ITO, New Delhi V. M/s WorthwhileDevelopers Pvt.Ltd., New Delhi

ITA 5323/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81703 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND S HRI GEORGE GEORGE K , JUDICIAL MEMBER ITA NO. 5 3 2 3/DEL/2013 ASSESSMENT YEAR 200 7 - 08 ITO, WARD 18(3) VS. WORTHWHILE DEVELOPERS PVT.LTD. NEW DELHI 304, HIMALAYA, 65, VIJAY BLOCK LAXMI NAGAR, NEW DELHI PAN: AAA CW 3382 J CROSS OBJECTION NO. 109/DEL/2014 (IN ITA 5323/DEL/2013) AY 2007 - 08 WORTHWHILE DEVELOPERS P.LTD. VS. I T O, WARD 18(3) NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY: - SH. GAUTAM JAIN, FCA RESPONDENT BY: - SHRI RAKESH KUMAR, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, AM THIS APPEAL IS FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. CIT(APPEALS) - XXI, NEW DELHI DT. 03.07.2013 P ERTAINING TO THE AY 2007 - 08. THE CROSS OBJECTION IS FILED BY THE ASSESSEE. 2. FACTS OF THE CASE : - THE FACTS ARE BROUGHT OUT AT PARA 3 OF THE PENALTY ORDER PASSED U/S 271 D OF THE ACT DT. 10.3.2012 WHICH ARE EXTRACTED FOR READY REFERENCE. M/S WORTHWHILE DEVELOPERS P.LTD. AND M/S JAI KRISHAN ESTATES P.LTD. MADE A MOU ON 22.3.2005, M/S WORTHWILE DEVELOPERS P.LTD. INVESTED A SUM OF RS.1,49,42 ,151/ - AGAINST PURCHASE OF 7885.04 SQ.FT. SUPER AREA OF 19 SHOPS IN KRISHAN APRA PLAZA. AS PER MOU, M/S JAI KRISHAN ESTATES P.LTD. WAS TO SELL THE SAID SHOPS AT THE PREVAILING MARKET PRICE AND THE SALE PROCEEDS COLLECTED WOULD THEN BE CREDITED BY M/S JAI KRISHAN ESTATES P.LTD. TO THE ACCOUNT OF THE ASSESSEE AND IN LIEU OF THESE SERVICES M/S JAI KRISHAN ESTATES P.LTD. WOULD BE PAID RS.50/ - PER SQ.FT. OF SHOPS SOLD. THE ASSESSEE SHOWN M/S JAI KRISHAN P.LTD. AS DEBTOR FOR RS.66,36,955/ - FOR EARLIER SALE OF SHOPS AND TRANSFERRED THE AMOUNT IN LOAN ACCOUNT IN THE CURRENT YEAR AND FOR THIS YEAR SALE ALSO A SUM OF RS.45,04,654/ - ALSO REFLECTED IN THE LOAN ACCOUNT. THUS, A TOTAL AMOUNT OF LOANS AND ADVANCES BY THE ASSESSEE TO M/S JAI KRISHAN ESTATES P.LTD. SHOWN AS RS.1,19,13,736/ - IN THE BALANCE SHEET TA 5323/DEL/2013 C.O.109/DEL/14 (IN ITA 5323/DEL/2013) AY: 2007 - 08 WORTHWHILE DEVELOPERS P.LTD. PAGE 2 OF 5 COMPRISES OF RS.66,36,955/ - , 7,72,127/ - AND RS.45,04,654/ - . SINCE THIS AMOUNT HAS NOT BEEN ADVANCED BY THE ASSESSEE TO M/S JAI KRISHAN ESTATES P.LTD. BY WAY OF ADJUSTMENTS OF JOURNAL ENTRIES ONLY, THE PROVISION OF 269 SS/269 T CLEARLY APPLY AND THEREFORE PENALTY PROCEEDINGS U/S 271D ARE RIGHTLY INITIATED BY THE AO. 3 . THE ACIT IN THE PENALTY ORDER AT PARA 6 HELD AS FOLLOWS . 6. THE SUBMISSIONS FILED BY THE ASSESSEE CONSIDERED BUT ARE NOT RELEVANT TO THE FACTS A ND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, I AM OF THE VIEW THAT THE PROVISIONS OF SECTION 269SS IS CLEARLY ATTRACTED FOR THE SUM OF RS.1,19,13,736/ - A SUM OF MONEY TRANSFERRED TO THE LOAN ACCOUNT IN THE FORM OF BOOK ENTRIES WITHOUT IN THE SHAPE OF ACCOU NT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. ON A COMPREHENSIVE CONSIDERATION, I AM OF THE CONSIDERED VIEW THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF S.269 SS OF THE I.T.ACT, 1961 AND IS LIABLE FOR THE PENALTY U/S 271D OF THE ACT. ACCORDINGLY, A PENALTY OF RS.1,19,13,736/ - , BEING THE AMOUNT RECEIVED IN THE FORM OF BOOK ENTRIES, IS BEING LEVIED U/S 271D OF THE ACT. 4 . ON APPEAL THE FIRST APPELLATE AUTHORITY DELETED THE PENALTY ON THE GROUND THAT THE PAYMENT HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE AND AS SUCH THERE IS NO VIOLATION OF PROVISIONS OF S.269SS OF THE ACT. 5 . AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND. 1. LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN CANCELLING THE PENALTY OF RS.1,19,13,736/ - IMPOSED BY AO U/S 271D OF THE I.T.ACT. 6 . WE HAVE HEARD SHRI RAKESH KUMAR, LD. SR.D.R. ON BEHALF OF THE REVENUE AND SHRI GAUTAM JAIN, FCA, THE LD.COUNSEL FOR THE ASSESSEE. 7 . ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD AND ORDERS OF THE LOWER AUTHORITIES, AS WELL AS CASE LAWS CITED, WE HOLD AS FOLLOWS. 8. THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD. IN ITA 232/2014 JUDGEMENT DT. 21 ST MAY, 2014 LEXDOCID 463622 AT PARA 8 HELD AS FOLLOWS. TA 5323/DEL/2013 C.O.109/DEL/14 (IN ITA 5323/DEL/2013) AY: 2007 - 08 WORTHWHILE DEVELOPERS P.LTD. PAGE 3 OF 5 8. A PLAIN READING OF S.269SS INDICATES THAT IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR A LOAN IS ACCEPTED BY AN ASSESSEE, OTHERWISE THAN B Y AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. 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 LIABILITY ARISES ON ACCOUNT OF BOOK ENTRIES . THE OBJECTION OF THE SECTION IS TO PREVENT TRANSACTIONS IN CURRENCY. THIS IS ALSO CLEARLY EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO S.269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY . THE LIABILITY RECORDED IN THE BOOKS OF ACC OUNTS 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 S. 269SS OF THE A CT, BECAUSE PASSING SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. IN THE PRESENT CASE, ADMITTEDLY NO MONEY WAS TRANSFERRED OTHER THAN THROUGH BANKING CHANNELS, M/S PACL INDIA LTD. MADE CERTAIN PAYMENTS THROUGH BANKING CHANNELS TO LAND OWNERS. THIS PAYMENT MADE ON BEHALF OF THE ASSESSEE WAS RECORDED BY THE ASSESSEE IN ITS BOOKS BY CREDITING THE ACCOUNT OF M/S PACL INDIA LTD. IN VIEW OF THIS ADMITTED POSITION, NO INFRINGEMENT OF S. 269SS OF THE ACT IS MADE OUT. THIS COURT, IN THE CASE OF NOIDA TOLL BRIDGE CO.LTD. (SUPRA), CONSIDERED A SIMILAR CASE WHERE A COMPANY HAD PAID MONEY TO THE GOVERNMENT OF DELHI FOR ACQUISITION OF A LAND ON BEHALF OF THE ASSESSEE THEREIN. THE AO LEVIED A PENALTY U/S 271D OF THE ACT FOR ALLEGED VIOLATI ON OF THE PROVISIONS OF SECTION 269SS OF THE ACT SINCE THE BOOKS OF THE ASSESSEE REFLECTED THE LIABILITY ON ACCOUNT OF THE LANDS ACQUIRED ON ITS BEHALF. ON APPEAL, THE CIT(A) AFFIRMED THE PENALTY. THE ORDER OF CIT WAS SUCCESSFULLY IMPUGNED BY THE ASSESSE E BEFORE THE ITAT. ON APPEAL THIS COURT HELD AS UNDER: 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 PAY MENT ON ACCOUNT WAS MADE IN CASH EITHER BY THE ASSESSED OR ON ITS BEHALF, (III) NO LOAN WAS ACCEPTED BY THE ASSESSEE IN CASH, AND (IV) THE PAYMENT OF RS.4.85 CRORES MADE BY THE ASSESSEE THOUGH IL AND FS, WHICH HOLDS MORE THAN 30 PER CENT OF THE PAID UP CAP ITAL OF THE ASSESSEE, BY JOURNAL ENTRY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY CREDITING THE ACCOUNT OF IL AND FS. HAVING REGARD TO THE AFORENOTED FINDINGS, WHICH ARE ESSENTIALLY FINDINGS OF FACT, WE ARE IN COMPLETE AGREEMENT WITH THE TRIBUNAL THAT TH E PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED ON THE FACTS OF THE CASE. ADMITTEDLY, NEITHER THE ASSESSEE NOR IL AND FS HAD MADE ANY PAYMENT IN CASH. THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW. TA 5323/DEL/2013 C.O.109/DEL/14 (IN ITA 5323/DEL/2013) AY: 2007 - 08 WORTHWHILE DEVELOPERS P.LTD. PAGE 4 OF 5 WE ACCORDINGLY DECLINE TO ENTERTAIN THE APPEAL. DISMISSED. 8.1. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT, WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY , THOUGH FOR DIFFERENT REASONS AND DISMISS THIS GROUND OF THE REVENUE. 8.2. THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED . 8. IN THE RESULT REVENUE S APPEAL IS DISMISSED AND ASSESSEE S CROSS OBJECTION ALSO STANDS DISMISSED AS NOT PRESSED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 T H SEPTEMBER, 2014. S D / - S D / - ( GEORGE GEORGE K ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DA TED: THE 2 4 T H SEPT. 2014 *MANGA C OPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR TA 5323/DEL/2013 C.O.109/DEL/14 (IN ITA 5323/DEL/2013) AY: 2007 - 08 WORTHWHILE DEVELOPERS P.LTD. PAGE 5 OF 5