TaxTMI 
TaxTMI 
2013 (7) TMI 486
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....order passed by the Assessing Officer imposing penalty under section 271E of the Income Tax Act (hereinafter referred to as " the Act") with proposed following question of law:- "Whether the Appellate Tribunal has substantially erred in holding that advances against the booking of shops and offices is not deposit within the meaning of section 269SS and 269T of the I.T.Act, against the decision of Allahabad High Court, 303 ITR 9 in the case of Chaubey Overseas Corp. and thereby deleting the penalty of Rs.15,92,940/- under section 271E of the Act ? 2. Facts leading to the present appeal in nutshell are as under:- 2.1 That with respect to Assessment Year 2006-07, the assessment in the case of the assessee under section 143(3) of the A....
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....d appeal before CIT(A) and by order dated 14.7.2009, the CIT(Appeals) allowed the said appeal preferred by the assessee and quashed and set aside the order of penalty by observing in paragraph 2.3 as under:- "2.3 I have carefully considered the contentions of the learned counsel for the appellant and have also carefully gone through the assessment order as well as penalty order. The appellant is an enterprise constructing several building like, flats, shops, offices, etc. During the last five years, the appellant has constructed two projects. The total units constructed by the appellant are 264 including flats, shops, offices, etc. For these projects, the appellant used to take earnest money for booking of flats, shop, office, etc. from ....
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....ion 271D of the Act. The AO has considered the advance-money taken by the appellant as return of loan or deposit which is actually not the fact in this case. It cannot be termed as deposits as held by the AO because the same were advance-money and were refunded to the parties without interest. Had there been any loan or deposit, the appellant certainly would have paid interest on it which is not the case here. Moreover, there is no bar in the Act against accepting the cash for sale of an immovable asset. In this case, it is also not the fact that the advance money received from the customers have been converted into loan or deposit and hence, the case-law relied upon by the appellant in the case of Sunflower Builders(P)Ltd. DCIT in ITA No.6....
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....funded did not include any interest. 10. In the case of the CIT vs. Rugmini Ram Ragav Spinners P.Ltd. (2008) 304 ITR 417 Hon'ble Madras High Court held " the the penalty u/s. 271E is not automatic and is to be levied only in the absence of reasonable cause. The rationale behind provisions of Sec.269SS and 269T is to prevent the tax evasion, i.e. the laundering of concealed income by the parties in the guise of cash loans or deposits in or outside the accounts. The provisions of section 269SS and 269T therefore have application only in a limited way in respect of deposits or loans. When it is neither deposit nor loan. The [provisions of section 269SS and 269T have no application at all. 11. The term loan or deposit as per explanation t....
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....DT Circular No.387 dated 06-07-1984 held receiving advance and re-payment of advances is a business transaction. Provisions of Sec.269SS is confined to loans and deposits only and does not extend to purchase/sale transaction." 6. Feeling aggrieved by and dissatisfied with the judgment and order passed by the ITAT, the Revenue has preferred the present appeal. 7. Having heard Ms. Mauna Bhatt, learned counsel appearing for the Revenue and considering the orders passed by ITAT as well as CIT(A), and as observed by ITAT and CIT(A), an amount of Rs.15,92,940/- returned by the assessee to various parties was by of advance and the assessee also reflected the said amount of advance received in its balancesheet, which came to be accepted by th....