Dy. CIT,Cent. Cir., Aurangabad V. M/s. Rudrance Construction Co., Aurangabad

ITA 623/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9905 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH; K K OZHA
• Assessee Lawyers: ARVIND SONDE; S A MUKADAM
• Keywords: Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI R.K. PANDA, ACCOUNTANT MEMBER I.T.A. NO. 622 TO 625/PN/2010 ( A.Y. 2003-04 TO 2006-07 ) DEPUTY COMMISSIONER OF INCOME TAX, CENT. CIRCLE, AURANGABAD APPELLANT VS. M/S. RUDRANEE CONSTRUCTION CO. A-9 UDYAM BHAVAN, MIDC AREA, RAILWAY STATION ROAD AURANGABAD 431 005 PAN AAEFR 0447 G , RESPONDENT APPELLANT BY: SHRI S.K. SINGH AND SHRI K.K. OZHA RESPONDENT BY: SHRI ARVIND SONDE AND SHRI S.A. MUK ADAM DATE OF HEARING:11-10-2012 DATE OF PROOUNCEMENT: 30-10-2012 ORDER PER BENCH THESE APPEALS BY THE DEPARTMENT ARE DIRECTED AGAINS T THE CONSOLIDATED ORDER OF CIT(A)-AURANGABAD DATED 2 9-1- 2010 FOR A.Y. 2003-04 TO 2005-06 RAISING COMMON ISS UE. SINCE ALL THE APPEALS RELATE TO THE SAME ASSESSEE A ND THE ISSUE INVOLVED IS ALSO COMMON, THEY WERE HEARD TOGE THER AND ARE BEING DECIDED BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE ONLY ISSUE RAISED BY THE DEPARTMENT IN ALL THESE APPEALS IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271D OF THE INCOME-TAX ACT, PAGE 2 OF 4 ITA NO. 622 TO 625/PN/2010 RUDRANCE CONSTRUCTION A.Y. 2003-04 TO 2006-07 1961. THE ASSESSMENT YEARS INVOLVED ARE 2003-04 TO 2006-07. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE CIT(A) HAS DEC IDED THE ISSUE BY OBSERVING AS UNDER: ONCE THE HAND LOAN RECORDED IN THE SEIZED MATERIAL IS OFFERED BY THE APPELLANT AS ITS UNDISCLOSED INCOME AND THE REVENUE ACCEPTED THE SURRENDER OF THE AMOUNT AN D ASSESSED IT AS INCOME OF THE ASSESSEE, THE PROVISIO NS OF SEC. 269SS R.W.S. 271D OR 269T R.W.S. 271E CANNOT B E RESORTED TO. WHILE DECIDING THE SIMILAR ISSUE THE HONBLE DELHI HIGH COURT IN THE CASE OF DIWAN ENTERPRISES VS. CIT & OTHERS (2000) 246 ITR 571, OBSERVED THAT IT WAS OPEN TO THE OAO NOT TO ACCEPT THE SURRENDER, TREAT THE AMOUNT AS LOAN AND THEN HOLD T HE ASSESSEE LIABLE TO PENALTY U/S 271D FOR NON-COMPLIA NCE WITH THE SEC. 269SS. IT WAS FURTHER OBSERVED BY THE HONBLE COURT THAT THE AO COULD NOT BE PERMITTED TO TREAT THE AMOUNT OF LOAN AS INCOME FOR THE PURPOSE OF COMPUTING ASSESSEES TAX AND AT THE SAME TIME TO TR EAT IT AS A LOAN FOR THE PURPOSE OF SEC. 269SS AND SUBJ ECT THE TRANSACTION TO PENALTY U/S 271D. SIMILAR VIEW W AS TAKEN IN THE CASE OF CIT VS. STANDARD BRAND LTD. (2006) 285 ITR 295. IN THIS CASE, ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 3 LAKHS IN CASH FROM ONE M/S. D. ACCORDING TO THE AO THE AMOUNT REPRESENTED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. NOTWITHSTANDING THE FACT THAT THE AO WAS OF THE VIE W THAT THE AMOUNT WAS UNDISCLOSED INCOME, PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE FOR THE VIOLATION OF PROVISIONS OF SEC. 269SS OF THE ACT. THE HONBLE DELHI HIGH COURT OBSERVED THAT THE REVENUE, HAVING TAKEN THE STAND THAT THE AMOUNT OF RS. 3 LAK H WAS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE , IT COULD NOT RESORT TO PROCEEDINGS U/S 269SS R.W.S. 271D. RELYING UPON THE AFORESAID ORDER OF HONBLE DELHI H IGH COURT, THE RELIEF WAS ALSO GRANTED BY THE HONBLE I TAT MUMBAI B BENCH, IN THE CASE OF DCIT VS. G.S. ENTERTAINMENT (2007) 109 TTJ (MUM) 54. IN THIS CAS E ALSO, IT WAS HELD BY THE HONBLE TRIBUNAL THAT ONCE THE PAGE 3 OF 4 ITA NO. 622 TO 625/PN/2010 RUDRANCE CONSTRUCTION A.Y. 2003-04 TO 2006-07 AMOUNT IN QUESTION IS ASSESSED AS THE UNDISCLOSED INCOME OF THE ASSESSEE IN THE BLOCK ASSESSMENT FOR THE BLOCK PERIOD, THE PROVISIONS OF SEC. 269SS R.W.S. 2 71D CANNOT BE RESORTED TO. IN VIEW OF THE ABOVE, ON E THE UNACCOUNTED FUND WAS SURRENDERED BY THE ASSESSEE AND IT WAS ACCEPTED BY THE AO AS INCOME OF THE ASSESSEE, IT CEASED TO BE A LOA N AND THEREFORE, THE VERY FOUNDATION FOR INITIATING T HE PROCEEDINGS FOR AND LEVYING PENALTY U/S 271E WAS LO ST. THEREFORE, PENALTIES IMPOSED BY THE JXCIT CENTRAL RANGE, NASHIK U/S 271E R.W.S. 269T ON THE BASIS OF ENTRIES RECORDED ON SEIZED REGISTERS MARKED AS ANNEXURE A-25, A-26, A-32 AND A-33 CANNOT BE SUSTAINED IN VIEW OF ABOVE, I CANCEL THE PENALTIES U/S 271E F OR A.Y. 2003-04, 2004-05, 2005-06 AND 2006-07. 4. FROM THIS, IT IS UNDISPUTED THAT ONCE UNACCOUNTE D FUNDS ARE SURRENDERED BY THE ASSESSEE AND SAME WAS ACCEPTED BY THE AO AS INCOME OF THE ASSESSEE HAD CE ASED TO BE LOAN, THEREFORE, THE VERY FOUNDATION FOR INITIAT ING THE PROCEEDINGS FOR LEVYING PENALTY U/S 271E IS LOST. THEREFORE, THE CIT(A) WAS JUSTIFIED IN CANCELLING THE PENALTY U/S 271E READ WITH SEC. 269SS OF THE ACT. 5. IN THE RESULT ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED ON THE 30 TH OCTOBER 2012. SD/- SD/- (R.K. PANDA) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 30 TH OCTOBER 2012 ANKAM PAGE 4 OF 4 ITA NO. 622 TO 625/PN/2010 RUDRANCE CONSTRUCTION A.Y. 2003-04 TO 2006-07 COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- AURANGABAD 4. THE CIT- AURANGABAD 5. THE D.R, B BENCH, PUNE 6. GUARD FILE BY ORDER SR. P.S. ITAT PUNE BENCH