M/s Panchsheel Marketing Private Limited, New Delhi V. Addl. CIT, New Delhi

ITA 927/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3968 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM ITA NO.927/DEL/2011 ITA NO.927/DEL/2011 ITA NO.927/DEL/2011 ITA NO.927/DEL/2011 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005 ASSESSMENT YEAR : 2005- -- -06 0606 06 M/S PANCHSHEEL MARKETING M/S PANCHSHEEL MARKETING M/S PANCHSHEEL MARKETING M/S PANCHSHEEL MARKETING PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, J JJ J- -- -1954, CHITTARANJAN PARK, 1954, CHITTARANJAN PARK, 1954, CHITTARANJAN PARK, 1954, CHITTARANJAN PARK, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 019. 110 019. 110 019. 110 019. PAN NO.AAACP0990P. PAN NO.AAACP0990P. PAN NO.AAACP0990P. PAN NO.AAACP0990P. VS. VS. VS. VS. ADDL.COMMISSIONER OF INCOME TAX, ADDL.COMMISSIONER OF INCOME TAX, ADDL.COMMISSIONER OF INCOME TAX, ADDL.COMMISSIONER OF INCOME TAX, RANGE RANGE RANGE RANGE- -- -14, 14, 14, 14, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER KAPOOR, CA. RESPONDENT BY : MS.Y.KAKKAR, SR.DR. ORDER ORDER ORDER ORDER PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : THIS IS ASSESSEES APPEAL. FOLLOWING GROUNDS ARE RAISED:- 1. WHETHER THE LD.CIT(A) HAS ERRED IN LAW AND FACT S OF THE CASE IN UPHOLDING THE PENALTY OF RS.21,40,762/- LEVIED U/S 271E BY THE LD.A.O. 2. WHETHER THE LD.CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE PENALTY BY IGNORING THE D ECISION OF JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NOIDA TOLL BRIDGE CO .LTD. (2003) 262 ITR 260 (DEL). 3. THE ASSESSEE MAY PLEASE BE ALLOWED TO ADD, DELET E, MODIFY, AND ALTER ANY OF THE GROUNDS OF APPEAL. 2. BRIEF FACTS ARE THAT ASSESSEE HAS AN ACCOUNT IN THE NAME OF SMT.MAYA GANGULY IN WHICH ASSESSEE RECEIVED MONEYS BY CHEQUES ON REGULAR BASIS. AO FOUND CERTAIN DEBITS TO HER ACCO UNT AND HE ISSUED PENALTY NOTICE U/S 271E. THESE PAYMENTS MADE TO TH IRD PARTIES BY ACCOUNT PAYEE CHEQUES WERE ENTERED BY WAY OF GENERA L ENTRIES IN THE ACCOUNT OF SMT.MAYA GANGULY. AO, HOWEVER, HELD THA T THE REPAYMENTS 2 HAVE BEEN MADE TO SMT.MAYA GANGULY AND HE LEVIED PE NALTY BY FOLLOWING OBSERVATIONS:- IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCUSSE D ABOVE, I HOLD THAT THE ASSESSEE HAS REPAID THE LOAN OF RS.21,40,762/-, OTHERWISE THAN BY ACCOUNT PAYEE CHE QUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF PE RSON WHO HAS MADE THE LOAN OR DEPOSIT, IN CONTRAVENTION TO THE PROVISION OF SECTION 269T OF THE ACT AND IS LIABLE FOR PENALTY U/S 271E OF THE ACT. BASED ON THE ABOVE FACTS, PEN ALTY OF RS.21,40,762/- BEING EQUAL TO THE AMOUNT OF LOAN RE PAID IS LEVIED. 3. CIT(A), THOUGH OBSERVED THAT THERE WERE REPAYMEN TS IN FAVOUR OF THIRD PARTIES ON ACCOUNT OF SMT.MAYA GANGULY, STILL CONFIRMED THE PENALTY BY FOLLOWING OBSERVATIONS:- 2.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ORDER PASSED BY THE AO. IT IS AN ADMITTED FACT THAT THE APPELLANT COMPANY HAS BEEN REGULARLY RECEIVING LOAN FROM MAYA GANGULY (ESTATE) THROUGHOUT THE YEAR. LAST AMOUNT WAS RECEIVED FROM HER ON 18.03.2005 FROM DENA BANK A/C NO.2595 AMOUNTING TO RS.5,00,000/-. THE TOTAL AMOUNT RECEIVED FROM HER DURING THE YEAR AMOUNTS TO RS.58,07,282/-. HOWEVER, THE APPELLANT COMPANY HAS REPAID RS.21,40,762/- BY WAY OF JOURNAL ENTRIES. THE LAST JOURNAL ENTRY WAS DATED 31.03.2005 AMOUNTING TO RS.7,91,014/-, WHICH HAS BE EN CREDITED AS PROJECT RECEIPTS. IT IS FURTHER SEEN T HAT THE OTHER PAYMENTS ARE BY WAY OF PAY ORDERS LIKE FOR PU RCHASE OF MOTOR CAR. ONE OF THE PAYMENT DATED 03.03.2005 HAS BEEN MADE BY WAY OF PAY ORDER IN FAVOUR OF ONE BITT OO SONDHI FOR RS.1,50,000/-. THERE IS NO DISPUTE THAT THE AMOUNT RECEIVED WAS IN THE NATURE OF LOAN. THERE I S ALSO NO DISPUTE THAT THE REPAYMENT OF LOAN HAS BEEN MADE OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAF T. 2.3.1 THE SUBMISSION OF THE APPELLANT IS THAT SIN CE THE REPAYMENT HAS NOT BEEN MADE IN CASH, THE PROVISIONS OF SECTION 269T OF I.T.ACT, 1961 COULD NOT HAVE BEEN I NVOKED AND THE PENALTY COULD NOT HAVE BEEN LEVIED BY THE A O. THE SUBMISSION OF THE APPELLANT IS NOT TENABLE. THE LA NGUAGE OF PROVISIONS OF SECTION 269T IS VERY CLEAR AND UNAMBIGUOUS. THE LEGISLATURE IN ITS WISDOM HAS USE D THE 3 WORD OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAFT. IF THE INTENTION OF THE LEGISLATURE WAS TO LEVY PENALTY ONLY IN RESPECT OF REPAYMENT BY CASH, IT WOULD HAVE PROVIDED SO. THE VARIOUS CASE LAWS RELIED UPON BY THE AR ARE DISTINGUISHED ON FACTS AND CANNOT BE MADE APPLI CABLE TO THE PRESENT CASE. IN THOSE CASES, THE DISPUTE W AS WHETHER THE AMOUNT RECEIVED/REPAID WAS IN THE NATUR E OF LOANS/DEPOSITS OR NOT. HOWEVER, IN THE APPELLANTS CASE THERE IS NO SUCH DISPUTE. IN MY CONSIDERED OPINION , WHEN THE LANGUAGE USED IN SECTION 269T IS SO CLEAR AND UNAMBIGUOUS, NO FURTHER IMAGINARY INFERENCE CAN BE DRAWN AS THE SAME WILL DEFEAT THE VERY PURPOSE OF THE SAI D PROVISIONS. THE EXPRESSION USED OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAFT IS NOT CAPABLE O F DRAWING INFERENCE THAT IT ONLY MEANS CASH REPAYMENT . IN VIEW OF THE ABOVE, THE ACTION OF THE AO IN LEVYING THE PENALTY OF RS.21,40,762/- IS HELD TO BE JUSTIFIED A ND IS THEREFORE CONFIRMED. THE GROUND OF APPEAL IS REJEC TED. 4. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE WHOLE ISSUE HAS BEEN MISCONSTRUED BY THE LOWER AUTHORITIES. TH E FOLLOWING FACTS ARE UNDISPUTED:- (I) SMT.MAYA GANGULY IS A REGULAR CREDITOR HAVING H ER ACCOUNT SINCE EARLIER YEARS AND THE AMOUNTS HAVE BEEN RECEI VED BY ACCOUNT PAYEE CHEQUES. (II) THAT THE IMPUGNED DEBIT ENTRIES ARE PAYMENTS M ADE BY ACCOUNT PAYEE CHEQUES OR DDS TO OTHER PARTIES ON TH E INSTRUCTION OF SMT.MAYA GANGULY WHO FACILITATED SOM E OF HER PAYMENTS WHICH WAS A COMMON PRACTICE INASMUCH A S SHE WAS THE CREDITOR AND ON HER INSTRUCTION, SUCH P AYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. (III) THE ASSESSEE FOR MAINTAINING BOOKS OF ACCOUNT DEBITED THESE ENTRIES TO HER ACCOUNT BY JOURNAL ENTRIES. L OWER AUTHORITIES FAILED TO APPRECIATE THAT THESE WERE NO T CASH PAYMENTS BUT PAYMENTS TO THIRD PARTIES AND FINAL ACCOUNTING WAS THROUGH JOURNAL ENTRIES WHICH HAS BE EN ADVERSELY INFERRED LOSING SIGHT OF THE REAL NATURE OF THE 4 TRANSACTION. IT IS THUS PLEADED THAT THE PENALTY I S NOT LEVIABLE. 5. LEARNED DR IS HEARD WHO DID NOT DISPUTE THE FACT THAT THE ABOVE DEBITS I.E. JOURNAL ENTRIES REPRESENTED PAYMENTS BY THE ASSESSEE TO THE CREDITORS SMT.MAYA GANGULYS INSTRUCTION BY ACCOUNT PAYEE CHEQUES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE MATERIAL ON RECORD. AS THE FACTS EMERGE, THE ACTUA L PAYMENTS TO THIRD PARTIES WERE MADE BY WAY OF ACCOUNT PAYEE CHEQUES O R DDS ON THE INSTRUCTION OF SMT.MAYA GANGULY, THEREFORE, IT CANN OT BE SAID THAT THE ASSESSEE CONTRAVENED THE PROVISIONS OF SECTION 269T SO AS TO ATTRACT PENALTY U/S 271E. LOWER AUTHORITIES HAVE ASSUMED T HAT THE JOURNAL ENTRIES ARE ACTUAL PAYMENTS WHICH IS NOT CORRECT. THE JOURNAL ENTRIES HAVE BEEN PASSED ONLY TO GIVE EFFECT TO THE ACTUAL PAYMENTS WHICH ARE THROUGH ACCOUNT PAYEE CHEQUES OR DDS. IN THESE CIR CUMSTANCES, WE DO NOT FIND ANY VIOLATION OF SECTION 269T AND THE P ENALTY IMPOSED IS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2011. SD/- SD/- (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) ACCOUNTAN ACCOUNTAN ACCOUNTAN ACCOUNTANT MEMBER T MEMBER T MEMBER T MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 13.05.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR