Shri Popatlal K.Shah, Ahmedabad V. The Addl.CIT.,A'bad Range-2, Ahmedabad

ITA 575/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76870 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO.575/AHD/2011 A.Y.2007-08 SHRI POPATLAL K. SHAH, VINIT MOONDRA C.A., 201 SARAP, OPP. NAVJIVAN PRESS ASHRAM ROAD, AHMEDABAD. PAN: ADIPS 2909K VS ACIT, RANGE-2, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.D.R., ASSESSEE(S) BY : SHRI VINIT MOONDRA, A.R. / DATE OF HEARING : 08/07/2014 / DATE OF PRONOUNCEMENT: 11/07/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M AN ORDER OF THE LD. CIT(A)-XVI AHMEDABAD, DATED 25.01.2011. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: IN HIS ORDER DATED 25.01.2011, THE LD. CIT(APPEALS ) HAS ERRED IN LAW BY UPHOLDING THE PENALTY U/S.271D OF THE IT ACT, 1961 LEVIED BY THE AO IN HIS ORIGINAL ORDER DATED 07.09.2010 IN WHICH A PENALTY OF RS.42,83,915/- WAS LEVIED U/S.271D. THE LD. CIT(A) HAS MISINTERPRETED THE ADVANCES RECEIVED ON SALE OF LAND AS LOAN TRANSACTIONS U/S. 269SS SIMPLY BECAUSE THEY WERE RECORDED AS JOURNAL ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNTS. 2. THE IMPUGNED PENALTY U/S. 271D WAS LEVIED ON THE ASSESSEE VIDE AN ORDER DATED 07.09.2010. WHILE LEVYING THE PENALT Y, THE AO HAS NOTED AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR TH E ASSESSMENT YEAR 2007- 08 , THE A.O. HAS NOTICED THAT ASSESSEE HAS COMMITT ED A DEFAULT AS PER ITA NO.575/AHD/2011 SHRI POPATLAL K. SHAH VS. ACIT RANGE-2, AHMEDABAD. FOR A.Y. 2007-08 - 2 - PROVISIONS OF SECTION 269SS OF THE ACT. SUBSEQUENTL Y THE A.O. VIDE HIS LETTER DATED 31.06.2010 INTIMATED TO INITIATE PENAL PROCEE DINGS U/S.271D FOR A.Y. 2007-08 TO THIS OFFICE. A NOTICE U/S 274 R.W.S. 271 D WAS ISSUED ON 06/07/2010 REQUESTING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 27ID SHOULD NOT BE LEVIED FOR ACCEPTING LOAN EXCEEDING RS. 20,000/- OTHERWISE THAN BY ON ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. T HE PENALTY PROCEEDINGS WERE THEREFORE INITIATED. IT WAS NOTICED THAT ASSES SEE HAS ACCEPTED LOAN OF RS.42,83,915/- FROM SHRI BALAJI CONSTRUCTION IN CON TRAVENTION OF THE PROVISIONS OF SECTION 269SS. IN RESPONSE TO THE SHO W CAUSE NOTICE DATED 06.07.2010, THE AR OF THE ASSESSEE SUBMITTED HIS RE PLY VIDE LETTER DATED 15.07.2010 AS UNDER : 'WITH REFERENCE TO ABOVE BE BEG TO SUBMIT THAT I HA VE -NOT BPH' TAKEN OR., ACCEPTED ANY LOAN OR DEPOSIT. THE AMOUNT RECEIVED B Y ME WAS NOT LOAN OR DEPOSIT -BIN ADVANCE AGAINST SALE OF LAND ONLY. SIN CE ADVANCE WAS TAKEN WITHOUT CERTAINLY OF SALE TO SAME PARTY, INTEREST WAS AGREE D TO BY US HENCE INTEREST WAS PAID. ONLY BECAUSE INTEREST IS PAID DOESN 'T MAKE A TRANSACTION LOAN AS INTEREST IS USUALLY PAID IN TRADING TRANSACTION WHERE PAYMENT. FROM DEBTORS IS RECEIVED BEYOND STIPULATED TIME OR ADVANCE ARE RECEIVED. HEN CE THERE BEING NO LOAN/DEPOSIT BEING TAKEN BY ME PROVISIONS OF SECTIO N 269SS ARE NOT APPLICABLE. YOU ARE THEREFORE REQUESTED TO DROP THE PENALTY PRO CEEDINGS U/S 27 ID. (I). MR. POPATLAL K. SHAH PURCHASED A LAND ALONGWI TH MR. MRUGESH SHARMA FOR RS.1,03,00,000/- WITH AN INTENTION TO SELL IT TO SH RI BALAJI CONSTRUCTION FOR WHICH SHREE BALAJI CONSTRUCTION PAID RS.39,00,000/- FROM SHREE BALAJI CONSTRUCTION ACCOUNT TO DIFFERENT SELLERS OF THE LAND MENTIONED IN REGISTER ED DEED DATED 18.05.2006. SHRI POPATLAL SHAH PASSED A COMBINED JV ENTRY OF RS.39,00,000/- D EBITED LAND ACCOUNT AND CREDITED SHREE BALAJI CONSTRUCTION ACCOUNT. (II) RS.77,415/- CASH PAID BY SHREE BALAJI CONSTRUC TION FOR STAMP TO POPATLAL K. SHAH. (III) RS.3,06,500/- IS ALSO PAID IN CASH BY SHREE B ALAJI CONSTRUCTION TO POPATLAL K. SHAH FOR STAMP AND OTHER EXPENSES. (DOCUMENTATION E XPENSES) '. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE ACTION OF THE AO WAS CONFIRMED. BEING AGGRIEVED , THE ASSESSEE IS IN APPEAL. 4. AT THE OUTSET, LEARNED AR, MR. VINIT MOONDRA HAS INFORMED THAT THE IMPUGNED ASSESSMENT ORDER OF THE AO THROUGH WHI CH THE PENALTY IN QUESTION WAS INITIATED NOW STOOD CANCELLED BECAUSE OF AN ORDER U/S.263 OF IT ACT OF LEARNED COMMISSIONER-I, AHMEDABAD, DATED 21.2.2012. THE ASSESSEES SUBMISSION WAS THAT THE TRANSACTION IN Q UESTION WAS NOT A LOAN ITA NO.575/AHD/2011 SHRI POPATLAL K. SHAH VS. ACIT RANGE-2, AHMEDABAD. FOR A.Y. 2007-08 - 3 - TRANSACTION BUT THE AMOUNT IN QUESTION WAS RECEIVED AGAINST THE SALE OF LAND. THERE WAS NO CONTRAVENTION OF SECTION 269SS O F IT ACT. HOWEVER, LEARNED COMMISSIONER VIDE PARAGRAPH 11 HAS CANCELLE D THE ORDER AS FOLLOWS: 11. FROM THE AFORESAID FACTS AND CIRCUMSTANCES AND REASONS, A FORTIORI, IT IS QUITE EVIDENT THAT THE AOS ASSESSMENT ORDER DAT ED 30.12.2009 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDI NGLY, THE ASSESSMENT ORDER U/S.143(3) OF THE IT ACT, 1961 DATED 30.12.2009 IS CANCELLED WITH A DIRECTION TO MAKE A FRESH ASSESSMENT BY CORRECTLY VERIFYING T HE ISSUES IN QUESTION AND ALSO BY AFFORDING REASONABLE OPPORTUNITY TO THE ASS ESSEE. 5. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., M R. NIMESH YADAV HAS PLEADED THAT THE PROCEEDINGS U/S.271D R.W.S. 26 9SS ARE INDEPENDENT PROCEEDINGS; THEREFORE, THE VIEW TAKEN BY THE LEARN ED COMMISSIONER SHOULD NOT HAVE ANY BEARING ON THIS PENALTY PROCEED INGS. 6. WE HAVE HEARD BOTH THE SIDES. AS FAR AS THE PROC EEDINGS U/S.271D IS CONCERNED; FOUND TO BE ARISING FROM THE ORIGINAL ORDER PASSED U/S.143(3) FOR A.Y.2007-08 DATED 30 TH OF DECEMBER, 2009; STOOD MERGED WITHIN THE ORDER PASSED BY LEARNED COMMISSIONER U/S .263 DATED 21.02.2012. THE ORDER PASSED U/S.271D WAS DATED 7.0 9.2010; THEREFORE AFTER PASSING OF THE ORDER U/S.263 THE IMPUGNED PEN ALTY PROCEEDINGS DO NOT SURVIVE. REVENUE DEPARTMENT CANNOT TAKE BOTH TH E VIEW AT THE SAME TIME THAT ON ONE HAND THE ASSESSEE HAS TRANSACTED I N LAND DEAL IN CASH; THEREFORE, THE PROVISIONS OF SECTION 40A(3) WAS TO BE INVOKED AND SIMULTANEOUSLY ON THE OTHER HAND TAKEN AN ANOTHER V IEW THAT THERE WAS A VIOLATION OF SECTION 269SS FOR ACCEPTING CASH LOANS . ON INQUIRY, WE HAVE BEEN INFORMED THAT CONSEQUENCE UPON THE DIRECTIONS OF LEARNED COMMISSIONER U/S.263 AN ADDITION HAS BEEN MADE AND THE MATTER IS SUBJUDICE BEFORE LEARNED CIT(A). BECAUSE OF THIS RE ASON, WE ARE NOT ITA NO.575/AHD/2011 SHRI POPATLAL K. SHAH VS. ACIT RANGE-2, AHMEDABAD. FOR A.Y. 2007-08 - 4 - INCLINED TO COMMENT ON THE MERITS OF THE CASE AND P RESENTLY DEEM IT FIT TO HOLD THAT THE PENALTY PROCEEDINGS NOW UNDER CONSIDE RATION STOOD MERGED, RATHER DO NOT SURVIVE CONSEQUENCE UPON THE CANCELLA TION OF THE ASSESSMENT ORDER BY LEARNED COMMISSIONER U/S.263 OF IT ACT. ON ACCOUNT OF THIS DEVELOPMENT, THE PENALTY IN QUESTIO N DESERVES TO BE DELETED. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/07/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD