TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 601
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....eciate that the time of Survey no proper books of accounts were found with respect to the Appellant Company, and other group concern and mixed details, incomplete records were impounded. It is explained that these entries do not pertains to Appellant Company. 3. The Ld. C.I.T. (A) did not appreciated that W. H. Siddiqui and Swaleha Nairn controlling the affairs of the Company and group concerns and keeping the cash balances in own custody. Thus, it is neither Loan or deposit but movement of funds for the purpose of business. 4. There was a reasonable cause, hence the penalty should not be upheld u/s 271E of I.T. Act. 5. The penalty upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him. 4. The assessee has also raised an additional ground that the penalty order is barred by limitation, as it was not passed within the period of six months from the order of the assessment as prescribed under section 275(1)(c) of the Act, with the submission that since the ground goes to the root of the case, the same may be admitted in the light of the judgment ....
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....011. Therefore, it was passed well within the period of limitation. 8. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the lower authorities and the judgments referred to by the assessee, we find that undisputedly the assessment order was passed on 31.12.2010, in which the Assessing Officer has made a reference for initiation of penalty under section 271E of the Act for violation of the provisions of section 269T of the Act. It is also a fact that the assessment was framed by the Dy. Commissioner of Incometax, who is not competent to levy penalty under section 271E of the Act. As per section 271E of the Act, the penalty under this section can only be levied by the Joint Commissioner of Income-tax. Therefore mere making a reference in the assessment order by the Assessing Officer for initiation of penalty cannot be called to be an action initiated for imposing penalty in the real sense. In such type of cases, the Assessing Officer is required to make reference to the Joint Commissioner of Income-tax, who is competent to impose the penalty under section 271E of the Act. On a reference of the Assessing Officer, the Joint Co....
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....ment in cash was made. In fact, Shri. Z. H.Siddiqui, who is the Director of the company, has a current account with the company and in the said account there is a credit balance of Rs. 60,03,60,022/- and the same has been verified and accepted by the Assessing Officer in the course of assessment proceedings. The assessee-company is not paying any interest in the said current account and the same is neither loan nor deposit in the assessee-company. In addition to this, there are two other Directors of the company, namely Shri. W. H. Siddiqui and Smt. Swaleha Naim. Shri. W. H. Siddiqui is the father of Shri. Z. H. Siddiqui and Smt. Swaleha Naim is the wife of Shri. W. H. Siddiqui. Thus, the Directors are Shri. Z. H. Siddiqui (son), Shri. W. H. Siddiqui (father) and Smt. Swaleha Naim (mother of Shri. Z. H. Siddiqui). Out of natural love and affection, Shri. Z. H. Siddiqui has gifted Rs. 31.50 lakhs to his father Shri. W. H. Siddiqui through transfer entry by debiting the current account of Shri. Z. H. Siddiqui and credited the current account of Shri. W. H. Siddiqui in the books of the company. In the course of assessment proceedings, the gift deed was filed and copies of ledger accou....
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....tional Finance (I) Ltd., 345 ITR 270 3. Income Tax Officer vs. M/s Vijay Lakshmi Printing Works Pvt. Ltd., New Delhi (I.T.A. No. 4653/Delhi/2009), ITAT Delhi Bench. 15. The ld. D.R., on the other hand, has submitted that since the assessee has made repayment of the deposit to the Directors otherwise than by account payee cheque or account payee bank draft drawn in the name of the persons, provisions of section 269T of the Act was rightly initiated. Under section 269T of the Act, nothing was stated with regard to the book entries, through which substantial amount was transferred from one person to the other. Besides, he has placed reliance upon the order of the ld. CIT(A). 16. Having carefully examined the orders of the authorities below and the judgments referred to by the parties and the documents placed on record, we find that the assessee has categorically stated before the ld. CIT(A) as well as before us that there was no repayment of loan in cash. It was merely an adjustment entry in the books of account. One of the Directors, Shri. Z. H. Siddiqui has gifted a sum of Rs. 31.50 lakhs to his father, Shri. W. H. Siddiqui through transfer entry by debiting his current account a....
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....from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money. In the present case, admittedly no money was transacted other than through banking channels. M/s PACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s PACL India Ltd. In view of this admitted position, no infringement of Section 269SS of the Act is made out." 17. Similar view was expressed by the Hon'ble jurisdictional High Court in the case of Anirban Nath Sushmita, HUF vs. DCIT (supra), in which their Lordships have held that the transaction in question being that a repayment of loan by debit entry did not come within the mischief of section 269T of the Act. The relevant observations of the Hon'ble High Court are extracted hereunder:- 16. We find that the Assessing Officer, Appellate Authority as well as Tribunal did not consider the method of transaction, which was by way of discharge of the liability of the l....
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....aid judgments, we are of the considered view that since the aforesaid financial transaction was undertaken through book entries, there is no violation of the provisions of section 269T of the Act. Therefore, penalty under section 271E of the Act is not leviable. We accordingly set aside the order of the ld. CIT(A) and delete the penalty levied under section 271E of the Act. I.T.A. No. 264/LKW/2013: 21. In this case, the assessee has assailed the order of the ld. CIT(A), on various grounds which are as under:- 1. The Ld. C. I. T. (A)-III, Lucknow erred on facts and in law in upholding the penalty of Rs. 3,25,000/- u/s 27IE of I. T. Act, inspite of the fact these transactions do not belong to the Appellant Company hence no penalty should be imposed. 2. The Ld. C.I.T. (A)-III did not appreciate that the time of Survey no proper books of accounts were found with respect to the Appellant Company, and other group concern and mixed details, incomplete records were impounded. It is explained that these entries do not pertains to Appellant Company. 3. The Ld. C.I.T. (A) did not appreciated that W. H. Siddiqui and Swaleha Nairn controlling the affairs of the Company and group concerns a....
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....2, it was contended that the aforesaid amount, which was considered to be repayment of loan or advance in contravention of the provisions of section 271E of the Act, was considered for an addition made under section 68 of the Act. But from a perusal of the assessment order, this contention of the assessee is found to be incorrect, as there was no addition of this amount in the entire order. The addition under section 68 of the Act was made with regard to different receipts of money from different persons. The repayment, which was considered to be in violation of the provisions of section 269T of the Act, was not added anywhere under section 68 of the Act. Therefore, the argument of the assessee that since this amount was added under section 68 of the Act, the provisions of section 269T of the Act cannot be invoked, cannot be accepted. We accordingly find no merit in this ground and we reject the same. 27. Now coming on merit, we find that the Assessing Officer has noted during the course of assessment that the assessee-company has made repayment of loan to the following parties in cash, in violation of the provisions of section 269T of the Act:- 1. Shri. Ashfaq Rs.1,94,000/- 1....