The DCIT, Central Circle-4, Surat V. M/s Sai Ram Developers, Surat

ITSSA 596/AHD/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9116 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER (SS)' ./ IT(SS)A NO.596/AHD/2012 ( / ASSESSMENT YEAR : 2007-08 ) THE DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4 SURAT / VS. M/S.SAI RAM DEVELOPERS 3/1204, GOLWAD, INDERPURA SURAT 395 002 % ./&' ./ PAN/GIR NO. : ABCFS 8849Q ( '%( / APPELLANT ) .. ( )*%( / RESPONDENT ) '%( + / APPELLANT BY : SHRI D.K.SINGH, SR.D.R. )*%( , + / RESPONDENT BY : SHRI M.J.SHAH - , / DATE OF HEARING : 26/03/2013 ./01 , / DATE OF PRONOUNCEMENT : 5/4/13 2 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FR OM THE ORDER OF LD.CIT(APPEALS)-II, AHMEDABAD DATED 26/09/2012 PA SSED FOR A.Y.2007- 08 AND THE GROUNDS RAISED ARE AS FOLLOWS:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE PENALTY OF RS.25,38,020/- IMPOSED U/S.271D OF THE A CT BECAUSE THE BOOKING ADVANCE RECEIVED PARTAKES THE CHARACTER OF A DEPOSIT. IT(SS)A NO.596/ AHD/2012 THE DY.CIT VS. M/S.SAI RAM DEVELOPERS ASST.YEAR - 2007-08 - 2 - 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE PENALTY OF RS.25,38 ,020/- IMPOSED U/S.271D OF THE ACT AS THE PROVISIONS OF SE CTION 271D OF THE ACT CLEARLY STIPULATES THAT IF A PERSON TAKE S OR ACCEPT ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, HE SHALL BE LIABLE TO PAY, BY WAY OF PENALTY , A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR AC CEPTED. THE ACT DOES NOT EXEMPT TRADE DEPOSIT FROM THE AMBIT OF PROVISIONS OF SECTION 271D. 3. THE APPELLANT RELY ON THE DECISION OF HON.JHARKHAND HIGH COURT IN THE CASE OF BHALOTIA ENGINEERING WORKS PVT.LTD. 275 ITR 399 . 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271D OF THE IT ACT DATED 29/12/2011 AND THE ASSESSMENT ORDER MADE U/S.143(3) R.W.S.153C OF THE ACT DATED 31.12.2 010 WERE THAT A SEARCH WAS CONDUCTED U/S.132 OF THE ACT ON RIVAA GR OUP ON 28/-1/2009 AND IN CONSEQUENCE THEREUPON A NOTICE U/S.153C OF T HE ACT WAS ISSUED. IT WAS STATED THAT THE ASSESSEE HAD PURCHASED PLOTS OF LAND FOR TWO PROJECTS ONE AT :PALI AND THE OTHER AT VADOD, SURAT. IT HAS ALSO BEEN FOUND THAT THE ASSESSEE HAD RECEIVED ADVANCE TOWARDS BOOKING O F THE UNITS/PLOTS. THE AO HAS ENQUIRED ABOUT THE PARTIES WHO HAVE ADVA NCED TOWARDS BOOKING, ASKING THE ASSESSEE TO GIVE ADDRESS, SALE- DEEDS, ETC. IN SUPPORT OF THE ALLEGED BOOKING ADVANCES. THE AO WAS NOT SA TISFIED, HENCE INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT. T HE ALLEGED BOGUS BOOKING ADVANCES OF RS.36,52,000/- WERE HELD AS UNE XPLAINED CREDIT AND ACCORDINGLY TAXED 7U/S.68 OF THE ACT IN THE HANDS O F THE ASSESSEE. THE AO HAS ALSO HELD THAT THE ADVANCES WERE RECEIVED IN EXCESS OF RS.20,000/- OTHERWISE THAN BY A/C.PAYEE CHEQUE, HEN CE CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT. IT(SS)A NO.596/ AHD/2012 THE DY.CIT VS. M/S.SAI RAM DEVELOPERS ASST.YEAR - 2007-08 - 3 - 3. WHILE LEVYING THE PENALTY U/S.271D OF THE ACT, T HE AO HAS DISCUSSED TWO CATEGORIES OF THOSE ADVANCES; ONE WAS IN RESPECT OF AN AMOUNT OF RS.25,38,020/-, WHEREIN THE ADDRESS, SALE -DEED AND PLOT NUMBER BOOKED, ETC. DETAILS WERE AVAILABLE. HOWEVE R, IN THE SECOND CATEGORY AMOUNTING TO RS.36,52,000/-, IT WAS NOTED BY THE AO THAT THE BOOKING ADVANCES DID NOT CONSIST THE COMPLETE ADDRE SS, SALES-DEED AS ALSO THE DETAILS OF THE PLOTS ALLOTTED WERE NOT FURNISHE D. ACCORDING TO AO, THE ASSESSEE HAD NOT FURNISHED THE TRUE PARTICULARS OF THE PERSONS FROM WHOM THE DEPOSITS WERE ACCEPTED, THEREFORE THE AMOUNT BE ING ACCEPTED OTHERWISE THAN BY AN A/C.PAYEE CHEQUE, HENCE INFRIN GED THE PROVISIONS OF SECTION 269SS OF THE ACT. THEREFORE, LEVIED THE PE NALTY U/S.271D OF THE ACT OF RS.61,90,020/-. THE MATTER WAS CARRIED BEF ORE THE FIRST APPELLATE AUTHORITY. 4. THE LD.CIT(A) HAS DISCUSSED FACTS THE FACTS AS W ELL AS CASE-LAWS AND THEREUPON DELETED THE PENALTY AS PER THE FOLLOW ING DECISION:- 4.2. REGARDING THE OBSERVATIONS OF THE ADDL.CIT TH AT DURING THE PENALTY PROCEEDINGS, IT IS FURTHER DISCOVERED THAT THE BALANCE AMOUNT OF RS.25,38,020/- IS ALSO UNEXPLAINED CASH C REDITS IN THE ASSESSEES BOOKS OF ACCOUNT, THE LEARNED A.R. HAS C LARIFIED THAT SALE DEED EXECUTED BY SMT.KRITA GIRISHKUMAR CHEVLI AND SHRI RAMESH AMRUTLAL MORAWALA, ON BEHALF OF THE FIRM ONL Y AS SMT.KRITA G.CHEVLI AND SHRI RAMESH AMRUTLAL MORAWAL A WERE PARTNERS IN THE APPELLANT FIRM DURING THE YEAR UNDE R CONSIDERATION AND WERE HOLDING AGRICULTURAL LAND ON BEHALF OF THE APPELLANT FIRM BECAUSE THE PURCHASE DEED FOR THE AGRICULTURAL LAND CAN BE EXECUTED ONLY IN FAVOUR OF A FARMER AND SMT.KRITA G IRISHKUMAR CHEVLI IS A FARMER. SO, THE IMPUGNED AGRICULTURAL LAND WAS PURCHASED IN THE NAME OF SMT.KRITA GIRISHKUMAR CHEV LI OUT OF THE FUNDS BELONGING TO THE PARTNERSHIP FIRM ONLY. THE ADVANCES FOR SALE CONSIDERATION AGAINST THE PLOTS WERE RECEIVED BY THE APPELLANT IT(SS)A NO.596/ AHD/2012 THE DY.CIT VS. M/S.SAI RAM DEVELOPERS ASST.YEAR - 2007-08 - 4 - FIRM AND THESE TWO PARTNERS EXECUTED THE SALE DEED ON BEHALF OF THE PARTNERSHIP FIRM ONLY. THE ASSESSING OFFICER ALSO ACCEPTED THE SALE OF PLOTS TO THE PARTIES AGAINST THE ADVANCES O F RS.25,38,020/- AND NO ADDITION WAS MADE U/S.68 OF THE I.T.ACT IN R ESPECT OF DEPOSITS IN THE NAMES OF VARIOUS PERSONS TO THE TUN E OF RS.25,38,9020/-. ON THESE GROUNDS, AND ON THE BASI S OF DECISIONS RELIED UPON AS MENTIONED HEREINABOVE, THE LEARNED A .R. REQUESTED TO QUASH THE LEVY OF PENALTY U/S.271D OF THE I.T. A CT ON THE GROUND OF ALLEGED CONTRAVENTION OF PROVISIONS OF SECTION 2 69SS OF THE ACT. 5. I HAVE CONSIDERED THE BASIS OF LEVY OF PENALTY BY THE ADDL.CIT AND THE ARGUMENTS OF THE LEARNED A.R. AND ALSO PERU SED THE CASE LAWS CITED BY THE LEARNED A.R. AS MENTIONED IN THE PRECEDING PARAGRAPHS. I ENTIRELY AGREE WITH THE SUBMISSIONS OF THE LEARNED A.R. THAT ONCE THE ALLEGED DEPOSITS WERE TREATED AS DEEMED INCOME U/S.68 OF THE I.T.ACT BY TREATING THE DEPOSIT AS NO N-GENUINE, THE PENALTY CANNOT BE LEVIED U/S.271D FOR CONTRAVENTION OF SECTION 269SS OF THE I.T. ACT. SIMILARLY, THE CASH RECEIVE D BY THE APPELLANT WAS ON ACCOUNT OF SALE AND THE SAME WAS SHOWN IN TH E BOOKS AS TRADE CREDIT OR ADVANCE AGAINST THE SUBSEQUENT SALE OF ANY GOODS, THE SAME CANNOT BE TREATED AS LOAN OR DEPOSIT AND T HE PROVISIONS OF SECTION 269SS ARE NOT APPLICABLE TO THE TRADE ADVAN CE HENCE, THE PENALTY U/S.271D IS NOT LEVIABLE. RESPECTFULLY FOLLOWING THE VARIOUS JUDGEMENTS AS ME NTIONED IN PARAS 4 & 4.1 AS RELIED UPON THE LEARNED A.R., IT I S HELD THAT THE ADDL.CIT WAS NOT JUSTIFIED IN LEVYING THE PENALTY O F RS.36,52,000/- ON THE UNEXPLAINED CASH CREDITS SHOWN IN CASH AND B ROUGHT TO TAX U/S.68 OF THE I.T.ACT AND OF RS.25,38,020/- ON ADVA NCES AGAINST THE SALE OF PLOTS RECEIVED IN CASH FROM DIFFERENT PARTI ES. SO THE ORDER PASSED U/S.271D LEVYING PENALTY OF RS.61,90,020/- I S CANCELLED AND THE GROUND OF APPEAL RAISED BY THE APPELLANT IS ALL OWED. 5. WITH THIS BRIEF BACKGROUND, WE HAVE HEARD BOTH T HE SIDES. ON ONE HAND, LD.SR.DR MR.D.K.SINGH HAS PLACED RELIANCE ON AN ORDER OF BHALOTIA ENGINEERING WORKS (P) LTD. VS. COMMISSIONER OF INCO ME TAX (2005) 275 ITR 399 (JHARKHAND), WHEREIN THE DEPOSITS WERE IN THE FORM OF SHARE IT(SS)A NO.596/ AHD/2012 THE DY.CIT VS. M/S.SAI RAM DEVELOPERS ASST.YEAR - 2007-08 - 5 - APPLICATION MONEY RECEIVED IN CASH AND THE HONBLE HIGH COURT HAS OPINED THAT SHARE APPLICATION MONEY PARTAKES THE C HARACTER OF DEPOSIT WITHIN THE MEANING OF SECTION 269SS OF THE ACT. IT WAS FINALLY HELD THAT THE ACCEPTANCE OF SHARE APPLICATION MONEY IN CASH T HUS ATTRACTED THE PENALTY PROVISIONS OF SECTION U/S.271D OF THE ACT. ON THE OTHER HAND, LD.AR HAS PLACED RELIANCE ON A DECISION OF ITAT AHM EDABAD PRONOUNCED IN THE CASE OF SHYAM DEVELOPERS, BEARING ITA NOS.3 303 & 3304/AHD/2009 FOR AYS 1996-97 & 1997-98 DATED 06/07 /2012 WHEREIN THE TRIBUNAL HAS HELD THAT SINCE THE DEPOSITS WERE TRADE ADVANCES AND NOT DEPOSITED FROM THIRD PARTY, THEREFORE NOT LIABLE TO BE PENALIZED U/S.271D OF THE ACT. LD.AR HAS ALSO PLACED RELIANCE ON THE FOLLOWING ORDERS:- 1. CIT VS. R.P.SINGH & CO.P.LTD. 304 ITR 217 (DEL) 2. CIT VS. STANDARD BRANCH CO. 285 ITR 295 (DEL) 3. ITO VS. G8URMEET KAUR 144 TTJ 50 (JD)(UO) 4. DCIT VS. G.S. ENTERTAINMENT 109 TTJ 54 (MUM) 5. CIT VS. KAILASH TRIPPLE STANDARISED WATER (CHENNAI) P.LTD. 2 ITR 39 (MAD) 6. CIT VS. KAILASH CHANDRA DEEPAK KUMAR 317 ITR 351 (ALL) 7. CIT VS. KHARAITI LAL & CO. 270 ITR 445 (PH) 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT ONCE THE ADMITTED FACTUAL POSITION WAS THAT TH E DEPOSITS IN QUESTION WERE IN THE NATURE OF BOOKING ADVANCE FROM VARIOU S CUSTOMERS, THEREFORE LD.CIT(A) WAS LEGALLY CORRECT IN HOLDING THAT THE ADDITION BEING MADE U/S.68 BY TREATING THE DEPOSIT AS DEEMED INCOM E OF THE ASSESSEE, NO PENALTY COULD BE LEVIED U/S.271D OF THE ACT. IN R ESPECT OF THE REST OF THE AMOUNT, IT WAS OPINED THAT THE CASH RECEIVED BY THE ASSESSEE WAS ON IT(SS)A NO.596/ AHD/2012 THE DY.CIT VS. M/S.SAI RAM DEVELOPERS ASST.YEAR - 2007-08 - 6 - ACCOUNT OF SALE AND SHOWN IN THE BOOKS AS TRADE CRE DITORS OR ADVANCE AGAINST SUBSEQUENT SALE OF GOODS, HENCE THE PROVISI ONS OF SECTION 269SS WERE INCORRECTLY APPLIED. HAVING GONE THROUGH THE FACTS OF THE CASE AS ALSO THE RELIANCE PLACED ON SEVERAL DECISIONS, WE A RE OF THE VIEW THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE IMPUGNED PENALTY. IN THE RESULT, WE HEREBY HOLD THAT THE PENALTY WAS RIGHTLY DELETED BY THE LD.CIT(A). GROUNDS RAISED BY THE REVENUE ARE HEREBY DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD; DATED 5 / 4 /2013 3.., .../ T.C. NAIR, SR. PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. '%( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 (') / THE CIT(A)-II, AHMEDABAD 5. 89: )56, ' 561, ;4 / DR, ITAT, AHMEDABAD 6. :<= >- / GUARD FILE. & / BY ORDER, *8' ) //TRUE COPY// '/ () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD