DCIT,Central Circle - 6, Hyderabad V. Sri. G. Sanjay Chowdary, Hyderabad

ITA 626/HYD/2014

• Counselvise Citation: 62622514 RSA 2014
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 04-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: J J VARUN
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 623/HYD/2014 A.Y. 2004-05 I.T.A. NO. 626/HYD/2014 A.Y. 2006-07 THE DEPUTY CIT CENTRAL CIRCLE-6 HYDERABAD VS. SRI G. SANJAY CHOWDARY HYDERABAD PAN: AVIPS9257L APPELLANT RESPONDENT APPELLANT BY: SRI RAJAT MITRA RESPONDENT BY: SRI J.J. VARUN DATE OF HEARING: 2 7 .10.2014 DATE OF PRONOUNCEMENT: 30.10.2014 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THE ABOVE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A)-I, HYDERABAD DATED 22.1.2014 FOR ASSESSMENT YEARS 2004-05 AND 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT WHILE FINALIZING T HE ASSESSMENTS FOR THE ASSESSMENT YEARS 2004-05 & 2006 -07 IT WAS NOTICED THAT THE ASSESSEE HAD REPAYMENT OF CASH LOANS OF RS. 14,58,000 AND RS. 20,71,750 RESPECTIVELY TO M/S . LAHARI GREEN PARK IN THE ACCOUNTING PERIOD CONCERNED. SUB SEQUENTLY, WHILE DELETING THE ADDITION MADE U/S. 68, THE THEN CIT(A) OBSERVED THAT AS PER THE RECEIPTS AND PAYMENTS STAT EMENT FILED BY THE ASSESSEE HIMSELF, CASH LOAN WAS REPAID BY TH E ASSESSEE TO M/S. LAHARI GREEN PARK. THEREFORE, IT WAS HELD THA T THERE WAS CONTRAVENTION OF THE PROVISION OF S. 269T OF THE AC T. I.T .A. NOS. 623 & 626/HYD/2014 SRI G. SANJAY CHOWDARY ======================== 2 ACCORDINGLY, PENALTY PROCEEDINGS U/S. 271E OF THE A CT WERE INITIATED. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED IN THIS REGARD, THE ASSESSEE CONTENDED THAT AS PER THE DECI SION OF THE CIT(A), THERE WAS NO CASH CREDIT U/S. 68 AND, THERE FORE, THERE WAS NO VIOLATION OF SEC. 269T. BESIDES, IT WAS SUB MITTED THAT THE LAND WAS PURCHASED IN THE NAME OF THE ASSESSEE AND THE PAYMENT WAS MADE BY M/S. LAHARI GREEN PARK. AT THE END OF THE YEAR, WHEN THE LAND WAS REGISTERED, LAND A/C WA S DEBITED IN THE BOOKS OF M/S. LAHARI GREEN PARK AND THE PARTY'S A/C, IN WHOSE NAME THE SAME WAS PURCHASED, WAS CREDITED. I T WAS, THEREFORE, ARGUED THAT NO CASH LOAN WAS REPAID SO A S TO SAY THAT THERE WAS ANY CONTRAVENTION OF S. 269T. 4. ON A CONSIDERATION OF FACTS AND EXPLANATION, THE JT . COMMISSIONER OF INCOME-TAX, CENTRAL RANGE-1, HYDERA BAD IN HIS ORDER OBSERVED THAT THE ASSESSING OFFICER HAD N OTED THAT AS PER THE RECEIPT AND PAYMENT A/C, CASH LOAN WAS RECE IVED FROM M/S. LAHARI GREEN PARK WHICH WAS UTILIZED FOR PURCH ASE OF LAND. THE LAND WAS ULTIMATELY PURCHASED IN THE NAME OF TH E ASSESSEE AND SINCE HE DID NOT HAVE SUFFICIENT FUNDS, THOSE W ERE MADE AVAILABLE BY M/S. LAHARI GREEN PARK, A PROPRIETARY CONCERN OF SHRI G. HARI BABU. THEREFORE, THE TRANSACTION BETW EEN M/S. LAHARI GREEN PARK AND THE ASSESSEE WAS THAT OF A LO AN. SINCE THE SAME WAS IN CASH, PROVISIONS OF S. 269T WERE VI OLATED AND PENALTY U/S. 271E WAS LEVIABLE. HE NOTED THAT NO E XPLANATION COULD BE OFFERED TO JUSTIFY SUCH VIOLATION. ACCORD INGLY, HE PROCEEDED TO LEVY PENALTIES FOR RESPECTIVE ASSESSME NT YEARS. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE ARGUED THAT THE PROVISIONS OF S. 269T HAVE BEEN BROUGHT INTO THE STATUTE WITH A VIEW TO COUNTER EVA SION OF TAX. I.T .A. NOS. 623 & 626/HYD/2014 SRI G. SANJAY CHOWDARY ======================== 3 IN THIS CASE, HOWEVER, THE TRANSACTION IS BETWEEN H IMSELF AND HIS FATHER, WHO DULY MAINTAINS BOOKS OF ACCOUNT, WH ICH ARE SUBJECTED TO AUDIT U/S. 44AB. LASTLY, THE AR SUBMI TTED THAT AFTER CONSIDERING SIMILAR SUBMISSIONS, THE PENALTY LEVIED U/S. 271E IN THE ASSESSMENT YEAR 2005-06 AND FOR ASSESSM ENT YEAR 2003-04 HAS BEEN DELETED BY THE CIT(A)-I, HYDERABAD AND THE SAME HAS BEEN CONFIRMED BY THE ITAT, HYDERABAD IN T HE CASE OF SMT. G. VENKATALAKSHMI, MOTHER OF THE ASSESSEE AND ONE OF THE LAHARI GROUP CASES. 6. THE CIT(A) OBSERVED THAT THE ISSUE OF PENALTY U/S. 271E LEVIED IN THE CASE OF SMT. G. VENKATALAKSHMI, MOTHE R OF THE ASSESSEE AND ONE OF THE LAHARI GROUP CASES IN THE A .Y. 2005-06 HAS BEEN DECIDED BY THE TRIBUNAL, HYDERABAD BENCHES IN THEIR ORDER DATED 9-11-2012 IN ITA NO. 1135/HYD/2012. TH E CIT(A) OBSERVED THAT UNDER SIMILAR FACTS, THE TRIBUNAL, AF TER EXAMINATION OF THE DECISIONS CITED BY THE AR OF THE ASSESSEE HAVE REMITTED THE MATTER BACK TO THE FILE OF THE AS SESSING OFFICER TO VERIFY THE FACT WHETHER THE ASSESSEE HAD ACTUALL Y REPAID CASH LOAN TO M/S. LAHARI GREEN PARK OR THERE WERE MERE J OURNAL ENTRIES TO THAT EFFECT. THEY HAVE OBSERVED THAT IF ULTIMATELY IT IS FOUND THAT NO CASH LOAN WAS ACTUALLY REPAID BY THE ASSESSEE IN THE COURSE OF TRANSACTION AND THERE WERE ONLY JOURN AL ENTRIES TO THAT EFFECT, NO PENALTY U/S. 271E OF THE ACT CAN BE LEVIED. IT WAS ALSO NOTED THAT AGAINST THE SAID ORDER OF THE ITAT, THE DEPARTMENT HAS FILED A MISCELLANEOUS PETITION SEEKI NG RECTIFICATION/RECALL OF THE ORDER. THE ITAT VIDE O RDER DATED 15.3.2013 MADE THE FOLLOWING OBSERVATION: 'WE FIND NO MERIT IN THE CONTENTION OF THE REVENUE THAT THE INFERENCE, ATTRIBUTED TO THE TRIBUNAL, S A MISTAKE OF LAW, AND HENCE APPARENT FROM RECORD. CLAUSE (IIL) OF EXPLANATION BELOW S. 269SS CLEARLY DEFINES 'LOAN OR DEPOSIT' AS MEANING 'LOAN OR DEPOS IT I.T .A. NOS. 623 & 626/HYD/2014 SRI G. SANJAY CHOWDARY ======================== 4 OF MONEY'. AS SUCH, ANY LOAN OR DEPOSIT OTHER THAN THROUGH THE MEDIUM OF MONEY IS OUTSIDE THE CLUTCHES OF THE PROVISIONS OF S. 269SS OF THE ACT. CONSEQUENTLY, MERE JOURNAL ENTRIES MADE IN THE BOOKS OF ACCOUNTS OF THE PARTIES DO NOT ATTRACT THE PROVISIONS OF S. 269SS OF THE ACT.' 7. EVEN IN ASSESSMENT YEAR 2003-04, IN THE CASE OF SMT . G. VENKATALAKSHMI, MOTHER OF THE ASSESSEE AND ONE OF T HE LAHARI GROUP CASES, THE TRIBUNAL CANCELLED THE PENALTY FOL LOWING THEIR ORDER FOR ASSESSMENT YEAR 2005-06. 8. THE CIT(A) HELD THAT SINCE FACTS ARE SIMILAR IN THE CASE OF ASSESSEE TO THAT OF SMT. G. VENKATALAKSHMI IN THE A SST. YEARS 2004-05, 2006-07 & 2008-09. RESPECTFULLY FOLLOWING THE ORDER OF THE JURISDICTIONAL INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF SMT. G. VENKATALAKSHMI FOR THE ASSESSMENT YEAR 2 005-06 AND ALSO ASSESSMENT YEAR 2003-04 STATED ABOVE BY TH E CIT(A), DIRECTED THE ASSESSING OFFICER TO VERIFY WHETHER IN THESE YEARS ALSO THE ASSESSEE HAD ACTUALLY REPAID CASH LOAN TO M/S. LAHARI GREEN PARK OR THEY WERE MERE JOURNAL ENTRIES TO THA T EFFECT AND IF IT IS ULTIMATELY FOUND THAT NO CASH LOAN WAS ACT UALLY REPAID BY THE ASSESSEE IN THE COURSE OF TRANSACTION AND THEY WERE ONLY JOURNAL ENTRIES TO THAT EFFECT, THE PENALTY U/S. 27 1E LEVIED IN THESE YEARS ALSO SHALL STAND CANCELLED. ACCORDINGLY , THE CIT(A) DECIDED THE GROUNDS TAKEN IN THESE APPEALS IN FAVOU R OF THE ASSESSEE, SUBJECT TO VERIFICATION ON THE LINES DIRE CTED BY THE ITAT AS DISCUSSED ABOVE. ACCORDINGLY, SHE ALLOWED THE AP PEALS OF THE ASSESSEE FOR STATISTICAL PURPOSES FOR THE A.YS. 200 4-05 AND 2006-07. 9. AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING COMMON GROUNDS: I.T .A. NOS. 623 & 626/HYD/2014 SRI G. SANJAY CHOWDARY ======================== 5 1) THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE ORDER OF THE CIT(A) THAT GENUINE TRANSACTIONS DO NOT ATTRACT PROVISIONS OF S. 269T O F THE IT ACT, 1961 WOULD MAKE THE SECTION REDUNDANT AND HENCE NOT ACCEPTABLE. 3) THE OPINION OF CIT(A) THAT MERE JOURNAL ENTRIES DO NOT COME WITHIN THE PURVIEW OF S. 269T I S UNACCEPTABLE. 10. WE HAVE HEARD BOTH THE PARTIES. WE CONFIRM THE ORD ER OF THE CIT(A) ON SIMILAR LINES. SINCE THE FACTS ARE S IMILAR IN THE CASE OF ASSESSEE TO THAT OF SMT. G. VENKATALAKSHMI IN THE ASST. YEARS 2004-05, 2006-07 & 2008-09, RESPECTFULLY FOLL OWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF SMT. G. VENKA TALAKSHMI FOR THE ASSESSMENT YEAR 2005-06 AND ALSO ASSESSMENT YEA R 2003- 04 STATED ABOVE, THE ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER IN THESE YEARS ALSO THE ASSESSEE HAD ACTUAL LY RECEIVED CASH LOAN FROM M/S. LAHARI GREEN PARK OR THEY WERE MERE JOURNAL ENTRIES TO THAT EFFECT AND IF IT IS ULTIMAT ELY FOUND THAT NO CASH LOAN WAS ACTUALLY RECEIVED BY THE ASSESSEE IN THAT COURSE OF TRANSACTION AND THEY WERE ONLY JOURNAL ENTRIES T O THAT EFFECT, THE PENALTY U/S 271E LEVIED IN THESE YEARS ALSO SHA LL STAND CANCELLED. THE GROUNDS TAKEN IN THESE APPEALS ARE, THEREFORE, DECIDED IN FAVOUR OF THE ASSESSEE, SUBJECT TO VERIF ICATION ON THE LINES DIRECTED BY THIS TRIBUNAL. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 30 TH OCTOBER, 2014 TPRAO I.T .A. NOS. 623 & 626/HYD/2014 SRI G. SANJAY CHOWDARY ======================== 6 COPY FORWARDED TO: 1. THE DEPUTY CIT, CENTRAL CIRCLE - 6 , 7 TH FLOOR , AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 004. 2. SRI G. SANJAY CHOWDARY, PLOT NO. 723/A, ROAD NO. 37 , JUBILEE HILLS, HYDERABAD. 3. THE CIT(A) - I, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD