ADDL CIT RG 19(1), THANE V. SUBHASH MULCHAND BHATIJA, ULHASNAGAR

ITA 4345/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 26-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Keywords: Gift
• Section: 143(3); 27

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BIL LAIYA, AM ./ I.T.A. NO.4345/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR :2005-06 THE ITO, WARD-2(4), KALYAN / VS. SHRI SUBHASH MULCHAND BHATIJA, 118, NEW PRINCE MARKET, NEW EAGLE HOTEL, ULHASNAGAR-421 003 ( % ./ ) ./ PAN/GIR NO. : AEKPB2859N ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI ASHOK SURI +,(* . - / RESPONDENT BY: SHRI RAJIV KHANDELWAL SHRI NEELKANT KHANDELWAL . /0% / DATE OF HEARING :21. 01.2014 12' . /0% / DATE OF PRONOUNCEMENT :29. 01.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-II, THANE DT.30.3.2012 PERTAINING TO A.Y. 20 05-06. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE PENALTY OF RS. 43,05,000/- LEVIED BY T HE ADDL. CIT U/S. 271D OF THE ACT. 3. FOR THE YEAR UNDER CONSIDERATION THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DT. 26.12.2007. DURIN G THE COURSE OF THE ITA NO. 4345/M/2012 2 ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS PROVIDED GIFT ENTRIES AMOUNTING TO RS. 43,05,0 00/- TO VARIOUS PARTIES AND HAS DECLARED A COMMISSION INCOME AT RS. 1,30,20 0/-. THE SAME WAS ESTIMATED AT RS. 2,15,250/- AND ADDITION OF RS. 85, 000/- WAS MADE TO THE INCOME OF THE ASSESSEE. THE AO INITIATED PENALTY P ROCEEDINGS U/S. 271D OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS ACCE PTED FOLLOWING AMOUNTS OF CASH DEPOSITS FROM VARIOUS PERSONS DURIN G THE YEAR UNDER CONSIDERATION. S. NO. NAME OF THE PERSON AMOUNT (RS. ) 1. GOPICHAND LALWANI, NAGELLA PARK, NR. HDFC BANK, TARABAI PARK, KOLHAPUR 8,00,000 6,00,000 2. LALCHAND D CHHABRIA, 235 OM SAI, TARABAI PARK, KOLHAPUR 9,00,000 50,000 75,000 3. JAMNABAI CHHABRIA, 235, OM SAI, TARABAI PARK, KOLHAPUR 3,50,000 4. RAHUL CHANDERLAL CHHABRIA, 235,OM SAI, TARABAI PARK, KOLHAPUR 7,00,000 5. LALCHAND D CHHABRIA, 235 OM SAI, TARABAI PARK, KOLHAPUR 6,80,000 6. SMT. CHANDRA A SOLANKI 50,000 7. SHRI AMRUT H. SOLANKI 50,000 TOTAL RS. 43,05,000 4. THE ASSESSEE WAS INFORMED THAT HE HAS CONTRAVENE D PROVISIONS OF SEC. 269SS OF THE ACT. THE ASSESSEE WAS ASKED TO S HOWCAUSE WHY PENALTY SHOULD NOT BE LEVIED U/S. 271D OF THE ACT. THE ASSESSEE FILED A DETAILED REPLY STATING THAT THE CASH TAKEN FROM PAR TIES IS NOT A TRANSACTION OF LOAN OR ADVANCE. THE SAME HAS BEEN TAKEN TO GIV E ENTRY OF GIFTS BY CHEQUE TO THOSE PERSONS. AMOUNTS HAVE NOT BEEN TAK EN FOR PERSONAL USE AND NO INTEREST HAS BEEN CHARGED. THE ASSESSEE ALS O RELIED UPON CERTAIN JUDICIAL DECISIONS WHICH ARE INCORPORATED AT PARA-4 OF THE PENALTY ORDER. ITA NO. 4345/M/2012 3 5. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSE SSEE AND AFTER CONSIDERING VARIOUS JUDICIAL DECISIONS, THE AO FINA LLY CONCLUDED THAT THE PROVISIONS OF SEC. 269SS HAVE BEEN VIOLATED BY THE ASSESSEE BY ACCEPTING THE CASH DEPOSITS FROM VARIOUS PERSONS. HENCE, THE PROVISION OF SEC.271D ARE CLEARLY ATTRACTED. THEREFORE, THE ASS ESSEE IS LIABLE FOR PENALTY OF RS. 43,05,000/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND EXPLAINED THE FACTS AND THE NATURE OF TRANSACTIONS VIS--VIS BUSINESS OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS AND NA TURE OF TRANSACTIONS, THE LD. CIT(A) OBSERVED THAT THERE IS NO ELEMENT OF LOAN IN THE TRANSACTIONS. THE LD. CIT(A) FURTHER OBSERVED THAT THE TRANSACTIONS OF GIVING ACCOMMODATION GIFT ENTRIES BY DEPOSITING THE CASH IN THE BANK CANNOT BE CALLED A LOANING TRANSACTION AND THUS I S OUTSIDE THE PURVIEW OF SEC. 269SS AND CONSEQUENTLY NOT COVERED UNDER THE P ENAL PROVISION OF SEC. 271D OF THE ACT AND ACCORDINGLY DELETED THE P ENALTY IMPOSED BY THE AO. 7. AGGRIEVED BY THIS, REVENUE IS BEFORE US. THE LD . DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE PENALTY ORDE R REFERRED TO THE MEANING OF DEPOSIT AND SUBMITTED THAT UNDER EXPLANA TION TO SEC. 269SS LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF MONEY. IT IS THE SAY OF THE LD. DR THAT SINCE THE ASSESSEE HAS FIRST ACCEPTED THE D EPOSIT FROM VARIOUS PARTIES, THEN ISSUE CHEQUE TO THEM HAS CLEARLY VIO LATED THE PROVISIONS OF SEC. 269SS AND THEREFORE LIABLE FOR PENALTY U/S. 27 1D OF THE ACT AS THE ASSESSEE DOES NOT HAVE ANY REASONABLE AND SUFFICIEN T CAUSE. 8. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. ITA NO. 4345/M/2012 4 COUNSEL THAT THE IMPUGNED TRANSACTIONS ARE NEITHER LOAN NOR DEPOSIT THEREFORE OUTSIDE THE PURVIEW OF SEC. 269SS OF THE ACT. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE ALSO HAVE THE BENEFIT OF GOING THROUGH THE ASSESSME NT ORDER FOR THE YEAR UNDER CONSIDERATION. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS PROVIDING ACCOMMODATION GIFT ENTRIES. THE MODUS OPERANDI OF THE ASSESSEE WAS THAT HE WAS TAKING CASH FROM VARIOUS PERSONS AND SIMULTANEOUSLY ISSUING CHEQUE TO THEM. SUCH TRANS ACTIONS, THE ASSESSEE HAS SHOWN COMMISSION INCOME WHICH HAS BEEN ACCEPTED BY THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. S INCE THE UNDISPUTED FACT IS THAT THE ASSESSEE IS PROVIDING ACCOMMODATIO N ENTRIES IN ITSELF IS A REASONABLE AND SUFFICIENT CAUSE FOR TRANSACTING IN CASH. FURTHER WE FIND THAT THE TRANSACTION IS SIMULTANEOUS I.E. ACCEPTING CASH AND ISSUING CHEQUE TO THE SAME PARTY. THEREFORE, WE CANNOT ACCEPT THI S TRANSACTION AS A LOAN OR DEPOSIT TRANSACTION. CONSIDERING THESE FACTS IN TOTALITY, IN THE LIGHT OF THE NATURE OF THE BUSINESS OF THE ASSESSEE, WE DO N OT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). THE AP PEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2014 . 3 . 2' % 4 56 29.01.2014 2 . 7 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 5 DATED 29.01.2014 . . ./ RJ , SR. PS ITA NO. 4345/M/2012 5 3 3 3 3 . .. . +/ +/ +/ +/ 8 '/ 8 '/ 8 '/ 8 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// = == = / > > > > (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI