ITO 12(3)(4), MUMBAI V. MUEZ HEST INDIA P.LTD, MUMBAI

ITA 6889/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5155 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT SINGH ARNEJA
• Assessee Lawyers: VIPUL J SHAH
• Keywords: Loose papers; Tangible material
• Section: 271D; 271E; 147; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 6889 /MUM/20 1 6 ASSESSMENT YEAR: 2010 - 2011 & ITA NO. 6890 /MUM/201 6 ASSESSMENT YEAR: 2010 - 2011 THE INCOME TAX OFFICER - 13(3)(4 ), ROOM NO. 147A, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S MUEZ HEST INDIA PVT. LTD., 231, BLUE ROSE INDL. ESTATE, WESTERN EXPRESS HIGHWAY, BORIVALI (EAST), MUMBAI - 400066 PAN: AABCM4586D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RANJIT SINGH ARNEJA (DR) ASSESSEE BY : SHRI VIPUL J. SHAH (AR) DATE OF HEARING: 06/07 /201 8 DATE OF PRONOUNCEMENT: 01 / 10 /201 8 O R D E R PER RAM LAL NEGI, JM THESE APPEALS HAVE BEEN F ILED BY THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 25/08/2016 AND 26/08/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI, FOR THE ASSESSMENT YEAR 2010 - 2011, WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEALS FILED BY THE ASSESSEE AGAI NST PENALTY ORDERS PASSED U/S 271D AND 271E OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE, BOTH WERE CLUBBED, HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE. 2 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 ITA NO. 6889/MUM/2016 (ASSESSMENT YEAR: 2010 - 2011) 2. IN THE PRESENT CASE, ASSESSMENT WAS REOPENED U/S 147 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF THE DY. CIT, CENTRAL CIRCLE - 1, LUDHIANA THAT A SEARCH U/S 132 OF THE A CT WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S TARA HEALTH FOODS LTD. AND DURING THE SEARCH CERTAIN INCRIMINATING DOCUMENTS INCLUDING A DOCUMENT IN WHICH ENTRIES PERTAINING TO ADVANCE GIVEN TO THE ASSESSEE AMOUNTING TO RS. 7,00,00,000/ - WERE FOUND . DURI NG THE RE - ASSESSMENT PROCEEDINGS, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE WITH THE DIRECTION TO EXPLAIN AS TO WHY THE ABOVE CASH RECEIPTS/CASH PAYMENTS SHOULD NOT BE TREATED AS MADE IN VIOLATION OF SECTION 269 SS/269T OF THE ACT. IN RESPONSE TO THE SAID NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NEITHER RECEIVED ANY CASH PAYMENT NOR MADE ANY CASH PAYMENT TO M/S TARA HEALTH FOODS LTD. HOWEVER, THE AO REJECTING THE CONTENTION OF THE ASSESSEE HELD THAT THE ASSE SSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT WHILE TAKING/RETURNING THE LOAN AMOUNT OF RS. 7,00,00,000/ - IN CASH AND SEND THE MATTER TO THE ADDITIONAL CIT CONCERNED FOR INITIATING PENALTY U/S 271D AND 271E OF THE ACT. ACCORDINGLY, THE LD. ADD ITIONAL COMMISSIONER OF INCOME T AX RANGE - 12 (3), MUMBAI INITIATED PROCEEDINGS U/S 271D OF THE ACT AND LEVIED PENALTY OF RS. 7,00,00,000/ - HOLDING THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS U/S 269SS OF THE ACT. IN THE FIRST APPEAL, THE LD. CIT (A) DELETED THE ADDITION HOLDING THAT THE EVIDENCE ON RECORD IS NOT SUFFICIENT TO IMPOSE PENALTY U/S 271D OF THE ACT. THE REVENUE IS IN APPEAL AGAINST THE FINDINGS OF THE LD. CIT (A). 3 . THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEA L AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS. 7,00,00,000/ - LEVIED U/S 271D OF THE I.T. ACT ON ACCOUNT OF CONTRAVENTION OF THE PROVISIO N OF SECTION 269SS OF THE I.T. ACT. 3 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE ADDL. COMMISSIONER OF INCOME TAX SUBMITTED THAT SINCE THE AMOUNT IN QUESTION WAS PAID BY M/S TARA HEALTH FOODS LTD. AMOUNTING TO RS . 7,00,00,000/ - , AS PER THE INCRIMINATING DOCUMENT RECOVERED DURING SEARCH ACTION, THE LD. CIT (A) HAS WRONGLY HELD THAT THE ADDL. CIT - RANGE - 12(3) WAS NOT HAVING ANY OTHER TANGIBLE MATERIAL TO CONFI RM THE SAID TRANSACTION. THEREFORE, THE IMPUGNED ORDER IS LIABLE TO BE SET - ASIDE. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE THE AO HAD WRONGLY LEVIED THE PENALTY DESPITE THE FACT THAT MANAGING DIRECTOR OF TATA HEALTH FOOD LTD. HAS SWO RN AN AFFIDAVIT STATING THEREIN THAT NO SUCH TRANSACTION HAD TAKEN PLACE WITH THE ASSESSEE , THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED THE AO TO DELETE THE PENALTY. WITHOUT PREJUDICE, THE LD. COUNSEL FURTHER SUBMITTED THAT E VEN IF IT IS ASSUMED THAT TATA HEALTH FOOD LTD, HAD MAD E PAYMENT OF THE AMOUNT IN QUESTION, THE PAYMENT WAS MADE TOWARDS ADVANCE FOR MACHINERY AND THE PROVISIONS OF SECTION 269SS OF THE ACT ARE APPLICABLE TO TRANSACTION OF LOAN OR DEPOSIT OR ANY SPECIFIED SUM AND NOT TO ANY BUSINESS TRANSACTIONS. THE LD. COUNSEL REL YING ON THE DECISION OF THE HONBLE SUPREME COURT, IN THE CASE OF COMMON CAUSE (A REGISTERED SOCIETY) VS. UNION OF INDIA, 394 ITR 220 SUBMITTED THAT PENALTY U/S 271D READ WITH SECTION 269 SS CANN OT BE LEVIED ON THE BASIS OF ENTRIES IN LOOSE PAPER RECOVERED FROM A THIRD PARTY. WITHOUT PREJUDICE THE LD. COUNSEL SUBMITTED THAT THE ENTR IES IN QUESTION DO NOT PERTAIN TO LOAN OR DEPOSIT BUT PERTAIN TO ADVANCE FOR MACHINERY. UNDER THESE CIRCUMSTANCES, TH E LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON THE AUTHORITIES BELOW AND THE LD. COUNSEL FOR THE ASSESSEE. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS WRONGLY DELETED THE PENALTY IN QUESTION. WE NOTICE THAT THE LD. CIT(A) HAS 4 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 DELETED THE ADDITION MAINLY ON THE GROUND THAT AO HAS MADE ADDITION ON THE BASIS OF ROUGH NOTING RECOVERED FROM THE POSSESSI ON OF TARA HEALTH FOODS LTD . DURING SEARCH CONDUCTED BY THE DEPARTMENT. THE OBSERVATIONS OF THE LD. CIT(A) READ AS UNDER: I HAVE GONE THROUGH THE ORDER OF THE ADDL. CIT RANGE - 12(3) LEVYING PENALTY AND THE SUBMISSIONS MADE BY THE A/R OF THE APPELLANT IN T HIS REGARD. IT IS NOTED THAT THE PENALTY HAS BEEN LEVIED U/S 271D ON THE ASSESSEE ON ACCOUNT OF ACCEPTANCE OF CASH LOANS IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS. THE A.O. HAD NOTED IN THE PENALTY ORDER INSTANCES OF ACCEPTANCE OF LOANS THROUGH MODES OTHER THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT. ACCORDINGLY IT WAS OBSERVED THAT ASSESSEE HAD VIOLATED PROVISIONS OF SECTION 269SS AND WAS LIABLE FOR PENALTY U/S. 271D. DURING THE COURSE OF APPELLATE PROCEEDINGS THE A/R OF THE ASSESSEE HAS VEHEMENTLY OPPOSED THE LEVY OF PENALTY. IT HAS BEEN SUBMITTED THAT THE LEARNED ADDL. CIT RANGE - 12(3) WAS NOT HAVING ANY OTHER TANGI BLE MATERIAL IN HIS POSSESSION TO CONFIRM THE SAID TRANSACTIONS BUT STILL HE DISREGARDED THE SUBMISSIONS OF THE APPELLANT AND THE STATEMENT OF TARA HEALTH FOODS LTD. THAT THERE PROCEEDINGS BASED ON THE INFORMATION RECEIVED FROM DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, LUDHIANA. THE LEARNED OFFICER ALSO DID NOT APPRECIATE THAT THE ROUGH NOTING FOUND WAS NOT A VALID DOCUMENT TO PROVE THE EXISTENCE OF SUCH TRANSACTION. IN THE PRESENT CASE THE REVENUE DOES NOT HAVE ANY MATERIAL TO PROVE THAT SUCH TRANSACTIONS EVER EXISTED. HENCE THE ACTION OF THE LEARNED OFFER IS BAD IN LAW IN UTTER DISREGARD OF THE LEGAL PROVISIONS AND HENCE IT IS PRAYED TH AT THE PENALTY LEVIED BE DELETED AND THE PENALTY ORDER BE QUASHED. IT IS ALSO SUBMITTE D THAT WITHOUT ACCEPTING, THAT IF WE PROCEED ON AN ASSUMPTION THAT SUCH TRANSACTIONS DOES EXISTS BETWEEN THE SAID THFL AND THE APPELLANT THE LEARNED OFFICER HAS 5 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 ERRED IN MISUNDERSTANDING THE REPORTED TRANSACTIONS OF ADVANCE FOR MACHINERY AS LOAN AND HELD THAT THE APPELLANT HAS VIOLATED THE CONDITIONS OF SEC 269SS AND 269T OF THE I T ACT, 1961 AND INITIATED PENALTY PROCEEDINGS U/S 271D/ THE LEARNED OFFICER DID NOT APPRECIAT E THAT THE TRANSACTION REPORTED BY THE DCIT LUDHIANA WAS OF AN ADVANCE FOR MACHINERY, WHICH IS OUT OF THE PURVIEW OF SEC 269 SS AND DOES NOT ATTRACT PENALTY U/S 271D. IF THE DOCUMENT FOUND BY THE SEARCH TEAM IN THE PREMISES OF M/S TARA HEALTH FOODS LTD. IS BELIEVED TO BE TRUE AND CORRECT THE NAME ON THE ACCOUNT AND THE NARRATIONS MENTIONED IN THE ENTRY ITSELF ARE SELF - SPEAKING THAT THE NATURE OF TRANSACTION IS OF ADVANCE FOR MACHINERY . WHICH MEANS THE TRANSACTION IS IN THE NATURE OF BUSINESS TRANSACTION AN D NOT THE TRANSACTION OF LOAN. IT IS SUBMITTED THAT WHENEVER ANY DOCUMENT HAS BEEN RELIED UPON IT SHOULD BE CONSIDERED AS A WHOLE AND THE ASSESSING OFFICER CANNOT READ OR SELECT THE PORTION ADVANTAGEOUS TO REVENUE AND IGNORE THE OTHER PART. THE SAID PRINCI PLE HAS ALSO BEEN CONFIRMED BY THE HONBLE ITAT, PUNE IN THE CASE OF [DHANVARSHA BUILDERS & DEVELOPERS PVT. LTD. (102 ITD 375 (PUNE). IN THE CASE OF APPELLANT IT IS APPARENT IN THE LEDGER NAME AND IN THE NARRATION OF THE ENTRIES THAT THE AMOUNT IS PAID TOW ARDS ADVANCE FOR MACHINERY, WHICH IS OUTSIDE THE PURVIEW OF SEC. 269SS AND 269T. IT IS ABSOLUTELY CLEAR FROM THE LANGUAGE OF THE SECTION THAT THE PROVISIONS OF SEC. 269SS ARE APPLICABLE ONLY IN THE CASE OF TRANSACTION OF LOANS OR DEPOSITS AND DOES NOT APPL Y TO ANY BUSINESS TRANSACTION. 7. THE RIVAL CONTENTIONS OF THE PARTIES GIVE RISE TO THE QUESTION THAT WHETHER THE ENTRIES IN LOOSE PAPERS RECOVERED FROM THE POSSESSION OF A THIRD PARTY, DURING SEARCH U/S 132 OF THE ACT , IS SUFFICIENT TO CONCLUDED THAT THE ASSESSEE HAS ACCEPTED LOAN OR ADVANCE IN CASH WITHIN THE MEANING OF SECTION 269SS SO AS TO IMPOSE PENALTY U/S 271D OF THE ACT ? 6 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 THE LD. CIT(A) HAS DELETED THE PENALTY FIRSTLY ON THE GROUND THAT THE AO HAD NO TANGIBLE MATERIAL TO HOLD THAT THE ASSESSEE HAS RECEIVED ANY LOAN OR DEPOSIT IN CASH FROM TATA HEALTH FOOD LTD IN VIOLATION OF SECTION 269SS OF THE ACT AND SECONDLY, ON THE GROUND THAT SINCE THE ENTRIES PERTAIN TO MONEY PAID TOWARDS ADVANCE FOR MACHINERY, WHICH IS OUTSIDE THE AMBIT OF LOANS OR DEP OSITS WITHIN THE MEANING OF SECTION 269SS OF THE ACT, THERE IS NO JUSTIFICATION IN IMPOSING PENALTY U/S 271D OF THE ACT . 8. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE , THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF COMMON CAUSE VS. UNION OF I NDIA (SUPRA) THAT LOOSE SHEET S OF PAPER CONTAINING ROUGH ENTRIES HAVE NO EVIDENTIARY VALUE UNDER EVIDENCE ACT. WE NOTICE THAT IN THE PRESENT CASE, EXCEPT THE PRESUMPTION DRAWN BY AO FROM THE ROUGH SHEET CONTAINING THE QUESTIONED ENTRIES, THERE IS NO OTHER DIRECT OR CIRCUMSTANTIAL EVIDENCE TO SUBSTANTIATE THE CONCLUSION OF AO THAT THE ASSESSEE HAS ACCEPTED LOAN OR DEPOSIT IN CASH FROM TATA HEALTH FOOD LTD. WITHIN THE MEANING OF SECTION 269SS OF THE ACT. WE FURTHER NOTICE THAT SH. BALWANT SINGH, MD OF TATA HE ALTH FOOD LTD. HAS SWORN AN AFFIDAVIT STATING THAT THE COMPANY TATA HEALTH FOOD LTD. HAD NEITHER GIVEN ANY CASH LOAN TO THE ASSESSEE COMPANY NOR ANY AMOUNT WAS RECEIVED BY TATA HEALTH FOOD LTD . SH. BALWANT SINGH HAS FURTHER STATED THAT ONLY IN THE FINANCIA L YEAR 2008 - 09, THE TATA HEALTH FOOD LTD HAD PURCHASED MACHINERY FROM THE ASSESSEE COMPANY . UNDER THESE CIRCUMSTANCES, PARTICULARLY IN THE LIGHT OF THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT REFERRED ABOVE, WE ARE OF THE CONSIDERED VIEW T HAT AO HAS WRONGLY ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAD OBTAINED THE AMOUNT IN QUESTION IN VIOLATION OF SECTION 269SS OF THE ACT, ON THE BASIS OF LOOSE PAPERS CONTAINING THE QUESTIONED ENTRIES, WITHOUT POINTING OUT ANY CORROBORATION. IN ANY CASE , EVEN IF ONE IS TO GO BY THIS DOCUMENTS FOUND BY THE SEARCH TEM, THE LD. CIT (A) HAS RIGHTLY INFERRED THAT, THE NATURE OF TRANSACTION IS NOT LOAN BUT A BUSINESS ADVANCE FOR PURCHASE OF MACHINERY. AS PER THE SETTLED PRINCIPLES OF THE LAW, PENAL PROVISIONS ARE REQUIRED TO BE 7 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 CONSTRUED STRICTLY. HENCE, IN OUR CONSIDERED VIEW, THE MATERIAL ON RECORD IS NOT SUFFICIENT TO SUSTAIN PENALTY IMPOSED BY THE ASSESSMENT OFFICER U/S 271D READ WITH SECTION 269SS OF THE ACT. 9. HENCE , WE AGREE WITH THE FINDINGS OF T HE LD. CIT(A) THAT PENALTY U/S 271D CANNOT BE LEVIED ONLY ON THE BASIS OF ENTRIES MADE IN LOOSE PAPERS FOUND IN POSSESSION OF A THIRD PARTY, PARTICULARLY IN VIEW OF THE FACT THAT THE QUESTION ENTRIES PERTAINED TO ADVANCE FOR PURCHASE OF MACHINERY WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) TO INTERFERED WITH . WE THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE SOLE GROUND OF APPEAL OF THE REVENUE. ITA NO. 6890/MUM/2016 (ASSE SSMENT Y EAR: 2010 - 2011 ) VIDE THE PRESENT APPEAL , THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING EFFECTIVE : - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS. 7,00,00,000/ - LEVIED U/S 271E OF THE I.T. AC T ON ACCOUNT OF CONTRAVENTION OF THE PROVISION OF SECTION 269T OF THE I.T. ACT. 2. THE PRESENT APPEAL ALSO ARISES FROM THE TRANSACTION DISCUSSED IN REVENUES APPEAL ITA NO 6889/MUM/2016 . THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER WHEREBY THE LD. CIT( A) HAS DELETED THE PENALTY LEVIED U/S 271E OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. THE LD. CIT(A) HAS DELETED THE PENALTY IN QUESTION LEVIED BY THE AO HOLDING AS UNDER: I HAVE GONE THROUGH THE ORDER OF THE ADDL. CIT RANGE - 1 2(3) LEVYING PENALTY AND THE SUBMISSIONS MADE BY THE A/R OF THE APPELLANT IN THIS REGARD. IT IS NOTED THAT THE PENALTY HAS BEEN LEVIED U/S 271E ON THE ASSESSEE ON ACCOUNT OF REPAYMENT OF CASH LOANS IN CONTRAVENTION OF PROVI SIONS OF SECTION 269T . THE A.O. H AD NOTED IN THE PENALTY ORDER 8 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 INSTANCES OF REPAYMENT OF LOANS THROUGH MODES OTHER THAN BY ACCOUNT PAYEE CHEQUE OR DRAFT. ACCORDINGLY IT WAS OBSERVED THAT ASSESSEE HAD VIOLATED PROVISIONS OF SECTION 269 T AND WAS LIABLE FOR PENALTY U/S. 271E . DURING THE COUR SE OF APPELLATE PROCEEDINGS THE A/R OF THE ASSESSEE HAS VEHEMENTLY OPPOSED THE LEVY OF PENALTY. IT HAS BEEN SUBMITTED THAT THE LEARNED ADDL. CIT RANGE - 12(3) WAS NOT HAVING ANY OTHER TANGI BLE MATERIAL IN HIS POSSESSION TO CONFIRM THE SAID TRANSACTIONS BUT S TILL HE DISREGARDED THE SUBMISSIONS OF THE APPELLANT AND THE STATEMENT OF TARA HEALTH FOODS LTD. THAT THERE WERE NO SUCH TRANSACTIONS EVER EXECUTED AND CONTINUED THE PROCEEDINGS BASED ON THE INFORMATION RECEIVED FROM DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, LUDHIANA. THE LEARNED OFFICER ALSO DID NOT APPRECIATE THAT THE ROUGH NOTING FOUND WAS NOT A VALID DOCUMENT TO PROVE THE EXISTENCE OF SUCH TRANSACTION. IN THE PRESENT CASE THE REVENUE DOES NOT HAVE ANY MATERIAL TO PROVE THAT SUCH TRANSACTIONS EVE R EXISTED. HENCE THE ACTION OF THE LEARNED OFFER IS BAD IN LAW IN UTTER DISREGARD OF THE LEGAL PROVISIONS AND HENCE IT IS PRAYED THAT THE PENALTY LEVIED BE DELETED AND THE PENALTY ORDER BE QUASHED. IT IS ALSO SUBMITTE D THAT WITHOUT ACCEPTING, THAT IF WE PR OCEED ON AN ASSUMPTION THAT SUCH TRANSACTIONS DOES EXISTS BETWEEN THE SAID THFL AND THE APPELLANT THE LEARNED OFFICER HAS ERRED IN MISUNDERSTANDING THE REPORTED TRANSACTIONS OF ADVANCE FOR MACHINERY AS LOAN AND HELD THAT THE APPELLANT HAS VIOLATED THE COND ITIONS OF SEC 269SS AND 269T OF THE I T ACT, 1961 AND INITIATED PENALTY PROCEEDINGS U/S 271E. THE LEARNED OFFICER DID NOT APPRECIATE THAT THE TRANSACTION REPORTED BY THE DCIT LUDHIANA WAS OF AN ADVANCE FOR MACHINERY, WHICH IS OUT OF THE PURVIEW OF SEC 269S S AND DOES NOT ATTRACT PE NALTY U/S 271E . IF THE DOCUMENT FOUND BY THE SEARCH TEAM IN THE PREMISES OF M/S TARA HEALTH FOODS LTD. IS BELIEVED TO BE TRUE AND CORRECT THE NAME ON THE 9 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 ACCOUNT AND THE NARRATIONS MENTIONED IN THE ENTRY ITSELF ARE SELF - SPEAKING TH AT THE NATURE OF TRANSACTION IS OF ADVANCE FOR MACHINERY , W HICH MEANS THE TRANSACTION IS IN THE NATURE OF BUSINESS TRANSACTION AND NOT THE TRANSACTION OF LOAN. IT IS SUBMITTED THAT WHENEVER ANY DOCUMENT HAS BEEN RELIED UPON IT SHOULD BE CONSIDERED AS A WHOLE AND THE ASSESSING OFFICER CANNOT READ OR SELECT THE PORTION ADVANTAGEOUS TO REVENUE AND IGNORE THE OTHER PART. THE SAID PRINCIPLE HAS ALSO BEEN CONFIRMED BY THE HONBLE ITAT, PUNE IN THE CASE OF [DHANVARSHA BUILDERS & DEVELOPERS PVT. LTD. (102 ITD 37 5 (PUNE). IN THE CASE OF APPELLANT IT IS APPARENT IN THE LEDGER NAME AND IN THE NARRATION OF THE ENTRIES THAT THE AMOUNT IS PAID TOWARDS ADVANCE FOR MACHINERY, WHICH IS OUTSIDE THE PURVIEW OF SEC. 269SS AND 269T. IT IS ABSOLUTELY CLEAR FROM THE LANGUAGE OF THE SECTION THAT THE PROVISIONS OF SEC. 269 T ARE APPLICABLE ONLY IN THE CASE OF TRANSACTION OF LOANS OR DEPOSITS AND DOES NOT APPLY TO ANY BUSINESS TRANSACTION. 3. SECTION 271E OF THE ACT MAKES A PERSON LIABLE FOR PENALTY FOR REPAYMENT OF LOAN OR DEPOSI T OR SPECIFIED ADVANCE REFERRED TO IN SECTION 269T OF THE ACT OTHERWISE THAN IN ACCORDANCE WITH THE SAID SECTION. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE AND UPHELD THE FINDINGS OF THE LD. CIT (A), HOLDING THAT THE ASSESSEE HAS NOT VIOLATED THE PROVISION U/S 269SS OF THE ACT, THERE IS NO REASON TO HOLD THE ASSESSEE LIABLE FOR PENALTY U/S 271E OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. WE THEREFORE, AGREE WITH THE LD. CIT (A) AND UPHOLD THE FINDINGS AND DISMISS THE SOLE GROUND OF APPEAL OF THE REVENUE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY. IN THE RESULT, APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEAR 2010 - 2011 ARE DISMISSED. 10 ITA NO S . 6889 & 6890/MUM/2016 ASSESSMENT YEAR: 2010 - 2011 ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER , 2018 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 01 / 10 /201 8 ALINDRA PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI