TaxTMI 
TaxTMI 
2002 (9) TMI 298
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....p; Rs. 14,57,449 1994-95 Rs. 13,09,800 1995-96 Rs. 8,06,000 ---------------------------------- 2. The assessee in the present case is an Advocate carrying on legal profession for last so many years. During the years under consideration, he was mainly dealing with the cases of farmers pertaining to compensation on compulsory acquisition of their land by the Government. A search proceeding was carried out at the assessee from 21-8-1995 to 22-8-1995. As a result of search various incriminating documents and records were seized by the department and block assessment order under section 158BC read with section 143(3) was passed on 24-8-1996 for the block period from 1-4-1985 to 21-8-1995. While scrutinizing the seized documents in the course of assessment for block period, the Assessing Officer observed that assessee had accepted and repaid loans/deposits in excess of Rs. 20,000 by mode other than account payee cheques/drafts and thus has contravened the provisions of sections 269SS and....
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....------------ 18-06-1991 16,000 Shri Vishnu Laxman Patil,Hatle 16-09-1991 20,000 -do- 19-09-1991 20,000 -do- 18-10-1991 20,000 -do- 02-10-1991 15,000 -do- 11-11-1991 20,000 -do- 19-11-1991 17,400 -do- 20-11-1991 10,000 &....
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....p; -do- 08-02-1992 50,000 -do- 17-09-1991 20,000 Shri Gorakhnath Nimba Vispute 17-09-1991 20,000 -do- ----------- 5,31,400 ------------------------------------------------------- Assessment year.. 1993-94 ------------------------------------------------------- Date Amount Name of the depositor ------------------------------------------------------- 22-01-1993 10,000 Shri Vishnu Laxman Patil 24-01-1993 &....
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....bsp; -do- 12-03-1992 12,500 -do- 17-10-1992 2,140 -do- 26-05-1992 5,000 -do- 06-06-1992 25,000 -do- 05-06-1992 25,000 -do- 29-06-1992 22,000 -do- 14-07-1992 22,000 -do- 09-07-1992 50,000 ....
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....p; -do- 01-03-1993 10,000 -do- 06-06-1992 20,000 Shri Pradeep Chaudhari 09-07-1992 10,000 -do- 01-12-1992 1,15,000 -do- 02-12-1992 25,000 -do- 30-03-1993 25,000 -do- 21-10-1992 50,000 Shri Satish Kankaariya 10-01-1993 10,000 -do- 13-01-1993 20,000 &n....
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....nbsp; 10,000 -do- 26-03-1993 30,000 -do- ------------ Total: 14,57,449 ------------------------------------------------------- Assessment year 1994-95 ------------------------------------------------------- Date Amount Name of the depositor ------------------------------------------------------- 17-03-1994 1,000 Shri Vishnu Laxman Patil 02-05-1993 35,000 -do- 22-01-1994 5,500 &....
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.... -do- 04-08-1993 20,000 -do- 18-07-1993 12,000 -do- 12-04-1993 15,000 -do- 13-04-1993 5,000 -do- 02-05-1993 20,000 -do- 04-05-1993 4,000 -do- 07-05-1993 3,000 -do- 11-05-1993 ....
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....900 -do- 06-07-1993 20,000 Shri Satish Kankariya 13-07-1993 15,000 -do- 01-10-1993 20,000 -do- 08-05-1993 10,000 Shri Sahebrao Patil 12-07-1993 15,000 -do- 14-09-1993 5,000 -do- 15-09-1993 5,000 -do- 23-04-1993 20,00....
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.... -do- 23-07-1994 4,000 Shri Dilip Suratwala 01-09-1994 10,000 -do- 03-09-1994 15,000 -do- 1,17,000 -do- 3,000 -do- 25-04-1994 9,000 Shri Pradeep Chadhari(Bandu Guruji) 03-08-1994 20,000 Shri Shah Saheb 18-08-1994 25,000 ....
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....p; -do- 23-12-1994 5,000 -do- 23-01-1995 5,000 -do- 03-02-1995 10,000 -do- 14-02-1995 25,000 -do- 21-08-1994 25,000 Shri Ishwar Pagare 14-09-1994 10,000 Shri Anil Rana 28-09-1994 25,000 -do- 19-05-1994 13,000 &n....
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....held by the Tribunal. Thus, penalty under section 271E was found not leviable on the ground that the repayment of the loan was in respect of 'loans' and not in respect of 'deposits'. The provisions of section 269T being applicable only to deposits, so no penalty could have been levied under section 271E. It is necessary to reproduce some of the observations of the Tribunal in the said order which will be relevant for the purposes of deciding the present appeals also. "... We have perused the statement of the assessee recorded under section 132(4) placed in the compilation at pages 42 to 45. In question No.3 on page 42, a question was asked to the assessee to give details regarding loans taken by him from various parties. The question No.4 is also in regard to the records maintained by the assessee in regard to these loans. Subsequent questions also are in regard to the advances received and interest paid by the assessee on the same. The statement of one of the creditors, Shri Vishnu L. Patil was also perused by us, He was also asked regarding the loans obtained by the assessee from him, In short, the department's case has always been that the assessee has borrowed different sums....
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....g committed to another person's charge as a pledge. The state of being deposited; Deposit: To lay put or set down; to be laid down or precipilated, to settle. Loan: A gift or grant from a superior. A thing lent; esp. a sum of money lent for a time, to be returned in money or money's worth, and usually at interest ME. Said, in recent use, of a word, a custom etc. borrowed or adopted by one people's from another. The action, or an act, of lending. Loan: To grant the loan of; to lend, Also with out. Take: To seize, grip, catch etc. To lay hold upon, get into one's hands by force or artifice, to seize capture, esp. in war; to make prisoner; hence,.....To catch, capture. He also referred to the observations given in respect of deposits and loans in Law Lexicon, which are as follows: Deposit: Money paid to a person as an earnest or security for the performance of some contract especially a contract for the sale of immovable property- Deposit and loan: The terms 'loans' and 'deposits' are not mutually exclusive terms. There are a number of common features between the two. In a sense a deposit is also a loan with this difference that it is a loan with somethin....
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....loans. None of these tests are satisfied because the basic identity confirmation of these parties has not been established by assessee or revenue. Merely on the basis that there were notings in the loose papers, it cannot be held that the assessee had taken loans in reality. Merely on the basis of presumption under section 132(4A), the entries have been considered genuine and true. He further contended that presumption under section 132(4A) is applicable only to the proceedings under section 132 and not to the assessment or penalty. He in this regard places reliance on the following decisions: (1) Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388(All.); (2) Raj Pal Singh Ram Avtar v. ITO [1991] 39 TTJ (Delhi) 544; (3) Smt. Shanti Devi v. Asstt. CIT [1994] 49 ITD 402 (Delhi); (4) Addl ITO v. T. Mudduveerappa Sons [1993] 45 ITD 12 (Bang.); (5) Miss Rose Ben v. Asstt. CIT [1998] 65 ITD 57 (Mum.); (6) Amar Natvarlal Shah v. Asstt. CIT [1997] 60 ITD 560 (Ahd.); (7) D.K. Gupta v. Dy. CIT [1998] 60 TTJ (Delhi) 587; (8) P.K. Narayanan v. ITO [1994] 48 TTJ (Coch.) 125. He further raised a contention that mere admission the part of the assessee is not sufficient f....
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....ad. He further placed reliance on the observation of the CIT(A) in the impugned order contained in para 11. According to these observations, the CIT(A) has pointed out that there is a possibility that what the assessee had shown is unaccounted money in the name of various persons. Referring to these observations, the learned counsel contended that the CIT(A) himself has doubted the notings in the loose papers that they may not be loans in reality. Thus also no penalty was leviable. 6. According to the learned counsel, from the above relevant observations of the learned CIT(A) it can be said that there is at least a doubtful issue involved as to whether the penalty is leviable. If it is so, when there two views are possible on any issue in the context of penalty proceedings, according to well settled law, the benefit of doubt must go in assessee's favour. For this proposition he placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 at 195. He further placed reliance on the decision of the Hon'ble Supreme Court in the case of C.A. Abraham v. ITO [1961] 41 ITR 425. 7. He contended that the penal provisions....
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....rom giving temporary advances to agriculturists who were his clients and who needed the money for their day-to-day expenses. Thus, there was a reasonable cause for taking such genuine finances which were needed urgently for giving it to the agriculturists and therefore, for this reasonable cause the penalty should not be levied. Reliance in this regard was placed on the following decisions: (1) Industrial Enterprises v. Dy. CIT[2000] 73 ITD 252 (Hyd.); (2) Chandra Cement Ltd. v. Dy. CIT [2000] 68 TTJ (Jp.) 35. In these decisions, it has been held that if the assessee has taken cash loans to meet the business exigencies, no penalty under section 271D may be levied. 8. It is also argued that all such transactions were apparently with the agriculturists who do not have the bank accounts etc. and hence the question of invoking the provision of section 269SS does not arise. Lastly, it was submitted that purpose behind the introduction of section 269SS is elaborated in the circular issued by the CBDT. As per the said circular, section was introduced to curb the practice amongst the assessees who used to explain the cash found during search as belonging to various persons by t....
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....to go for further verification to establish that assessee had contravened the provisions of section 269SS. According to the learned D.R. the admission made by the assessee and subsequently acted upon is sufficient to establish the contravention under section 269SS and there was no need to establish a fact which was already established by way of an admission and also by way of documents seized at the time of search. According to the learned D.R. the findings given by the Tribunal in an order against levy of penalty under section 271E were conclusive and binding on Tribunal and principle of res judicata is therefore, applicable as for it relate to the Tribunal. He in this regard referred to the decision of the Hon'ble Supreme Court in the case of M.M. Ipoh v. CIT [1968] 67 ITR 106. In this case the Hon'ble Supreme Court held that the assessments and the facts found are conclusive only in the year of assessment. According to the learned D.R. the facts as have been found by the Tribunal relate to the years under consideration and therefore, the principle of res judicata applies to the Tribunal in respect of proceedings under section 271D as well. 10. He further contended that the ca....
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....been alleged by the assessee. The transactions were series of transactions. Bank facilities were available at the place of the business of the assessee. As such there was no reasonable cause existed with the assessee. 12. In reply, the learned counsel of the assessee repeated his contention that it was obligatory upon the revenue to establish that the loans were actually raised by the assessee. Unless it was so established, there could not have been any penalty. He further contended that the decision of the Hon'ble Supreme Court in M.M. Ipoh's case relied upon by the learned DR is on the principles of res judicata which is not relevant in the present case as the issue in the present case is regarding establishment of fact. The revenue was required to do something extra than to rely on the admission of the assessee. He further contended that the decision relied upon by the learned D.R. in the case of P.R. Metrani (HUF) and Kerala Liquor Corpn.'s case have no application to the facts of the present case as they relate to presumption under section 132(4A). He contended that in the present case, the presumption is applicable and restricted only for the purposes of block assessment a....
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....sits. Keeping in view all these facts, we do not see any justification in the argument of the learned counsel that in spite of all these facts, the revenue was under obligation to establish that assessee had raised loans. According to the learned counsel it was a must for Assessing Officer to call each and every person and to establish his identity, capacity and genuineness of the transaction. In our opinion, this contention of the learned counsel is not correct. The said three ingredients are required to be established only in the circumstances where there is any addition called for in respect of section 68. We are not dealing with a situation enumerated as per section 68. The assessee in the present case has himself agreed that these transactions were loans, therefore, there was no obligation on the revenue to further prove by examining each and every party that those were loans. 14. Now coming to the case law relied upon by the learned counsel of the assessee, heavy reliance has been placed on the decision in the case of D. Halappa & Sons. According to us, the said case has no relevance to the facts of this case. In the said case assessee agreed for levy of minimum penalty....
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....e case of Pushkar Narain Sarraf does not support the case of the assessee as in the said case, it was held by the High Court that presumption under section 132(4A) do not exclude section 68 when regular assessment is made in regard to the income of the person from whose possession those books of account were seized under section 132. In the present case, the proceedings carried out are not assessment proceedings but it relate to levy of penalty under section 271D. 18. The decision relied upon by the learned counsel in the case of Smt. Shanti Devi is also not applicable to the facts of the present case as in the said case, assessee had denied any link or connection with the loose sheets in the form of sworn affidavit and the Assessing Officer did nothing to establish its connection with the assessee. In the present case it has never been denied by the assessee that the transaction recorded in the seized documents were not loan obtained by him. 19. In the case of T. Mudduveerappa Sons also, assessee had denied that it earned secret profit and that the documents seized belongs to it. So this case also is not applicable to the present case. 20. The decision in the case of Miss....
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....a good piece of evidence for the purpose of levy of penalty. Here in the present case, assessee had admitted that he had taken loans. Thus the ratio laid down by the said decision has no application on the facts of this case. 24. Further regarding reliance of the assessee on views expressed by CIT(A) in para 11 also do not support the case of the assessee that as CIT(A) has merely expressed the possibility and has not given any definite findings. Here in the present case, we are dealing with the situation in which the assessee had made a categorical admission and maintained such admission through all the proceedings. The admission made is not retracted at any stage till date. The law relating to admission is well settled that what is admitted by a party must be presumed to be true unless contrary is shown. Reference in this regard can be made to the decision of the Hon'ble Supreme Court in the case of Nathoo Lal v. Durga Prasad AIR 1954 SC 355. However, it is open to the assessee who made the admission to show that it is incorrect and the assessee should be given proper opportunity to show that. In the present case, no such attempt has been made by the assessee that admission ma....
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....d v. Dwarka Prasad AIR 1974 SC 117, 119; (3) Bharat Singh v. Bhagirathi AIR 1966 SC 405; (4) Mahabir Saha v. Haripada Saha AIR 1982 Cal. 353, 356. Further, if the admission is clear and unequivocal it is not only the best evidence against the person making it but shifts the onus on the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted the fact admitted must be taken to be established. Reference in this regard is made to the decision of the Hon'ble Supreme Court in the case of Thiru John v. Returning Officer AIR 1977 SC 1724, 1726-7. The above legal position regarding admission has been taken from pages 4907 to 4909 of Chaturvedi and Pithisaria's Commentary, 5th Edition, which was relied upon by the learned counsel of the assessee. 25. Viewing from this legal position, it can well be said that in presence of admission by the assessee that the transactions in question were loans taken by him, the initial onus which was on the revenue was shifted on assessee to prove that what he had stated is not true and transactions were not loan. No such attempt has been made by the assessee. Th....
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....collected from which person. He could not spell out the names also. He was having an independent bank account. In his statement, he repeatedly had admitted that he do not remember that to whom these sums belong. Reference in this regard can be made to the answers to question Nos. 6, 10, 18. Said Shri Vishnu Laxman Patil was giving acknowledgements about receipt of money with his name and signature and also taking the signature of the assessee while giving money to him. Reference in this regard can be made question No.16. He was also holding the money-lending licence which was taken in 1991. Besides licence, he was a man of means. The provisions of section 269SS take into consideration 'any person'. Thus, the transactions of the assessee with Shri Vishnu Laxman Patil were the transactions with 'any person', Shri Vishnu Laxman Patil was not an exception. Therefore, the argument of the assessee that penalty is not leviable with respect to transactions relating to Shri Vishnu Laxman Patil, is not acceptable. Similarly, the argument that the amount relating to various persons is also not acceptable as in spite of repeated questions, he could not tell the names of the various persons and....