GUMAN FRUNITURE AND SERVICES P LTD., Jaipur V. ACIT, Jaipur

ITA 641/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5184 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Business income
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 641/JP/2015. FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04. M/S. GUMAN FURNITURE AND SERVICES P. LTD., A-2, RANA PRATAP NAGAR, KALWAR ROAD, JHOTWARA, JAIPUR. CUKE VS. THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCG 7610 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22/08/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT (A)-4, JAIPUR DATED 20.05.2015 PERTAINING TO ASSESSMENT YE AR 2003-04. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AUTHORITIES BELOW HAVE LEGALLY AND FACTUALLY ERRED IN IMPOSING AND CONFIRMING A PENALTY OF RS. 2,00,000/- U/S 271D OF THE ACT WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE AND ALSO IGNORING THE VARIOUS CASE LAWS RELIED UPON, WHICH HAVE DIREC T BEING ON THE FACTS OF ASSESSEES CASE. THUS, THE PENALTY SO IMPOSED AN D FURTHER CONFIRMED BY THE LD. CIT (A) DESERVES TO BE DELETED. 2. BRIEFLY STATED THE FACTS ARE THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAD ACCEPTED CASH OF RS. 2,00,000/- FROM TWO PERSONS. ACCORDINGLY, TREATING SUCH CASH RECEIPTS AS DEPOSITS OR LOAN, INITIATED 2 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. PROCEEDINGS UNDER SECTION 271D FOR CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE IT ACT, 1961. IN RESPONSE TO SHOW CAUSE NOTICE U/S 271D ISSUED TO THE ASSESSEE ON 07.08.2012, THE ASSESSEE HAS FILED SUBMISSION ON 23.08.2012 AS UNDER :- SHRI MOHAN LAL KHANDELWAL AND SHRI SHANKAR LAL KH ANDELWAL ARE DIRECTORS AND PROMOTERS OF THE COMPANY. IT IS A SE TTLED LAW THAT THE CASH FUNDS RECEIVED BY THE COMPANY FROM ITS DIRECTORS D OES NOT FALL WITHIN THE AMBIT OF THE PROVISIONS OF SECTION 269SS OF THE ACT AND ACCORDINGLY DO NOT ATTRACT PENALTY PROVISIONS U/S 271D AS HELD IN NUMB ER OF CASES FEW ARE AS UNDER :- CIT VS. I.P. INDIA (P) LTD. (2012) TAXMAN 368 (DE L.) CIT VS. PREETI FUELS & FLAMES P. LTD. (2011) 238 CTR (CHATTISGARH) 226 CIT VS. STANDARD BRANDS LTD. (2006) 204 CTR (DEL. ) 48 FOR READY REFERENCE, THE JUDGMENT IN THE CASE OF CI T VS. LDHYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD) MAY KIND LY BE REFERRED WHEREIN IT WAS HELD THAT AS PER THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULE S, 1975 UNDER THE RULE 2(H)(IX) DEPOSIT DOES NOT INCLUDE AN Y AMOUNT RECEIVED FROM A DIRECTOR OR A SHARE HOLDER OF PRIVATE LTD. COMPANY. THEREFORE THE TRANSACTION BETWEEN THE APPELLANT AND THE DIRECTOR CUM SHARE HO LDERS IS NOT A LOAN OR DEPOSIT AND IT IS ONLY A CURRENT ACCOUNT IN NATURE AND NO INTEREST IS BEING CHARGED FOR THE ABOVE TRANSACTION. IN VIEW OF THESE FACTS, YOUR GOOD SELF WOULD APPRECIATE THAT NO PROVISIONS OF SECTION 269S S OF THE ACT ARE ATTRACTED IN THE PRESENT CASE. 3 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. FURTHER, IT WOULD ALSO BE RELEVANT TO MENTION HERE THAT THE IMPUGNED DEPOSIT WERE TAKEN AS UNDISCLOSED INCOME OF THE A SSESSEE CO. BY THE CONCERNED AO WITHIN THE MEANING OF SECTION 68 OF TH E ACT. THOUGH SUCH ADDITIONS WERE DELETED BY THE HONBLE ITAT, JAIPUR BENCH, JAIPUR VIDE APPEAL ORDER ITA 156/JP/2011 DATED 02.09.2011, YET THE FAC T STILL REMAINED THAT ONCE A DEPOSIT IS TAKEN AS UNDISCLOSED INCOME OF THE CO . WITHIN THE MEANING OF SECTION 68 OF THE ACT, THEN THE SAME DEPOSIT COULD NOT BE TAKEN AS LOAN WITHIN THE MEANING OF SECTION 269SS OF THE ACT AS H ELD IN THE CASE OF CIT VS. R.P. SINGH & CO. (P) LTD. (2012) ITR 217 (DEL.) REL EVANT EXTRACT FROM THE SAID JUDGMENT IS REPRODUCED HEREUNDER FOR YOUR READY REF ERENCE : PENALTY UNDER S. 271D CONTRAVENTION OF S. 269SS S HARE APPLICATION MONEY IN CASH CIT (A) AND TRIBUNAL HAVE RECORDED TH E FINDING THAT ONCE THE AO HAS TREATED THE SHARE APPLICATION MONEY AS UNDISCLOSED INCOME, HE COULD NOT HAVE PROCEEDED ON THE BASIS TH AT IT WAS A DEPOSIT AND THERE WAS NO QUESTION OF PENALTY UNDER S. 271D. IN VIEW OF SAID FINDING THE QUESTION WHETHER THE TRIBUNAL ERRED IN DELETING THE PENALTY UNDER S. 271D DOES NOT ARISE. LASTLY, THE NATURE AND SOURCE OF THE DEPOSIT OF THE CASH FUNDS AS MADE BY THE DIRECTORS STOOD ACCEPTED BY THE SAME AO IN T HEIR PERSONAL CASES OF THE RESPECTIVE YEAR AND THE HONOURABLE ITAT JAIPUR BENC H, JAIPUR HAVE ALSO TREATED THE SAID AMOUNT AS EXPLAINED IN THE CASE OF ASSESSEE CO. IN THE CIRCUMSTANCES, SUCH DEPOSITS COULD NOT BE TAKEN AS LOAN BY ANY STRETCH OF IMAGINATION. 4 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. THE AO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE B UT HE COULD NOT FIND IT ACCEPTABLE, THEREFORE, HE IMPOSED THE PENALTY OF RS . 2,00,000/- EQUIVALENT TO ACCEPTANCE OF THE DEPOSIT IN CASH. BEING AGGRIEVED , THE ASSESSEE FILED APPEAL BEFORE LD. CIT (A), WHO ALSO CONFIRMED THE PENALTY. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE ITAT JAIPUR IN THE C ASE OF M/S. SHRI GOVIND KRIPA BUILDMART PVT. LTD. ITA NOS. 876 & 877/JP/2013 WHER EIN THE HONBLE BENCH DELETED THE PENALTY U/S 271D/271E. THE LD. COUNSEL SUBMITTE D THAT HAVING CONSIDERED THE SPIRIT OF THE LEGISLATION AND INTERPRETATION OF THE RELEVANT PROVISIONS OF LAW AS PRONOUNCED IN NUMBER OF CASES, IT IS A SETTLED LAW THAT NO PENALTY U/S 271D/271E IS IMPOSABLE IF THE RECEIPTS ARE FOUND TO BE SATISFACT ORILY AND PROPERLY EXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT. THE LD. COUN SEL FURTHER SUBMITTED THAT IN QUANTUM APPEAL, THE HONBLE TRIBUNAL HAD DELETED TH ESE ADDITIONS. THEREFORE, HE PRAYED THAT THE PENALTY LEVIED BE DELETED. 4.1. ON THE OTHER HAND THE LD. D/R SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND PRAYED TO CONFIRM THE PENALTY. 4.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF M/S. SHRI GOVIND KRIPA BUILD MART PVT. LTD. ITA NO. 876 & 877/JP/2013 DATED 15 TH MAY, 2015 WHEREIN THE TRIBUNAL HAS HELD AS UNDER : - 5 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. ON ME RIT ALSO, THESE CASH TRANSACTIONS ALSO ARE NOT COVERED U/S 269SS AND 269 T OF THE ACT AS THESE WERE BUSINESS TRANSACTIONS MADE FOR PURCHASE OF LAND/SHARE APPLICATION MONEY WHICH HAS BEEN RECEIVED BY THE AS SESSEE AND REFUNDED BACK TO THE CONCERNED PARTIES. IT CAN BE V ERIFIED FROM THE ORDER OF THE LD CIT(A) IN QUANTUM WHICH HAS BEEN RE PRODUCED BY THE COORDINATE BENCH ON PAGE NO. 17 FOR RS. 6,87,500/- AND MENTIONED AMOUNT WAS PAID FOR BOOKING OF PLOTS BY SHRI ANIL D HANDIA, RS. 15,000/- BY M.S. CHAUDHARY PAID AS SHARE CAPITAL. RS. 54 LAC S WERE RECEIVED FROM SHRI RAMPAL YADAV AND SHRI SURJA RAM FOR WHICH THE ASSESSEE HAS FILED AFFIDAVIT WHICH HAS BEEN REPRODUCED BY THE CIT(A) I N HIS ORDER ON PAGE 20 WHERE THE ASSESSEES REPLY HAS REPRODUCED AND P URPOSE OF PAYMENT HAS BEEN SHOWN BY THE ASSESSEE FOR PURCHASE OF LAND , THEREFORE, THESE ARE THE RECEIPT FOR BUSINESS PURPOSES. THE REMAININ G AMOUNT OF RS. 18.5 LACS RECEIVED BY THE ASSESSEE THROUGH CHEQUE F ROM SHRI RAKESH KUMAR GUPTA, WHICH HAS BEEN HELD BY THE ITAT AS STA ND EXPLAINED. AS THE ASSESSEE WAS IN PROPERTY BUSINESS IN PURCHASE A ND SALE OF LAND WHICH REFLECTS FROM THE ORDER OF THE ASSESSING OFFI CER THAT THE ASSESSEE HAD PURCHASED LAND DURING THE YEAR UNDER CONSIDERAT ION FROM ITS GLOBAL CITY PROJECT (240 BIGHA APPROX) IN VILLAGE CHAKBAD. THE TOTAL AMOUNT OF RS. 11 CRORES WERE PAID UP TO THE DATE OF SEARCH. T HE ASSESSEE HAD SHOWN IN BALANCE SHEET, SHARE APPLICATION MONEY PEN DING FOR ALLOTMENT AT RS. 37,45,000/-, WHICH IS FOR BUSINESS PURPOSE. HOWEVER, UNSECURED LOAN AT RS. 12,63,58,946/- HAD BEEN SHOWN BUT THESE WERE NOT LOAN ENVISAGED U/S 269SS/269T OF THE ACT AS THE HON'BLE SUPREME COURT HAS HELD IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD. VS . CIT (CENTRAL), CALCUTTA [1971] 82 ITR 363 (SC) THAT PARTICULAR DED UCTION WILL DEPEND 6 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. ON THE PROVISIONS OF LAW RELATING THERETO NOT ON EN TRIES OF BOOKS OF ACCOUNT BE DECISIVE OR CONCLUSIVE IN THE MATTER . THE LD AR HAS FILED ALL EVIDENCES BEFORE THE LOWER AUTHORITIES WITH CONFIRM ATION, WHICH HAS BEEN PARTLY ACCEPTED BY THE CIT(A) IN HER PENALTY A PPEAL ORDER THAT THESE ARE THE BUSINESS RECEIPTS BUT PARTLY AS DEPOS IT IN FORM OF LOAN/ADVANCES. THE LD CIT(A) IN HIS QUANTUM APPEAL ORDER DATED 31/3/2011 ON PARAGRAPH 3.3.2 HAS HELD THAT ALMOST A LL THE ENTRIES ARE IN RELATION TO ADVANCE RECEIVED AGAINST BOOKING/SALE O F PLOT, WHICH IS ALSO FOUND CORRECT BY THE ASSESSING OFFICER AS PER REMAN D REPORT SUBMITTED BY THE ASSESSING OFFICER. IN MOST OF THE CASES, THE APPELLANT COMPANY HAS ISSUED THE ALLOTMENT LETTER TO ALL THE PARTIES EITHER IN THIS YEAR OR IN SUBSEQUENT YEAR. THE ASSESSING OFFICER HAS VERIFIED THESE DETAILS BY GOING THROUGH THE REGISTRATION FORM SUBMITTED BY TH E PARTY FOR PLOT BOOKING, MOST OF THE ADVANCES HAVE BEEN RECEIVED TH ROUGH CHEQUES. FURTHER THE APPELLANT HAS FILED CONFIRMATION LETTER IN VARIOUS CASES, THE APPELLANT HAS EVEN FURTHER FILED THE COPY OF BANK S TATEMENT OF DIFFERENT PARTIES. THESE EVIDENCES HAVE BEEN SENT AND VERIFIE D BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IN HIS REMAND REPORT HAS NOT GIVEN ANY ADVERSE COMMENT ABOUT THE VARIOUS ENTRIES MENTIONED ON DIFFERENT SERIAL NUMBERS. FINALLY HE DELETED THE REMAINING AD DITIONS MADE BY THE ASSESSING OFFICER. THEREFORE, WE FIND THAT THE ORDE R PASSED BY THE LD CIT(A) IS NOT BASED ON EVIDENCES AND HELD THAT IN Q UANTUM APPEAL, THE LD CIT(A) AS WELL AS ITAT HAS NOT CONSIDERED THE NA TURE OF THE TRANSACTION HAS BEEN GIVEN WRONG FINDING. AS DISCUS SED ABOVE, SPECIFICALLY WITH REFERENCE TO PAGE NUMBERS OF THE ORDER OF THE CIT(A) AS WELL AS ITAT, THEREFORE, WE REVERSE THE ORDER OF THE LD CIT(A). ACCORDINGLY, THE ASSESSEES APPEALS ARE ALLOWED AND REVENUES APPEALS ARE DISMISSED. 7 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE A O TO DELETE THE PENALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/2016. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 22/08/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. GUMAN FURNITURES & SERVICES PVT. LTD., JAIPUR. 2. THE RESPONDENT THE ADDL.CIT CENTRAL RANGE, JAI PUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 641/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 8 ITA NO. 641/JP/2015 M/S. GUMAN FURNITURE & SERVICES PVT. LTD.