DCIT, New Delhi V. M/s. Laxmi Lumber Industries Pvt. Ltd., New Delhi

ITA 5913/DEL/2013

• Counselvise Citation: 591320114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEAR SHARMA
• Assessee Lawyers: V SACHDEVA
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

ITA NO. 5913.D EL. 2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. S.V.MEHROTRA , AM AND SH. I.C.SUDHIR , JM ITA NO. 5913/DEL/2013 : ASSTT. YEAR : 2009-10 DCIT CIRCLE-4(1) NEW DELHI VS LAXMI LUMBE R INDUSTRIES PVT. LTD. 1/34, WHS, KIRTI NAGAR NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AABCL4439L APPELLANT BY : SH. SAMEAR SHARMA, DR RESPONDENT BY : SH. V.SACHDEVA, CA DATE OF H EARING : 31 .07.2015 DATE O F PRONOUNCEMENT : 26 .0 8 .2015 ORDER PER I.C.SUDHIR, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30.08.2013 OF LD. CIT(A)- VIII, NEW DELHI FOR ASSES SMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271D R ELATING TO SECTION 269SS OF RS. 70,00,000/- IMPOSED BY THE ADD L. CIT RANGE-4, NEW DELHI? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN IGNORING THE DECISION OF THE HONBL E HIGH COURT IN THE CASE OF CIT VS. SAMORA HOTELS PVT. LTD. (2012) WHICH IS CLEARLY APPLICABLE IN THE CASE OF ASSESSEE? 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. ITA NO. 5913.D EL. 2013 2 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUNDS OF APPEAL RAISED ABOVE AT THE TIME OF H EARING. 2. THE FACTUAL MATRIX , LEADING TO THE PRESENT APPE AL ARE AS FOLLOWS; ASSESSEE IS PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF TRADING IN ALL KINDS OF TIMBER PLYWOOD LAMINATED SHEETS, ADHESIVE, CERAMIC TILES ETC. ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARI NG RS. 64,52,610/- ON 27.09.09. A SURVEY WAS CONDUCTED AT THE PREMISES OF FIRM M/S LAXMI TIMBER INDUSTRY. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE FIRM M/S LAXMI TIMBER INDUSTRY HAS BEEN TAKEN OVER BY THE ASSESSEE COMPANY ON 1.04.08. THE INFORMATION WAS PASSED TO JURISDICTIONAL OF THE ASS ESSEE COMPANY. DURING THE COURSE OF THE SURVEY AT ASSESSEE COMPANY, IT WAS OB SERVED THAT THE ASSESSEE COMPANY HAD RECEIVED TWO SHARE APPLICATION IN CASH TO AN EXTENT OF RS. 35,00,000/- EACH FROM M/S GANGA RANI PATEL & SONS ( HUF) AND M/S. DHANNA RAM PATEL & SONS (HUF). THE ASSESSING OFFICER MADE ADDITION OF RS. 70,00,000/- IN THE HANDS OF THE ASSESSEE COMPANY ON THE GROUND THAT PROVISIONS OF SEC. 269SS OF THE INCOME TAX ACT MAND ATES THAT ANY LOAN OR DEPOSITS IN EXCESS OF RS. 20,000/- IS TO BE ACCEPTE D ONLY BY WAY OF AN ACCOUNT PAYEE CHEQUE. THE A.O. ALSO INITIATED PENALTY U/S 2 71D FOR THE DEFAULT U/S 269.55. 3. THE ASSESSING OFFICER CONFIRMED THE PENALTY TO T AKE EXTENT OF MONEY RECEIVED IN CASH. AGGRIEVED BY THE ASSESSMENT ORDER U/S 271D, THE ASSESSEE COMPANY PREFERRED APPEAL BEFORE CIT(A) (VIII). THE LD. CIT(A) VII QUASHED THE PENALTY ORDER RELYING ON M/S IP INDIA PVT. LTD. VS. CIT, 343 ITR 353(DEL) (2012). HENCE THIS APPEAL. ITA NO. 5913.D EL. 2013 3 4. THE LD. DR RELIES ON THE PENALTY ORDER PASSED BY THE ADDL. CIT. RANGE 4. BEFORE THE TRIBUNAL THE LD. COUNSEL FOR THE ASSESSE E COMPANY SUBMITTED THAT, IT HAD RECEIVED MONEY TOWARDS SHARE APPLICATIONS IN CASH FROM M/S GANGA RANI PATEL & SONS (HUF) AND M/S. DHANNA RAM PATEL & SONS (HUF) AMOUNTING TO RS.35,00,000/-EACH. 5. THE LD. COUNSEL FOR ASSESSEE COMPANY SUBMITTED THAT, THE AMOUNT WAS RECEIVED ONLY FOR THE PURPOSE OF ALLOTMENT OF EQUIT Y SHARES ONLY. THE MONEY WAS NEITHER RECEIVED AS A TEMPORARY ACCOMMODATION, NOR WAS THERE ANY LIABILITY TO RETURN IT, TO FALL WITHIN THE AMBIT OF DEPOSITS. THE ASSESSEE COMPANY HAS ALLOTTED 2,20,000/- EQUITY SHARES HAVING VALUE OF RS. 22,00,000/- ON 17.11.08 TO GANGA RAM PATEL AND 4,80,000/- (RUPEES FOUR LAKH EIGHTY THOUSAND ONLY) ON 10.2.09 TO GANGA RAM PATEL & SONS (HUF) IN LIEU OF SHARE APPLICATION MONEY RECEIVED IN CASH FROM EACH PARTY. 6. THE LD. COUNSEL FOR ASSESSEE COMPANY SUBMITS THA T NO AMOUNT WHATSOEVER WAS KEPT AS A DEPOSIT, TO BE REFUNDED LA TER ON. THE ESSENCE OF A DEPOSIT IS THAT THESE MUST BE A LIABILITY TO RETURN IT TO THE PARTY TO WHOM OR ON WHOSE BEHALF IT HAS BEEN MADE ON FULFILMENT ON CERT AIN CONDITIONS. 7. IT HAS BEEN SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE COMPANY THAT, THE COMPANIES (ACCEPTANCE OF DEPOSIT RULES) 1975 UN DER RULE 2 (B)(IX) CLEARLY STATES THAT, DEPOSIT DO NOT INCLUDE ANY AMOUNT RECE IVED FROM A DIRECTOR, OR A SHARE HOLDER OF A PRIVATE LIMITED COMPANY. IT WAS F URTHER SUBMITTED THAT DHANNA RAM PATEL & SONS (HUF) AND GANGA RAM PATEL & SONS (HUF) WERE DIRECTORS OF THE ASSESSEE COMPANY AND HENCE THE AMO UNTS RECEIVED WERE CLEARLY OUTSIDE THE PURVIEW OF THE DEFINITION OF DE POSIT. ITA NO. 5913.D EL. 2013 4 8. THE LD. COUNSEL FOR THE ASSESSEE COMPANY FURTHER SUBMITTED THAT THE ASSESSEE HAD A REASONABLE CAUSE U/S 273-B FOR RECEI PT OF THE MONEY IN CASH. IT IS SUBMITTED THAT THE SHARE HOLDERS HAVE PAID THE T AXES IN THE PERSONAL RETURNS ON THE SHARE APPLICATION MONEY AND NO TAX WHATSOEVE R HAS BEEN EVADED. THE SHARE HOLDERS HAVE ADVANCED THE SHARE APPLICATION M ONEY IN CASH FOR THE BUSINESS PURPOSE BASED ON BONAFIDE BELIEF AND THE L EGAL ADVICE OBTAINED BY THEM. 9. ON THE BASIS OF THE SUBMISSIONS ADVANCED BY BOT H THE PARTIES AND ON PERUSAL OF THE ORDERS PASSED BY THE AUTHORITIES BEL OW, WE FIND THAT NEITHER THE LD. CIT(A) HAS VERIFIED THE ABOVE SUBMISSIONS ADVAN CED BEFORE HIM BY THE ASSESSEE COMPANY NOR HAS HE GONE THROUGH THE DOCUME NTS FILED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK. . THE LD. CIT( A) HAS ONLY RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S IP INDIA PVT. LTD (SUPRA) AND ALLOWED THE CLAIM OF THE ASSESSEE C OMPANY WITHOUT GOING INTO THE ENTIRE FACTS OF THE PRESENT CASE. THE ASSESSEE COMPANY HAS NOT FILED THE PAPER BOOK WHICH WAS FILED BEFORE THE CIT(A), SO AS TO VERIFY THE SAME. WE THEREFORE SET ASIDE THE ISSUE BACK TO THE FILE OF L D. CIT(A) FOR VERIFYING THE SAME AND DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTU NITY OF BEING HEARD TO THE PARTIES. 10. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE LD. CIT(A) HAS DELETED THE PENALTY IN QUESTION ON THE BASIS THAT PROVISIONS UNDER SECTION 271D/269SS ARE NOT APPLICABLE IN CASE OF SHARE APPLICATION MONEY RECEIVED IN CASH AND THAT THE RECEIPT IN QUES TION WAS NOT A LOAN OR DEPOSIT. IN THIS REGARD HE HAS PLACED RELIANCE ON THE LATER DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CA SE OF CIT VS. I.P. INDIA PVT. ITA NO. 5913.D EL. 2013 5 LTD., 343 ITR 353 (DEL), WHEREIN THE DECISION RELIE D UPON BY THE ASSESSING OFFICER HAS BEEN CONSIDERED. WE THUS DO NOT FIND I NFIRMITY IN THE FIRST APPELLATE ORDER ON THE ISSUE. THE SAME IS UPHELD. THE GROUND NO. 1 RAISING THE ISSUE IS THUS REJECTED. 11. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE COURT ON 26.08.2015. SD/- SD/- (S.V. MEHROTRA) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 26.08.2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 5913.D EL. 2013 6 DATE 1. DRAFT DICTATED ON ...26/08/2015 2. DRAFT PLACED BEFORE AUTHOR 26/08/2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.08.2015 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 26.08.2015 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.08.2015 6. KEPT FOR PRONOUNCEMENT ON 26.08.2015 7. FILE SENT TO THE BENCH CLERK 31.08.2015 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.