DCIT, Meerut V. M/s Paswara Chemicals Ltd., Meerut

ITA 4046/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3214 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 15-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATICE AHMAD
• Assessee Lawyers: SUMIT GOEL CAS; SSH RAJ KUMAR GUPTA
• Keywords: Reasonable cause
• Section: 273B; 143(3); 27; 2

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS. 4046 & 4047/DEL./2016 ASSESSMENT YEAR: 2012-13 D.C.I.T., CIRCLE 2, MEERUT. (APPELLANT) VS. M/S. PASWARA CHEMICALS LTD., PASWARA HOUSE, BAGHPAT ROAD, MEERUT. PAN-AADCP 0846P (RESPONDENT) ITA NOS. 4048 & 4049/DEL./2016 ASSESSMENT YEAR: 2012-13 D.C.I.T., CIRCLE 2, MEERUT. (APPELLANT) VS. M/S. PASWARA PAPERS LTD., PASWARA HOUSE, BAGHPAT ROAD, MEERUT. PAN-AADCP 9539Q (RESPONDENT) A PPELLANT BY SH. ATICE AHMAD, SR. DR RE SPONDENT S BY S/SH. RAJ KUMAR GUPTA & SUMIT GOEL, CAS ORDER PER L.P. SAHU, A.M.: ALL THESE FOUR APPEALS FILED BY THE REVENUE IN THE CASES OF TWO ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A), MEERUT DATED 29.04.2016 FOR THE ASSESSMENT YEAR 2012-13, CHALLEN GING THE DELETION OF PENALTIES IMPOSED AGAINST BOTH THE ASSESSEES U/S. 2 71D AND 271E OF THE IT ACT DATE OF HEARING 01.02.2018 DATE OF PRONOUNCEMENT 28.02 .2018 ITA NOS. 4046 TO 4049/DEL./2016 2 IN VIOLATION OF SECTION 269SS AND 269T OF THE IT AC T, 1961. BOTH THE ASSESSEES HAVE RAISED COMMON GROUNDS IN THESE APPEALS. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE AP PEALS, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE FIRST TAKE UP THE APPEALS O F THE REVENUE IN THE CASE OF M/S. PASWARA CHEMICALS LTD., BEARING NO. 4046 & 404 7/DEL./2016, THE DECISION ON WHICH SHALL EQUALLY APPLY TO OTHER TWO APPEALS OF REVENUE IN THE CASE OF PASWARA PAPERS LTD. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, IT WAS NOTICED BY THE ASSES SING OFFICER THAT THE ASSESSEE HAD CLAIMED TO HAVE ACCEPTED LOAN OF RS.52,00,000/- FROM SOME PARTIES AND PAID BACK THE LOANS OF RS.2,76,00,000/- TO SOME PAR TIES. HOWEVER, THE SAME WAS NOT ACTUALLY RECEIVED FROM AND PAID BACK TO THE CLAIMED PARTIES, BUT IT WAS RECEIVED FROM AND PAID BACK TO OTHER GROUP CONCERN ON BEHALF OF THE LOAN PROVIDERS. THE DETAILS OF AMOUNTS RECEIVED AND REPA ID BY WAY OF CHEQUES ARE AS UNDER : THE DETAILS REGARDING RECEIPT OF LOANS ITA NOS. 4046 TO 4049/DEL./2016 3 S. NO. NAME OF DEPOSITOR CHEQUE NO. DATE AMOUNT FROM WHERE AMT. WITHDRAWN FOR DEPOSIT THROUGH A/C PAYEE CHEQUE 1 KAVITA SINGHAL 070688 10.02.2012 15,00,000 FROM PASWARA IMPEX LTD. THROUGH JOURNAL ENTRY 2 NISHIT SINGHAL 070687 10.02.2012 37,00,000 FROM PASWARA IMPEX LTD. THROUGH JOURNAL ENTRY TOTAL 52,00,000 THE DETAILS REGARDING REPAYMENT OF LOANS S.NO. NAME OF DEPOSITOR CHEQUE NO. DATE AMOUNT AMOUNT REPAID OTHER THAN A/C PAYEE CHEQUE OR DRAFT (VIOLATION OF SECTION 269T) 1 ARVIND KUMAR 115261 9.2.2012 30,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 2 VINOD KUMAR 115262 9.2.2012 58,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 3 KAPIL KUMAR 115263 9.2.2012 40,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 4 RANJI AGARWAL 115265 9.2.2012 20,00,000 FROM PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 5 KAVITA SINGHAL 058723 31.5.2011 2,00,000 TO SAVING A/C WITH UBI IN THE NAME OF KAVITA SINGHAL 5 KAVITA SINGHAL 115266 9.2.2012 15,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 6 NITASHA SINGHAL 115267 9.2.2012 15,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 7 MAGANWATI 115264 9.2.2012 25,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY ITA NOS. 4046 TO 4049/DEL./2016 4 8 ARVIND KUMAR HUF 115258 9.2.2012 15,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 9 VINOD KUMAR HUF 115259 9.2.2012 29,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY 10 KAPIL KUMAR HUF 115260 9.2.2012 27,00,000 TO PASWARA PAPERS LTD. THROUGH JOURNAL ENTRY TOTAL 2,76,00,000 4. THE ASSESSING OFFICER OBSERVED THAT THE AMOUNTS OF ADVANCES RECEIVED AND CHEQUE NUMBERS DO NOT APPEAR IN THE BANK STATEM ENTS OF THE LOAN PROVIDERS SINCE THE CHEQUES WERE ISSUED BY SOME OTH ER PARTIES ON BEHALF OF THE LOAN PROVIDERS, WHICH WAS IN VIOLATION OF SECTI ON 269SS OF THE ACT. SIMILARLY, IT WAS ALSO OBSERVED THAT THE AMOUNTS OF REPAYMENTS WERE NOT FOUND IN THE GIVEN BANK STATEMENTS OF LOAN PROVIDER S, BUT WERE PAID BACK TO PASWARA PAPERS LTD. IN VIOLATION OF SECTION 269T OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE FAILED T O ASSIGN ANY EXPLANATION AS TO WHY THE AMOUNT OF LOAN WAS RECEIVED BY CHEQUES F ROM THE PERSON OTHER THAN LOAN PROVIDERS AND WHY THE AMOUNT OF LOANS WER E REPAID TO THE PERSONS OTHER THAN CLAIMANTS. HE ACCORDINGLY, IMPOSED PENAL TY OF RS.52,00,000/- U/S. 271D IN VIOLATION OF SECTION 269SS AND PENALTY OF R S.2,76,00,000/- U/S. 271E IN VIOLATION OF SECTION 269T OF THE ACT AGAINST THE ASSESSEE. THE ASSESSEE CHALLENGED THE PENALTY ORDERS BEFORE THE LD. CIT(A) IN APPEALS, WHERE THE FIRST ITA NOS. 4046 TO 4049/DEL./2016 5 APPELLATE AUTHORITY DELETED THE PENALTIES VIDE IMPU GNED ORDERS. BEING AGGRIEVED, THE REVENUE IS IN APPEALS BEFORE THE TRI BUNAL. 5. THE LD. DR RELYING ON THE PENALTY ORDERS, SUBMIT TED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTIES IGNORIN G THE FACT THAT THE ASSESSEE HAS ACTED IN CONTRAVENTION OF SECTION 269SS AND 269 T OF THE IT ACT. IT WAS SUBMITTED THAT THE CHEQUES RECEIVED OF LOAN WERE NO T REFLECTED IN THE BANK ACCOUNT OF THE LOAN PROVIDERS AND SIMILARLY, THE AM OUNTS REPAID WERE NOT REFLECTING IN THE BANK STATEMENTS OF THE PERSONS FR OM WHOM THE LOANS WERE SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE. THE AS SESSEE DID NOT OFFER ANY PLAUSIBLE EXPLANATION TO RECEIVE THE PAYMENTS BY WA Y OF CHEQUES FROM THE PERSONS OTHER THAN LOAN PROVIDERS AND TO MAKE THE R EPAYMENTS TO THE PERSONS OTHER THAN THE LOAN PROVIDERS. THE LD. CIT(A) HAS N OT CONSIDERED THE FACTS OF THE CASE IN RIGHT PERSPECTIVE AND THEREFORE, THE IM PUGNED ORDERS DESERVE TO BE SET ASIDE. 6. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE, R ELYING ON THE ORDERS OF THE LD. CIT(A) SUBMITTED THAT THE ASSESSEE HAD RECEIVED LOANS OF RS.52,00,000/- THROUGH ACCOUNT PAYEE CHEQUES IN THE ACCOUNT OF TWO PARTIES NAMELY KAVITA SINGHAL AMOUNTING TO RS.15,00,000/- AND NISHIT SING HAL RS.37,00,000/- DURING ITA NOS. 4046 TO 4049/DEL./2016 6 THE YEAR UNDER CONSIDERATION. NO VIOLATION OF SECT ION 269SS AND 269T OF THE ACT CAN BE ASSUMED, AS NO TRANSACTIONS WERE MADE OT HERWISE BY WAY OF ACCOUNT PAYEE CHEQUES. NO PAYMENT WAS MADE IN CASH EITHER BY ASSESSEE OR ON ITS BEHALF NOR ANY LOAN WAS ACCEPTED BY ASSESSEE OTHERWISE BY WAY OF CHEQUES. BOTH THE ACCOUNT PAYEE CHEQUES WERE REEIVE D FROM M/S. PASWARA IMPEX LTD. WHERE LOAN CREDITORS WERE HAVING THEIR L OAN ACCOUNT. M/S. PASWARA IMPEX LTD. DEBITED LOAN CREDITORS ACCOUNT AND ASSE SSEE CREDITED THE ACCOUNT OF LOAN CREDITORS. THE AMOUNTS ACCEPTED AND REPAID BY CHEQUES STOOD EVIDENT FROM THE BANK CERTIFICATE ISSUED BY ASSESSEES BANK , BANK STATEMENT OF ASSESSEE, LEDGER ACCOUNT OF LOAN CREDITOR, KAVITA S INGHAL AND NISHIT SINGHAL IN THE BOOKS OF ASSESSEE, BANK STATEMENT OF PASWARA IM PEX LTD. AND LEDGER ACCOUNT OF LOAN CREDITOR KAVITA SINGHAL AND NISHIT SINGHAL IN THE BOOKS OF PASWARA IMPEX LTD. HE, THEREFORE, CONTENDED THAT AN Y PAYMENT ACCEPTED OR REPAYMENT MADE PURSUANT TO CURRENT ACCOUNT MAINTAIN ED BETWEEN THE PARTIES CANNOT BE CONSIDERED AS VIOLATION OF SECTION 269SS AND 269T OF THE ACT AND AS SUCH, THE PENALTIES IMPOSED U/S. 271D AND 271E FOR ALLEGED VIOLATION OF SECTIONS 269SS & 269T OF THE ACT HAVE RIGHTLY BEEN DELETED BY THE LD. CIT(A). THE RELIANCE IS PLACED, INTER ALIA, ON THE FOLLOWIN G DECISIONS : (I). CIT VS. NOIDA TOLL BRIDGE CO. LT., 262 ITR 260 (DEL) (II). CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD., 367 ITR 433 (DEL) (III). NATCO MAHASHAKTI MINING (P) LTD., 66 DTR(DEL )(TRIB) 401 (IV). CIT VS. NATVARLAL PURSHOTTAM PAREKH 303 ITR 5 (GUJ) ITA NOS. 4046 TO 4049/DEL./2016 7 (V). ADI(INV) VS. KUMARI A.B. SHANTHI 255 ITR 258 ( SC) (VI). SAINI MEDICAL STORE, 277 ITR 420 (P&H) (VII). OMEC ENGINEERS VS. CIT,217 CTR 144(JHARKHAND ) (VIII). ACIT VS. BHAGWATI PRASAD BAJORIA, 137 TAXMA N 75(GAU)(MAG) (IX). SHIV NANDAN KAUSHIK VS. DCIT, 74 TTJ (CHD) 76 1 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECOR D AND WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS PASSED BY THE LD. CIT(A). TH E FINDINGS REACHED BY THE LD. CIT(A) READ AS UNDER : IT HAS BEEN ADMITTED BY THE AO ALSO THAT THESE PAY MENTS ARE NOT BY CASH BUT HE HAS DRAWN ADVERSE INFERENCE SINCE THE ENTRIES DO NOT TO UCH THE RELEVANT BANK ACCOUNT OF THE DEPOSITORS AND THESE ENTRIES HAVE BEEN ROUTED T HROUGH ACCOUNTS OF SOME OTHER PERSONS AND LOANS HAVE BEEN SHOWN TO HAVE BEEN TAKE N BY OTHER PERSONS. FROM THE PERUSAL OF THE FACTS OF THE CASE FOLLOWING CONCLUSIONS CAN BE DRAWN: (I) ALL DEPOSITORS ABOUT WHOM ADVERSE INFERENCE HAS BEEN DRAWN BY THE AO. THESE DO NOT FALL IN THE CATEGORY LOANS AND DEPOSITS AS P ER THE COMPANIES ACT. (II) ALL THE ENTRIES ON WHICH ADVERSE VIEW WAS TAKE N BY THE ADDL. CIT ARE JOURNAL ENTRIES WHICH HAVE GONE TO OTHER ACCOUNT. (III) ALL ENTRIES WHICH HAVE BEEN HELD BY THE AO AS CONTRAVENING THE PROVISIONS OF SECTION 269SS ARE EITHER THROUGH ACCOUNT PAYEE CHEQ UE OR JOURNAL ENTRIES. DURING APPEAL THE AR HAS BROUGHT ON RECORD SEVERAL RULINGS AND CITATION DEFINING THE SCOPE OF SECTION 269SS AND THE INCIDENCE OF CORRESP ONDING PENALTY U/S 271D OF THE IT ACT. THE SUM AND SUBSTANCE OF THESE JUDGMENTS GO BACK TO THE INSERTION OF THE SAID PROVISIONS INTO THE INCOME TAX ACT, WHEREIN IT WAS CLARIFIED THAT THESE PROVISIONS HAVE BEEN BROUGHT IN SPECIFICALLY TO CUR B TRANSACTIONS AND DEPOSIT BY CASH. THE JUDGMENT OF NOIDA TOLL BRIDGE CO. LTD. ON 28 JANUARY, 2003, 184 CTR DEL 266, 2003 262 ITR 260 DELHI IS RELEVANT WHEREIN THE HON'BLE COURT OBSERVED AS UNDER: '....AGGRIEVED, THE ASSESSED PREFERRED APPEAL TO TH E COMMISSIONER OF INCOME-TAX (APPEALS) BUT WITHOUT ANY SUCCESS. THE ASSESSED CARR IED THE MATTER IN FURTHER APPEAL TO THE TRIBUNAL. BY THE IMPUGNED ORDER, THE T RIBUNAL HAD DELETED THE SAID PENALTY. WHILE HOLDING THAT THE PROVISIONS OF SECTION 269SS OF THE ACT WERE NOT ATTRACTED, THE TRIBUNAL HAS NOTICED THAT: (I) IN THE INSTANT CASE, THE TRANSACTION WAS BY AN ACCOUNT PAYEE CHEQUE, (II) NO PAYMENT ON ACCOUNT WAS ITA NOS. 4046 TO 4049/DEL./2016 8 MADE IN CASH, EITHER BY THE ASSESSED OR ON ITS BEHAL F, (HI) NO LOAN WAS ACCEPTED BY THE ASSESSED IN CASH, AND (IV) THE PAYMENT OF RS . 4.85 CRORES MADE BY THE ASSESSED THROUGH IL & FS, WHICH HOLDS MORE THAN 30 PER CENT, OF THE PAID-UP CAPITAL OF THE ASSESSED, BY JOURNAL ENTRY IN THE BO OKS OF ACCOUNT OF THE ASSESSED BY CREDITING THE ACCOUNT OFIL & FS... '. FURTHER, IN THE CASE OF IDHAYAM PUBLICATIONS LIMITE D ON 23 JANUARY, 2006 (285 ITR 221 (MADRAS) IS RELEVANT WHEREIN THE HON'BLE COURT OBSERVED AS UNDER: ' ....WE HEARD THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE REVENUE. WE HAVE PERUSED THE MATERIALS AVAILABLE IN RECORD. ADMITTEDL Y MR. S.V. S. MANIAN WAS ONE OF THE DIRECTORS. THEREFORE THE ORDER OF THE LO WER AUTHORITY CLEARLY SHOWS THAT THERE WAS A RUNNING CURRENT ACCOUNT IN THE BOO KS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF MR. S. V.S. MANIAN USED TO PAY THE MONEY IN THE CURRENT ACCOUNT AND USED TO WITHDRAW THE MONEY ALSO FROM TH E CURRENT ACCOUNT. THE REVENUE SHOULD ESTABLISH THAT WHAT WAS RECEIVED BY T HE ASSESSEE IS A LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269SS. THE DE POSIT AND THE WITHDRAWAL OF THE MONEY FROM THE CURRENT ACCOUNT COULD NOT BE CONS IDERED AS A LOAN OR ADVANCE. FURTHER IT WAS ALSO FOUND THAT THE ASSESSE E FILED A LETTER DATED 29.09.97 AND IN THAT LETTER HE EXPLAINED THAT THE A MOUNT RECEIVED FROM MR. S.V.S. MANIAN HAD BEEN SHOW AS 'UNSECURED LOAN FROM DIRECTORS'' IN THE BALANCE SHEET. AS PER THE COMPANIES ACT, UNDER COMPANIES (A CCEPTANCE OF DEPOSIT) RULES 1975, UNDER RULE 2(B)(IX), DEPOSIT DOES NOT I NCLUDE ANY AMOUNT RECEIVED FROM A DIRECTOR OR A SHARE HOLDER OF A PRIVATE LIMI TED COMPANY. THEREFORE THE TRANSACTION BETWEEN THE APPELLANT AND THE DIRECTOR C UM SHARE HOLDER IS NOT LOAN OR DEPOSIT AND IT IS ONLY CURRENT ACCOUNT IN N ATURE AND NO INTEREST BEING CHARGED FOR THE ABOVE TRANSACTION....'. ..-.. . - ...... THE OBJECT OF INTRODUCING SECTION 269SS OF THE ACT WAS TO ENSURE THAT A TAX PAYER WAS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS U NACCOUNTED MONEY OR IF THE TAX PAYER MADE SOME FALSE ENTRIES, HE WOULD NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. IT WAS FOUND THAT DURING THE SEARCH AND S EIZURE, UNACCOUNTED MONEY WAS FOUND AND THE TAX PAYER USUALLY GAVE AN EXPLANATION THAT HE HAD BORROWED OR RECEIVED DEPOSITS FROM HIS RELATIVES OR FRIENDS AND , CONSEQUENTLY, IT BECAME EASY FOR THE SO CALLED LENDER TO MANIPULATE HIS RECORD TO SU IT THE PLEA OF THE TAX PAYER. IN ORDER TO CURB THIS MENACE, SECTION 269SS OF THE ACT WAS INTRODUCED TO DO AWAY WITH THE MENACE OF MAKING FALSE ENTRIES IN THE ACCOUNT B OOKS AND LATER GIVE AN EXPLANATION FOR THE SAME. SECTION 269SS OF THE ACT CONSEQUENTLY, REQUIRED THAT NO PERSON SHALL TAKE OR ACCEPT ANY LOAN OR DEPOSIT, IF IT EXCEEDS MORE THAN RS. 20,000/- IN CASH. SECTION 27 ID OF THE ACT CAUSED UNDUE HARDSHIP TO T HE TAX PAYERS WHERE THEY TOOK A LOAN OR DEPOSIT IN CASH EXCEEDING RS. 20,000/- EVEN WHERE THERE WAS A GENUINE OR BONA FIDE TRANSACTION. THE LEGISLATURE ACCORDINGLY, INTRODUCE D SECTION 273B OF THE ACT, WHICH PROVIDED THAT IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT BY AN ACCOUNT PAYEE CHEQUE OR DEMAND ITA NOS. 4046 TO 4049/DEL./2016 9 TRANSACTION FOR SOME BONA FIDE REASON, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAD A DISCRETION NOT TO LEVY THE PEN ALTY. 13. IN CHAMUNDI GRANITES (P.) LTD. [2002] 255 ITR 2587122 TAXMAN 574 (SC) THE SUPREME COURT CONSIDERED THE PROVISION OF SECTION 2 71D AND 273B OF THE ACT AND HELD: 'IT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION, NA MELY SECTION 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDING AN YTHING CONTAINED IN THE PROVISIONS OF SECTION 271D, NO PENALTY SHALL BE IMPO SABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERR ED TO IN THE SAID PROVISION IS FIE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE T O TAKE A LOAN OTHERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT-PAYEE DEMAN D DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHI P IS VERY MUCH MITIGATED BY THE INCLUSION OF SECTION 273B IN THE ACT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY REASON THE TAXPAYER COUL D NOT GET A LOAN OR DEPOSIT BY ACCOUNT-PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BON A FIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY H AS GOT DISCRETIONARY POWER.' THE GAUHATI HIGH COURT IN CIT V. BHAGWATI PRASAD BAJORIA (HUF)[2QQ3] 263 ITR 487/133 TAXMAN 426 HELD: '.,... THE TRANSACTION OF LOAN HAS FOUND PLACE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THE LENDER OF THE LOAN. NONE OF THE AUTHORITIES HAVE REACHED THE CONCLUSION THAT THE TRANSACTION OF THE LOAN WAS NOT GENUINE AND IT WAS A SHAM TRANSACTION TO COVER UP THE UNACCOUNTED MONEY. IT APPEARS TO US THAT THE ASSESSEE FELT NEED OF MONEY AND THUS HE APPROACHED THE MONEY-LENDER FOR ADVANCEMENT OF THE MONEY, THE TRANSACTION IS REFLEC TED IN THE PROMISSORY NOTES EXECUTED BY THE ASSESSEE IN FAVOUR OF THE LENDER. W HEN THERE IS AN IMMEDIATE NEED OF MONEY THE PERSON CANNOT GET SUCH MONEY FROM THE NATIONALISED BANK TO SATISFY THE IMMEDIATE REQUIREMENT. .....' THE LD. ITAT [ 2015 ] 60 TAXMANN.COM 407 (DELHI - T RIB.)ASSISTANT COMMISSIONER OF INCOME-TAX VS VARDAAN FASHION HAS HELD AS UNDER : I. SECTION 269SS, READ WITH SECTION 271D, OF THE IN COME-TAX ACT, 1961 - DEPOSITS - MODE OF TAKING/ACCEPTING (BOOK ENTRY) - ASSESSMEN T YEAR 2008-09 - ASSESSING OFFICER NOTICED THAT ASSESSEE HAD ACCEPTED LOAN OR DEPOSIT OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT AND ACC ORDINGLY, LEVIED PENALTY UNDER SECTION 271D - IT WAS OBSERVED THAT THERE WAS NO MONETARY TRANSACTION BETWEEN ASSESSEE AND CREDITORS -TRANSACTION HAD TAKE N PLACE BETWEEN CREDITORS AND SOME THIRD PARTY WHICH ENTRY BY DEBITING ACCOUNT OF SOME OTHER PARTY AND CREDITING TO ACCOUNT OF CREDITOR -WHETHER SINCE THE RE WAS NO MONETARY TRANSACTION BETWEEN ASSESSEE AND CREDITOR, IT COULD NOT BE SAID THAT ASSESSEE ACCEPTED LOAN OR DEPOSIT FROM CREDITOR IN VIOLATION OF SECTION 269SS; HENCE ITA NOS. 4046 TO 4049/DEL./2016 10 PENALTY LEVIED UNDER, SECTION 271D WAS TO BE CANCEL LED - HELD, YES [PARA 15] [IN FAVOUR OF ASSESSEE] THUS, CONSIDERING THE RATIO OF VARIOUS JUDGMENT CIT ED AND DISCUSSED ABOVE AND TAKING INTO CONSIDERATION OF THE FINDINGS OF LD. JU RISDICTIONAL TRIBUNAL IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME-TAX VS VARDAAN FAS HION (SUPRA) ALONGWITH THE FACT THAT ALL THE TRANSACTION INVOLVED ARE EITHER T HROUGH ACCOUNT PAYEE CHEQUES OR JOURNAL ENTRIES AND CONSIDERING THAT AS PER THE COM PANIES ACT NONE OF THE ENTITIES INVOLVED COME WITHIN THE DEFINITION OF LOANS AND DE POSITORS IN TERMS OF COMPANIES ACT. IN VIEW OF THE FORGOING DISCUSSION PENALTY IMP OSED U/S 27ID OF THE INCOME TAX ACT IS UNCALLED FOR AND NOT SUSTAINABLE IN LAW OR O N FACTS AND IS THEREFORE HEREBY DELETED. 8. SIMILAR FINDINGS HAVE BEEN GIVEN BY THE LD. CIT( A) WHILE DELETING THE PENALTY U/S. 271E OF THE ACT. WE FIND THAT THE LD. CIT(A) HAS REACHED ITS DECISION AFTER RELYING ON VARIOUS DECISIONS AS NOTE D ABOVE AND THE ATTENDING FACTS OF THE CASES IN RIGHT PERSPECTIVE. IT IS ALSO NOTABLE THAT IN THE INSTANT CASE IT IS ADMITTEDLY PROVED THAT NO TRANSACTION EITHER OF RECEIPT OR REPAYMENT WAS MADE IN CASH. THE BANK STATEMENTS AND LEDGER ACCOUN TS OF THE LOAN CREDITORS ETC. IN THE BOOKS OF ASSESSEE UNEQUIVOCALLY PROVE T HAT THE TRANSACTIONS WERE MADE BY WAY OF CHEQUES AND RESPECTIVE JOURNAL ENTRI ES WERE PASSED IN RESPECTIVE BOOKS OF ACCOUNT OF THE PARTIES. THEREFO RE, IN VIEW OF THE DECISIONS RELIED BY THE LD. CIT(A) AND ALSO RELIED BY THE ASS ESSEE BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LD. CIT(A) WHILE DELETING THE IMPUGNED PENALTIES U/S. 271D AND 271E OF THE IT ACT. THE LD. CIT(A) HAS PASSED GOOD REASONED ORDERS WHICH NEED NOT TO BE INTERFERED WIT H. NO MATERIAL IS PLACED ON RECORD ON BEHALF OF THE REVENUE TO DISCARD THE F INDINGS OF THE FIRST ITA NOS. 4046 TO 4049/DEL./2016 11 APPELLATE AUTHORITY. ACCORDINGLY, BOTH THE APPEALS OF THE REVENUE IN THE CASE OF ASSESSEE M/S. PASWARA CHEMICALS LTD. DESERVE T O BE DISMISSED. 9. ADVERTING TO REMAINING TWO APPEALS OF THE REVENU E, AS ALREADY NOTED, THE FACTS, CIRCUMSTANCES, ATTENDING TO OTHER TWO AP PEALS OF REVENUE IN THE CASE OF PASWARA PAPERS LTD., ARGUMENTS OF THE PARTIES AN D FINDINGS OF THE LD. AUTHORITIES BELOW ARE SIMILAR, THEREFORE, OUR DECIS ION REACHED IN APPEALS OF REVENUE IN CASE OF PASWARA CHEMICALS LTD. SHALL EQU ALLY APPLY TO REMAINING TWO APPEALS OF REVENUE IN THE CASE OF PASWARA PAPER S LTD. ACCORDINGLY, THESE APPEALS OF THE REVENUE ALSO DESERVE TO FAIL. 10. IN THE RESULT, ALL THE FOUR APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (BHAVNESH SAINI) ( L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH FEBRUARY,2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI