DCIT, New Delhi V. M/s Forging Ltd., New Delhi

ITA 5690/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58870 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN
• Assessee Lawyers: P N MONGA; MONA MONGA
• Keywords: Question of law; Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI. BEFORE SHRI K.G. BANSAL & SHRI C.M. GARG I.T.A. NOS. 5689 & 5690(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME M/S FORG ING LTD., TAX, CIRCLE 11(1), NEW DELHI. VS. F-1/ 9, OKHLA INDL ESTATE, PHASE-I, NEW DELHI. PAN: AAACF0983A (APPLICANT) (RESPONDENT) APPELLANT BY : MS. RENUKA JAIN, SR. DR RESPONDENT BY : S HRI P.N. MONGA & SHRI MONA MONGA, ADVOCATES DATE OF HEARING: 01.03.2012 DATE OF PRONOUNCE MENT: 16.03.2012. ORDER PER K.G. BANSAL : A.M THESE TWO APPEALS REGARDING LEVIABILITY OF PENAL TY U/S 271D AND 271E OF THE INCOME-TAX ACT, 1961 WERE ARGUED IN A CONSOLIDATED MANNER BY THE LD. SENIOR DR AND THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, A CONSOLIDATED ORDER IS PASSED. 1.1 THE ONLY SUBSTANTIVE GROUND TAKEN IN APPEAL NO . 5689(DEL)/2010 IS TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE PENALTY OF RS. 11,84,314/- LEVIED BY THE AO U/S 271D OF THE ACT. SIMILARLY, THE ONLY ITA NOS. 5689 & 5690(DEL)/2010 2 GROUND TAKEN IN APPEAL NO. 5690(DEL)/2010 IS THA T THE LD. CIT(APPEALS) ERRED IN DELETING THE PENALTY OF RS. 77,07,502/- LEVIED BY THE AO U/S 271E OF THE ACT. 2. WE PROCEED TO DISPOSE OF APPEAL BEARING ITA NO. 5689(DEL)/2010 AT THE FIRST INSTANCE. THE LD. SENIOR DR REFE RRED TO THE PENALTY ORDER PASSED BY THE AO ON 30.06.2009. IT IS MENTIONED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS IT HAD BEEN OBSERVED THAT T HE ASSESSEE RECEIVED DEPOSITS FROM D.D. TOWNSHIP (P) LTD. (DD FOR SH ORT) OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR DRAFT. THE DET AILS ARE AS UNDER:- DATE PARTICULARS DESCRIPTION AMOUNT (RS.) 20.12.2005 SHREE DEVI JOURNAL 2,50,563/- 17.02.2006 UJJAGAR SINGH JOURNAL 70,000/- 18.02.2006 MOHAN SINGH JOURNAL 2,00,000/- 18.02.2006 SHER SINGH JOURNAL 4,13,751/- 20.02.2006 JASWINDER SINGH JOURNAL 1,50,000/- 21.02.2006 RAJINDER KUMAR JOURNAL 50,000/- 21.02.2006 MUKHTAIR SINGH JOURNAL 50,000/- 2.1 THE AO ISSUED SHOW CAUSE NOTICES TO THE ASS ESSEE ON 24.12.2008 AND 08.06.2009 REQUESTING IT TO EXPLAIN AS TO WHY PENALTY U/S 271D MAY NOT BE LEVIED. IT WAS SUBMITTED THAT THE DD MAD E PAYMENTS ON BEHALF OF THE ASSESSEE FOR PURCHASING LAND FROM THE FARMER S. THE SALE AGREEMENTS EXECUTED IN THIS CONNECTION SHOW THAT ADVANCES W ERE PAID TO THEM IN CASH. ITA NOS. 5689 & 5690(DEL)/2010 3 SUCH PAYMENTS WERE MADE BY SHRI J.P. KHANNA, THE REPRESENTATIVE OF THE DD, TO THE FARMERS. CORRESPONDING ENTRIES WERE MADE IN THE BOOKS OF THE ASSESSEE CREDITING THE DD BY WAY OF JOURNAL ENTR IES. THE AO DID NOT FIND THE EXPLANATION TO BE SATISFACTORY. REFERR ING TO THE PROVISION OF SECTION 271D, IT HAS BEEN HELD THAT THE ASSESSEE HAD TO ACCEPT ANY LOAN OR DEPOSIT ONLY BY WAY OF ACCOUNT PAYEE CHEQUE OR DRAFT, FAILING WHICH IT MADE ITSELF LIABLE FOR LEVY OF THE PENALTY. ACC ORDINGLY, PENALTY OF RS. 11,84,314/- WAS LEVIED. 2.2 THEREAFTER, HE REFERRED TO THE IMPUGNED ORDE R PASSED ON 08.10.2010. IT WAS SUBMITTED BEFORE THE LD. CIT (APPEALS) THAT THE ASSESSEE AND THE DD ENTERED INTO A COLLABORATION AGREEMENT WHICH DESIGNATES THE ASSESSEE AS COLLABORATOR AND TH E DD AS THE DEVELOPER. UNDER THE AGREEMENT, IT HAS BEEN AGREED THAT LA NDS PURCHASED BY THE ASSESSEE WILL FORM THE SUBJECT OF PROJECT FOR DEVELOPMENT BY THE DEVELOPER. ALL OTHER OBLIGATIONS WITH GOVERNMENT AUTHORITIES, FINANCIAL INSTITUTIONS, SALE ETC. WILL BE DISCHARGED BY THE DEVELOPERS. IN VIEW OF THIS AGREEMENT, A CURRENT ACCOUNT WAS MAINTAINED BY TH E ASSESSEE IN RESPECT OF THE DD. THE PAYMENTS MADE BY THE DD ON BEHALF OF THE ASSESSEE WERE CREDITED IN THE ACCOUNT AND RE-PAYMENTS TO IT WE RE ALSO DEBITED IN THIS ITA NOS. 5689 & 5690(DEL)/2010 4 ACCOUNT. THE BALANCE PAYABLE HAS BEEN SHOWN IN THE BALANCE-SHEET AS CURRENT LIABILITIES AND PROVISIONS. IT WAS FURTH ER SUBMITTED THAT THE DEVELOPER HAS MADE PAYMENTS TO THE FARMERS ON BEHA LF OF THE ASSESSEE THROUGH REPRESENTATIVE SHRI J.P. KHANNA. SHRI J.P. KHANNA WAS PAID IN THIS BEHALF BY THE DEVELOPER BY WAY OF CHEQUES. SUCH SALE AGREEMENTS HAD BEEN FILED BEFORE THE AO AND THE TRANSACTIONS REC ORDED IN THE ACCOUNT OF THE DD ARE SUPPORTED BY THE PURCHASE AGREEMENTS. THUS, IT WAS ARGUED THAT THE ASSESSEE HAS NOT RECEIVED ANY LOAN OR DEPOSIT FROM THE DD. 2.3 THE LD. CIT(APPEALS) CONSIDERED THE FACTS A ND SUBMISSIONS MADE BEFORE HIM. IT IS MENTIONED THAT SHRI J.P. KHANN A HAS MADE PAYMENT TO VARIOUS PERSONS ON BEHALF OF THE DD. HE IS SIT UATED IN MOHALI AND HE RECEIVED PAYMENTS BY WAY OF CHEQUES FROM THE DD . THE CHEQUES WERE DEPOSITED IN HIS ACCOUNT AND SUBSEQUENTLY CASH W AS WITHDRAWN AND PAID TO VARIOUS LAND OWNERS. SINCE THE PAYMENTS WERE M ADE TO THE LAND OWNERS ON BEHALF OF THE ASSESSEE, IT PASSED CORRESPONDI NG ENTRIES GIVING CREDIT TO THE DD. THE ENTRIES WERE PASSED THROUGH JOURNAL . THESE FACTS SHOW THAT NO LOAN OR DEPOSIT HAS BEEN ACCEPTED BY THE ASSE SSEE FROM THE DD, WHICH IS COVERED U/S 269SS OF THE ACT. WITHOUT PREJUD ICE TO THE AFORESAID, IT IS MENTIONED THAT THE PAYMENT OF CASH MADE BY SHRI J.P. KHANNA TO THE LAND ITA NOS. 5689 & 5690(DEL)/2010 5 OWNERS IS PAYMENT FOR PURCHASE OF LAND. THUS, THE AMOUNTS DID NOT REPRESENT LOANS OR DEPOSITS ACCEPTED BY THE ASS ESSEE. FURTHER, THE PAYMENT HAD TO BE MADE IN CASH FAILING WHICH THE LAND OWNERS WOULD NOT HAVE CARRIED THROUGH THE TRANSACTIONS. THUS, BUSI NESS EXIGENCY DEMANDED THAT THE PAYMENTS SHOULD BE MADE TO THEM IN CASH . IN VIEW OF THESE FINDINGS, THE PENALTY HAS BEEN DELETED. 3. THE CASE OF THE LD. SENIOR DR IS THAT THE CHA IN OF TRANSACTIONS INVOLVE THE ASSESSEE, THE DD AND SHRI J.P. KHAN NA. THIS CHAIN HAS BEEN CREATED TO CAMOUFLAGE THE ACTUAL TRANSACTION OF LOAN OR DEPOSIT SHOWING IT TO BE A BUSINESS TRANSACTION. IT IS AN ADMITTED FACT THAT THE RECEIPTS FROM THE DD HAVE BEEN MADE OTHERWISE THAN BY ACCOUNT P AYEE CHEQUE OR DRAFT. THERE IS NO EVIDENCE ON RECORD THAT SHRI KHANNA H AD TO PAY MONEY IN CASH TO THE INTENDING SELLERS. THEREFORE, IT IS AR GUED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED U/S 271D FOR LEVY OF PENALTY. 3.1 IN ORDER TO SUPPORT HIS CASE, RELIANCE HAS BEE N PLACED ON THE DECISION IN THE CASE OF CHAUBEY OVERSEAS CORPORATIONVS. CIT (2008) 303 ITR 9 (ALL.). IN THIS CASE, ONE SANJAY KUMAR AGGARWA L ASKED SHREE NARAIN AND GOPAL DASS, BROKERS OF SILK FABRICS, FOR SUPPLY OF SPECIAL KIND OF SILK ITA NOS. 5689 & 5690(DEL)/2010 6 FABRIC. THESE BROKERS PLACED ORDERS WITH THE ASS ESSEE FOR SUPPLY OF SILK FABRIC FOR REQUISITE QUANTITY. THE ASSESSEE DEMA NDED A SUM OF RS. 25,000/- EACH FROM THE BROKERS AS ADVANCE FOR SUPPLY OF T HE REQUISITE GOODS. THE AMOUNT WAS DEPOSITED. THE ASSESSEE COULD NOT AR RANGE FOR SILK FABRICS AND, THEREFORE, RETURNED THE ADVANCE TO THE BROKER S IN CASH. THE EXPLANATION OF THE ASSESSEE WAS THAT THE BROKERS HAD NOT DEPOSITED THE MONEY ON THEIR BEHALF BUT ON BEHALF OF THE TRADE RS. THEREFORE, THE ADVANCES WERE RECEIVED IN THE COURSE OF THE BU SINESS FOR SALE OF SILK FABRIC. THIS EXPLANATION WAS NOT ACCEPTED BY TH E AO AND PENALTY U/S 271D WAS LEVIED. THE CIT(APPEALS) ALLOWED THE APP EAL OF THE ASSESSEE AGAINST THIS ORDER ON THE GROUND THAT THE WORD DE POSIT MEANS KEEPING OF MONEY WITH A PERSON OR A BANK FOR EARNING INTE REST. THEREFORE, PROVISIONS OF SECTION 269D WERE NOT ATTRACTED. THIS ORDER WAS REVERSED BY THE TRIBUNAL BY MENTIONING THAT THE WORD DEPOS IT MEANS EVERY KIND OF DEPOSIT AND THERE IS NO DIFFERENCE BETWEEN A DEP OSIT, BUSINESS DEPOSIT OR TRADE DEPOSIT. THE HONBLE COURT CAME TO THE CON CLUSION THAT THE WORDS ANY DEPOSIT HAS BEEN USED TO COVER ALL SORTS O F DEPOSITS INCLUDING TRADE DEPOSITS. THEREFORE, THE MATER WAS DECIDED IN FA VOUR OF THE REVENUE. ITA NOS. 5689 & 5690(DEL)/2010 7 4. IN REPLY, THE LD. COUNSEL FURNISHED BACKGROUND FACTS IN BRIEF THAT THE ASSESSEE IS A COMPANY. ITS ACCOUNTS ARE LIAB LE TO BE AUDITED AND HAVE BEEN AUDITED AS SUCH. THE ASSESSEE HAD FILED THE RETURN OF INCOME AND AUDITED ACCOUNTS WERE ENCLOSED WITH THE RETURN. T HE ACCOUNTS HAVE BEEN ACCEPTED BY THE AO AS SEEN FROM ASSESSMENT ORDE R PASSED U/S 143(3) OF THE ACT. IN THIS ORDER, NO SATISFACTION HAD BEEN RECORDED THAT PROVISIONS OF SECTION 269SS HAVE BEEN VIOLATED BY THE ASSESSEE. IN FACT, THE ASSESSEE HAS NOT DOUBTED IN ANY MANNER WHATSOEVER THE TRANSAC TIONS OF THE ASSESSEE WITH THE DD. THERE IS NO FINDING EITHER IN ASSE SSMENT ORDER OR IN THE PENALTY ORDER THAT THE CHAIN OF TRANSACTIONS W AS CREATED WITH A VIEW TO CAMOUFLAGE THE TRANSACTIONS OF LOANS OR DEPOSITS AS BUSINESS TRANSACTIONS. NO EVASION OF TAX OR ATTEMPT TO EVADE TAX HAS BEEN ALLEGED IN ANY OF THESE ORDERS. AS A MATTER OF FACT, THE ASSESSEE HAS NOT RECEIVED ANY LOAN OR DEPOSIT. THE TRANSACTIONS ARE IN RESPECT OF DEVELOPMENT AGREEMENT WITH THE DD. IT APPOINTED A LOCAL PERSON TO BUY LANDS FROM VARIOUS PERSONS. FOR THIS PURPOSE, THE DD PAID SHRI KH ANNA CERTAIN AMOUNTS BY WAY OF CHEQUES. THE CHEQUES WERE DEPOSITED IN HI S ACCOUNT. THE MONEY WAS DRAWN FROM THIS ACCOUNT TO MAKE PAYMENT IN CASH TO THE SELLERS OF THE LANDS. SINCE THE LANDS WERE PURCHASED ON BEHALF O F THE ASSESSEE THROUGH THE AGENT OF THE DD, CORRESPONDING CREDIT WAS GI VEN TO THE DD IN HIS ITA NOS. 5689 & 5690(DEL)/2010 8 CURRENT ACCOUNT MAINTAINED BY THE ASSESSEE. THE SE TRANSACTIONS DO NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OTHERWI SE THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT. THE TRANSACTIONS ARE RECORDED B Y WAY OF JOURNAL ENTRIES, THEREFORE, NO MONEY IN CASH HAS BEEN RECEIVED BY TH E ASSESSEE FROM THE DD. THE LD. CIT(APPEALS) CONSIDERED ALL THESE FA CTS. THEREAFTER, HE CAME TO THE CONCLUSION THAT IT WAS NOT A FIT CASE FO R LEVY OF PENALTY U/S 271D OF THE ACT. 4.1 IN ORDER TO SUPPORT HIS CASE, THE LD. COUNSEL HAS RELIED ON A NUMBER OF DECIDED CASES. IN THE CASE OF CIT VS. NOIDA TOLL BRIDGE CO. LTD., (2003) 262 ITR 260, THE TRIBUNAL HAD DELETED TH E IMPOSITION OF PENALTY U/S 271D BY OBSERVING THAT : THE TRANSACTION IS BY AN ACCOUNT PAYEE CHEQUE, NO PAYMENT ON ACCOUNT IS MADE IN CASH BY THE ASSESSEE OR ON ITS BEHALF, NO LOAN HAS BEEN ACCEPTED BY THE ASSESSEE IN CASH , AND THE PAYMENT OF RS. 4.85 CRORE HAS BEEN MADE THROU GH IL&FS, WHICH HOLDS MORE THAN 30% OF THE PAID UP CAPITAL OF T HE ASSESSEE BY JOURNAL ENTRIES BY CREDITING THE ACCOUNT OF IL&F S. ITA NOS. 5689 & 5690(DEL)/2010 9 THE HONBLE COURT OBSERVED THAT AFORESAID FINDINGS ARE FINDING OF FACTS AND THAT IT IS IN AGREEMENT WITH THE TRIBUNAL THAT PR OVISIONS OF SECTION 269SS ARE NOT ATTRACTED. NEITHER THE ASSESSEE NOR IL& FS HAD MADE ANY PAYMENT IN CASH. IN SUCH CIRCUMSTANCES, THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO ANY QUESTION OF LAW. 4.2 IN THE CASE OF CIT VS. KHARAITI LAL & CO. (20 04) 270 ITR 445, THE TRIBUNAL DELETED THE PENALTY U/S 271D BY OBSERVI NG THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS. 6,49,344/- AS AN ADVANCE FOR PURCHASE OF TRUCK AND THIS AMOUNT WAS ADJUSTED AGAINST THE VALUE OF THE TRUCK. THE HONBLE COURT CAME TO THE CONCLUSION THAT THE FINDINGS WER E OF FACT. THE AMOUNT RECEIVED BY THE ASSESSEE WAS IN THE FORM OF ADVA NCE AND NOT A LOAN AS ALLEGED BY THE DEPARTMENT. THEREFORE, PROVISIONS OF SECTION 269SS ARE NOT ATTRACTED. IN THE CASE OF CIT VS. SAINI MEDICAL S TORE (2005) 277 ITR 420 ( P&H), THE CIT(APPEALS) HAD ACCEPTED THE EXPLANA TION OF THE ASSESSEE THAT THE BREACH OF THE PROVISION WAS ON ACCOUNT OF BO NA FIDE BELIEF OF THE ASSESSEE AND THE SAME WAS NOT WITH ANY INTENTION TO AVOID OR EVADE THE TAX. THESE FINDINGS WERE CONFIRMED BY THE TRIBUNA L. THE CAUSE SHOWN BY THE ASSESSEE WAS HELD TO BE A REASONABLE CAUSE BY THE CIT(APPEALS) AND THE TRIBUNAL. THE HONBLE COURT INTER-ALIA CONSIDERED THE DECISION IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, (197 2) 83 ITR 26 (S.C.) AND ITA NOS. 5689 & 5690(DEL)/2010 10 CAME TO THE CONCLUSION THAT THE FINDINGS OF THE CI T(APPEALS) AND THE TRIBUNAL ARE IN THE NATURE OF FINDINGS OF FACT BASED ON APPRECIATION OF MATERIAL ON RECORD. THESE FINDINGS DO NOT LEAD T O ANY QUESTION OF LAW. IN THE CASE OF CIT VS. NATVARLAL PURSHOTTAMDAS PAREK H (2008) 303 ITR 5 (GUJ.), ONE OF THE ARGUMENTS WHICH FOUND FAVOUR WITH THE TRIBUNAL WAS THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE C AUSE IN THE LIGHT OF AFFIDAVIT OF SHRI J.B. SHAH, AN ADVOCATE AND INCOM E-TAX PRACTITIONER HAVING STANDING OF 33 YEARS AS GENTLEMAN, WHO HAD OP INED THAT THE ASSESSEE WOULD NOT VIOLATE THE PROVISIONS OF SECTIONS 269 SS AND 269T IF HE RECEIVES AMOUNTS FROM THE FAMILY MEMBERS AND REPAY S TO DIFFERENT FAMILY MEMBERS. THE HONBLE COURT MENTIONED THAT THESE FINDINGS ARE BASED ON APPRECIATION OF EVIDENCE. WHETHER THE EVIDENCE IS CORRECTLY APPRECIATED OR NOT, THE POSITION OF LAW IS THAT IT DOES NOT GIVE RISE TO A QUESTION OF LAW UNLESS SUCH FINDINGS ARE CONTRARY TO EVID ENCE ON RECORD OR THE FINDINGS ARE RECORDED BY OMITTING TO CONSIDER RELEVANT EVIDENCE OR TAKING INTO ACCOUNT IRRELEVANT EVIDENCE. THUS, NO QUESTION OF LAW ARISES FROM THE FINDING OF THE TRIBUNAL. IN THE CASE OF LAXMI TRUST COMPANY (2008) 303 ITR 99 (MAD.), THE COMMISSIONER (AP PEALS) HAD DELETED THE PENALTY LEVIED UNDER SECTIONS 271D AND 271E BY RECORDING A FINDING THAT TRANSACTIONS OF LOAN ARE GENUINE AND THE IDENT ITY OF THE LENDER IS NOT IN ITA NOS. 5689 & 5690(DEL)/2010 11 DOUBT. BASED UPON THIS FINDING, THE TRIBUNAL HEL D THAT THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO INFRINGE THE PROVISIONS CONTAINED IN SECTION 269SS AND 269T. THE HONBLE COURT CONCU RRED WITH THE TRIBUNAL THAT ONCE TRANSACTIONS ARE FOUND TO BE GENUIN E, WHICH IS A FINDING OF FACT, NO QUESTION OF LAW ARISES FROM THE ORDER. IN THE CASE OF CIT VS. SUNIL KUMAR GOYAL (2009) 315 ITR 163 ( P&H), THE H ONBLE COURT REFERRED TO ITS OWN DECISION IN THE CASE OF SA INI MEDICAL STORE (SUPRA), IN WHICH IT WAS INTER-ALIA MENTIONED THAT THERE I S NO DOUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS WHICH HAVE BEEN F ULLY ACCEPTED IN THE ASSESSMENT. EVEN IF THERE IS ANY IGNORANCE, WHIC H RESULTED IN INFRACTION OF LAW, THE DEFAULT IS TECHNICAL AND VENIAL WHICH DOES NOT PREJUDICE THE INTEREST OF THE REVENUE AS NO TAX AVOIDANCE OR EVASION IS INVOLVED. AS SUCH EXPLANATION HAS BEEN ACCEPTED BY THE TRIBUNA L AND IT CAME TO THE CONCLUSION THAT THE ASSESSEE HAVING UNDERTAKEN TRANSACTIONS WITH THE SISTER CONCERN SHOWED THAT REASONABLE CAUSE EXISTED, NO QUESTION OF LAW IS INVOLVED. 5. IN THE REJOINDER, THE LD. DR SUBMITTED THAT T HE DECISION IN THE CASE OF NOIDA TOLL BRIDGE CO. LTD. (SUPRA), IS NOT AP PLICABLE TO THE FACTS OF THE CASE AS MATERIAL FINDINGS WERE RECORDED THAT N O PAYMENT WAS MADE IN CASH BY THE ASSESSEE OR ON ITS BEHALF AND IL&FS, WHO MADE THE PAYMENT, ITA NOS. 5689 & 5690(DEL)/2010 12 HELD MORE THAN 30% PAID UP CAPITAL OF THE AS SESSEE. FURTHER, IT IS SUBMITTED THAT THE GENUINENESS OF LOAN IS NOT A RELEVANT CONSIDERATION AS HELD IN THE CASE OF THENAMAL CHHAJJER VS. JCIT, (2005) 96 ITD 210 (CHENNAI). IT IS ALSO SUBMITTED THAT IT IS NOT INCUMBENT ON THE AO TO RECORD ANY SATISFACTION IN THE ASSESSMENT ORDER, AS HELD IN THE CASE OF CARGILL INDIA (P) LTD. VS. DEPUTY CIT (2008) 110 ITR 616 (DEL); AND ACIT VS. VINMAN FINANCE & LEASING LTD. (2008) 11 5 ITD 115 (VISHAKHAPATNAM) (TM). 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE E NTERED INTO A COLLABORATION AGREEMENT WITH THE DD FOR PURCHASE OF LAND ON ITS BEHALF AND DEVELOPMENT THEREOF BY THE DEVELOPER. THE DEVELOPER PURCHAS ED LANDS FROM FARMERS ON BEHALF OF THE ASSESSEE THROUGH ITS AGENT, M R. J.P. KHANNA. IN LIEU OF THE CONSIDERATION PAID BY THE DD, ITS ACCOUNT W AS CREDITED BY WAY OF JOURNAL ENTRIES, THE DETAILS OF WHICH HAVE ALREAD Y BEEN FURNISHED. SHRI J.P.KHANNA HAD MADE PAYMENTS IN CASH TO THE SELL ERS OF THE LANDS IN ORDER TO EFFECT PURCHASES. THE QUESTION IS WHETHER PR OVISIONS OF SECTION 269SS ARE VIOLATED AND THE ASSESSEE IS LIABLE TO BE PEN ALIZED U/S 271D OF THE ACT? ITA NOS. 5689 & 5690(DEL)/2010 13 6.1 THE DECISION IN THE CASE OF NOIDA TOLL BRIDG E CO. LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THIS CASE AS THE REP RESENTATIVE OF THE DD HAS MADE PAYMENT IN CASH TO THE SELLERS OF LAND ON BEHALF OF THE ASSESSEE. THE DECISION IN THE CASE OF SAINI MEDICAL STO RE (SUPRA) LAYS DOWN THAT THE PENALTY CAN BE LEVIED ONLY AFTER HEARING THE ASSESSEE. IF THE TRIBUNAL COMES TO THE CONCLUSION THAT THERE IS BONA FIDE EXPLANATION, THE PENALTY MAY NOT BE LEVIED IF THERE IS A VENIAL BREACH O F THE PROVISION. IN THAT CASE A PLEA WAS TAKEN THAT THE TRANSACTIONS WERE NOT UNDERTAKEN WITH ANY INTENTION TO AVOID OR EVADE TAX, WHICH WAS HELD T O BE A REASONABLE CAUSE. HOWEVER, THE QUESTION OF SHOWING REASONABLE CAU SE WILL BE DECIDED ON THE FACTS OF EACH CASE. IN OTHER WORDS, THE PLE A THAT THERE WAS NO AVOIDANCE OR EVASION OF TAX WILL NOT ON ITS OWN LEAD TO THE DELETION OF THE PENALTY. IN THE CASE OF KHARAITILAL & CO. (SUPRA ), THE AMOUNT ACCEPTED BY THE ASSESSEE WAS IN RESPECT OF SALE OF A TRUCK. THE TRANSACTION WAS HELD TO BE UNDERTAKEN IN THE COURSE OF THE BUSINESS AND NOT TRANSACTION OF A LOAN OR A DEPOSIT. IN THE CASE OF CIT VS. IDHA YAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD.), RELIED UPON BY THE LD. COUNSEL, IT HAS BEEN HELD THAT IT IS FOR THE REVENUE TO ESTABLISH THAT THE ASSESSEE RECEIVED A LOAN OR A DEPOSIT AS UNDERSTOOD U/S 269SS. THE AS SESSEE HAD RECEIVED CASH LOAN OF RS. 2,94,000/- FROM A SISTER CONCERN IN R ESPECT OF WHICH THE PENALTY ITA NOS. 5689 & 5690(DEL)/2010 14 WAS LEVIED. THE HONBLE COURT HELD THAT TRANSACTI ON BETWEEN THE ASSESSEE AND DIRECTOR-CUM-SHAREHOLDER IS NOT A TRANSACTI ON OF A LOAN OR A DEPOSIT. THE ACCOUNT WAS IN THE NATURE OF A CURRENT ACCO UNT ON WHICH NO INTEREST WAS CHARGED. THEREFORE, THE DELETION OF PENALTY B Y THE TRIBUNAL WAS JUSTIFIED. THE REVENUE HAS RELIED ON THE DECIS ION IN THE CASE OF CHAUBEY OVERSEAS CORPORATION (SUPRA), IN WHICH IT WAS HEL D THAT DEPOSIT ALSO INCLUDES WITHIN ITS AMBIT A TRADE DEPOSIT. 6.2 WHEN WE LOOK TO THE PROVISION CONTAINED IN SECTION 269SS, THE TERM LOAN OR DEPOSIT HAS BEEN DEFINED TO MEAN LOAN OR DEPOSIT OF MONEY. IN THIS CASE, THE ASSESSEE HAS NOT ACCE PTED ANY DEPOSIT FROM THE DD BY WAY OF MONEY IN CASH. IT HAS CREDITED THE ACCOUNT OF THE DD IN RESPECT OF PURCHASE CONSIDERATION PAID ON ITS B EHALF BY THE DD THROUGH MR. J.P. KHANNA. THE ENTRIES ARE MADE BY WAY O F JOURNAL ENTRIES. FROM THIS FACT, IT BECOMES CLEAR THAT THE CREDIT HA S BEEN GIVEN FOR PURCHASE OF LANDS. THE LANDS WERE PURCHASED IN THE COURSE OF BUSINESS OF DEVELOPING THEM IN ASSOCIATION WITH THE DD. THEREFORE, THE TRANSACTIONS ARE IN THE NATURE OF BUSINESS TRANSACTIONS, RECORDED THROU GH THE CURRENT ACCOUNT. THE DD WAS SUBSEQUENTLY PAID THROUGH THIS ACCOUNT. T HUS, IT IS NOT A CASE OF ACCEPTING LOAN OR DEPOSIT. RATHER, IT IS A CASE OF CARRYING OUT BUSINESS TRANSACTION FOR PURCHASE OF LAND AND MAKING PAYM ENT THEREOF. FURTHER, THE ITA NOS. 5689 & 5690(DEL)/2010 15 TRANSACTIONS HAVE BEEN FOUND TO BE GENUINE AND NO PART OF THE AMOUNT HAS BEEN FOUND TO BE UNEXPLAINED MONEY. IT HAS NO WHERE BEEN RECORDED IN THE ASSESSMENT ORDER OR THE PENALTY ORDER THAT T HE TRANSACTIONS WERE UNDERTAKEN WITH A VIEW TO AVOID OR EVADE PAYMENT O F TAX. IT IS NO DOUBT TRUE THAT PROOF OF GENUINENESS OF LOAN DOES NO T ABSOLVE THE ASSESSEE FROM LEVY OF PENALTY, AS HELD IN THE CASE OF T HENAMAL CHHAJJER (SUPRA), THE FACT REMAINS THAT IT IS ONE OF THE RELEVANT FACTORS TO BE TAKEN INTO ACCOUNT FOR COMING TO THE CONCLUSION AS TO WHETHE R THE EXPLANATION TENDERED BY THE ASSESSEE IS BONA FIDE OR NOT. FU RTHER, IT IS TRUE THAT THE SECTION DOES NOT PROVIDE FOR RECORDING OF ANY S ATISFACTION FOR INITIATION OF PENALTY, YET THE PENALTY ORDER MUST DISCLOSE A S TO WHY THE EXPLANATION OF THE ASSESSEE THAT THE TRANSACTIONS WERE UNDER TAKEN IN THE COURSE OF BUSINESS WAS NOT ACCEPTABLE. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAD TENDERED EXPLANATION IN REGARD TO TRANSACTIONS, THE CIRCUMSTANCES IN WHICH PAYMENTS WERE MADE IN CAS H BY SHRI J.P. KHANNA, AND SUCH EXPLANATION OUGHT TO HAVE BEEN TAKEN A S A BONA FIDE EXPLANATION. THE TRANSACTION IS ALSO NOT ONE OF L OAN OR DEPOSIT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. C IT(APPEALS) WAS RIGHT IN DELETING THE PENALTY. ITA NOS. 5689 & 5690(DEL)/2010 16 7. COMING TO THE PENALTY LEVIED U/S 271E, THE A .O. HAS NOTED THE FOLLOWING TRANSACTIONS:- DATE PARTICULARS DESCRIPTION AMOUNT (RS.) 29.12.2005 SHYAMBIR JOURNAL 2,23,125/- 29.12.2005 BHIM SINGH JOURNAL 2,23,125/- 20.1.2006 RAJVATI JOURNAL 13,20,500/- 20.1.2006 RAMPHAL JOURNAL 27,69,250/- 20.1.2006 SHANKAR JOURNAL 2,50,563/- 20.1.2006 KHAM CHAND JOURNAL 2,50,563/- 20.1.2006 MULA JOURNAL 2,50,563/- 20.1.2006 SHANTI JOURNAL 5,55,750/- 20.1.2006 SOMDUTT?NAKUL JOURNAL 5,09,125/- 20.1.2006 JAGDISH/KELA DEVI JOURNAL 8,73,125/- 20.1.2006 SHREE DEVI JOURNAL 2,50,563/- 31.01.2006 PROFIT AGREEMENTS RIGHTS JOURNAL 2,31,250/- 7.1 THESE AMOUNTS REPRESENT REPAYMENTS TO THE DD BY WAY OF JOURNAL ENTRIES. IT HAS BEEN HELD THAT THE PAYMENTS HAVE BEEN MADE OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT. THE POSITION OF PAYMENTS IS SAME AS ACCEPTANCE OF LOAN. THESE TRANSACTIONS HAVE BEEN RECORDED IN THE CURRENT ACCOUNT OF THE DD MAINTAINED IN THE BOOKS OF TH E ASSESSEE. THE ITA NOS. 5689 & 5690(DEL)/2010 17 SUBMISSIONS OF RIVAL PARTIES ARE IDENTICAL WITH THE SUBMISSIONS MADE IN RESPECT OF PENALTY U/S 271D. THE ONLY DIFFERENCE WE FIND IS THAT THE WORDS LOAN OR DEPOSIT HAVE BEEN DEFINED IN SECTION 26 9T TO MEAN ANY LOAN OR DEPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD AND, IN CASE OF PERSON OTHER THAN A COMP ANY, INCLUDES LOAN OR DEPOSIT OF ANY NATURE. THE LATTER PART OF THE DEF INITION IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT IS A COMPANY. THE ORDERS OF LOWER AUTHORITIES NO WHERE SHOW THAT THE MONEY WAS REPAY ABLE AFTER NOTICE OR AFTER A PERIOD OF TIME. THIS IS AN ADDITIONAL FACTOR IN FAVOUR OF THE ASSESSEE. RELYING ON OUR ORDER IN RESPECT OF LEVY OF PENALTY U/S 271D, IT IS HELD THAT THE LD. CIT(APPEALS) RIGHTLY DELETED THIS PENALTY ALSO. 8. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. SD/- SD/- (C.M. GARG) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- FORGING LTD., NEW DELHI. DCIT, CIRCLE 11(1), NEW DELHI. CIT(A) CIT, THE D.R., ITAT, NEW DELHI. ASSISTANT REGISTRAR.