M/s. Himland Real Estate Pvt. Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 5771/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2698 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C , NEW DELHI BEFORE SH. I.C. SUDHIR , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 5771 /DE L/ 2013 ASSESSMENT YEAR: 2008 - 09 M/S. HIMLAND REAL ESTATE PVT. LTD., B46/6, MAIN WAZIRABAD ROAD, BHAJAN PURA, NEW DELHI VS. ADDL. CIT, RANGE - 12, NEW DELHI PAN : AABCH7293Q (APPELLANT) (RESPONDENT) APPELLANT BY SH. ANIL KUMAR JAIN, FCA RESPONDENT BY SH. ATIQ AHMAD, SR.DR DATE OF HEARING 13.06.2017 DATE OF PRONOUNCEMENT 28.07.2017 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 26/03/2013 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) - XV, NEW DELHI [IN SHORT THE CIT - (A) ] IN RELATION TO ASSESSMENT YEAR 2008 - 09. 2. IN THE GROUNDS OF APPEAL RAISED, THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE LD. CIT - (A) IN UPHOLDING THE PENALTY OF RS.67,87, 398/ - LEVIED UNDER SECTION 271D OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) BY THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 12 , NEW DELHI , (IN SHORT THE ADDL. COMMISSIONER ). 3. B RIEFLY STATED FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEA R 2008 - 09, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPAN Y HAD RECEIVED AN AMOUNT OF RS. 67,87,398/ - AS LOAN IN CASH FROM MRS . MAMTA CHAUDHARY, WHICH WAS 2 ITA NO . 5771/DEL/2013 IN VIOLATION OF SECTION 269 SS OF THE ACT. THE ASSESSING OFFICER SENT A PROPOSAL TO THE LD. ADDL. COMMISSIONER, WHO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT ON 07/03/2011. IT WAS PLEADED BY THE ASSESSEE THAT THE AMOUNT RECEIVED FROM MRS . MAMTA CHAUDHARY WAS TOWARDS SALE OF MULTIPLEX, WAS PURELY AND CONSTRUCTIVELY OF THE NATURE OF ADV ANCES FROM CUSTOMERS AND WERE NEITHER IN THE NATURE OF LOAN AND/OR DEPOSIT AND NOT COVE RED IN THE AMBIT OF SECTION 269 SS OF THE ACT. T HE LD. ADDL. COMMISSIONER NOTED IN THE ORDER THAT THE ASSESSEE HAS PASSED ENTRY IN ITS BOOKS OF ACCOUNTS ON 31/03/2008, ACCORDING TO WHICH, THE AMOUNT BEING RECEIVED AGA INST SALE OF PROPOSED MULTIPLEX , WAS TRANSFERRED TO LOAN ACCOUNT. IN VIEW OF THE SAID ENTRY, THE LD. ADDL. COMMISSIONER HELD THE SAID RECEIPT OF LOAN WAS IN CONTRAVENTION OF SECTION 269SS AND ACCORDINGLY , LE VIED T HE PENALTY UNDER SECTION 27 1D OF THE ACT. BEFORE THE LD. CIT - (A) , THE ASSESSEE FILED COPY OF MEMORANDUM OF U NDERSTANDING (MOU) DATED 15/01/2007 BETWEEN THE ASSESSEE COMPANY AND MRS . MAMTA CHAUDHARY FOR PURCHASE OF MULTIPLEX PLANNED BE CONSTRUCTED BY THE ASSESSEE COMPANY, STATEMENT OF ACCOUNTS OF MRS . MAMTA CHAUDHARY CONFIRMED BY BOTH THE PARTIES AND SUBMITTED THAT THE AMOUNT IN QUESTION WAS ADVANCE, WHICH DOES NOT FALL IN THE TERMS LOAN/DEPOSIT, USED /COVE RED IN THE AMBIT OF SECTION 269 SS OF THE ACT. T HE LD. CIT - (A) WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND HE UPHELD THE PENALTY LEVIED BY THE LD. ADDL. COMMISSIONER. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD. COUNSEL FILED A PAPER BOOK CONTAINING PAGE S 1 TO 172 AND SUBMITTED THAT AMOUNT IN QUESTION WAS ADVANCE AGAINST PURCHASE OF MULTIPLEX PLANNED TO BE CONSTRUCTED BY THE ASSESSEE COMPANY AND NOT LOANS AND DEPOSITS AS HELD BY THE LD. ADDL. COMMISSIONER OF INCOME TAX. IN SUPPORT OF THE CONTENTION THAT S UCH ADVANCE RECEIVED IN CASH I N RELATION TO BUSINESS ACTIVITY, AND NOT IN 3 ITA NO . 5771/DEL/2013 CONTRAVENTION OF SECTION 269 SS OF THE ACT, THE LD. COUNSEL RELIED ON FOLLOWING TWO DECISIONS: 1. W ORLDWIDE TOWNSHIP PROJECT L IMITED , 367 ITR 433 (DELHI) 2. FARRUKHABAD INVESTMENT (I) LTD. VS. JOINT COMMISSIONER OF INCOME TAX, 85 ITD 230 (DELHI). 5. ON THE OTHER HAND, THE LD. SENIOR DEPARTMENTAL R EPRESENTATIVE (DR) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE UNDISPUTED FACT IS THAT MRS . MAMTA CHAUDHARY, WAS DIRECTOR OF THE ASSESSEE C OMPANY. IT IS EVIDENT FROM THE L EDGER ACCOUNT OF MRS . MAMTA CHAUDHARY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WHICH IS AVAILABLE ON PAGE 28 T O 30 OF THE ASSESSE E S PAPER BOOK, THE SAID CASH AMOUNT OF RS.67,87, 398/ - WAS RECEIVED IN VARIOUS INSTALLMENTS BEGINNING FROM 14/04/2007 TO 26/12/2007 . THE LD. COUNSEL HAS CONTENDED THAT THE AMOUNT IN QUESTION WAS AN ADVANCE RECEIVED FROM MRS . MAMTA CHAUDHARY AGAINST SALE OF PROPOSED MULTIPLEX . 7. IN THE CASE OF W ORLDWIDE TOWNSHIP PROJECT LTD (SUPRA) RELIED UPON BY THE LD. COUNSEL , THE AMOUNT WAS RECEIVED BY J OURNAL ENTRY, WHICH WAS HELD BY THE HON BLE HIGH COURT AS NOT IN VIOLATION OF SECTION 269 SS OF THE A CT. THE RELEVANT FINDING OF THE HON BLE HIGH COURT IS REPRODUCED AS UNDER: 8. A PLAIN READING OF THE AFORESAID SECTION INDICATES THAT (THE IMPORT OF THE ABOVE PROVISION IS LIMITED) IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR A LOAN IS ACC EPTED BY AN ASSESSEE, OTHER THAN BY 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 EN TRIES. THE OBJECT OF THE S ECTION IS TO PREVENT TRANSACTIONS IN CURRENCY. THIS IS ALSO CLEARLY EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO SECTION 269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY . THE 4 ITA NO . 5771/DEL/2013 LIABILITY RECORDED IN THE BOOKS OF ACCOUNTS 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 SECTION 269SS OF THE ACT, BECAUSE PASSING SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. IN THE PRESENT CASE, ADMITTEDLY NO MONEY WAS TRANSACTED OTHER THAN THROUGH BANKING CHANNELS. M/S PACL INDIA LTD. MADE CERTAIN PAYMENTS T HROUGH 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 SECTION 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 ASSESSING OFFICER LEVIED A PENALTY UNDER SECTION 271D OF THE ACT FOR ALLEGED VIOLATION 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 ORDE R OF THE CIT - (A) WAS SUCCESSFULLY IMPUGNED BY THE ASSESSEE 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 PAYMENT 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 THROUGH IL & FS, WHICH HOLDS MORE THAN 30 PER CENT. OF THE PAID - UP CAPITAL OF THE ASSESSEE, BY JOURNAL ENTRY IN THE BOOKS OF ACCOUNT OF THE ASSESSED BY CREDITING THE ACCOUNT OF IL & FS. HAVING REGARD TO THE AFORENOTED FINDINGS, WHICH ARE ESSENTIALLY FINDINGS OF FACT, W E ARE IN COMPLETE AGREEMENT WITH THE TRIBUNAL THAT THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED ON THE FACTS OF THE CASE. ADMITTEDLY, NEITHER THE ASSESSEE NOR IL & FS HAD MADE ANY PAYMENT IN CASH. THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO ANY Q UESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW. WE ACCORDINGLY DECLINE TO ENTERTAIN THE APPEAL. DISMISSED. 5 ITA NO . 5771/DEL/2013 8 . THE FACTS OF THE ABOVE CASE ARE DIFFERENT FROM THE INSTANT CASE, AS IN THE INSTANT CASE LOAN HAS BEEN RECEIVED IN CASH AND NOT THROUGH JOURNAL ENTRIES. 9 . IN THE CASE OF FARRUKHABAD INVESTMENT (I) LTD. VS. JOINT COMMISSIONER OF INCOME TAX (SUPRA), THE AS SESSEE WAS A NON - BANKING FINANCIAL COMPANY. IN THE INSTANT CASE , THE ASSESSEE IS A REAL ESTATE COMPANY, WHICH CANNOT BE COMPARED WITH NON - BANKING FINANCIAL COMPANY ACCEPTING DEPOSITS FROM VARIOUS PERSONS OR EXTENDING LOANS TO GENERAL PUBLIC. 10 . IN THE I NSTANT CASE, THE AMOUNT IN QUESTION IS FOUND TO BE ENTERED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS LOAN FROM MRS . MAMTA CHOUDHARY . THE NARRATION OF THE TRANSACTION OF RECEIPT OF MONEY ENTERED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS AVAILABLE ON PAGE 25 OF THE ASSESSEE S PAPER BOOK IS REPRODUCED AS UNDER: DEBIT : MAMTA CHOUDHARY - ADVANCE AGAINST MULTIPLEX ( BEING AMOUNT RECEIVE D AGAINST SALE OF PROPOSED MULTIPLES T/F TO LOAN A/C DUE TO NON PERMISSION OF PROJECT) . 1 1 . CONTRA ENTRY OF THE SAME AMOUNT IS AVAILABLE ON PAGE 30 OF THE ASSESSEE S S PAPER BOOK , IN WHICH ALSO SAME NARRATION I S MENTIONED. 12 . IDENTICAL NARRATION IS APPEARING IN THE LEDGER ACCOUNT OF MRS MAMTA CHOUDHARY APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND DULY CONFIRMED BY MRS MAMTA CHOUDHARY, WHICH IS AVAI LABLE ON PAGE 34 OF THE ASSESSEE S PAPER BOOK. 13 . THUS , THE AMOUNT IN QUESTION IS LOAN ACCORDING TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE ITSELF. 6 ITA NO . 5771/DEL/2013 14 . THE LD. COUNSEL CONTENDED THAT IT WAS NOT LOAN OR DEPOSIT BUT IT WAS ADVANCE TOWARDS PURCHASE OF MULTIPLEX PLAN TO BE CONSTRUCTED BY THE ASSESSEE COMPANY. THUS , IT IS EVIDENT THAT MULTIPLEX WAS NOT CONSTRUCTED AT THE TIME OF RECEIPT OF THE AMOUNT FROM MRS . MAMTA CHOUDHARY. THE LD. COUNSEL EVEN FAILED TO EXPLAIN WHAT WAS THE STAGE OF CONSTRUCTION OF THE MULTIPLEX AT THE TIME OF ACCEPTING SAID RECEIPT. IN THE COPY OF MEMORANDUM OF UNDERSTANDING BETWEEN THE ASSESSEE AND MRS . MAMTA CHOUDHARY, WHICH IS AVAILABLE ON PAGE 31 TO 33 OF THE ASSESSES PAPER BOOK , THERE IS NO MENTION OF SCHEDULE OF PAYME NT TO THE ASSESSEE COMPANY AND A T WHAT STAGE OF CONSTRUCTION THE PAYMENT SHALL BE MADE . IT IS ALSO NOT MENTIONED THAT SU CH PAYMENT WILL BE MADE IN CASH . IN OUR OPINION, THE ASSESSEE HAS FAILED TO JUSTIFY THAT AMOUNT IN QUESTION WAS ADVANCE TOWARD PURCHASE OF MULTIPLEX. THE LD. CIT - (A) , UPHELD THE PENALTY WITH FOLLOWING OBSERVATION: 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS MADE BY THE APPELLANT AND THE APPLICABLE LAW IN THIS REGARD. ON CAREFUL PERUSAL OF THE DETAILS FURNISHED BY THE APPELLANT INCLUDING THE LEDGER ACCOUNT OF MRS. MAMTA CHAUD HARY BEFORE ME DURING THE COURSE OF APPEAL AGAINST THE QUANTUM APPEAL IN THE CASE OF THE APPELLANT, I OBSERVE THAT THE APPELLANT HAD RECEIVED AN AMOUNT OF RS.67,87,398 IN CASH FROM MRS. MAMTA CHAUDHARY. FURTHER, AN AMOUNT OF RS.33.15 LAKH WAS RECEIVED CHEQ UE. IN THE APPELLANT'S OWN ADMISSION, THESE AMOUNTS WERE INITIALLY TOWARDS ADVANCE FOR RIGHTS IN THE MULTIPLEX TO BE DEVELOPED BY THE APPELLANT COMPANY AND WERE TO BE CONVERTED INTO LOAN WITHIN THE PERIOD OF ONE YEAR IF THE CONSTRUCTION DID NOT START. THER EFORE, WHILE HOLDING THAT INITIALLY THE NATURE OF THE AMOUNT ADVANCED TO THE APPELLANT OF RS.67,87,398 WAS IN THE NATURE OF ADVANCE FOR GETTING RIGHTS IN THE MULTIPLEX, ITS NATURE GOT CHANGED WHEN THE ADVANCE GOT CONVERTED INTO LOAN ONCE THE APPELLANT COMP ANY COULD NOT MEET ITS COMMITMENT, DURING THE YEAR. IN VIEW OF THE SAME, I UPHOLD THE DECISION OF THE AO IN LEVY OF PENALTY UNDER SECTION 271D IN VIOLATION OF SECTION 269SS BY RECEIVING LOAN IN CASH IN RESPECT OF WHICH NO SATISFACTORY EXPLANATION WAS FURNI SHED. ACCORDINGLY, THE ORDER OF PENALTY IS CONFIRMED. 7 ITA NO . 5771/DEL/2013 15 . I N OUR OPINION, THE FINDING OF THE LD. CIT - (A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY , THE GROUND OF THE APPEAL IS DISMISSED. 16. IN TH E RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 28 TH JULY , 201 7 . SD/ - SD/ - ( I.C. SUDHIR ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH JULY , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI