The Asstt. Commissioner of Income-tax, Hoshiarpur V. M/s. Hoshiarpur Automobiles, Hoshiarpur

ITA 511/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0780 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISRA
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.511(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN: AAAFH6382G ASSTT. COMMR. OF INCOME TAX, VS. M/S. HOSHIARPUR AU TOMOBILES, HOSHIARPUR CIRCLE, JALANDHAR ROAD, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. AMALENDU NATH MISRA, DR RESPONDENT BY: NONE DATE OF HEARING: 11/05/2016 DATE OF PRONOUNCEMENT: 12/05/2016 ORDER PER A.D. JAIN, JM: THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2010-11, AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING PENALTY OF RS.12,00,513/- IMPOSED BY THE A.O. UNDER SECTION 271D OF THE INCOM E TAX ACT, 1961 ( IN SHORT, THE ACT). 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE FIRM WAS HAVING DEALERSHIP OF MARUTI/SUZUKI VEHICLES. DURING THE YE AR, IT DECLARED INCOME OF RS.61,97,240/-. THE AO NOTICED THAT THE A SSESSEE FIRM HAD TAKEN ADVANCES IN CASH FROM PROSPECTIVE BUYERS OF V EHICLES, FOR BOOKING OF CARS. THE AMOUNT RECEIVED IN SOME OF THE CASES EXCEEDED RS.20,000/-. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD NOT D ELIVERED ANY VEHICLE ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 2 TO 15 PARTIES AND HAD RETURNED THE MONEY TAKEN AS A DVANCE. FURTHER, THE AO TREATED THE ACCEPTANCE OF THE ADVANCES IN CASH F ROM 15 PARTIES, IN AMOUNTS OF S.20,000/- OR MORE AS VIOLATION OF THE P ROVISIONS OF SECTION 269SS OF THE ACT AND IMPOSED THE PENALTY UNDER SECT ION 271D OF THE ACT, VIDE ORDER DATED 11.09.2013. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE PENALTY. 4. IN THE PROCEEDINGS BEFORE US, NONE HAS PUT IN AP PEARANCE ON BEHALF OF THE ASSESSEE, DESPITE NOTING OF THE REGIS TRY ON THE RECORD, WHEREBY, ON THE EARLIER APPLICATION FOR ADJOURNMENT DATED 21.03.2016 FILED BY THE ASSESSEE, IT STANDS NOTED THAT THE C.A . OF THE ASSESSEE HAS ASCERTAINED THE DATE OF HEARING OVER THE PHONE. NOW , FINDING THAT THE MATTER CAN BE PROCEEDED WITH IN THE ABSENCE OF THE ASSESSEE, WE ARE DOING SO. 5. THE LD. DR HAS CONTENDED THAT WHILE DELETING TH E PENALTY CORRECTLY IMPOSED BY THE AO, THE LD. CIT(A) HAS FAILED TO CO NSIDER THAT SINCE THERE WAS A CLEAR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT, LEVY OF PENALTY U/S 271D OF THE ACT WAS SQUARELY ATTRACTED AND IT HAD RIGHTLY BEEN LEVIED; THAT THE LD. CIT(A) HAS FAILED TO SEE THAT THE TOTAL AMOUNT OF RS.78,80,733/- WAS RECEIVED IN CASH BY THE ASSESSEE DURING THE YEAR; THAT IN 15 CASES, THE AMOUNT RECEIVED IN CASH, AS A DVANCE HAS BEEN RETURNED/REFUNDED AND CARS HAD NOT BEEN SUPPLIED; T HAT THIS REFUND AMOUNTED TO RS.12,00,513/-; THAT ALL SUCH CASES WER E CASES OF ADVANCE ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 3 RECEIVED IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT, FOR WHICH THE PENALTY WAS RIGHTLY LEVIED. 6. WE HAVE HEARD THE LD. DR AND HAVE PERUSED THE MA TERIAL AVAILABLE ON THE RECORD. THE LD. CIT(A), WHILE DELETING THE P ENALTY HAS OBSERVED AS FOLLOWS: 5.4. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HIM/HER IN THE PENALTY ORDER AS WELL AS IN THE REMAND REPORT. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSI ONS OF THE ASSESSEE FIRM AS WELL AS ITS COUNTER COMMENTS ON TH E REPORT OF THE ASSESSING OFFICER. I HAVE FURTHER CONSIDERED THE JU DICIAL PRONOUNCEMENTS AS RELIED UPON BY THE ASSESSING OFFI CER AS WELL AS BY THE ASSESSEE FIRM. ON CAREFUL CONSIDERATION OF T HE PENALTY ORDER, IT HAS BEEN NOTICED THAT THE ASSESSING OFFICER HAS TREATED THE CASH ADVANCE OF RS.20,000/- OR MORE RECEIVED FROM 15 PRO SPECTIVE BUYERS OF VEHICLES AS LOAN OR DEPOSIT WHICH ATTRACT THE PR OVISIONS OF SECTION 269SS OF THE ACT. ON THE OTHER HAND, IT HAS VEHEMEN TLY BEEN SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE AM OUNT RECEIVED FROM PROSPECTIVE BUYERS IN CASH CANNOT BE TREATED B Y ANY STRETCH OF IMAGINATION AS LOAN OR DEPOSIT AS CONTEMPLATED IN T HE PROVISIONS OF SECTION 269SS OF THE ACT. IT HAS ALSO BEEN SUBMITTE D BY THE LD. AR THAT THE ADVANCE WAS RECEIVED AS THERE WAS SHORT SU PPLY OF VEHICLES BY THE COMPANY/MANUFACTURER. IT WAS FURTHER SUBMITT ED THAT IF DUE TO SOME REASON, THE BOOKED VEHICLE IS CANCELLED BY THE PROSPECTIVE BUYER, THE AMOUNT OF ADVANCE IS RETURNED TO THE CUS TOMER WITHOUT MAKING ANY DEDUCTION. IT HAS AGAIN BEEN SUBMITTED T HAT THE ASSESSEE FIRM HAS SHOWN THE AMOUNT UNDER THE HEAD A DVANCE FROM CUSTOMERS AND NEVER TREATED THE ADVANCE AS LOAN OR DEPOSIT. 5.5 ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTI ON, I AM ALSO OF THE CONSIDERED OPINION THAT THE AMOUNT OF ADVANCE R ECEIVED FROM THE PROSPECTIVE BUYERS OF VEHICLES CANNOT BE EQUATED WI TH THE TERM LOAN OR DEPOSIT AS USED IN SECTION 269SS OF THE ACT. MOR EOVER, THE ASSESSEE HAS NEVER TREATED THE AMOUNT OF ADVANCE RE CEIVED FROM CUSTOMERS AS LOAN OR DEPOSIT IN ITS BOOKS OF ACCOUN T. IN NORMAL TERMS ANY LOAN OR DEPOSIT IS TAKEN ON WHICH THE BORROWER OF MONEY GENERALLY PAYS INTEREST TO THE PERSON FROM WHOM THE LOAN OR DEPOSIT IS TAKEN. THE LOAN OR DEPOSIT IS ALSO FOR A FIXED P ERIOD. HOWEVER, IN THE CASE OF THE ASSESSEE FIRM NONE OF THE CONDITION HOLD GOOD FOR CASH ADVANCES RECEIVED FROM PROSPECTIVE BUYERS OF V EHICLES. IN THE CASE OF CIT VS. KHARAITI LAI & CO. (2004) 270 ITR 4 45 (P&H), IT WAS HELD BY THE HONORABLE COURT THAT THE AMOUNT RECEIVE D IN CASH AS AN ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 4 ADVANCE FOR THE PURCHASE OF TRUCK CANNOT BE TREATED AS LOAN OR DEPOSIT UNDER THE PROVISIONS OF SECTION 269SS OF TH E ACT. IN THE CASE OF OMEC ENGINEERS VS CIT (2007) 294 ITR 599 (JHARKH AND), THE HONORABLE COURT HAS CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER (WHICH WAS ALSO CONFIRMED BY THE CIT(A) AND ITAT) UNDER SECTION 27ID OF THE ACT AS THERE WAS NO FINDING OF THE ASSESSING OFFICER, CIT(A) OR TRIBUNAL THAT THE TRANSACTIONS I N VIOLATION OF SECTION 269SS OF THE ACT WERE NOT GENUINE, ASSESSEES RETUR N HAVING BEEN ACCEPTED UNDER SECTION 143(3) AFTER SCRUTINY, THERE BEING ALSO NO FINDING THAT TRANSACTIONS WERE MALA FIDE AND AIMED AT DISCLOSING CONCEALED INCOME. IT WAS FURTHER HELD THAT THE IMPO SITION OF PENALTY UNDER SECTION 27 ID OF THE ACT MERELY FOR TECHNICAL MISTAKE COULD NOT BE SUSTAINED. IN THE CASE OF CIT VS. KAILASH TRIPLE STERILIZED WATER (CHENNAI) (P) LIMITED (2008) 215 CTR (MAD.) 198, TH E HONORABLE COURT HAS HELD THAT THE TRIBUNAL HAVING FOUND AS A FACT THAT CASH WAS RECEIVED BY ASSESSEE ON ACCOUNT OF SALE AND THE SAME WAS SHOWN IN THE BOOKS AS TRADE CREDIT, THERE WAS NO VI OLATION OF S. 269SS SO AS TO ATTRACT PENALTY UNDER S. 27ID. AGAIN IN THE CASE OF CIT AND ANOTHER VS. KAILASH CHANDRA DEEPAK KUMAR (2 009) 317 ITR 351 (ALL.), THE HONORABLE COURT HAS HELD THAT SEC. 269SS IS APPLICABLE ONLY IN CASE OF LOAN OR DEPOSIT AND DOES NOT COVER CASH ADVANCE RECEIVED FOR THE PURPOSE OF SUPPLY OF GOODS; ASSESS EE HAVING RECEIVED THE AMOUNT OF RS. 1 LAKH IN CASH FROM A PA RTY AS AN ADVANCE AGAINST SALE OF GOODS AND LATER SUPPLIED GO ODS TO IT AGAINST THE SAID ADVANCE, PROVISION OF S. 269SS ARE NOT APP LICABLE AND THEREFORE, PENALTY UNDER S. 271D IS NOT LEVIABLE. 5.5 IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE A MOUNT OF CASH ADVANCE RECEIVED FROM THE PROSPECTIVE BUYERS OF VEH ICLES CANNOT BE EQUATED WITH THE TERM LOAN OR DEPOSIT AS USED IN SE CTION 269SS OF THE ACT. I AM ALSO OF THE OPINION THAT THE ACTION O F THE ASSESSEE IN ACCEPTANCE OF AMOUNT IN CASH FROM PROSPECTIVE BUYER S OF VEHICLES CANNOT BE SAID TO BE IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. MOREOVER, THE ADVANCE HAS BEEN RECEIVED IN THE NORMAL COURSE OF DAY TO DAY BUSINESS. THE JUDICIAL PRONOUN CEMENTS RELIED UPON BY THE ASSESSING OFFICER HAVE ALTOGETHER DIFFE RENT FACTS AS IN NONE OF THE CASE THE ADVANCE RECEIVED FROM CUSTOMER S HAS BEEN TREATED AS LOAN OR DEPOSIT UNDER THE PROVISIONS OF SECTION 269SS OF THE ACT. HOWEVER, THE JUDICIAL PRONOUNCEMENTS RELIE D UPON BY THE ASSESSEE SUPPORT ITS CASE. THERE IS ALSO NO FINDING ON THE PART OF ASSESSING OFFICER THAT THE TRANSACTIONS ARE NOT GEN UINE ALTHOUGH THE ASSESSMENT IN THE CASE OF THE ASSESSEE HAS BEEN COM PLETED UNDER SECTION 143(3) OF THE ACT. THUS, LOOKING TO THE TOT ALITY OF FACTS AS STATED ABOVE AND THE RATIO OF VARIOUS JUDICIAL PRON OUNCEMENTS (SUPRA), I AM OF THE CONSIDERED OPINION THAT THE AS SESSING OFFICER IS ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 5 NOT JUSTIFIED IN LEVYING PENALTY IN THE CASE OF THE ASSESSEE FIRM UNDER SECTION 27ID OF THE ACT BY TREATING THE CASH ADVANC E FROM PROSPECTIVE BUYERS OF VEHICLES AS VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE PENALTY LEVIED BY THE ASSESSING OFFICER AT RS. 12,00,513/- UNDER SECTION 271D OF THE ACT IS , THEREFORE, DIRECTED TO BE DELETED. IN THE RESULT, GROUNDS NO. 1 AND 2 OF APPEAL TAKEN BY THE ASSESSEE FIRM ARE ALLOWED. 6. THE GROUND NO. 3 OF APPEAL TAKEN BY THE ASSESSEE FIRM IS GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 7. THUS, THE LD. CIT(A) HAS AGREED WITH THE ASSESSE ES CONTENTION THAT THE ADVANCE RECEIVED FROM THE PROSPECTIVE BUYERS OF VEHICLES CANNOT BE SAID TO BE A LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269SS OF THE ACT, SO AS TO ATTRACT THE PENALTY U/S 271D OF THE ACT FOR VIOLATION OF ITS PROVISIONS. IT REMAINS UNDISPUTED THAT THE ASSESSEE NEVER TREATED THE ADVANCE RECEIVED AS EITHER LOAN OR DEPOSIT IN ITS B OOKS OF ACCOUNT. THE INTENTION OF THE ASSESSEE, IS, THEREFORE, SELF EVID ENT. 8. THE LD. DR HAS SOUGHT TO PLACE RELIANCE ON CHA UBEY OVERSEAS CORPORATION VS. CIT, 303 ITR 9 (ALL.), WHEREIN THE TRIBUNAL WHILE CONFIRMING THE PENALTY UNDER SECTION 271E OF THE AC T TOOK THE VIEW THAT SECTION 269T IS APPLICABLE TO EVERY KIND OF DEPOS IT AND THERE IS NO DIFFERENCE BETWEEN A TRADE DEPOSIT OR BUSINESS DEPOSIT OR DEPOSIT. THIS ORDER WAS UPHELD BY THE HONBLE HIGH COURT. AS AGAINST THIS, THE LD. CIT(A) HAS RELIED ON CIT VS. KAILASH TRIPLE STERL IZED WATER (CHENNAI) (P) LIMITED, 215 CTR (MAD.) 198, WHEREIN IT WAS HELD T HAT THE TRIBUNAL HAVING FOUND AS A FACT THAT CASH WAS RECEIVED BY TH E ASSESSEE ON ACCOUNT OF SALE AND THE SAME WAS SHOWN IN THE BOOKS AS TRAD E CREDIT, THERE WAS ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 6 NO VIOLATION OF SECTION 269SS SO AS TO ATTRACT PENA LTY UNDER SECTION 271D. THE LD. CIT(A) HELD THAT SECTION 269SS IS AP PLICABLE ONLY IN THE CASE OF LOAN OR DEPOSIT AND IT DOES NOT COVER CASH ADVANCE RECEIVED FOR THE PURPOSE OF SUPPLY OF GOODS. 9. IN VIEW OF CIT VS. VEGETABLE PRODUCTS LTD., 8 8 ITR 192 (SC), WHERE THERE ARE DIVERGENT OPINIONS OF DIFFERENT HI GH COURTS, THE VIEW IN FAVOUR OF THE ASSESSEE NEEDS TO BE FOLLOWED. THEREF ORE, RELIANCE BY THE LD. DR ON CHAUBEY OVERSEAS CORPORATION, IS OF NO AVA IL AND IS REJECTED. 10. THE LD. CIT(A) HAS PLACED RELIANCE ON VARIOUS CASE LAWS TO HOLD IN FAVOUR OF THE ASSESSEE. THE LD. CIT(A) HAS TRIED TO DISTINGUISH THESE DECISIONS BY STATING THAT IN ALL THOSE CASES, THE G OODS WERE DELIVERED, WHEREAS IT IS NOT SO IN THE CASE AT HAND. WE ARE UN ABLE TO COMPREHEND AS TO HOW THIS WOULD MAKE A DIFFERENCE. THE ISSUE AS TO WHETHER THE AMOUNT ADVANCED IS OR IS NOT A LOAN OR DEPOSIT WITH IN THE MEANING OF SECTION 269SS, THE VIOLATION OF WHICH, WOULD ATTRAC T PENALTY U/S 271D OF THE ACT. IT REMAINS UNCONTROVERTED THAT THE AMOUNTS RECEIVED AS ADVANCES WERE, IN FACT, BUSINESS ADVANTAGE AS TAKEN BY THE LD. CIT(A) ALSO. THESE WERE BOOKING ADVANCES RECEIVED IN CASH FROM PROSPECTIVE BUYERS OF THE CARS. AS RIGHTLY HELD BY THE LD. CIT( A), THE PROVISIONS OF SECTION 269SS ARE APPLICABLE ONLY IN CASES OF LOA N OR DEPOSIT AND THAT CASH ADVANCES RECEIVED FOR THE PURPOSES OF SUPPLY OF GOODS DO NOT STAND COVERED. THE LD. CIT(A) HAS TAKEN DUE NOTE OF THE F ACT THAT THE ADVANCES ITA NO.511(ASR)/2014 ASSESSMENT YEAR: 2010-11 7 WERE RECEIVED BY THE ASSESSEE IN THE NORMAL COURSE OF DAY TO DAY BUSINESS. THE AO HAD ALSO NOT FOUND THE TRANSACTION S NOT TO BE GENUINE. 11. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ERROR WHATSOEVER, IN THE ORDER OF THE LD. CIT(A). THE SAM E, THEREFORE, DOES NOT REQUIRE ANY INFERENCE AT OUR HANDS. HENCE, THE ORD ER APPEAL IS CONFIRMED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/05/ 2 016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. HOSHIARPUR AUTOMOBILES, HOSHIARPU R. 2. THE ACIT, HOSHIARPUR RANGE, HOSHIARPUR. 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.