M.Mala Kondaiah, Hyderabad V. The Addl.CIT, Central Range, Visakhapatnam

ITA 523/HYD/2011

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3772 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 28-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Document seized; Reasonable cause; Corroborative evidences; Documents seized; Set aside
• Section: 271D; 201; 132; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 5 22 - 524 / HYD /201 1 ( / A . Y S : 200 2 - 0 3, 2004 - 05 & 2006 - 07 RESPECTIVELY ) M.MALA KONDAIAH #B - 65, JOURNALIST COLONY JUBILEE HILLS HYDERABAD [PAN : ADUPM0073A] VS. ADDL.COMMISSIONER OF INCOME TAX CENTRAL RANGE VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI A.V.RAGHURAM , AR / RESPONDENT BY : S MT.SUMAN MALIK, D R / DATE OF HEARING : 31 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT : 30 .0 8 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], VIJAYAWADA DATED 13.01.2011 FOR THE ASSESSMENT YEAR (A.Y.)2002 - 03, 2004 - 05 AND 2006 - 07 . SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON, THESE APPEALS ARE 2 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD CLUBBED, HEARD TOGETHER AND A COMMON ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AS UNDER. 2. IN THE INSTANT CASE , THE ADDL.COMMISSIONER OF INCOME TAX, RANGE - 1, VISAKHAPATNAM (AO) HAS PASSED PENALTY ORDERS FOR THE A.Y. 2002 - 03, 2 004 - 05 AND 2006 - 07 LEVYING PENALTY U/S 271D OF THE ACT AS PER THE DETAILS GIVEN BELOW : A.Y. PENALTY (RS.) 2002 - 03 3,58,04,875 2004 - 05 8,80,000 2006 - 07 61,05,000 THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) ALLOWED PARTIAL RELIEF. THE LD.CIT(A) CONFIRMED THE PENALTY OF RS.2 LAKHS FOR THE A.Y.2002 - 03 AGAINST THE LEVY OF PENALTY OF RS.3,58,04,875/ - , FOR THE A.Y. 2004 - 05, THE LD.CIT(A) CONFIRMED THE PENALTY OF RS.1,20,000/ - AGAINST THE LEVY OF PENALTY OF RS.8,80,000/ - AND FOR T HE A.Y. 2006 - 07 THE LD.CIT(A) CONFIRMED THE PENALTY OF RS.12,00,000/ - AGAINST THE LEVY OF PENALTY OF RS.61,05,000/ - . 2.1. AGAINST THE ORDER PASSED BY THE LD.CIT(A), THE DEPARTMENT HAS FILED APPEAL BEFORE ITAT, VISAKHAPATNAM, WHICH WAS DISPOSED OFF BY AN O RDER 3 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD DATED 09.092011. THE ASSESSEE HAS FILED APPEAL BEFORE ITAT, HYDERABAD AND THE RECORDS WERE TRANSFERRED FROM ITAT, HYDERABAD TO ITAT, VISAKHAPATNAM IN NOVEMBER 2017. SUBSEQUENTLY, THE CASE WAS FIXED FOR HEARING ON VARIOUS DATES. IN THE INSTANT CASE, AS DISCUSSED EARLIER, THE REVENUE APPEALS WERE DISPOSED OFF WITHOUT HEARING THE ASSESSEES CASE AND THE ASSESSEES APPEALS REMAINED PENDING. DURING THE APPEAL HEARING, THE LD.AR FILED AFFIDAVIT STATING THE FACT OF PENDENCY OF ASSESSEES APPEALS AT ITAT HYDERABAD WAS BROUGHT TO THE NOTICE OF THE ITAT AT THE TIME OF HEARING THE DEPARTMENTAL APPEALS. BOTH THE LD.AR AND THE LD.DR SUBMITTED THAT THE ISSUES INVOLVED IN THE ASSESSEES APPEALS AND THE REVENUE APPEALS ARE INDEPENDENT. WE HAVE ALSO GONE THROUGH TH E GROUNDS OF THE CASE AND OBSERVE THAT THE ISSUES IN THE ASSESSEES APPEALS ARE INDEPENDENT OF THE DEPARTMEN TS APPEALS AND NOT INTER LINKED. THE DEPARTMENT ALSO DID NOT FILE MISCELLANEOUS APPLICATION FOR RECALLING AND CLUBBING THE APPEALS. HENCE, THE ASSESSEES APPEALS ARE TAKEN UP FOR ADJUDICATION. 3. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE PENALTY LEVI ED U/S 271D OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. A SEARCH U/S 132 WAS CONDUCTED IN THE PREMISES 4 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD OF M/S R.K.TOWNSHIP PROMOTERS PVT. LTD.(COMPANY) ON 12.12.2005 AND DURING THE COURSE OF S EARCH CERTAIN INCRIMINATING MATERIAL WAS FOUND AND SEIZED WHICH WAS IDENTIFIED AS FOLLOWS : SL.NO. SEIZED ITEMS 1. A/RK/RJAY/21 (PAGE NO.45 TO 51) 2. A/RKTSP/10 (PAGE NO. 154 TO 161) 3. A/RK/TSP/P019(PAGE NO.30) 4. AB/RKTP/16 (PAGE NOS.51,55,58) 5. ABC/RKTP/4(PAGE NOS. 22 TO 25/7 6. ABC/RKTP (PAGE NOS.22 TO 25) 7. A/CUB/4(PAGE NO.24 TO 46) 8. AB/RKTP/5(PAGE NO.31 TO 45) 9. AB/RKTP/30 10. A/RKTS/PKM/VSP/05 - 06 BUNDLE 9 - 92 3.1. FROM THE SEIZED MATERIAL, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAS TAKEN HAND LOANS ON PROMISSORY NOTES AND CERTAIN AMOUNTS WERE ALSO REPAID IN CASH. FOR THE A.Y.2002 - 03, FROM THE SEIZED MATERIAL MARKED AS ANNEXURE AB/RKTP/30, IT IS REVEALED THAT THE ASSESSEE HAD ACCEPTED THE LOAN OF RS.2,00,000/ - FROM SRI K.MALLESH AS PER TABLE 9 OF THE PENALTY ORDER. THE AO HAS GIVEN THE YEAR WISE BREAKUP OF THE LOANS TAKEN DURING THE PREVIOUS YEAR RELEVANT TO THE A.YS 2002 - 03, 2004 - 05 AND 2006 - 07 IN PAGE NO.14 TO 16, TABLE NO.9 OF THE PENALTY ORDER. SINCE THE ASSESSEE HA S ACCEPTED THE CASH LOANS, THE ADDL.CIT, CENTRAL RANGE, VISAKHAPATNAM (AO) INITIATED THE PENALTY U/S 271D AND HAS ASKED THE ASSESSEE AS TO WHY 5 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD THE PENALTY SHOULD NOT BE LEVIED AGAINST THE ASSESSEE U/S 271D OF THE ACT FOR VIOLATION OF PROVISIONS U/S 269SS OF THE ACT . THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE AMOUNTS MENTIONED IN THE SEIZED MATERIAL W ERE RELATED TO ADVANCES OF THE COMPANY BUT NOT PERTAINED TO HIM. THE ASSESSEE SUBMITTED THAT HE IS BEING THE MANAGING DIRECTOR OF THE COMPANY WHICH IS ENGAGED IN THE REAL ESTATE BUSINESS AND ACCEPTED THE LOANS / PLOT ADVANCES ON BEHALF OF THE COMPANY AND NONE OF THE TRANSACTIONS WERE RELATED TO HIM , ALL PERTAINED TO THE COMPANY AND FURTHER SUBMITTED THAT A LL THE AMOUNTS OF ADVANCES FOUND AS PER THE SEIZED MATERIAL WERE RELATED TO THE ADVANCES FOR SALE OF PLOTS OF THE COMPANY , HENCE THERE IS NO CASE FOR LEVY OF PENALTY ON HIM. DUE TO NON ALLOTMENT OF PLOTS TO THE BUYERS, THE AMOUNTS WERE STATED TO BE OUTSTANDING AND PROMISSORY NOTES WERE GIVEN AS SECURITY. THEREFORE, ARGU ED THAT SINCE THE TRANSACTIONS WE RE RELATED TO THE COMPANY, THE PENALTY IS NOT PERMISSIBLE TO BE LEVIED ON THE ASSESSEE. HOWEVER, TH E AO DID NOT FIND MERIT IN THE ARGUMENT OF THE ASSESSEE SINCE, THE ASSESSEE FAILED TO ESTABLISH THAT THE TRANSACTIONS IN QUESTION WERE RELATED TO THE COMPANY BUT NOT RELATED TO THE ASSESSEE AND THUS LEVIED THE PENALTY U/S 271D R.W.S. 269SS OF THE A CT FOR THE A. Y .S 2 002 - 03,2004 - 05 AND 2006 - 07. THE FACTS ARE 6 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD IDENTICAL FOR THE REMAINING YEARS OF 2004 - 05 AND 2006 - 07. THE ASSESSMENT YEAR WISE DETAILS OF PENALTIES IN APPEAL BEFORE THE ITAT ARE AS UNDER : A.Y. PENALTY LEVIED (RS.) 2002 - 03 2,00,000 2004 - 05 1,20,000 2006 - 07 12,00,000 A.Y:2002 - 03 5. IN THE ASSESSMENT YEAR 2002 - 03, THE ASSESSEE HAD ACCEPTED THE CASH LOAN OF RS.2,00,000/ - ON 28.06.2001 FROM SRI K.MALLESH AS PER TABLE 9 OF THE PENALTY ORDER AND SEIZED DOCUM ENT MARKED AS ANNEXURE AB/RKTP/ 3 0 . THE ASSE SSEE HAS EXPLAINED BEFORE THE ADDL.CIT ( AO ) THAT THE AMOUNT WAS RELATED TO THE R.K.TOWNSHIPS(P) LTD. RELATING TO THE PLOT ADVANCES RECEIVED FROM K.MALLESH BUT NOT RELATED TO HIM. HENCE, SUBMITTED THAT THE PENALTY IS NOT LEVIABLE AGAINST THE ASSESSEE. 5. 1. NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, AO LEVIED THE PENALTY U/S 271D R.W.S. 269SS OF THE ACT AND THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE PENALTY. THE LD.CIT(A) FOUND AS PER THE PRO NOTE EXECUTED BY THE ASSESSEE, THE MONEY WAS RECEIVED BY THE ASSESSEE ON 28.06.2001 AS CASH LOAN . DURING THE APPEAL PROCEEDINGS, THE LD.CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO 7 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD TO VERIFY WHETHER THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY, M/S R.K.TO WNSHIP PROMOTERS (P) LTD OR NOT ? AND THE AO HAS SUBMITTED THE REMAND REPORT GIVING THE FINDING THAT THE AMOUNT OF RS.2.00 LAKHS WAS NEITHER RECORDED IN THE COMPANYS BOOKS OF ACCOUNTS NOR FOUND ANY EVIDENCE IN THE SEIZED MATERIAL TO SUBSTANTIATE THAT THE TRANSACTION WAS RELATED TO THE COMPANY, HENCE THE AO WAS OF THE VIEW THAT T HE CLAIM OF THE ASSESSEE THAT THE TRANSACTION WAS RELATED TO THE COMPANY WAS NOT ESTABLISHED. DURING THE APPEAL PROCEEDINGS, THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT(A) THAT THE COMPANY HAD PURCHASED THE LAND FROM K.MALLESH AND THERE WAS NO ADEQUAT E FUNDS AVAILABLE WITH THE COMPANY TO MAKE THE PAYMENT OF SALE CONSIDERATION, HENCE THE ASSESSEE HAS GIVEN PROMISSORY NOTE TO K.MALLESH TOWARDS THE BALANCE SALE CONSIDERATION AND FURTHER SUBMITTED THAT THE PRO - NOTE WAS SIGNED BY THE ASSESSEE ON BEHALF O F THE COMPANY. THE LD.CIT(A) PERUSED THE PROMISSORY NOTE AND FOUND THAT THE ASSESSEE WAS UNABLE TO DEMONSTRATE THAT THE LOAN TRANSACTION WAS RECORDED IN THE BOOKS OF ACCOUNTS OR THE ASSESSEE HAS GIVEN PRO NOTE TOWARDS THE BALANCE SALE CONSIDERATION FOR PU RCHASE OF THE PROPERTY. THEREFORE, HELD THAT LEVY OF PENALTY U/S 271D IN RESPECT OF THE LOAN ACCEPTED FROM K.MALLESH IS JUSTIFIED AND ACCORDINGLY CONFIRMED THE PENALTY. 8 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD 6. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNA L. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY, HENCE THE PENALTY IS NOT LEVIABLE IN THE ASSESSEES CASE. THE LD.AR TAKEN OUR ATTENTION TO PAGE NO.75, 44 AND 86 OF THE PAPER BOOK AND ARGUED THA T THE TRANSACTIONS WERE RELATED TO THE COMPANY BUT NOT RELATED TO THE ASSESSEE. THE LD.AR CONTENDED THAT PAGE NO.75, THE COPY OF SALE AGREEMENT WHICH PROVES THAT THE COMPANY HAS PURCHASED THE LAND FROM K.MALLESH AND OTHERS ON 27.06.2001. PAGE NO.44 ESTABL ISHES THAT THE COMPANY HAS REPAID THE AMOUNT TO THE ASSESSEE. THEREFORE, SUBMITTED THAT THE PRO - NOTE WAS RELATED TO THE COMPANY BUT NOT PERTAINING TO THE ASSESSEE, HENCE, REQUESTED TO CANCEL THE PENALTY. 7. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE RELEVANT PAGES REFERRED BY THE AR IN RESPECT OF LOAN TAKEN FROM K.MALLESH WAS COPY OF THE SALE DEED IN PAGE NO.75 TO 85, PAGE NO.44 LEDGER ACCOUNT OF K.MALLESH, PAGE NO.86 PROMISSORY NOTE GIVEN BY THE 9 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD ASSESSEE TO K.MALLESH ON 30.04.2005. AS PER THE RECITALS OF THE SALE DEED DATED 27.06.20 01 BETWEEN K.MALLESH AND OTHERS AND THE COMPANY, SHRI K.MALLESH AND OTHERS HAVE SOLD AGRICULTURAL LAND TO THE COMPANY FOR A SUM OF RS.6,87,500/ - AND THE ENTIRE SUM WAS PAID AND ACKNOWLEDGED BY THE COMPANY (PAGE NO.80 OF THE PAPER BOOK) . N O AMOUNT WAS OUTS TANDING AS PER THE RECITALS OF THE SALE DEED. THERE WAS NO MENTION WITH REGARD TO THE FACT THAT THE MANAGING DIRECTOR HAS GIVEN PROMISSORY NOTE TOWARDS PART OF SALE CONSIDERATION IN THE SALE DEED. AS OBSERVED BY THE LD.CIT(A), THERE WAS NO ENTRY IN THE C OMPANYS BOOKS OF ACCOUNTS WITH REGARD TO AMOUNTS RECEIVED FROM SRI K.MALLESH FOR PENDING SALE CONSIDERATION. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTIONS WERE RELATED TO THE COMPANY IN RESPECT OF SALE TRANSACTIO N OF AGREEMENT CUM GPA DATED 27.06.2001 . PAGE NO.44 OF THE PAPER BOOK SHOWS THAT THE COMPANY HAS REFUNDED THE PLOT ADVANCE, BUT NOT THE BALANCE SALE CONSIDERATION. THE ACCOUNT ALSO DOES NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR, BUT RELATED TO THE FINAN CIAL YEAR 01.04.2005 TO 31.03.2006 RELEVANT TO THE A.Y. 2006 - 07. THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO ESTABLISH THAT THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY, BUT NOT RELATED TO HIM. THERE IS NO DISPUTE THAT THE ASSESSEE HAS GIVEN 10 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD P ROMISSORY NOTE AND ACCEPTED THE LOAN IN CASH IN VIOLATION OF PROVISION 269SS OF THE ACT. THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTION WAS RELATED TO THE COMPANY WAS NOT ESTABLISHED WITH ANY TANGIBLE EVIDENCE. THEREFORE, WE HOLD THAT THE LD.CIT(A) H AS RIGHTLY UPHELD THE ORDER OF THE AO AND CONFIRMED THE PENALTY IMPOSED U/S 271D R.W.S. 269SS OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE FOR THE A.Y.2002 - 03. A.Y. 2004 - 05 9. FOR THE A.Y.2004 - 05 , AS PER THE SEIZED DOCUMENTS THE ASSESSEE HAS RECEIVED THE CASH LOANS OF RS.1,20,000/ - AS PER THE DETAILS GIVEN BELOW : MR TPS RAO 12.01.2004 RS.60,000/ - MISS T.SHRAVANI 12.01.2004 RS.60,000/ - THE AO LEVIED THE PENALTY U/S 271D OF THE ACT FOR ACCEPTING TH E CASH LOANS AND THE LD.CIT(A) CONFIRMED THE PENALTY OBSERVING THAT THE ASSESSEE HAS ACCEPTED THAT HE HAS RAISED THE FUNDS IN CASH FOR LAND ADVANCES FROM SEVERAL PERSONS IN HIS INDIVIDUAL CAPACITY FOR THE COMPANY. ALL THE TRANSACTIONS WERE STATED TO HAVE BEEN ENTERED INTO BY HIM ON BEHALF OF THE COMPANY, BEING THE MANAGING DIRECTOR AND CLAIMED THAT ALL THE TRANSACTIONS WERE RECORDED IN THE COMPANYS BOOKS OF ACCOUNTS. THE LD.CIT(A) CALLED 1 1 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD FOR THE REMAND REPORT FROM THE AO AND THE AO HAS VERIFIED THE CONT ENTION OF THE ASSESSEE AND FOUND THAT THE TRANSACTIONS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE COMPANY. THEREFORE, THE LD.CIT(A) REJECTED THE ASSESSEES CONTENTION THAT THE TRANSACTION WITH MR.TPS RAO AND M S . T.SHRAVANI WERE RELATED THE COMPA NY AND CONFIRMED THE PENALTY OF RS.1,20,000/ - U/S 271D R.W.S 269SS OF THE ACT. 9.1. DURING THE APPEAL HEARING, THE LD.AR REITERATED THE ARGUMENTS MADE BEFORE THE LD.CIT(A) AND STATED THAT THE TRANSACTIONS IN QUESTION WERE RELATED TO THE COMPANY, BUT NO T RELATED TO THE ASSESSEE, THUS PENALTY IS NOT LEVIABLE IN HIS HANDS. REFERRING TO PAGE NO.71 AND 72 OF THE PAPER BOOK, THE LD.AR SUBMITTED THAT PAGE NO.71 IS ACCOUNT OF THE COMPANY OF SHRI TPS RAO IN THE BOOKS OF THE COMPANY AND AS PER WHICH THE COMPANY HAS REFUNDED THE SUM OF RS.1,35,000/ - TO SHRI TPS RAO ON 01.09.2005. SIMILARLY, AS PER PAGE NO.72 OF THE PAPER BOOK IN THE LEDGER ACCOUNT, THE COMPANY HAS REFUNDED THE PLOT ADVANCE OF RS.1,35,000/ - TO MS T.SHRAVANI. SINCE THERE WAS AN OUTSTANDING BALANCES IN THE NAMES OF SHRI RAO AND SHRAVANI AND THE COMPANY HAS REFUNDED THE ADVANCES TO THE CREDITORS , T HE LD.AR ARGUED THAT THE TRANSACTIONS IN QUESTION WERE RELATED TO THE COMPANY, BUT NOT 12 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD RELATED TO THE ASSESSEE. THEREFORE, REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND CANCEL THE PENALTY LEVIED BY THE AO. 10. PER CONTRA, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS RECEIVED CASH LOANS FROM MR.TPS RAO AND MS. T.SHRAVANI AS EVIDENCED FROM THE SEIZED MATERIAL. THE CONTENTION OF THE ASSESSEE IS THAT THE CASH LOANS WERE RELATED TO THE COMPANY, BUT NOT TO THE ASSESSEE. EXCEPT THE LEDGER ACCOUNTS IN THE BOOKS OF THE COM P A N Y, THE ASSESSEE DID NOT PLACE ANY CORROBORATIVE EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAS TAKEN THE CASH LOANS FOR THE COMPANY. PAGE NO.71 AND 72 OF THE PAPER BOOK ARE THE LEDGER ACCOUNT COPIES OF SHRI T . P . S . RAO AND SHRAVANI FOR THE PERIOD 01.04.200 5 TO 31.03.2006 RELEVANT TO THE A.Y. 2006 - 07, BUT NOT RELEVANT THE ASSESSMENT YEAR 2004 - 05. THERE WAS NO OTHER EVIDENCE PLACED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES TO SHOW THAT THE LOANS WERE ACCEPTED IN 2004 - 05 FROM MR.TPS RAO AND MS T.SHRAVANI O N BEHALF OF THE COMPANY. IN THE REMAND REPORT, THE AO VERIFIED THE BOOKS OF ACCOUNTS OF THE COMPANY AND THE SEIZED MATERIAL AND CONFIRMED THE FACT THAT THESE TRANSACTIONS WERE NOT RECORDED IN THE 13 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD COMPANYS BOOKS. THE COPIES OF THE LEDGER ACCOUNTS PLACED IN THE PAPER BOOK SHOWS THE OPENING BALANCE OF RS.85,000/ - IN BOTH THE CASES WHERE AS THE LOAN ACCEPTED BY THE ASSESSEE WAS RS.60,000/ - IN EACH CASE. THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE TO CORROBORATE THAT THE SAME WERE RELATED TO THE PLOT ADVANCES OF THE COMPANY. THE AO IN THE REMAND REPORT FOUND THAT THERE IS NO CORROBORATIVE EVIDENCE TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE LOANS WERE RELATED TO THE COMPANY. THE LEDGER ACCOUNT COPIES ALONE CANNOT ESTABLISH THAT LOANS ACCEP TED BY THE ASSESSEE WERE RELATED TO THE COMPANY. THE ENTRIES OF THE BOOKS OF ACCOUNTS OF THE COMPANY AND THE SEIZED DOCUMENTS SHOULD SUPPORT THE CONTENTION OF THE ASSESSEE. AGAINST THE OPENING BALANCE OF RS.85,000/ - AS ON 01.04.2005 IN THE BOOKS OF THE COM PANY, THE COMPANY HAS REFUNDED THE SUM OF RS.1,35,000/ - AND SHOWN CLOSING BALANCE OF RS.50,000/ - . THE OPENING BALANCE IN THE COMPANYS ACCOUNTS, THE AMOUNT REFUNDED TO SHRI RAO AND SHRAVANI AND THE CASH LOANS OF RS.60,000/ - EACH DOES NOT MATCH WITH THE EXP LANATION AND THE ENTRIES IN THE BOOKS OF ACCOUNTS OF THE COMPANY AND THE CLA I M OF THE ASSESSEE. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE WITH SUPPORTING EVIDENCE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTIONS WERE RELATED TO THE COMPANY. THEREFORE, WE HOLD THAT 14 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD THE ASSESSEE FAILED TO ESTABLISH WITH TANGIBLE EVIDENCE THAT THE TRANSACTIONS WERE PERTAINING TO THE COMPANY, BUT NOT TO THE ASSESSEE. THE ASSESSEE ALSO FAILED TO ASSIGN REASONABLE CAUSE FOR ACCEPTING THE LOAN IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A), HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND UPHOLD THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 2006 - 07 12. IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS ACCEPTED THE CASH LOANS AS UNDER : K.MALLESH 30.04.2005 RS.1,00,000/ - P.RAYAPPA 25.11.2005 RS.11,00,000/ - THE AO LEVIED PENALTY U/S 271D R.W.S. 269SS OF THE ACT AND THE LD.CIT(A) CONFIRMED THE PENALT IES, SINCE THE ASSESSEE FAILED TO ESTABLISH THAT THE SUM OF RS.12 LAKHS I.E. RS.11 LAKHS FROM SHRI RAYAPPA AND RS.1.00 LAKH FROM SHRI K.MALLESH WAS RELATED TO THE COMPANY. THE ASSESSEE HAD ACCEPTED THE CASH LOANS IN VIOLATION OF PROVISIONS OF SECTION 26 9SS OF THE ACT. HENCE, THE LD.CIT(A) UPHELD THE PENALTY LEVIED BY THE AO AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 15 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD 13. DURING THE APPEAL HEARING, THE LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD.CIT(A) AND ARGUED THAT THE TRANSACTIONS WER E RELATED TO THE COMPANY, BUT NOT TO THE ASSESSEE. THE ASSESSEE HAS TAKEN REFERENCE TO PAGE NO.44, 86, 87 AND 80 OF THE PAPER BOOK IN RESPECT OF THE LOANS RECEIVED FROM K MALLESH. PAGE NO.86 AND 87 OF THE PAPER BOOK ARE COP IES OF PROMISSORY NOTE S DATED 30.0 4.2005 FOR RS.1 LAKH EACH. IT APPEARED THAT PAGE 87 IS THE DUPLICATE OF PAGE 86. AS PER THE CONTENTS OF THE PROMISSORY NOTE, THE ASSESSEE HAD RECEIVED RS. 1.00 LAKHS ON 30.04.2005 WHICH WAS ACKNOWLEDGED BY THE ASSESSEE. PAGE NO.80 OF THE PAPER BOOK IS COP Y OF SALE DEED DATED 27.06.2001, WHEREIN, THE COMPANY HAD ACKNOWLEDGED THE PAYMENT OF SALE CONSIDERATION TO K.MALLESH. THERE WAS NO MENTION WITH REGARD TO OUTSTANDING BALANCE IF ANY, TO BE PAID TO SHRI K.MALLESH IN THE AGREEMENT OF SALE CUM IRREVOCABLE GP A DATED 27.06.2001. THEREFORE, SALE AGREEMENT DATED 27.6.2001 HAS NO RELEVANCE TO THE PRESENT LOAN TRANSACTION. ACCORDINGLY, THE CONTENTION OF THE ASSESSEE THAT HE HAS SIGNED THE PROMISSORY NOTE FOR PARTIAL SALE CONSIDERATION IS NOT ACCEPTABLE AND REJEC TED. AS PER THE CONTENTS OF THE PROMISSORY NOTES, THE ASSESSEE HAD RECEIVED THE SUM OF RS.1,00,000/ - FROM K.MALLESH ON 30.04.2005. PAGE NO.44 ALSO DOES NOT INDICATE THE PAYMENT TOWARDS THE LOAN RECEIVED BY THE 16 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD ASSESSEE. IT REPRESENTS THE REFUND OF PLO T A DVANCES TO SRI K.MALLESH BY THE COMPANY. AGAINST THE REFUND OF THE AMOUNT IN THE LEDGER ACCOUNT ON 16.04.2005 THE PROMISSORY NOTE WAS DATED 30.04.2005 SUBSEQUENT TO THE REFUND OF 1 ST INSTALMENT WHICH IS UNLIKELY . THE ASSESSEE DID NOT PLACE ANY EVIDENCE TO SUPPORT HIS CONTENTION THAT THE PROMISSORY NOTE WAS GIVEN IN RESPECT OF TRANSACTION OF THE COMPANY. THE CONTENTION OF THE ASSESSEE WAS NOT SUPPORTED BY THE BOOKS OF ACCOUNTS AND THE FINANCIAL STATEMENTS OF THE COMPANY. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE AND AGREE WITH THE FINDING OF THE LD.CIT(A) THAT THE ASSESSEE FAILED TO ESTABLISH THAT THE TRANSACTIONS IN QUESTION WERE RELATED THE COMPANY AND ACCORDINGLY WE, HOLD THAT THE ASSESSEE HAS ACCEPTED TH E CASH LOAN OF RS. 1.00 LAKHS FROM K.MALLESH IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT AND THE AO HAS RIGHTLY LEVIED THE PENALTY WHICH THE LD.CIT(A) HAS CONFIRMED. THEREFORE, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 14. IN RESPECT OF THE CASH LOAN FROM RAYAPPA, THE ASSESSEE HAS REFERRED PAGE NO.74 AND 75 OF THE PAPER BOOK. PAGE NO.74 WAS THE COPY OF PROMISSORY NOTE WHICH ESTABLISHES THAT THE ASSESSEE HAS TAKEN THE LOAN OF RS.11 LAKHS FROM P.RAYAPPA WHICH WAS ALSO ACKNOWLEDGED BY THE ASSESSEE. 17 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD PAGE NO.73 OF THE PAPER BOOK IS THE COPY OF THE CHEQUE DATED 24.12.2005 STATED TO BE GIVEN FOR REPAYMENT OF THE LOAN AND THE SAME WAS ISSUED BY THE COMPANY. THE CONTENTION OF THE LD.AR IS THAT THIS LOAN WAS TAKEN O N BEHALF OF THE COMPANY WHICH SHOULD BE DEALT IN THE COMPANYS HANDS BUT NOT IN THE ASSESSEES HANDS. FURTHER DURING THE FIRST APPEAL PROCEEDINGS, THE ASSESSEE FAILED TO ESTABLISH THAT THE TRANSACTION WAS RELATED TO THE COMPANY , H ENCE, THE LD.CIT(A) CONFI RMED THE PENALTY. BEFORE US ALSO, EXCEPT PLACING COPY OF THE CHEQUE ISSUED IN FAVOUR OF P.RAYAPPA, THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO SHOW THAT THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY BUT NOT RELATED TO THE ASSESSEE. THE ASSESSEE EVEN FAILED TO FURNISH EVIDENCE TO SHOW THAT THE SAID SUM OF RS.11.00 LAKHS WAS CLEARED IN THE BANK ACCOUNT OF THE COMPANY WITH PARTICULAR ACCOUNT COPY OF THE BANK. IT IS OBLIGATION OF THE ASSESSEE TO ESCAPE FROM THE RIGOURS OF 269SS OF THE ACT TO ESTA BLISH THAT THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY BUT NOT RELATED TO THE ASSESSEE. AS PER THE PROMISSORY NOTE IN PAGE NO.74 OF THE PAPER BOOK, IT IS EVIDENT THAT THE ASSESSEE HAS ACCEPTED THE CASH LOAN FROM SHRI P.RAYAPPA ON 25.11.2005. T HE SAID TRANSACTION WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE COMPANY. REPAYMENT OF LOAN WAS NOT ESTABLISHED WITH THE BANK ACCOUNT OF THE COMPANY. T HE LD.CIT(A) HAS GIVEN 18 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD FINDING THAT THE TRANSACTION WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE COM PANY. AND THE SEIZED MATERIAL ALSO DID NOT ESTABLISH THAT THE AMOUNT WAS RELATED TO THE COMPANY AND DURING THE APPEAL HEARING ALSO, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT THE CHEQUE GIVEN TO P.RAYAPPA FOR RS.11 LAKHS WAS TO SQUARE OFF T HE LOAN RECEIVED BY THE ASSESSEE.. THEREFORE, WE HOLD THAT THE ASSESSEE HAS ACCEPTED THE CASH LOAN OF RS.11 LAKHS FROM P.RAYAPPA IN VIOLATION OF PROVISIONS OF SECTION 269SS AND THERE IS NO EVIDENCE TO ESTABLISH THAT THE TRANSACTION IN QUESTION WAS RELATED TO THE COMPANY, BUT NOT RELATED TO THE ASSESSEE. THE ASSESSEE ALSO FAILED TO SUBMIT REASONABLE CAUSE FOR ACCEPTING THE LOAN OTHERWISE THAN ACCOUNT PAYEE CHEQUE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), A CCORDING LY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEALS OF THE ASSESSEE. 15. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 30 .0 8 .2019 L.RAMA, SPS 19 I.T.A. NO .522 - 52 4/HYD/2011, A.Y.2002 - 03, 2004 - 05 AND 2006 - 07 M. MALA KONDAIAH, HYDERABAD / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M.MALA KONDAIAH , #B - 65, JOURNALIST COLONY , JUBILEE HILLS , HYDERABAD 2. / THE REVENUE - ADDL.COMMISSIONER OF INCOME TAX, CENTRAL RANGE , VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX ( CENTRAL ) , HYDERABAD 4. THE COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM