ITO, UDAIPUR V. M/s. Vinayak Build Dev Pvt. Ltd., UDAIPUR

ITA 560/JODH/2013

• Counselvise Citation: 56023314 RSA 2013
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Assessee Lawyers: YOGESH POKHARANA
• Keywords: Search and seizure; Loose papers; Opportunity of being heard; Reasonable cause
• Section: 40A(3); 153A; 27

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NOS. 558 TO 565/JODH/2013 (A.Y. 2003-04 TO 2007-08) THE INCOME-TAX OFFICER VS. M/S VINAYAK BUILD DEV ( P) LTD. WARD -1(4) 107, BAPU BAZAR UDAIPUR. UDAIPUR PAN NO. AACCV 5543 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI YOGESH POKHARANA DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 06/05/2014. DATE OF PRONOUNCEMENT : 15/05/2014. O R D E R PER BENCH :- THIS A BUNCH OF EIGHT APPEALS ALL FILED BY THE REV ENUE PERTAINING TO A.YS. 2003-04 TO 2007-08 IN WHICH ALMOST IDENTIC AL ISSUES ARE INVOLVED. THEREFORE, FOR THE SAKE OF CONGRUENCE, C ONVENIENCE AND BREVITY, WE ARE PROCEEDING TO DECIDE THEM BY A COMM ON ORDER. FOR EACH A.Y. , THERE ARE TWO APPEALS BY THE REVENUE, O NE EMANATING FROM THE ORDER PASSED U/S 271D OF THE INCOME-TAX ACT, 19 61 ['THE ACT', FOR 2 SHORT] AND THE OTHER EMANATING FROM THE ORDER PASSE D U/S 271E OF THE ACT. 2. TO UNDERSTAND THE ISSUE, WE WOULD LIKE TO NARRAT E THE FACTS OF THE CASE OBTAINING IN A.Y. 2003-04. THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MAKING BUILDINGS AS WELL AS DEVELOP ING LAND. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE BUSINE SS PREMISES OF SHRI LALIT SHARMA OF SURYA ESTATE GROUP, UDAIPUR ON 23.0 4.2008. DURING THIS SEARCH, NUMEROUS INCRIMINATING EVIDENCE INCLUDING L OOSE PAPERS/ DOCUMENTS, BOOKS ETC. RELATING TO THE ASSESSEE-COMP ANY WERE FOUND AND SEIZED AS PER ANNEXURE A-1 TO ANNEXURE A-5. ON THE BASIS OF MATERIAL GATHERED DURING THE COURSE OF THIS SEARCH, NOTICE U/S 153C R.W.S 153A OF THE ACT WAS ISSUED ON 21.3.2011 WHICH WAS SERVED ON THE ASSESSEE ON 22.3.2011. IN COMPLIANCE THEREOF, THE ASSESSEE FURNISHED COPY OF INCOME TAX RETURN FILED ON 6.11.2003 ALONGW ITH STATEMENT OF TOTAL INCOME WITH THE REQUEST THAT THE ORIGINAL RET URN FILED BY THE COMPANY MAY BE TREATED AS RETURN FILED IN RESPONSE TO THIS NOTICE. IN THE ORIGINAL RETURN, THE ASSESSEE HAS DECLARED NIL INCOME. FINALLY, ASSESSMENT WAS MADE AT A TOTAL INCOME OF RS. 1,72,9 99/- AFTER MAKING DISALLOWANCE U/S 40A(3) OF THE ACT. DURING ASSESSM ENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD ACCEPTED LOAN/DEP OSIT IN CASH IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE ACT AND 3 CONSEQUENTLY, PENALTY PROCEEDINGS U/S 271D OF THE A CT WERE INITIATED. LIKEWISE, REPAYMENT OF LOAN/DEPOSITS, IN CASH, IN C ONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE ACT WAS ALSO NOTI CED AND CONSEQUENTLY, PENALTY PROCEEDINGS U/S 271E OF THE A CT WAS INITIATED. THEREFORE, THERE ARE TWO APPEALS FOR ONE A.Y. AS ST ATED ABOVE. PENALTY U/S 271D OF THE ACT 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE HAD RECEIVED LOANS/DEPOSI TS IN CASH FROM VARIOUS PARTIES IN VIOLATION OF PROVISIONS OF SECTION 269SS TOTALING RS. 22,59,200/-, THE DETAIL OF WHICH IS GIVEN AT PAGE 1 OF PENALTY ORDER DATED 29.6.2012. AFTER HEA RING THE SUBMISSIONS OF THE ASSESSEE, THE A.O. FINALLY CONCL UDED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT WITHOUT ANY REASONABLE CAUSE AND THEREFORE, HE HAS IMPOSED PENALTY U/S 271D OF THE ACT. AGAINST THIS ORDER, THE ASSESSEE WENT IN APPEAL AND THE LD. CIT(A) HAS, AFT ER CONSIDERING VARIOUS DECISION RELIED UPON BY THE ASS ESSEE, DELETED THE PENALTY ON THE REASONING THAT IN THE QU ANTUM APPEAL, ENTIRE ADDITIONS SO MADE HAVE BEEN DELETED. THEREFORE, LEVY OF PENALTY U/S 271D OF THE ACT WILL ALSO NOT 4 SURVIVE. IN THIS REGARD, THE LD. CIT(A) HAS PLACED RELIANCE ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF K.C. BUILDERS & ANOTHER VS. ACIT [2004] 265 ITR 562 [SC] . AGAINST THIS, THE REVENUE HAS COME IN APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. THE MAIN CR UX OF SUBMISSIONS OF THE LD. CIT-DR IS THAT WHEN ASSESSME NT ORDER IS MADE AND DURING THE COURSE OF THOSE PROCEEDINGS IT IS NOTICED THAT THE LOANS/DEPOSITS HAVE BEEN ACCEPTED OTHERWISE THAN THROUGH CHEQUE, OR ACCOUNT PAYEE CHE QUE OR ACCOUNT PAYEE BANK DRAFT PROVISIONS OF SECTION 271D ARE ATTRACTED. HE HAS FURTHER ARGUED THAT THE DECISION OF THE HON'BLE APEX COURT ON WHICH RELIANCE HAS BEEN PLACE D BY THE LD. CIT(A) FOR DELETING THIS PENALTY IS MISPLACED I N AS MUCH AS IN THAT CASE PENALTY WITH WHICH THE HON'BLE APEX CO URT WAS DEALING WAS IMPOSED UNDER DIFFERENT SECTION I.E. 27 1(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME ON ACCO UNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE ARGUED THAT DE HORS WHAT HAS HAPPENED IN THE QUANTUM PROCE EDINGS, 5 PENALTIES U/S 271D & 271E CAN BE INDEPENDENTLY IMPO SED IF CONDITION LAID IN SS. 269 AND 269T, ARE VIOLATED. 5. ON THE OTHER HAND, THE LD. A.R. HAS RELIED ON TH E ORDER OF THE LD. CIT(A) AND HAS FURTHER SUBSTANTIATED HIS ARGUMENTS WITH REFERENCE TO THE DECISIONS RELIED UPON BY HIM. ALL OTHER DECISIONS ON WHICH HE HAS PLACED RELIANCE BEFORE TH E LD. CIT(A) ARE INCORPORATED IN THE APPELLATE ORDER. HE HAS FURTHER ARGUED THAT THE CASH HAD BEEN RECEIVED BY T HE ASSESSEE ON ACCOUNT OF SALE OF FLATS AND THE SAME H AS BEEN SHOWN IN THE BOOKS OF ACCOUNT AS TRADE CREDIT. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE CASH AMOUNT RECEIVED WHICH WAS CONSIDERED BY THE A.O. IN VIOLATION OF PROVISIONS OF SECTION 269SS PE RTAINS TO ADVANCE TOWARDS SALE OF FLATS ETC. AND IS OUT OF BO OKS OF ACCOUNT. IT IS ALSO FOUND THAT THE BOOKS OF ACCOUN T HAVE BEEN REJECTED ON ACCOUNT OF VARIOUS DEFECTS FOUND I N THE AUDITED BOOKS OF ACCOUNT LIKE NON RECORDING OF ENTI RE SALE RECEIPTS AND PAYMENTS AND INCOME HAS BEEN TAXED ON ESTIMATE BASIS. IT WAS FOUND THAT THE ASSESSEE COM PANY WAS UNDER-REPORTING SALE PROCEEDINGS AND WAS RECEIVING ON-MONEY 6 ON SALE OF FLATS. ALL THE DIRECTORS OF THE COMPANY HAVE DEPOSED THAT ANNEXURE A-1 TO ANNEXURE A-5 ARE REAL BOOKS OF ACCOUNT AND THESE ANNEXURES CONTAINED THE ACTUAL DE TAILS AND RECEIPTS MADE. THE RECEIPT FOR ADVANCE ON SALE OF FLATS/SHOPS ARE SEPARATELY ENTERED IN THEIR NAMES I N THESE ANNEXURES. ALL THE ABOVE PAYMENTS ARE RECEIVED IN CASH. OUT OF THE ABOVE PAYMENTS RECEIVED, PAYMENTS WERE M ADE TO M/S SHARMA CONSTRUCTION DEPOSITED IN BANK AND ALSO USED FOR OTHER PURPOSES BY THE COMPANY. REPAYMENTS OF LOANS WERE SHOWN IN THESE ANNEXURES IN THE SAME MANNER. DURIN G SEARCH OPERATION CARRIED OUT AT THE BUSINESS PREMISES OF S URYA ESTATE, CERTAIN LOOSE PAPERS RELATING TO THE ASSESS EE-COMPANY WERE FOUND. IN OUR CONSIDERED OPINION, RECEIVING OF ADVANCE/SALE PROCEEDINGS CANNOT BE TREATED AS RECEI VING OF LOAN/DEPOSITS. HOWEVER, WE HAVE FOUND THAT THE ORD ERS OF LD. CIT(A) WHICH HAVE BEEN APPEALED AGAINST ARE NOT SPEAKING ORDERS, THEREFORE, WE CULL OUT FULL AND FINAL FACTS , WHICH WE ARE DUTY BOUND TO DO. HENCE, WE RESTORE THESE APPEA LS TO THE FILE OF LD. CIT(A) FOR DE NOVO CONSIDERATION AND AD JUDICATION. NEEDLESS TO MENTION THAT LD. CIT(A) SHALL GIVE EFFE CTIVE 7 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THESE A PPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. LIKEWISE, MUTATIS MUTANDIS, ARE THE FACTS RELATI NG TO THE REPAYMENT OF LOANS/DEPOSITS. THEREFORE, WITH THE P ARITY OF REASONING TAKEN HEREINABOVE, WE RESTORE THE ISSUE R ELATING TO THE DELETION OF PENALTY U/S 271E OF THE ACT ALSO TO THE FILE OF LD. CIT(A). 8. IN ALL OTHER YEARS, THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL EXCEPT FOR THE AMOUNTS OF DEPOSI T/LOANS TAKEN AND AMOUNT OF REPAYMENT MADE. ALL OTHER FACT S, ARGUMENTS OF THE PARTIES ARE SAME AND SIMILAR. THE ORDERS OF LD. CIT(A) APPEALED AGAINST THE ORDER ASSESSMENT YE AR ARE ALSO NON SPEAKING ONE. THEREFORE, WITH SIMILAR DIR ECTIONS, WE RESTORE ALL THE APPEALS FILED AGAINST THE ORDER OF THE LD. CIT(A) EITHER IN RESPECT OF PENALTY IMPOSED U/S 271 D OR 271E OF THE ACT, AND ALLOW THEM FOR STATISTICAL PURPOSES . 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ST AND ALLOWED FOR STATISTICAL PURPOSES. 8 ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2014. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH MAY, 2014. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR