TRANS ASIA PACKAGING LTD.(SINCE AMALGAMATED WITH M/S ASIAN CONSOLIDATED INDUSTRIES LTD.) 96TH MILE STONE, DELHI JAIPUR HIGHWAY, VILLAGE BAWAL, DISTT. ,REWARI V. ACIT, RANGE-3,C.R.BUILDING, INDRAPRASTHA ESTATE, NEW DELHI

ITA 3572/DEL/2023

AI Insights

The case involves M/s Trans Asia Packaging Ltd., which appealed against the penalty levied under Section 271E of the Income-tax Act, 1961 for alleged violations of Section 269T concerning certain financial transactions. The transactions involved payments to sister concerns and were scrutinized during a special audit. The primary legal issue was whether these transactions fell under the ambit of 'loan repayments' as per Section 269T, which would require such repayments to be made through account payee cheques or drafts. The Tribunal examined the nature of the transactions and the applicable legal provisions at the time of the transactions, concluding that the transactions did not violate Section 269T as it was understood prior to its amendment in 2002.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 303098 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1992-1993
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: VED JAIN
• Keywords: Liquidation
• Section: 143(3); 271E

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3572/Del/2023 (Assessment Year: 1992-93) M/s Trans Asia Packaging Ltd. (Since amalgamated with M/s Asian Consolidated Industries Ltd.), 96th Mile Stone, Delhi Jaipur Highway, Village Bawal, Distt. Rewari, Haryana Vs. ACIT, Range-3, New Delhi (Appellant) (Respondent) PAN: AAACA5887A Assessee by : Shri Ved Jain, Adv Shri Ayush Garg, CA Revenue by: Shri Sahil Kumar Bansal, Sr. DR Date of Hearing 22/01/2025 Date of pronouncement 16/04/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.3572/Del/2023 for AY 1992-93, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi dated 14.10.2023 [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2023-24/1057061187(1) dated 14.10.2023 against the order of assessment passed u/s 271E of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 27.06.2017 by Add CIT, Range-3, New Delhi (hereinafter referred to as „ld. AO‟). 2. The only effective issue to be decided in this appeal is as to whether the provisions of Section 269T of the Act and consequentially levy of penalty u/s 271E of the Act could be made applicable in the facts and circumstances of the instant case. ITA No. 3572/Del/2023 M/s Trans Asia Packaging Ltd Page | 2 3. We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of trading and printing of Tin Sheets used for manufacturing of Tin containers, containing and printing of Tin Sheets used for manufacturing of cans/ containers. By virtue of the Judgment of Punjab and Haryana High Court at Chandigarh dated 28.07.1995, the assessee company was amalgamated with M/s. Asian Consolidated Industries Ltd w.e.f 01.04.1992. M/s. Asian Consolidated Industries Ltd went into liquidation w.e.f. 07.01.1999 by the orders of the Hon‟ble Punjab and Haryana High Court at Chandigarh. The company was revived by the order of the Hon‟ble Punjab and Haryana High Court vide order dated 12.05.2014. 4. The return of income for AY 1992-93 was filed by the assessee company on 31.12.1992 declaring total income of Rs. 5,90,498/-. The assessment was completed u/s 143(3) of the Act on 06.10.1995 determining the total income of Rs. 5,53,48,790/-. This matter reached up to the level of Tribunal and Tribunal restored issues which are raised before the Tribunal to the file of the ld AO for de novo adjudication. Consequentially order was framed by the ld AO u/s 254 read with Section 143(3) of the Act on 30.12.2016 determining the total income of Rs. 2,47,84,179/-. While framing this consequential assessment, the ld AO alleged that certain transactions to be in violation of provisions of section 269T of the Act amounting to Rs. 41,55,260/- and this penalty u/s 271E of the Act was levied for the same. This penalty order was upheld by the ld CIT(A). 5. The break-up of payment of Rs. 41,55,260/- as tabulated by the ld AO are as under:- M/s. Asian Closure Ltd Rs. 34,95,000/- M/s. Asian Consolidated Industries Ltd Rs. 6,10,000/- M/s. Rajasthan Breweries Ltd Rs. 50,000/- Total Rs. 41,55,260/- ITA No. 3572/Del/2023 M/s Trans Asia Packaging Ltd Page | 3 6. The assessee submitted all the three entities are sister concerns of the assessee and submitted their entire ledger account as appearing in its books to establish the nature of transactions. From the ledger account of M/s. Asian Closure Ltd enclosed in pages 55 to 57 of the Paper Book, we find that assessee had made certain purchases from the said party and had merely made payments to them against the bills raised. The assessee is having a running account with the said party. We hold that it is not a case of repayment of any loan to the said party. 7. With regard to M/s. Asian Consolidated Industries Ltd, the ledger account of the said party is enclosed in pages 58 to 82 of the Paper Book. On perusal of the said ledger account, we find that assessee has made sales to the group company M/s. Asian Consolidated Industries Ltd and this was having a debit balance in its books of account. The assessee is having a running account with the said party. No loan was borrowed from this party by the assessee. Hence, any payment made to them cannot be construed as repayment of any loan. 8. With respect to payment to M/s. Rajasthan Breweries Ltd, we find that this is a group company having regular business transaction with the assessee in the form of running account. Thus as and when funds are required for the assessee to meet its business exigencies, the same were transferred by the said party and eventually repaid by the assessee. This transaction clearly falls within the ambit of loans and the repayment has been made in the mode otherwise then by way of account payee cheque or account payee draft. But what is to be seen is that the provisions of Section 269T of the Act brought within its ambit the expression “loan” only w.e.f. 01.06.2002. Prior to 01.06.2002, only deposit was sought to be included in Section 269T of the Act. The year under consideration is AY 1992-93. Hence, the pre amended ITA No. 3572/Del/2023 M/s Trans Asia Packaging Ltd Page | 4 provisions would apply wherein, the expression loan was not at all included u/s 269T of the Act. 9. The ld DR vehemently argued that special audit was carried out in the instant case and special audit had brought out on violation of Section 269T of the Act. To buttress this argument, the ld AR submitted that there was no whisper about violation of provisions of Section 269T of the Act in the Special Audit Report and even the Special Audit merely stated that there was violation of provisions of Section 40(3) of the Act for making cash payments. Hence, we dismiss the argument advanced by the ld DR. 10. In view of the aforesaid observations, we have no hesitation to hold that provisions of Section 269T of the Act were not violated at all in the instant case by the assessee and consequentially levy of penalty u/s 271E of the Act is not applicable in the instant case. Accordingly, grounds raised by the assessee are allowed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 16/04/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: /04/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "