TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 71
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....ondent assessee to explain why penalty under section 271E of the Act should not be imposed for such violation of the provisions of section 269T of the Act. The payments of Rs. 14.6 crores made in cash by the assessee to AI were made on several occasions between 28.10.2004 to 22.3.2005, and payment of Rs. 0.12 crores (12 lakhs) to AE was made in cash by the assessee on 16.12.2004. In response to the said notice, assessee submitted its reply on 8.3.2008, stating that since one of the partners of the assessee and AI firms was common, being Sri A Ramakrishna, and both the firms were carrying on the business in real estate, these were inter-firm transactions which were to be treated only as current account transactions, and could not be described as loan or deposits within the meaning of section 269T of the Act. It was also stated that even if the transactions were held to be loan transactions, there was no intention to commit any violation of the provisions of the Act. It was further explained in the reply, that the amounts drawn from the firm by one of the partners was nothing but investments in a group concern, by way of drawing from the firm, to meet the expenses of emergency situa....
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....points treat these transactions as loan or deposit and therefore repayment thereof in cash violating the provisions of section 269T has to be necessarily visited by the penalty under section 271E of the IT Act. ITA No. 75/ACIT CC2 (3) B'lore/CIT (A) - VI/2008- 09 M/s Canara Housing Development Co., Bangalore, A Y 2005-06 (vii) The argument that Sri A Ramarkrishna common partner drew money from the appellant firm to pay to AI so as to take these transactions from the ambit of definition of loan and deposit is of no help because records do not justify or corroborate the same. The audit report clearly shows AI as lenders of money to the appellant firm. No such claim has been made by the appellant in case of Sri Satish Pai of AE." (Emphasis Supplied) Challenging the order of the Appellate Commissioner, assessee filed a further appeal before the Tribunal, where certain additional evidence by way of documents had been filed, which were: (i) Agreement to sell dated 5.10.2004 between AI and Sahara India Commercial Corporation Ltd., and others; (ii) Agreement of sale dated 31.3.2005 between M/s Gauri Ganesh Real Estate, AI and MAHE; (iii) Memorandum of Agreement between AI and t....
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.... 29: Production of additional evidence before the Tribunal The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." It is under the said provision that additional evidence had been adduced by the respondent. The said Rule 29 provides for the Tribunal requiring any document to be produced, or witness to be examined, or affidavit etc., or, if the income tax authorities have decided the case without affording sufficient opportunity to the assessee to adduce evidence, the Tribunal may, for sufficient reasons to be recorded, allow additional evidence to be filed. In the present cas....
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....s, what to speak of sister concerns, and are independent of one another, that filing of these agreements was necessitated. Sri Aravind, learned counsel for the appellant, has submitted that there was no adequate reason for accepting the additional evidence at the stage of second appeal before the Tribunal, as the documents which have been filed by respondent-assessee before the Tribunal were all there with the assessee at the time of filing its reply to the notice dated 23.6.2008. It is submitted that in its reply to the show-cause notice itself the assessee had contended that the transactions were between inter-firms, with one of the partners being common in the firm, and as such, if the agreements (especially unregistered ones dated 5.10.2004) had existed at that time, then to substantiate the stand taken in the reply, the agreements ought to have been filed along with the reply or before the Assessing Officer, and the same having been filed at a much later stage, ought not to have been accepted. It has been contended that filing of unregistered documents at such a late stage is always doubtful as they can be prepared at a later stage for the purpose of the case. On the other ha....
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....second substantial question of law. At present, we have to only consider whether the filing of additional documents, which were available with the assessee at the initial stage, would be justified or not, when they have been filed at the stage of second appeal before the Tribunal. In the facts and circumstances of the case and for the reasons given hereinabove, we are of the view that the Tribunal was not justified in accepting the additional evidence filed by the assessee at the second appellate stage, and we are also of the view that the reasons assigned by the assessee for not having produced the same earlier before the Assessing Officer, is not worthy of acceptance. As such, we answer the first substantial question of law in favour of the Revenue and against the assessee. Question No. (ii) For deciding the second substantial question of law, which is as to whether repayments made by the assessee to AI and AE firms are in the nature of current account transactions and hence, the question of violation of section 269T of the Act was not there, we will have to examine the nature of transactions which had taken place between the assessee and the AI/AE, and also the relationship ....
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....loan' and 'deposit' which was in the purview of section 269T and not 'specified advance'. The submission thus is, since in the notice dated 26.2.2008 itself it had been stated that the repayment had been made of the advances which were deposited by AI with the assessee firm, such repayment would not attract the provisions of section 269T of the Act. It is also contended that all the transactions were duly recorded in the account books and hence, same were bona fide transactions on which TDS had been deducted and as such, payment by the assessee in cash could, at best, be an irregularity and not illegality, and that the case of the assessee would be covered under the provisions of section 273B of the Act. By amendment of 2015, what has been included is 'specified advance'. Advance, in the present case, is of a sum of over Rs. 50.36 crores parked by AI with the assessee. The parking of such huge amount can only be by way of a loan or deposit. Advances of such nature with a different company, which is an independent entity, cannot be anything but a loan or deposit made by such firm. Merely because one partner is common, would not justify the parking of suc....
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....the amount of Rs. 14.60 cores during the assessment year in question. In support of his submission, learned counsel for the appellant has relied on the decision of Punjab & Haryana High Court in the case of Commissioner of Income Tax Vs Sunil Kumar Goel - (2009) 315 ITR 163. In the said case, transactions entered into were between members of the family, and due to business exigencies. It was, thus, held in the said case that a family transaction between two independent assessees, based on act of casualness, especially in case where a disclosure thereof was contained in the compilation of accounts and which had no tax effect, establishes 'reasonable cause' under section 273B of the Act. The present is not a case of family transaction. Even if it is accepted that the transaction was between two group concerns, there cannot be casualness between group concerns or sister concerns, especially when they are separate legal entities. Except for there being one common partner between the firms, there is no other relationship between the two firms. In another case of the Karnataka High Court relied on by the learned counsel for the assessee, rendered in ITA 453/2003 between H.S. An....
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.... given by the assessee for making payment in cash, not on one occasion, but more than half a dozen occasions. The same cannot be said to be reasonable cause shown by the assessee for repeatedly violating the provisions of section 269T of the Act. If the benefit of section 273B of the Act is given in cases as the present one, the very purpose of enacting section 269T of the Act would be frustrated or lost. The assessee who deals in crores of rupees, is expected to not only know the provisions of law, but also comply with the same. Section 269T requires the assessee to repay the loan or deposit by an account payee cheque or account payee bank draft, if the amount of such repayment is of Rs. 20,000/- or more. In the present case, the amount paid by the assessee to AI is in cash, amounting to several crores, and on several occasions. Similar is the position in the case of payment of Rs. 12 lakhs in cash by the assessee to AE, where again it is claimed that there was a common partner between the assessee firm and the firm - AE. The common partner between the assessee and AE is one Sri Satish Pai, but no such plea had been raised by the assessee before the Assessing Officer, as has been....