ITO, Kota V. SANKALP FOUNDATION, Kota

ITA 669/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5149 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Reasonable cause; Assessment record
• Section: 273B; 12AA; 12; 28

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL ; DS LE{K BEFORE:SHRI BHAGCHAND,AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 669/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO (EXEMPTION) KOTA CUKE VS. M/S. SANKALP FOUNDATION 112, SHAKTI NAGAR,KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJTS 2510 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 46/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 669/JP/2015) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S. SANKALP FOUNDATION 112, SHAKTI NAGAR,KOTA CUKE VS. THE ITO (EXEMPTION) KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJTS 2510 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 670/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO (EXEMPTION) KOTA CUKE VS. M/S. SANKALP FOUNDATION 112, SHAKTI NAGAR,KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJTS 2510 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 47/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 670/JP/2015) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S. SANKALP FOUNDATION 112, SHAKTI NAGAR,KOTA CUKE VS. THE ITO (EXEMPTION) KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJTS 2510 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 2 VK;DJ VIHY LA-@ ITA NO. 671/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO (EXEMPTION) KOTA CUKE VS. M/S.PROSEED FOUNDATION 112, SHAKTI NAGAR,KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABTP 6909 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 48/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 671/JP/2015) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S. PROSEED FOUNDATION 112, SHAKTI NAGAR,KOTA CUKE VS. THE ITO (EXEMPTION) KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABTP 6909 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 672/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO (EXEMPTION) KOTA CUKE VS. M/S.PROSEED FOUNDATION 112, SHAKTI NAGAR,KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABTP 6909 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 49/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 672/JP/2015) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S. PROSEED FOUNDATION 112, SHAKTI NAGAR,KOTA CUKE VS. THE ITO (EXEMPTION) KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABTP 6909 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA, ADDL. CIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY :SHRI VIJAY GOYAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/08/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 1/09/2016 ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 3 VKNS'K@ ORDER PER BHAGHCHAND, AM THE REVENUE HAS FILED THE APPEALS AGAINST SEPARATE ORDERS OF THE LD. CIT(A), KOTA DATED 26-05-2015 FOR THE ASSESSMENT YEAR 2011-12 U/S 271D AND U/S 271E OF THE ACT RESPECTIVELY . THE ASS ESSEE HAS FILED THE CROSS OBJECTIONS. 2.1 THE GROUNDS RAISED BY THE REVENUE IN DEPARTMENT AL ITA NO. NO.669/JP/2015 ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A), KOTA HAS ERRED :- 1. IN DELETING THE PENALTY AMOUNTING TO RS. 40,00,000/- IMPOSED U/S 271D OF THE I.T. ACT IGNORI NG THE FACT THAT THE PROVISIONS OF SECTION 269SS ARE ATTRA CTED IN CASE THE LOAN/ ADVANCE ARE ACCEPTED OTHERWISE THAN AN AC COUNT PAYEE CHEQUE OR DEMAND. 2. IN DELETING THE PENALTY AMOUNTING TO RS. 40,00,000/- IMPOSED U/S 271D OF THE I.T. ACT IGNORI NG THE FACT THAT NEW CHARGE OF CIT (EXEMPTIONS) WAS CREATE D W.E.F. 15-11-2014 AND THE TRANSFER OF PAN AND RECORDS TO N EW OFFICE REQUIRES SOMETIME AND THE PENALTY WAS BARRED BY LIMITATION ON 30-11-2014. 3. IN IGNORING THE FACT THAT ASSESSEE HAS NEVER RAISED THE GROUND OF JURISDICTION BEFORE THE ADDL. CIT, RANGE-1, KOTA DURING PENALTY PROCEEDINGS THOUGH FIN AL REPLY WAS FILED BY THE ASSESSEE VIDE LETTER DATED 25-11-2 014 I.E. AFTER 15-11-2014 4. IN IGNORING THE FACT THAT ON THE DATE OF IMPOSITION OF PENALTY THE PAN AS WELL AS ASSESSMENT RECORDS ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 4 WERE UNDER THE JURISDICTION OF ITO, WARD- 1(2), KOT A OVER WHICH ADDL. CIT, RANGE-1, KOTA WAS HAVING JURISDICT ION. 5. IN GIVING THE FINDING THAT THE QUANTUM OF PENALTY WAS RS. 31,00,000/- IN PLACE RS. 40,00,000/ - WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD AS REGARDS THE FIGURES QUOTED BY HIM. 2.2 BRIEF FACTS OF THE ISSUE IN QUESTION AS PER ORD ER DATED 27-11-2014 OF ADDL. CIT, RANGE-1 KOTA IS THAT THE ASSESSEE HAD RE CEIVED THE FOLLOWING LOANS IN VIOLATION OF PROVISIONS OF SECTION 269SS O F THE I.T. ACT. SN. NAME OF THE PERSON FROM WHOM LOANS/ DEPOSITS TAKEN ACCEPTED. DATE AMOUNT (RS.) 1. SHAKTI FOUNDATION, KOTA 04-05-2010 20,00,000 2. SHAKTI FOUNDATION, KOTA 20-05-2010 20,00,000 TOTAL 40 ,00,000 IT IS OBSERVED FROM THE ORDER OF THE ADDL. CIT, KOT A THAT M/S. SANKALP FOUNDATION IS A SISTER CONCERN OF CAREER POINT INFR A LTD. AND SHAKTI FOUNDATION .THE MAIN OBJECTS OF THE ASSESSEE TRUST ARE TO ACQUIRE LAND, DEVELOP AND USE INFRA FOR THE PURPOSE OF EDUCATIONA L ACTIVITY. THE ASSESSEE HAD SUBMITTED ITS EXPLANATION BEFORE THE A DDL. CIT, KOTA CONTENDING THAT ISSUANCE OF NOTICE U/S 271D IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE ASSESSEE HAD NOT ACCEPTED ANY LOAN F ROM THE PARTIES MENTIONED IN THE NOTICE. IT IS ALSO MENTIONED THERE IN THAT THERE WAS A REASONABLE CAUSE FOR NOT LEVYING THE PENALTY BECAUS E THERE WAS NO MALAFIDE INTENTION ON THE PART OF THE ASSESSEE WHIL E CARRYING OUT THE ABOVE TRANSACTIONS IN THEIR BOOKS OF ACCOUNT AND THEY WER E UNDER THE BONA FIDE ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 5 BELIEF THAT SUCH TRANSACTIONS DID NOT CONTRAVENE SE CTION 269SS OF THE ACT AS THE TRANSACTIONS HAD BEEN CARRIED OUT THROUGH AC COUNT PAYEE CHEQUE. THE ASSESSEE HAD RELIED ON FOLLOWING CASE LAWS BEFO RE THE ADDL. CIT MENTIONING THEREIN THAT ITAT AND HON'BLE HIGH COURT S HAVE RENDERED THE DECISIONS THAT BOOK ENTRIES ARE NOT COVERED BY THE CONTRAVENTION OF SECTION 269SS AND 269T OF THE ACT. (A) CIT VS. NOIDA TOLL BRIDGE COMPANY LTD. ,262 ITR 260 (DEL). (B) CIT VS. SAURABH ENTERPRISES (ALLAHABAD HIGH CO URT) LODHA BUILDERS (P) LTD. VS. ACIT (ITAT MUMBAI) (D) CIT VS. MAHESHWRI NIRMAN UDYOG (2011) 2011 CTR 579 (RAJ.) AND CIT VS. RAJ KUMAR SHARMA (2007) 294 ITR 131 (RAJ,) (E) CIT VS. SENI MEDICAL STORE (2005) 27 7 ITR 430 (P&H) (F) ITO VS. SMT. BHAN BAN R SHAH (ITA NO. 1801/AHD/ 2009) IF TRANSACTION BETWEEN SISTER CONCERN ARE MADE WI TH A VIEW TO MEET THE BUSINESS NEED UNDER THE BONA FIDE BELIEVE AND WITH A REASONABLE CAUSE, NO PENALTY U/S 271D IS IMPOSABLE UNDER SUCH CIRCUMSTANCES. IN OUR CASE BOTH COMPANIES ARE HOLDI NG AND SUBSIDIARIES. THE ASSESSEE THUS PRAYED BEFORE THE ADDL. CIT, KOTA TO DROP THE PROCEEDINGS. ALTHOUGH THE ADDL. CIT, RANGE-1, KOTA HAD TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE AS ME NTIONED IN HIS ORDER YET HE HAD REFERRED THE DECISION OF HON'BLE MUMBA I HIGH COURT IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL (P) LTD. (201 2) 345 ITR 370 IN ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 6 WHICH IT IS HELD THAT WHERE THE LOANS/DEPOSITS WERE REPAID BY DEBITING THE AMOUNT THROUGH JOURNAL ENTRIES, IT MUST BE HELD THA T THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269T OF THE A CT. THE ADDL. CIT, KOTA FURTHER OBSERVED THAT THE RATIO LAID DOWN BY T HE HON'BLE HIGH COURT ALSO APPLIED TO THE VIOLATION OF PROVISIONS OF SECT ION 269SS OF THE ACT IN THE CASE UNDER REFERENCE. THE ADDL. CIT, KOTA OBSER VED THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269SS WHILE ACCEPTING THE LOANS UNDER REFERENCE AMOUNTING TO RS. 40,00,000/- FROM T HE PARTIES MENTIONED ABOVE AND THE ASSESSEE HAD NOT BEEN ABLE TO PROVE T HAT THERE WAS ANY REASONABLE CAUSE FOR RECEIVING THE ABOVE LOADS IN V IOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT AND ACCORDIN GLY IT IS A FIT CASE FOR IMPOSING PENALTY U/S 271D OF THE ACT. THUS THE ADDL . CIT IMPOSED THE PENALTY OF RS. 40,00,000/- U/S 271D OF THE ACT ON T HE ASSESSEE FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT . 2.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAD DELETED THE PENALTY BY OBSERVING AS UNDER:- 4.12 I HAVE GONE THROUGH ASSESSEE'S SUBMISSION AND AOS FINDINGS. IT WAS SEEN THAT THE ADDL. CIT HAS QUOTED WRONG FIGURES, THE CORRECT FIGURE WAS RS. 31,00,000/- AND NOT RS. 40,00,000/- ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 7 IN MY OPINION, SECTION 269SS WAS INTRODUCED IN THE STATUTE TO PREVENT INTRODUCTION OF UNACCOUNTED MONE Y BY SHOWING CASH LOANS ETC. SECTION 269SS DOES NOT APPL Y ON JOURNAL ENTRIES PASSED IN THE BOOKS OF ACCOUNTS. TH EREFORE, THE AO IS DIRECTED TO DELETE PENALTY OF RS. 40,00,0 00/- . THESE GROUNDS OF APPEAL ARE ALLOWED. GROUND NO. 2:- THE ASSESSEE CONTENDED THAT THE ORDER WAS PASSED ON 27-1-2014 WHEREAS ALL THE ASSESSEES COVERED BY SECT ION 10,11,12 & 13 HAVE BEEN TRANSFERRED TO CIT (EXEMPTI ON), JAIPUR AS PER CBDT NOTIFICATION NO. 52/2014 DATED 2 2-10- 2014. THE ASSESSEE CONTENDED THAT THE ORDER PASSED BY ADDL. CIT WAS WITHOUT ANY JURISDICTION. THE ASSESSEE ALSO SUBMITTED COPY OF REGISTRATION U/ S 12AA OF THE I.T. ACT. WHEN THE JURISDICTION OF ALL THE ASSESSEES COVERED U/S 10,11,12 & 13 HAD BEEN TRANSF ERRED TO CIT (EXEMPTION), JAIPUR, THE ADDL. CIT, RANGE-1, KO TA SHOULD HAVE TRANSFERRED THE CASE TO HIS COUNTER PAR T WORKING UNDER CIT (EXEMPTION). PASSING OF ORDER BY ADDL. CI T, RANGE-1, KOTA AFTER THE ISSUANCE OF NOTICE BY CBDT WAS APPARENTLY WITHOUT JURISDICTION. THIS GROUND OF APP EAL IS THEREFORE, ALLOWED. 2.4 NOW THE REVENUE IS BEFORE US AGAINST THE ORDER OF THE LD. CIT(A) PRAYING THAT THE LD. CIT(A) HAS ERRED IN DELETING T HE PENALTY OF RS. 40,00,000/- IMPOSED BY THE AO WHICH DO NOT COVE R THE GROUNDS 1 TO 5 OF THE REVENUE (SUPRA). DURING THE COURSE OF HEARIN G, THE LD. DR RELIED ON THE ORDER OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (2012) 22 TA XMANN.COM 138 (BOM.) ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 8 2.5 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE C.O. FILED BY THE ASSESSEE IS SUPPORTIVE T O THE ORDER OF THE LD. CIT(A). HOWEVER, THE LD. AR OF THE ASSESSEE FILED T HE FOLLOWING WRITTEN SUBMISSION PRAYING THEREIN TO UPHOLD THE FINDINGS O F THE LD. CIT(A). 1) GROUND NO 1 & 5 OF THE REVENUE ARE AGAINST CANC ELLATION OF PENALTY OF RS. 40,00,000/- LEVIED BY AO U/S 271D. 1.1) THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, KOTA HAS IMPOSED PENALTY U/S 271D OF THE ACT OF RS. 40,00,000/-, WHI CH WAS CANCELLED BY LD CIT(A). 1.2) AN AMOUNT OF RS. 20,00,000/- WAS RECEIVED BY S HAKTI FOUNDATION FROM SH. VISHNU KUMAR GARG THROUGH RTGS IN FY 2009-10. S HRI VISHNU KUMAR GARG, TRUSTEE OF M/S SANKALP FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOUNDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WE RE TRANSFERRED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY BOOK ENTRY . SIMILARLY AMOUNT OF RS. 11,00,000/- WAS RECEIVED BY SHAKTI FOUNDATION FROM SH. MURARI LAL AGRAWAL THROUGH RTGS, IN FY 2009-10. SH. MURARI LAL AGRAWAL TRUSTEE OF M/S SANKALP FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOUNDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WERE TRANSFERRED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY BOOK ENTRY . 1.3) THE LD AO TOOK THE WRONG FIGURE AT RS. 40,00,0 00/- AS AGAINST CORRECT FIGURE 20,00,000/- +11,00,000/- = RS. 31,00,000/- A ND LEVIED THE PENALTY OF RS. 40,00,000/- 1.4) WE FURTHER SUBMIT THAT THE ASSESSEE HAS RECEIV ED LIABILITY FROM THE ASSOCIATE/SISTER CONCERNS BY WAY OF BOOK ENTRIES. W E WOULD LIKE TO MENTION THAT NONE OF THE TRANSACTIONS HAVE BEEN CARRIED OUT IN CASH BUT THROUGH ACCOUNT PAYEE CHEQUES /DEMAND DRAFTS. A PLAIN READI NG OF SECTION INDICATES THAT IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR A LOAN IN MONEY IS ACCEPTED BY AN ASSESSEE, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. THE AMBIT OF THE SECTION IS CLEARLY RE STRICTED TO TRANSACTION INVOLVING ACCEPTANCE OF MONEY AND NOT INTENDED TO A FFECT CASES WHERE A DEBT OR A LIABILITIES ARISES ON ACCOUNT OF BOOK ENTRIES. THE OBJECT OF THE SECTION IS TO PREVENT TRANSACTIONS IN CURRENCY IE. CASH. THIS IS ALSO CLEARLY EXPLICIT FROM ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 9 CLAUSE(III) OF THE EXPLANATION TO SECTION 269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY. THE LIAB ILITY RECORDED IN THE BOOKS OF ACCOUNTS BY WAY OF JOURNAL ENTRIES I.E. CREDITIN G THE ACCOUNT OF A PARTY TO WHOM MONIES PAYABLE AND DEBITING THE ACCOUNT OF A P ARTY FROM WHOM MONIES ARE RECEIVABLE IN THE BOOKS OF ACCOUNTS IS CLEARLY OUT THE AMBIT OF PROVISIONS OF SECTION 2699 SS OF THE ACT BECAUSE PASSING SUCH ENT RIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. IN THIS CASE, ADMITTEDLY NO MONEY WAS TRANSACTED OTHERWISE THAN THROUGH BANKING CHANN ELS. 1.5) RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - S.NO NAME OF CASE CASE LAW PAPER BOOK PG (FILED IN CASE OF SHAKTI FOUNDATION ITA NO ITA NO 663/JP/15 1. CIT-VI V/S WORLDWIDE TOWNSHIP PROJECTS LTD. (2014) 89 CCH 0100 (DEL) 1 TO 6 2. CIT V/S NATIONAL CLOTHING CO. (2014) 91 CCH 0019 (DEL) 7 TO 9 3. ITO V/S AMARNATH SHIVRAJ (HUF) (2003) 22 CCH 0120 AGRA TRIB. 10 TO 15 4. ITO V/S INTEGRATED TECHNOLOGY LTD (2012) 31 CCH DEL TRIB. 16 TO 24 5. DCIT V/S G. SANJAY CHOWDARY (2014) 41 CCH 0020 HYD TRIB. 25 TO 28 6. M/S S. R. ASSOCIATED CONSTRUCTION CO. PVT. LTD V /S JCIT, RANGE MALDA 2016(5) TMI 1168-ITAT KOLKATA 29 TO 40 7. ITO WARD-1, KAKINADA V/S M/S RAMALINGESWARA COMMERCIAL COMPLEX AND VICE VERSA 2016(5) TMI 1145-ITAT VISHAKHAPATNAM 41 TO 47 ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 10 8. 2013 (12) TMI 1545 - ALLAHABAD HIGH COURT COMMISSIONER OF INCOME TAX VERSUS M/S. SAURABH ENTERPRISES INCOME TAX APPEAL NO. 242 OF 2005 DATED: - 11 DECEMBER 2013 COPY ENCLOSED. 2) GROUND NO 2 TO 4 OF THE REVENUE IS AGAINST THE F INDINGS OF LD CIT(A) THAT THE ORDER PASSED BY ADDL CIT, RANGE-1, KOTA IS WITHOUT JURISDICTION. 2.1 THE ADDL. CIT RANGE-1 KOTA ISSUED A SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY U/S 271 D OF THE ACT ON 23.05 .2014. THEN ANOTHER SHOW CAUSE NOTICE DATED 14.11.2014 WAS ISSUED TO THE APP ELLANT. THE ADDL. C.I.T. HAS PASSED ORDER U/S 271D WITHOUT HAVING JURISDICTI ON AS ALL CASES OF THE ASSESSEES COVERED BY SECTION 10,11,12 AND 13 (TRUST AND SOCIETIES) HAVE BEEN TRANSFERRED TO THE CIT (EXEMPTIONS),JAIPUR AS PER C BDT NOTIFICATION NO. 52/2014 DATED 22.10.2014 (COPY PB PG 30-36) . SUCH NOTICE WAS ISSUED ON 22/10/2014 AND MADE EFFECTIVE AND CAME INTO FORCE F ROM 15.11.2014 AND ORDER OF PENALTY WAS PASSED ON 27.11.2014. THE APPELLANT IS REGISTERED U/S 12 AA OF THE ACT HENCE JURISDICTION OF THE APPELLANT LIES WITH THE C.I.T. (EXEMPTION) JAIPUR. COPY OF REGISTRATION IS AT PB PAGE 16 . THE ADDL. C.I.T. RANGE-1, KOTA HAS PASSED ORDER WITHOUT HAVING VALID JURISDICTION AND SUCH ORDER IS INVALID/ ILLEGAL AND LIABLE TO BE QUASHED AND LD CIT(A) HAS RIGHTLY HELD THAT THE ORDER WAS PASSED WITHOUT JURISDICTION. 2.2 SINCE THE NOTIFICATION WAS ISSUED ON 22/10/201 4 AND CAME INTO FORCE W.E.F. 15/11/2014. THEREFORE, THERE WAS SUFFICIENT TIME WITH THE LD AO TO COMPLY WITH THE NOTIFICATION ISSUED BY CBDT. 2.3 AS REGARDS NOT RAISING THE OBJECTION BEFORE THE ADDL CIT, RANGE-1, KOTA BY THE ASSESSEE AT THE STAGE OF PENALTY PROCEE DING, WE SUBMIT THAT IT IS A LEGAL ISSUE AND JURISDICTION CAN BE CHALLENGED AT A NY STAGE OF PROCEEDINGS. A) NATIONAL THERMAL POWER CO LTD VS CIT (1998) 229 ITR 0383. B) ZAKIR HUSSAIN VS. CIT & ANR. (2006) 202 CTR (RAJ ) 40 C) SIKSHA VS. COMMISSIONER OF INCOME TAX & ORS HIGH COURT OF ORISSA (2011) 336 ITR 0112 D) WEST BENGAL STATE ELECTRICITY BOARD VS. DY. CIT & ANR . (2005) 278 ITR 218 (CAL) E) ORISSA CEMENT LTD. VS. CIT: (2001) 250 ITR 856 (DEL) ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 11 F) AHMEDABAD ELECTRICITY CO. LTD. VS. CIT (1993) 1 99 ITR 351 (BOM) (FB) G) INVENTORS INDUSTRIAL CORPORATION LTD. VS. CIT - 194 ITR 548 (BOM.) H) RAMILABEN RATILAL SHAH VS. CIT - 282 ITR 176 (GUJ.) I) PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. ACIT - 21 SOT 440 (KOL.). J) P.V.DOSHI VS. CIT - (113 ITR 22) (GUJ.) THE HUMBLE ASSESSEE PRAYS YOUR HONOR TO UPHELD THE FINDINGS OF LD CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORD TH AT THE ADDL. CIT, KOTA HAD IMPOSED THE PENALTY OF RS. 40,00,000/- U/S 271D OF THE ACT ON THE ASSESSEE FOR ACCEPTING LOANS/ DEPOSITS IN VIOLATIO N OF PROVISIONS OF SECTION 269SS OF THE ACT. IT IS FURTHER NOTED FROM THE ORDER OF THE LD. CIT(A) WHO HAS OBSERVED THAT THE ADDL. CIT HAD QUOT ED WRONG FIGURES WHEREAS THE CORRECT FIGURE WAS AT RS. 31,00,000/- A ND NOT AT RS. 40,00,000/-. HOWEVER, THE AO IMPOSED PENALTY OF RS. 40,00,000/-. THE LD. CIT(A) HAD TAKEN INTO CONSIDERATION THE AMOUNT OF RS. 21,00,000 + RS. 11,00,000/- WHICH COMES TO RS. 31,00,000/- AS M ENTIONED BY THE LD. AR OF THE ASSESSEE IN HIS WRITTEN SUBMISSION SUPRA. THE SAME IS CLARIFIED THAT THE AMOUNT WAS RS. 31,00,000/- AND RS. 40,00,0 00/- WHICH HAS BEEN CORRECTED BY THE LD. CIT(A). THE MOOT ISSUE IS ABOU T CORRECTNESS OF THE IMPOSITION OF PENALTY U/S 271D MADE BY THE ADDL. CI T, RANE-1, KOTA. BEFORE COMING TO ANY CONCLUSION, IT WILL IN THE INT EREST OF JUSTICE TO TAKE ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 12 INTO CONSIDERATION THE FOLLOWING PROVISIONS OF SEC TION 269SS OF THE ACT THAT THE ASSESSEE HAD ACTUALLY VIOLATED THIS PROVIS ION AND THE ADDL. CIT , KOTA HAD IMPOSED THE PENALTY U/S 271D OF THE ACT. [CHAPTER XX-B] REQUIREMENT AS TO MODE OF [ACCEPTANCE, PAYMENT OR] REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX [MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEP OSITS. 269SS. NO PERSON SHALL, AFTER THE 30TH DAY OF JUNE, 1984, TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFTER IN THIS SECTION REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT IF, (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGR EGATE AMOUNT OF SUCH LOAN AND DEPOSIT ; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN O R DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FROM THE D EPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HAS FALLEN DUE OR NOT), T HE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID ; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN C LAUSE (B), IS [TWENTY] THOUSAND RUPEES OR MORE : PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPOSIT TAKE N OR ACCEPTED BY, (A) GOVERNMENT ; (B) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK OR CO-OPERATIVE BANK ; (C) ANY CORPORATION ESTABLISHED BY A CENTRAL, STAT E OR PROVINCIAL ACT ; (D) ANY GOVERNMENT COMPANY 84 AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956) ; (E) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY 85 IN THIS BEHALF IN THE OFFICIAL GAZETTE : 86 [ PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y TO ANY LOAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPO SIT IS TAKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCE PTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABL E TO TAX UNDER THIS ACT.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 13 87 [(I) BANKING COMPANY MEANS A COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 (10 OF 1949), APPLIES AND INCLUDES ANY BA NK OR BANKING INSTITUTION REFERRED TO IN SECTION 51 OF THAT ACT ;] (II) CO-OPERATIVE BANK SHALL HAVE THE MEANING AS SIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949) ; (III) LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF M ONEY.] A PLAIN READING OF SECTION INDICATES THAT IT APPLIE S TO A TRANSACTION WHERE A DEPOSIT OR LOAN MONEY IS ACCEPTED BY AN ASSESSEE OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. THI S IS ALSO EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO SECTION 269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT OF MONEY. ALTHOUGH IN THE CASE O F CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (SUPRA), IT IS HELD THAT THE LIABILITY RECORDED IN THE BOOKS OF ACCOUNT BY WAY OF JOURNAL ENTRIES I .E. CREDITING THE AMOUNT OF PARTY TO WHOM MONIES PAYABLE AND DEBITING THE AC COUNT OF A PARTY FROM WHOM MONIES ARE RECEIVABLE IN THE BOOKS OF ACC OUNT IS IN CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE ACT BUT IN THAT CASE ALSO THE PENALTY WAS HELD TO BE NOT LEVIABLE FOR TH E REASON THAT TRANSACTION WAS BONA FIDE AND WAS NOT TO EVADE TAXES. IN ASSESS EE'S CASE ALSO, THE TRANSACTION IS BONAFIDE AND IT WAS NOT TO EVADE TAX ES. IT IS ALSO NOTED FROM THE RECORDS THAT THE LD. CIT(A) HAD TAKEN INTO CONS IDERATION THE ACTUAL AMOUNT OF RS. 31,00,000/- WHICH HAS BEEN NARRATED BY THE ASSESSEE AS UNDER:- ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 14 RS. 20,00,000/- WAS RECEIVED BY SHAKTI FOUNDATIO N FROM SHRI VISHNU KUMAR GARG THROUGH RTGS IN F.Y. 2009-10. SHRI VISHN U KUMAR GARG, TRUSTEE OF M/S SANKALP FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOUNDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WERE TRANSFER RED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY BOOK ENTRY. SIMILARLY AMOUNT OF RS. 11,00,000/- WAS RECEIVED BY SHAKTI FOUNDATION FROM SH. MURARI LAL AGRAWAL THROUGH RTGS, IN FY 200 9-10. SH. MURARI LAL AGRAWAL TRUSTEE OF M/S SANKALP FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOUNDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WERE TRANSFERRED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY BOOK ENTRY . AS REGARDS THE ISSUE OF JURISDICTION, IT IS NOTED T HAT THE NOTIFICATION WAS ISSUED ON 22-10-2014 AND CAME INTO FORCE W.E.F. 15- 11-2014. THEREFORE, THERE WAS SUFFICIENT TIME WITH THE AO TO COMPLY WIT H THE NOTIFICATION ISSUED BY THE CBDT. IN THIS VIEW OF THE MATTER AND FURTHER PERUSING THE CITATIONS OF THE CASE LAWS (SUPRA), WE FIND NO INFI RMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED ON THIS ISSUE. THUS T HE GROUNDS 1 TO 5 OF THE REVENUE ARE DISMISSED. 3.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT S C.O. NO. 46/JP/2015 (ARISING OUT OF ITA NO. 669/JP/2015) (I) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETED TH E PENALTY OF RS. 40,00,000/- U/S 271D SINCE THERE IS AN ACCEP TANCE OF LOAN THROUGH BOOK ENTRY WHICH IS NOT IN THE CONTRAV ENTION OF PROVISION OF SECTION 269SS AS DECIDED BY HON'BLE HI GH COURTS AND ITAT ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 15 (II) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING P ENALTY OF RS. 40,00,000/-U/S 271D AS THE ADDL. CIT , RANGE-1, HAS NO JURISDICTION OVER THE APPELLANT. (III) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING PENALTY OF RS. 31,00,000/- U/S 271D AS THE ADDL. CIT, RANGE-1, KOTA HAS WRONGLY IMPOSED PENALTY OF RS. 40,00,000/- INST EAD OF RS. 31,00,000 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE C.O., IT IS NOTED THAT THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). SINCE, WE HA VE DISMISSED THE APPEAL OF THE REVENUE THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN ITS C.O. SUPPORTING THE ORDER OF THE LD. CIT(A), ARE IN FUCTUOUS AND DISMISSED. 4.0 THUS, THE APPEAL FILED BY REVENUE IS DISMISSED AND C.O. OF THE ASSESSEE IS ALSO DISMISSED. ITA NO. 670/JP/2015 5.1 THE GROUNDS RAISED BY THE REVENUE IN DEPARTMENT AL ITA NO. 670/JP/2015 ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A), KOTA HAS ERRED :- 1. IN DELETING THE PENALTY AMOUNTING TO RS. 31,00,000/- IMPOSED U/S 271E OF THE I.T. ACT IGNORI NG THE FACT THAT THE PROVISIONS OF SECTION 269T ARE ATTRAC TED IN CASE THE LOAN/ ADVANCE ARE ACCEPTED OTHERWISE THAN AN AC COUNT PAYEE CHEQUE OR DEMAND. 2. IN DELETING THE PENALTY IMPOSED U/S 271E ON THE GROUND THAT THE ADDL. CIT, RANGE-1, KOTA HAS QUOTED WRONG SECTION IGNORING THE FACT THAT MERE MENTION OF WRON G SECTION ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 16 DOES NOT CHANGE THE PROVISIONS AS THE PROVISIONS OF SECTION 269SS & 269T ARE BASED ON THE SAME PRINCIPLE 3. IN DELETING THE PENALTY AMOUNTING TO RS. 31,00,000/- IMPOSED U/S 271E OF THE I.T. ACT IGNORI NG THE FACT THAT NEW CHARGE OF CIT (EXEMPTIONS) WAS CREATE D W.E.F. 15-11-2014 AND THE TRANSFER OF PAN AND RECORDS TO N EW OFFICE REQUIRES SOMETIME AND THE PENALTY WAS BARRED BY LIMITATION ON 30-11-2014. 4. IN IGNORING THE FACT THAT ASSESSEE HAS NEVER RAISED THE GROUND OF JURISDICTION BEFORE THE ADDL. CIT, RANGE-1, KOTA DURING PENALTY PROCEEDINGS THOUGH FIN AL REPLY WAS FILED BY THE ASSESSEE VIDE LETTER DATED 25-11-2 014 I.E. AFTER 15-11-2014 5. IN IGNORING THE FACT THAT ON THE DATE OF IMPOSITION OF PENALTY THE PAN AS WELL AS ASSESSMENT RECORDS WERE UNDER THE JURISDICTION OF ITO, WARD- 1(2), KOT A OVER WHICH ADDL. CIT, RANGE-1, KOTA WAS HAVING JURISDICT ION. 5.2 BRIEF FACTS OF THE ISSUE IN QUESTION AS PER ORD ER DATED 27-11-2014 OF ADDITIONAL CIT, RANGE-1, KOTA IS THAT THE ASSESSEE HAD REPAID THE FOLLOWING LOANS IN VIOLATION OF PROVISIONS OF SECTI ON 269T OF THE I.T. ACT. SN. NAME OF THE PERSON FROM WHOM LOANS/ DEPOSITS TAKEN ACCEPTED. DATE AMOUNT (RS.) 1. SHAKTI FOUNDATION 04-05-2010 20,00,000 2. SHAKTI FOUNDATION 12-05-2010 11,00,000 TOTAL 31,00,000 IT IS OBSERVED FROM THE ORDER OF THE ADDITIONAL CIT , RANGE-1, KOTA THAT M/S. SANKALP FOUNDATION IS A SISTER CONCERN OF CARE ER POINT INFRA LTD., AND SHAKTI FOUNDATION. THE MAIN OBJECTS OF THE ASSE SSEE TRUST ARE TO ACQUIRE LAND, DEVELOP AND USE INFRA FOR THE PURPOSE OF EDUCATIONAL ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 17 ACTIVITY. THE ASSESSEE HAD SUBMITTED ITS EXPLANATIO N BEFORE THE ADDITIONAL CIT, RANGE-1, KOTA CONTENDING THAT ISSUANCE OF NOT ICE U/S 271E IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE ASSESSEE HAD NO T REPAID ANY LOAN TO THE PARTIES MENTIONED IN THE NOTICE. IT IS ALSO MEN TIONED THEREIN THAT THERE WAS A REASONABLE CAUSE FOR NOT LEVYING THE PENALTY BECAUSE THERE WAS NO MALAFIDE INTENTION ON THE PART OF THE ASSESSEE WHIL E CARRYING OUT THE ABOVE TRANSACTIONS IN THEIR BOOKS OF ACCOUNT AND THEY WER E UNDER THE BONA FIDE BELIEF THAT SUCH TRANSACTIONS DID NOT CONTRAVENE SE CTION 269SS OF THE ACT AS THE TRANSACTIONS HAD BEEN CARRIED OUT THROUGH AC COUNT PAYEE CHEQUE. THE ASSESSEE HAD RELIED ON FOLLOWING CASE LAWS BEFO RE THE ACIT (EXEMPTIONS) MENTIONING THEREIN THAT ITAT AND HON'B LE HIGH COURTS HAVE RENDERED THE DECISIONS THAT BOOK ENTRIES ARE N OT COVERED BY THE CONTRAVENTION OF SECTION 269SS AND 269T OF THE ACT. (A) CIT VS. NOIDA TOLL BRIDGE COMPANY LTD. ,262 ITR 260 (DEL). (B) CIT VS. SAURABH ENTERPRISES (ALLAHABAD HIGH CO URT) LODHA BUILDERS (P) LTD. VS. ACIT (ITAT MUMBAI) (D) CIT VS. MAHESHWRI NIRMAN UDYOG (2011) 2011 CTR 579 (RAJ.) AND CIT VS. RAJ KUMAR SHARMA (2007) 294 ITR 131 (RAJ,) (E) CIT VS. SENI MEDICAL STORE (2005) 27 7 ITR 430 (P&H) (F) ITO VS. SMT. BHAN BAN R SHAH (ITA NO. 1801/AHD/ 2009) IF TRANSACTION BETWEEN SISTER CONCERN ARE MADE WI TH A VIEW TO MEET THE BUSINESS NEED UNDER THE BONA FIDE BELIEVE AND WITH A ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 18 REASONABLE CAUSE, NO PENALTY U/S 271D IS IMPOSABLE UNDER SUCH CIRCUMSTANCES. IN OUR CASE BOTH COMPANIES ARE HOLDI NG AND SUBSIDIARIES. THE ASSESSEE THUS PRAYED BEFORE THE ADDITIONAL CIT, RANGE-1, KOTA TO DROP THE PROCEEDINGS. ALTHOUGH THE ADDITIONAL CIT, RANGE-1, KOTA HAD TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE ASS ESSEE AS MENTIONED IN HIS ORDER YET HE HAD REFERRED THE DECISION OF HON' BLE MUMBAI HIGH COURT IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL (P) LTD. (2012) 345 ITR 370 IN WHICH IT IS HELD THAT WHERE THE LOANS/DE POSITS WERE REPAID BY DEBITING THE AMOUNT THROUGH JOURNAL ENTRIES, IT MUS T BE HELD THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269T OF THE ACT. THE ADDITIONAL CIT, RANGE-1, KOTA OBSERVED THAT THE AS SESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269T WHILE REPAYING THE L OANS UNDER REFERENCE AMOUNTING TO RS. 31,00,000/- FROM THE PARTIES MENTI ONED ABOVE AND THE ASSESSEE HAD NOT BEEN ABLE TO PROVE THAT THERE WAS ANY REASONABLE CAUSE FOR REPAYING THE ABOVE LOADS IN VIOLATION OF THE PR OVISIONS OF SECTION 269T OF THE ACT AND ACCORDINGLY IT IS A FIT CASE FO R IMPOSING PENALTY U/S 271E OF THE ACT. THUS THE ADDITIONAL CIT, RANGE-1, KOTA IMPOSED THE PENALTY OF RS. 31,00,000/- U/S 271E OF THE ACT ON T HE ASSESSEE FOR VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT. 5.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAD DELETED THE PENALTY BY OBSERVING AS UNDER:- ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 19 I HAVE GONE THROUGH ASSESSEE'S SUBMISSION AND AO S FINDINGS. IT WAS SEEN THAT THE ADDL. CIT HAS QUOTED WRONG SECTION, THE ASSESSEE HAD RECEIVED THESE AMOUNTS AN D HAS NOT REPAID THE SAME. THEREFORE, SECTION 271E R.W.S. WAS NOT APPLICABLE IN MY OPINION, SECTION 269T WAS INTRODUCED IN THE STATUTE TO PREVENT INTRODUCTION OF UNACCOUNTED MONE Y BY SHOWING CASH LOANS AND THEIR REPAYMENT ETC. SECTION 269T DOES NOT APPLY ON JOURNAL ENTRIES PASSED IN THE BOO KS OF ACCOUNTS. THEREFORE, THE AO IS DIRECTED TO DELETE P ENALTY OF RS. 31,00,000/- . THESE GROUNDS OF APPEAL ARE ALLOW ED. GROUND NO. 2:- THE ASSESSEE CONTENDED THAT THE ORDER WAS PASSED ON 27-1-2014 WHEREAS ALL THE ASSESSEES COVERED BY SECT ION 10,11,12 & 13 HAVE BEEN TRANSFERRED TO CIT (EXEMPTI ON), JAIPUR AS PER CBDT NOTIFICATION NO. 52/2014 DATED 2 2-10- 2014. THE ASSESSEE CONTENDED THAT THE ORDER PASSED BY ADDL. CIT WAS WITHOUT ANY JURISDICTION. THE ASSESSEE ALSO SUBMITTED COPY OF REGISTRATION U/ S 12AA OF THE I.T. ACT. WHEN THE JURISDICTION OF ALL THE ASSESSEES COVERED U/S 10,11,12 & 13 HAD BEEN TRANSF ERRED TO CIT (EXEMPTION), JAIPUR, THE ADDL. CIT, RANGE-1, KO TA SHOULD HAVE TRANSFERRED THE CASE TO HIS COUNTER PAR T WORKING UNDER CIT (EXEMPTION). PASSING OF ORDER BY ADDL. CI T, RANGE-1, KOTA AFTER THE ISSUANCE OF NOTICE BY CBDT WAS APPARENTLY WITHOUT JURISDICTION. THIS GROUND OF APP EAL IS THEREFORE, ALLOWED. 5.4 NOW THE REVENUE IS BEFORE US AGAINST THE ORDER OF THE LD. CIT(A) PRAYING THAT THE LD. CIT(A) HAS ERRED IN DELETING T HE PENALTY OF RS. 31,00,000/- IMPOSED BY THE AO WHICH DO NOT COVER TH E GROUNDS 1 TO 5 OF ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 20 THE REVENUE (SUPRA). DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (2012) 22 TA XMANN.COM 138 (BOM.) 5.5 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE C.O. FILED BY THE ASSESSEE IS SUPPORTIVE T O THE ORDER OF THE LD. CIT(A). HOWEVER, THE LD. AR OF THE ASSESSEE FILED T HE FOLLOWING WRITTEN SUBMISSION PRAYING THEREIN TO UPHOLD THE FINDINGS O F THE LD. CIT(A). 1) GROUND NO 1 & 2 OF THE REVENUE IS AGAINST CANCEL LATION OF PENALTY OF RS. 31,00,000/- LEVIED BY AO U/S 271E. 1.1) THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, KOTA HAS IMPOSED PENALTY U/S 271E OF THE ACT OF RS. 31,00,000/-, WHI CH WAS CANCELLED BY LD CIT(A). 1.2) THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, KOTA HAS ISSUED SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY U/S 271 E OF THE ACT WHICH RELATES TO REPAYMENT OF LOAN OF RS. 31,00,000/- TO M/S SHAKTI FOUNDATION (PB PG 10). THE APPELLANT HAS NOT REPAID ANY LOAN T O THE SAID PARTY. THE FACTUAL POSITION IS THAT:- (I) AN AMOUNT OF RS. 20,00,000/- WAS RECEIVED BY SH AKTI FOUNDATION FROM SH. VISHNU KUMAR GARG THROUGH RTGS IN FY 2009-10. SHRI VISHNU KUMAR GARG, TRUSTEE OF M/S SAN KALP FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOU NDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WERE TRANSFER RED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY B OOK ENTRY THROUGH M/S CAREER POINT INFRA LTD. THE ASSESSEE HA S NOT REPAID LOAN OF RS. 20,00,000/- TO SHAKTI FOUNDATION. (II) SIMILARLY AMOUNT OF RS. 11,00,000/- WAS RECEIV ED BY SHAKTI FOUNDATION FROM SH. MURARI LAL AGRAWAL THROUGH RTGS , IN FY 2009-10. SH. MURARI LAL AGRAWAL TRUSTEE OF M/S SANK ALP ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 21 FOUNDATION INTENDED TO GIVE LOAN TO M/S SANKALP FOU NDATION ONLY BUT DUE TO OVERSIGHT, SUCH FUNDS WERE TRANSFER RED TO M/S SHAKTI FOUNDATION. WHEN SUCH MISTAKE NOTICED BY THE TRUST, THIS LOAN WAS TRANSFERRED TO M/S SANKALP FOUNDATION BY B OOK ENTRY THROUGH M/S CAREER POINT INFRA LTD. THE ASSESSEE HA S NOT REPAID LOAN OF RS. 11,00,000/- TO SHAKTI FOUNDATION.. 1.3) THE APPELLANT VIDE REPLY DATED 25.11.2014 (PB 11-12) HAD CHALLENGED THE LEGALITY OF THE NOTICE IN PARA NO. 6. ISSUANCE OF SUCH NOTICE IS INCORRECT, INVALID AND ILLEGAL AS THE APPELLANT HAS NOT REPAID ANY LOAN TO M/S SHAKTI FOUNDATION DURING THE YEAR. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE- 1, KOTA HAS ISSUED NOTICE U/S 271 E WITHOUT VERIFYI NG THE TRANSACTIONS WITH M/S SHAKTI FOUNDATION. 1.4) THE COPY OF SHOW CAUSE NOTICE IS AT PB PG 10. THE ALLEGATION IN SHOW CAUSE NOTICE IS THAT THE ASSESSEE HAS REPAID THE LO AN TO M/S SHAKTI FOUNDATION. WHEREAS IN FACT, THE ASSESSEE HAS NOT REPAID THE LO AN OR LIABILITY TO M/S SHAKTI FOUNDATION. HERE THE ACCOUNT OF CAREER POINT INFRA LTD WAS DEBITED NOT THE ACCOUNT OF M/S SHAKTI FOUNDATION (PB PG 28) AS THE TRANSFER ENTRY RELATING TO VISHNU KUMAR GUPTA AND MURARI LAL AGARWAL ROUTED TH ROUGH THE ACCOUNT OF CAREER POINT INFRA LTD.. THEREFORE, THE PROVISIONS OF SECTION 269T/271E CANNOT BE APPLIED FOR THE ALLEGED PAYMENT TO M/S SHAKTI FO UNDATION. 1.5) WE FURTHER SUBMIT THAT THE ASSESSEE HAS TRANSF ERRED THE LIABILITY TO THE ASSOCIATE/SISTER CONCERNS BY WAY OF BOOK ENTRIES BY DEBITING M/S CAREER POINT INFRA LTD. AND CREDITING A/C OF SHRI VISHNU KUMAR G UPTA AND A/C OF SHRI MURARI LAL AGARWAL. WE WOULD LIKE TO MENTION THAT N ONE OF THE TRANSACTIONS HAVE BEEN CARRIED OUT IN CASH BUT IN ORIGIN BY ACCO UNT PAYEE CHEQUES /DEMAND DRAFTS. A PLAIN READING OF SECTION INDICATE S THAT IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR A LOAN IS PAID BY A N ASSESSEE, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. THE AMBIT OF THE SECTION IS CLEARLY RESTRICTED TO TRANSACTION INVOLVING PAYMENT OF MONEY AND NOT INTENDED TO AFFECT CASES WHERE A DEBT OR A LIABILITIES TRANS FERRED FROM ONE PERSON TO OTHER BY BOOK ENTRIES IN ACCOUNT. 1.6) THE PROVISION OF SECTION 269SS AND 26T WERE IN TRODUCED TO ELIMINATE THE PROLIFERATION OF THE BLACK MONEY IN THE SOCIETY AT LARGE AND NOT OTHERWISE. MEMORANDUM EXPLAINING THE FINANCE BILL, 1984 (146 I TR ST 157, 162) EXPLAINED DURING THE BUDGET SPEECH HONORABLE FINANC E MINISTER SPOKE IN THE BUDGET SPEECH THAT WHY THIS PROVISION BROUGHT IN TH E BUDGET AND CLARIFIED THAT THE PERSONS GENERALLY MAKE ADJUSTMENT OF LOAN AND D EPOSITS IN THEIR BOOKS THROUGH CASH TRANSACTION WHEN THE INCOME TAX DEPART MENT CARRY OUT INVESTIGATION. ACCORDINGLY PROVISIONS OF SECTION 26 9SS AND 269T WERE ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 22 BROUGHT IN THE BUDGET. BUT IN CASE OF ASSESSEE, ALL TRANSACTIONS HAVE BEEN MADE THROUGH A/C PAYEE CHEQUES ONLY AND ONLY TRANSFER EN TRIES WERE EFFECTED IN BOOKS OF ACCOUNT FOR TRANSFER OF LIABILITIES. 1.7) THERE IS A REASONABLE CAUSE U/S 273B FOR NOT L EVYING THE PENALTY BECAUSE THERE WAS NO MALA-FIDE INTENTION ON THE PAR T OF THE ASSESSE WHILE CARRYING OUT THE ABOVE TRANSACTIONS IN THEIR BOOKS AND THEY WERE UNDER BONA- FIDE BELIEF THAT SUCH TRANSACTIONS DO NOT CONTRAVEN E SECTION 269SS/T AS TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES. THE GENUINENESS OF THE RECEIPT OF LOAN/DEPOSIT NOR THE TRANSACTION OF REPAYMENT OF LOAN BY WAY OF ADJUSTMENT THROUGH BOOK ENTRIES CARR IED OUT IN THE ORDINARY COURSE OF BUSINESS HAS NOT BEEN DOUBTED IN THE REGU LAR ASSESSMENT. IN THE ABSENCE OF ANY FINDING THAT THE REPAYMENT OF LOAN/D EPOSIT WAS NOT A BONAFIDE TRANSACTION AND WAS MADE WITH A VIEW TO EVADE TAX, THE PENALTY U/S 271E CANNOT BE LEVIED AS THE ASSESSEE. 1.8) RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - S.NO NAME OF CASE CASE LAW PAPER BOOK PG (FILED IN CASE OF SHAKTI FOUNDATION ITA NO ITA NO 663/JP/15 1. CIT-VI V/S WORLDWIDE TOWNSHIP PROJECTS LTD. (2014) 89 CCH 0100 (DEL) 1 TO 6 2. CIT V/S NATIONAL CLOTHING CO. (2014) 91 CCH 0019 (DEL) 7 TO 9 3. ITO V/S AMARNATH SHIVRAJ (HUF) (2003) 22 CCH 0120 AGRA TRIB. 10 TO 15 4. ITO V/S INTEGRATED TECHNOLOGY LTD (2012) 31 CCH DEL TRIB. 16 TO 24 5. DCIT V/S G. SANJAY CHOWDARY (2014) 41 CCH 0020 HYD TRIB. 25 TO 28 6. M/S S. R. ASSOCIATED CONSTRUCTION CO. PVT. LTD V /S JCIT, RANGE MALDA 2016(5) TMI 1168-ITAT KOLKATA 29 TO 40 ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 23 7. ITO WARD-1, KAKINADA V/S M/S RAMALINGESWARA COMMERCIAL COMPLEX AND VICE VERSA 2016(5) TMI 1145-ITAT VISHAKHAPATNAM 41 TO 47 8. 2013 (12) TMI 1545 - ALLAHABAD HIGH COURT COMMISSIONER OF INCOME TAX VERSUS M/S. SAURABH ENTERPRISES INCOME TAX APPEAL NO. 242 OF 2005 DATED: - 11 DECEMBER 2013 COPY ENCLOSED. (ITA NO. 672/JP/15) LODHA BUILDERS PVT LTD AND OTHERS VERSUS ASSTT COMMISSIONER OF INCOME TAX ITA NO.476,481,475,477,478,479,480/M/2014 DATED: - 27 JUNE 2014 [2014] 34 ITR (TRIB) 157 (ITAT [MUM]) COPY ENCLOSED. (ITA NO. 672/JP/15) COMMISSIONER OF INCOME-TAX, CENTRAL-IV VERSUS TRIUMPH INTERNATIONAL FINANCE (I) LTD. [2012] 345 ITR 270 COPY ENCLOSED. (ITA NO. 672/JP/15) 2) GROUND NO 3 TO 5 OF THE REVENUE IS AGAINST THE F INDINGS OF LD CIT(A) THAT THE ORDER PASSED BY ADDL CIT, RANGE-1, KOTA IS WITHOUT JURISDICTION. 2.1 THE ADDL. CIT RANGE-1 KOTA ISSUED A SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY U/S 271 D OF THE ACT ON 23.05 .2014. THEN ANOTHER SHOW CAUSE NOTICE DATED 14.11.2014 WAS ISSUED TO THE APP ELLANT. THE ADDL. C.I.T. HAS PASSED ORDER U/S 271D WITHOUT HAVING JURISDICTI ON AS ALL CASES OF THE ASSESSEES COVERED BY SECTION 10,11,12 AND 13 (TRUST AND SOCIETIES) HAVE BEEN TRANSFERRED TO THE CIT (EXEMPTIONS),JAIPUR AS PER C BDT NOTIFICATION NO. 52/2014 DATED 22.10.2014 (PB PG 30-36). SUCH NOTICE WAS ISSUED ON 22/10/2014 AND MADE EFFECTIVE AND CAME INTO FORCE F ROM 15.11.2014 AND ORDER OF PENALTY WAS PASSED ON 27.11.2014. THE APPELLANT IS REGISTERED U/S 12 AA OF THE ACT HENCE JURISDICTION OF THE APPELLANT LIES WITH THE C.I.T. (EXEMPTION) JAIPUR. COPY OF REGISTRATION IS AT PB PAGE 16. THE ADDL. C.I.T. RANGE-1, KOTA HAS PASSED ORDER WITHOUT HAVING VALID JURISDICTION AND SUCH ORDER IS INVALID/ ILLEGAL AND LIABLE TO BE QUASHED AND LD CIT(A) HAS RIGHTLY HELD THAT THE ORDER WAS PASSED WITHOUT JURISDICTION. ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 24 2.2 SINCE THE NOTIFICATION WAS ISSUED ON 22/10/2014 AND CAME INTO FORCE W.E.F. 15/11/2014. THEREFORE, THERE WAS SUFFICIENT TIME WITH THE LD AO TO COMPLY WITH THE NOTIFICATION ISSUED BY CBDT. 2.3 AS REGARD NOT RAISING THE OBJECTION BEFORE THE ADDL CIT, RANGE-1, KOTA BY THE ASSESSEE AT THE STAGE OF PENALTY PROCEEDING, WE SUBMIT THAT IT IS A LEGAL ISSUE AND JURISDICTION CAN BE CHALLENGED AT ANY STA GE OF PROCEEDINGS. A) NATIONAL THERMAL POWER CO LTD VS CIT (1998) 229 ITR 0383. B) ZAKIR HUSSAIN VS. CIT & ANR. (2006) 202 CTR (RAJ ) 40 C) SIKSHA VS. COMMISSIONER OF INCOME TAX & ORS HIGH COURT OF ORISSA (2011) 336 ITR 0112 D) WEST BENGAL STATE ELECTRICITY BOARD VS. DY. CIT & ANR . (2005) 278 ITR 218 (CAL) E) ORISSA CEMENT LTD. VS. CIT: (2001) 250 ITR 856 (DEL) F) AHMEDABAD ELECTRICITY CO. LTD. VS. CIT (1993) 1 99 ITR 351 (BOM) (FB) G) INVENTORS INDUSTRIAL CORPORATION LTD. VS. CIT - 194 ITR 548 (BOM.) H) RAMILABEN RATILAL SHAH VS. CIT - 282 ITR 176 (GUJ.) I) PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. ACIT - 21 SOT 440 (KOL.). J) P.V.DOSHI VS. CIT - (113 ITR 22) (GUJ.) THE HUMBLE ASSESSEE PRAYS YOUR HONOR TO UPHELD THE FINDINGS OF LD CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORD TH AT THE ADDL. CIT, RANGE- 1, KOTA HAD IMPOSED THE PENALTY OF RS. 31,00,000/- U/S 271E OF THE ACT ON THE ASSESSEE FOR REPAYING LOANS/ DEPOSITS IN VI OLATION OF PROVISIONS OF SECTION 269T OF THE ACT. IT IS FURTHER NOTED FROM T HE ORDER OF THE LD. CIT(A) WHO HAD OBSERVED THAT THE ADDL. CIT, RANGE-1 , KOTA HAD QUOTED WRONG SECTION THAT THE ASSESSEE HAD RECEIVED THESE AMOUNTS AND HAD NOT REPAID THE SAME. THEREFORE, SECTION 271E R.W.S. 269 T WAS NOT APPLICABLE. ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 25 THE LD. CIT(A) OBSERVED THAT THE SECTION 269T WAS I NTRODUCED IN THE STATUTE TO PREVENT INTRODUCTION OF UNACCOUNTED MONE Y BY SHOWING CASH LOANS AND THEIR REPAYMENT ETC. SECTION 269T DOES N OT APPLY ON JOURNAL ENTRIES PASSED IN THE BOOKS OF ACCOUNTS. THE MOOT I SSUE IS ABOUT CORRECTNESS OF THE IMPOSITION OF PENALTY U/S 271E M ADE BY THE ADDL. CIT, RANE-1, KOTA. BEFORE COMING TO ANY CONCLUSION, IT W ILL IN THE INTEREST OF JUSTICE TO TAKE INTO CONSIDERATION THE FOLLOWING P ROVISIONS OF SECTION 269SS AND 269T OF THE ACT THAT THE ASSESSEE HAD AC TUALLY VIOLATED THE PROVISIONS AND THE ADDL. CIT , KOTA HAD IMPOSED THE PENALTY U/S 271E OF THE ACT. [CHAPTER XX-B] REQUIREMENT AS TO MODE OF [ACCEPTANCE, PAYMENT OR] REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX [MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEP OSITS. 269SS. NO PERSON SHALL, AFTER THE 30TH DAY OF JUNE, 1984, TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFTER IN THIS SECTION REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT IF, (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGR EGATE AMOUNT OF SUCH LOAN AND DEPOSIT ; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN O R DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FROM THE D EPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HAS FALLEN DUE OR NOT), T HE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID ; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN C LAUSE (B), IS [TWENTY] THOUSAND RUPEES OR MORE : PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y TO ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPOSIT TAKE N OR ACCEPTED BY, (A) GOVERNMENT ; ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 26 (B) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK OR CO-OPERATIVE BANK ; (C) ANY CORPORATION ESTABLISHED BY A CENTRAL, STAT E OR PROVINCIAL ACT ; (D) ANY GOVERNMENT COMPANY 84 AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956) ; (E) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY 85 IN THIS BEHALF IN THE OFFICIAL GAZETTE : 86 [ PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y TO ANY LOAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPO SIT IS TAKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN OR DEPOSIT IS TAKEN OR ACCE PTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABL E TO TAX UNDER THIS ACT.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, 87 [(I) BANKING COMPANY MEANS A COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 (10 OF 1949), APPLIES AND INCLUDES ANY BA NK OR BANKING INSTITUTION REFERRED TO IN SECTION 51 OF THAT ACT ;] (II) CO-OPERATIVE BANK SHALL HAVE THE MEANING AS SIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949) ; (III) LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF M ONEY.] [ MODE OF REPAYMENT OF CERTAIN LOANS OR DEPOSITS. 269T. NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIVE BA NK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM OR OTHE R PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT P AYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAS MADE THE LOAN OR DEPOSIT IF (A) THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WI TH THE INTEREST, IF ANY, PAYABLE THEREON, OR (B) THE AGGREGATE AMOUNT OF THE LOANS OR DEPOSITS HELD BY SUCH PERSON WITH THE BRANCH OF THE BANKING COMPANY OR CO-OPERATIVE BANK OR, AS THE CASE MAY BE, THE OTHER COMPANY OR CO-OPERATIVE SOCIETY OR TH E FIRM, OR OTHER PERSON EITHER IN HIS OWN NAME OR JOINTLY WITH ANY OTHER PE RSON ON THE DATE OF SUCH REPAYMENT TOGETHER WITH THE INTEREST, IF ANY, PAYAB LE ON SUCH LOANS OR DEPOSITS, IS TWENTY THOUSAND RUPEES OR MORE: PROVIDED THAT WHERE THE REPAYMENT IS BY A BRANCH OF A BANKIN G COMPANY OR CO- OPERATIVE BANK, SUCH REPAYMENT MAY ALSO BE MADE BY CREDITING THE AMOUNT OF SUCH LOAN OR DEPOSIT TO THE SAVINGS BANK ACCOUNT OR THE CURRENT ACCOUNT (IF ANY) WITH SUCH BRANCH OF THE PERSON TO WHOM SUCH LOAN OR DEPOSIT H AS TO BE REPAID : [ PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO REPAYMENT OF ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED FROM ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 27 (I) GOVERNMENT; (II) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK OR CO-OPERATIVE BANK; (III) ANY CORPORATION ESTABLISHED BY A CENTRAL, ST ATE OR PROVINCIAL ACT; (IV) ANY GOVERNMENT COMPANY 91 AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956); (V) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLASS OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENTRAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITING, NOTIFY IN THIS BEHALF IN TH E OFFICIAL GAZETTE.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) BANKING COMPANY SHALL HAVE THE MEANING ASSI GNED TO IT IN CLAUSE (I) OF THE EXPLANATION TO SECTION 269SS ; (II) CO-OPERATIVE BANK SHALL HAVE THE MEANING A SSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (III) LOAN OR DEPOSIT MEANS ANY LOAN OR DEPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD AND, IN TH E CASE OF A PERSON OTHER THAN A COMPANY, INCLUDES LOAN OR DEPOSIT OF ANY NAT URE.] A PLAIN READING OF SECTION 269 SS INDICATES THAT IT APPLIES TO A TRANSACTION WHERE A DEPOSIT OR LOAN MONEY IS ACCEPTED BY AN ASS ESSEE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAF T. THIS IS ALSO EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION TO SE CTION 269SS OF THE ACT WHICH DEFINES LOAN OR DEPOSIT OF MONEY. THE PLAIN READING OF SECTION 269T INDICATES THAT NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIVE BANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY A ND NO FIRM OR OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DR AWN IN THE NAME OF THE PERSON WHO HAS MADE THE LOAN OR DEPOSIT. THIS I S ALSO EXPLICIT FROM CLAUSE (III) OF THE EXPLANATION OF SECTION 269T OF THE ACT WHICH DEFINES ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 28 LOAN OR DEPOSIT OF MONEY WHICH IS REPAYABLE. ALTHO UGH IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (SUPRA), IT IS HELD THAT THE LIABILITY RECORDED IN THE BOOKS OF ACCOUNT BY WAY O F JOURNAL ENTRIES I.E. CREDITING THE AMOUNT OF PARTY TO WHOM MONIES PAYABL E AND DEBITING THE ACCOUNT OF A PARTY FROM WHOM MONIES ARE RECEIVABLE IN THE BOOKS OF ACCOUNT IS IN CONTRAVENTION OF PROVISIONS OF SECTIO N 269T OF THE ACT BUT IN THAT CASE ALSO THE PENALTY WAS HELD TO BE NOT LE VIABLE FOR THE REASON THAT TRANSACTION WAS BONA FIDE AND WAS NOT TO EVADE TAXE S. IN ASSESSEE'S CASE ALSO, THE TRANSACTION IS BONAFIDE AND IT WAS NOT TO EVADE TAXES. AS REGARDS THE ISSUE OF JURISDICTION, IT IS NOTED THAT THE NOT IFICATION WAS ISSUED ON 22- 10-2014 AND CAME INTO FORCE W.E.F. 15-11-2014. THER EFORE, THERE WAS SUFFICIENT TIME WITH THE AO TO COMPLY WITH THE NOTI FICATION ISSUED BY THE CBDT. IN THIS VIEW OF THE MATTER AND FURTHER PERUS ING THE CITATIONS OF THE CASE LAWS (SUPRA), WE FIND NO INFIRMITY IN THE ORDE R OF THE LD. CIT(A) WHICH IS SUSTAINED ON THIS ISSUE. THUS THE GROUNDS 1 TO 5 OF THE REVENUE ARE DISMISSED. 6.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT S C.O. NO. 47/JP/2015 ( ARISING OUT OF ITA NO. 670/JP/2015). (I) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETED TH E PENALTY OF RS. 31,00,000/- U/S 271E SINCE THERE IS AN ACCEP TANCE OF LOAN THROUGH BOOK ENTRY WHICH IS NOT IN THE CONTRAV ENTION OF ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 29 PROVISION OF SECTION 269SS AS DECIDED BY HON'BLE HI GH COURTS AND ITAT (II) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING P ENALTY OF RS. 31,00,000/-U/S 271E AS THERE WAS NO REPAYMENT O F LOAN BUT ACCEPTANCE OF LOAN HENCE SECTION 271E R.W.S. 26 9T IS NOT APPLICABLE (III) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING PENALTY OF RS. 31,00,000/- U/S 271E AS THE ADDL. CIT, RANGE-1, KOTA HAS NO JURISDICTION OVER THE APPELLANT. 6.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE C.O., IT IS NOTED THAT THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). SINCE, WE HA VE DISMISSED THE APPEAL OF THE REVENUE THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN ITS C.O. SUPPORTING THE ORDER OF THE LD. CIT(A), ARE IN FUCTUOUS AND DISMISSED. 7.0 THUS THE APPEAL FILED BY REVENUE IS DISMISSED AND C.O. OF THE ASSESSEE IS ALSO DISMISSED. ITA NO. 671/JP/2015 8.1 THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPE AL IN ITA NO. 671/JP/2015. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A), KOTA HAS ERRED :- ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 30 1. IN DELETING THE PENALTY AMOUNTING TO RS. 84,75,600/- IMPOSED U/S 271D OF THE I.T. ACT IGNORI NG THE FACT THAT THE PROVISIONS OF SECTION 269SS ARE ATTRA CTED IN CASE THE LOAN/ ADVANCE ARE ACCEPTED OTHERWISE THAN AN AC COUNT PAYEE CHEQUE OR DEMAND. 2. IN DELETING THE PENALTY AMOUNTING TO RS. 84,75,600/- IMPOSED U/S 271D OF THE I.T. ACT IGNORI NG THE FACT THAT NEW CHARGE OF CIT (EXEMPTIONS) WAS CREATE D W.E.F. 15-11-2014 AND THE TRANSFER OF PAN AND RECORDS TO N EW OFFICE REQUIRES SOMETIME AND THE PENALTY WAS BARRED BY LIMITATION ON 30-11-2014. 3. IN IGNORING THE FACT THAT ASSESSEE HAS NEVER RAISED THE GROUND OF JURISDICTION BEFORE THE ADDL. CIT, RANGE-1, KOTA DURING PENALTY PROCEEDINGS THOUGH FIN AL REPLY WAS FILED BY THE ASSESSEE VIDE LETTER DATED 25-11-2 014 I.E. AFTER 15-11-2014 4. IN IGNORING THE FACT THAT ON THE DATE OF IMPOSITION OF PENALTY THE PAN AS WELL AS ASSESSMENT RECORDS WERE UNDER THE JURISDICTION OF ITO, WARD- 1(2), KOT A OVER WHICH ADDL. CIT, RANGE-1, KOTA WAS HAVING JURISDICT ION. 8.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE LD. CIT(A ) HAS DISMISSED THE APPEAL OF THE REVENUE. IT IS FURTHER NOTED THAT SIM ILAR ISSUE HAS ALREADY BEEN TAKEN UP FOR ADJUDICATION IN THE CASE OF ITO (EXEMPTION) VS. M/S. SANKALP FOUNDATION IN ITA NO. 669/JP/2015 FOR THE A SSESSMENT YEAR 2011-12 WHERE THE APPEAL OF THE REVENUE HAS BEEN D ISMISSED. SINCE THE ISSUE RAISED BY THE DEPARTMENT IN THE CASE OF M/S. PROSEED FOUNDATION RELATING TO PENALTY OF RS. 84,75,600/- U/S 271D OF THE ACT IS SIMILAR AS IN THE CASE OF M/S. SANKALP FOUNDATION, THEREFORE, THE DECISION TAKEN BY US ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 31 IN THE CASE OF M/S. SANKALP FOUNDATION SHALL APPLY MUTATIS MUTANDIS IN THE CASE OF M/S. PROSEED FOUNDATION. HENCE, THE APP EAL OF THE REVENUE IS DISMISSED AS INDICATED ABOVE. 9.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT S C.O. NO. 48/JP/2015 (ARISING OUT OF ITA NO. 671/JP/2015) (I) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETED TH E PENALTY OF RS. 84,75,600/- U/S 271D SINCE THERE IS AN ACCEP TANCE OF LOAN THROUGH BOOK ENTRY WHICH IS NOT IN THE CONTRAV ENTION OF PROVISION OF SECTION 269SS AS DECIDED BY HON'BLE HI GH COURTS AND ITAT (II) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING P ENALTY OF RS. 84,75,600/- U/S 271D AS THE ADDL. CIT , RANGE-1 , HAS NO JURISDICTION OVER THE APPELLANT. 9.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE C.O., IT IS NOTED THAT THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). SINCE, WE HA VE DISMISSED THE APPEAL OF THE REVENUE THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN ITS C.O. SUPPORTING THE ORDER OF THE LD. CIT(A), ARE IN FUCTUOUS AND DISMISSED. 10. THUS THE APPEAL FILED BY THE REVENUE AND C.O. F ILED BY THE ASSESSEE IS ALSO DISMISSED. ITA NO. 672/JP/2015 11.1 THE GROUNDS RAISED BY THE REVENUE IN DEPARTMEN TAL ITA NO. 672/JP/2015 ARE AS UNDER:- ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 32 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A), KOTA HAS ERRED :- 1. IN DELETING THE PENALTY AMOUNTING TO RS. 87,00,000/- IMPOSED U/S 271E OF THE I.T. ACT IGNORI NG THE FACT THAT THE PROVISIONS OF SECTION 269T ARE ATTRAC TED IN CASE THE LOAN/ ADVANCE ARE ACCEPTED OTHERWISE THAN AN AC COUNT PAYEE CHEQUE OR DEMAND. 2. IN DELETING THE PENALTY IMPOSED U/S 271E ON THE GROUND THAT THE ADDL. CIT, RANGE-1, KOTA HAS QUOTED WRONG SECTION IGNORING THE FACT THAT MERE MENTION OF WRON G SECTION DOES NOT CHANGE THE PROVISIONS AS THE PROVISIONS OF SECTION 269SS & 269T ARE BASED ON THE SAME PRINCIPLE 3. IN DELETING THE PENALTY AMOUNTING TO RS. 87,00,000/- IMPOSED U/S 271E OF THE I.T. ACT IGNORI NG THE FACT THAT NEW CHARGE OF CIT (EXEMPTIONS) WAS CREATE D W.E.F. 15-11-2014 AND THE TRANSFER OF PAN AND RECORDS TO N EW OFFICE REQUIRES SOMETIME AND THE PENALTY WAS BARRED BY LIMITATION ON 30-11-2014. 4. IN IGNORING THE FACT THAT ASSESSEE HAS NEVER RAISED THE GROUND OF JURISDICTION BEFORE THE ADDL. CIT, RANGE-1, KOTA DURING PENALTY PROCEEDINGS THOUGH FIN AL REPLY WAS FILED BY THE ASSESSEE VIDE LETTER DATED 25-11-2 014 I.E. AFTER 15-11-2014 5. IN IGNORING THE FACT THAT ON THE DATE OF IMPOSITION OF PENALTY THE PAN AS WELL AS ASSESSMENT RECORDS WERE UNDER THE JURISDICTION OF ITO, WARD- 1(2), KOT A OVER WHICH ADDL. CIT, RANGE-1, KOTA WAS HAVING JURISDICT ION. 11.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE LD. CIT(A ) HAS DISMISSED THE APPEAL OF THE REVENUE. IT IS FURTHER NOTED THAT SIM ILAR ISSUE HAS ALREADY BEEN TAKEN UP FOR ADJUDICATION IN THE CASE OF ITO (EXEMPTION) VS. M/S. ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 33 SANKALP FOUNDATION IN ITA NO. 670/JP/2015 FOR THE A SSESSMENT YEAR 2011-12 WHERE THE APPEAL OF THE REVENUE HAS BEEN D ISMISSED. SINCE THE ISSUE RAISED BY THE DEPARTMENT IN THE CASE OF M/S. PROSEED FOUNDATION RELATING TO PENALTY OF RS. 87,0,000/- U/S 271E OF T HE ACT IS SIMILAR AS IN THE CASE OF M/S. SANKALP FOUNDATION, THEREFORE, THE DECISION TAKEN BY US IN THE CASE OF M/S. SANKALP FOUNDATION SHALL APPLY MUTATIS MUTANDIS IN THE CASE OF M/S. PROSEED FOUNDATION. HENCE, THE APP EAL OF THE REVENUE IS DISMISSED AS INDICATED ABOVE. 12.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN I TS C.O. NO. 49/JP/2015 ( ARISING OUT OF ITA NO. 672/JP/2015). (I) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETED TH E PENALTY OF RS. 87,00,000/- U/S 271E SINCE THERE IS AN ACCEP TANCE OF LOAN THROUGH BOOK ENTRY WHICH IS NOT IN THE CONTRAV ENTION OF PROVISION OF SECTION 269SS AS DECIDED BY HON'BLE HI GH COURTS AND ITAT (III) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING PENALTY OF RS. 87,00,000/- U/S 271E AS THE ADDL. CIT, RANGE-1, KOTA HAS NO JURISDICTION OVER THE APPELLANT. (II) THE LD. CIT(A) HAS RIGHTLY ACTED IN DELETING P ENALTY OF RS. 87,00,000/-U/S 271E AS THERE WAS NO REPAYMENT O F LOAN BUT ACCEPTANCE OF LOAN HENCE SECTION 271E R.W.S. 26 9T IS NOT APPLICABLE 12.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IN THE C.O., IT IS NOTED THAT THE LD. AR OF THE ASSESSEE ITA NO. 669/JP/2015 ITO, (EXEMPTION), KOTA VS. M/S. SANKALP FOUNDATION, KOTA . 34 SUPPORTED THE ORDER OF THE LD. CIT(A). SINCE, WE HA VE DISMISSED THE APPEAL OF THE REVENUE THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN ITS C.O. SUPPORTING THE ORDER OF THE LD. CIT(A), ARE IN FUCTUOUS AND DISMISSED. 13. THUS THE APPEAL FILED BY THE REVENUE AND C.O. F ILED BY THE ASSESSEE IS ALSO DISMISSED. 14.0 IN THE RESULT, THE APPEALS FILED BY REVENUE AND C ROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 /09/2 016 SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01 /09/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, (EXEMPTION), KOTA 2. IZR;FKHZ@ THE RESPONDENT-M/S. SANKALP FOUNDATION, KOTA & PR OSEED FOUNDATION 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 669 ,670, 671 & 672/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR