PENALTY U/S 271E OF THE ACT F OR ALLEGED VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT ONLY ON THE BASIS THAT THE BOOKS OF THE ASSESSEE REFLECTED THE PAYMEN T TO APIL. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. WORLD WIDE TOWNSHIP LTD. (SUPRA ), WE HOLD THAT THE PROVISIONS OF SECTION 269T WERE NOT ATTRAC TED TO THE FACTS OF THE PRESENT CASE. WE, THEREFORE, DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE GROU NDS RAISED BY THE REVENUE STANDS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.20 16 SD/ SD/- (J.S. REDDY) (BEENA A. PILLAI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09.03.2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT I.T.A. NO. 3952/D/2013 7 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR