TaxTMI 
TaxTMI 
2018 (10) TMI 435
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....3A was conducted on 10.10.2013 in the business premises of the assessee and during the course of survey incriminating material was found indicating escapement of income and consequently the assessee admitted the income of Rs. 3.00 crores spread over for three years involving assessment years 2012-13, 2013-14 and 2014-15. Subsequently, on the basis of incriminating material found, the Assessing Officer (AO) had issued the notice u/s 148 calling for the return of income for the A.Y.2012-13 on 12.11.2013. In response to the notice issued, the assessee has filed the return of income on 06.08.2014 and the case was taken for scrutiny and the notices u/s 143(2) and 142(1) were issued to the assessee calling for various details. In response to the notices issued by the AO, the assessee filed the copies of unaudited Profit & Loss Account, Balance Sheet and its enclosures, bank statements and registered sale deeds pertaining to the sales made during the financial year 2011-12 which was offered to income. The assessee has not produced the books of accounts, vouchers and the audited financial statements before the AO in the assessment proceedings. Therefore, the AO completed the assessment on ....
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....agreements were found and on verification it was found that the consideration as per the sale agreements was much higher than the sale deeds. The assessee was admitting the sale consideration as recorded in the sale deeds but not the actual sale consideration which was agreed as per the sale agreement. As observed by the AO, the assessee sold the semi-finished flats to the buyers with sale deed and subsequently made the agreements for additional construction(sale agreement) and the differences noticed in sale deeds and the agreements are as follows : 1. As pet Bundle GNR/BNDL1 of impounded material, at Page No.35, the agreement value was Rs. 1,20,00,000/-. However, the sale value was recorded at Rs. 94,00,000/-. 2. As per Bundle GNR/BNDL-1 of Impounded material, from Page No.13 to 18 & Page Nos. 19 to 28, the value of sale recorded in the saIe-deed and the agreement of sale for same flat are at Rs. 4,90,000/- and Rs. 29,00,000/- respectively. 3. As per GNR/BNDL-12 read with answer to Q.No.37 in the statement recorded on 10-102013, the sale was agreed for three fiats at Rs. 57 Lakhs. However, the sales offered from these to the Profit & Loss Account is Rs.....
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....ued that the AO wrongly estimated income @12.5% on turnover without accepting the income declared and further submitted that the AO should not have made a separate addition towards the additional receipts as per agreements having accepted the Revised total sales. The Ld.AR submitted that when the AO has resorted for estimation of income he should not have made the addition to the returned income which results in double addition. The assessee further submitted that the AO committed the error in making separate addition of Rs. 2,15,000/- on account of unrecorded interest after estimation of income. The Ld.CIT(A) forwarded the submissions of the assessee to the AO for submission of the remand report. At the remand stage also the AO called for the various details with regard to the additional receipts, but the assessee furnished only the ledger account copies of the flat buyers but failed to furnish the remaining details. As stated earlier the assessee failed to get the books of accounts audited. Therefore the AO disbelieved the submissions of the assessee and submitted the remand report supporting the assessment order. The Ld.CIT(A) considered remand report, the submissions made by th....
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....008/2011 dated 27.06.2011 (page no.128 to 137 of paper book) carpet area of constructed flat is 1060 sq. ft. and market value of cost of construction is Rs. 1350/- per sq. ft. Hence, the cost of construction of apartment worked out to Rs. 14,31,000!-. SRO determined the value of property at Rs. 14,85,000/- for stamp duty/registration purposes as per the document cited above (back side of page no.129 of paper book). Hence purchase consideration of Rs. 4,90,000/- in the confirmation letter (page no.127 of paper book) is in my view is not correct. From the impounded materials (page no.42 of paper book), it could be noted that appellant received a sum of Rs. 5 Iakhs as token advance from Shri V. Chandrasekhar and hence the actual sale consideration must be more. Relevant impounded material is reproduced. Scanned copy of receipt on the letterhead of G.Narayana Rao Flat No.FF-5 SVL Nilaya Date : 18/3/11 RECEIPT Received Rs. 5,00,001/- (five lakhs one) token advance for Flat No.FF-5, SVL Nilaya from Sri Vallamkonda Chandra Sekhar S/o Sri Satyanarayana. Including car parking & amenities. Sd/- Below the receipt, ....
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....tion of 12.5% made by the AO and deleting the separate addition made on account of unaccounted receipts of Rs. 1,23,30,000/- as found in sale agreements. The assessee filed cross appeal for reducing the estimation of income and also cross objection supporting the order of the Ld.CIT(A). During the appeal hearing, the Ld.DR submitted that the estimation of income @11% adopted by the Ld.CIT(A) is erroneous and the Ld.CIT(A) ought to have upheld the estimation of income @ 12.5% as held by the Hon'ble ITAT, Hyderabad in the case of KNR Constructions due to the deficiencies found during the survey. The Ld.DR further supported the case stating that the assessee has not at all maintained the books of accounts and the books of accounts were not found during the course of survey. The books of accounts were neither produced before the AO at the time of assessment nor produced before the Ld.CIT(A) during the appeal proceedings. The Ld.DR further argued that during the remand proceedings also, the assessee failed to produce the books of accounts and the incriminating material found shows the unaccounted receipts in the business of the assessee. Therefore, the Ld.DR argued that the estimatio....
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....eipts of Rs. 1,23,30,000/- as worked out by the Ld.CIT(A) as under : Names Bundle No. Agreement Vale Sale Deed Value Difference Gita Sasidharan GNR/BNDL-1 (Page No.35) 94,00,000 1,20,00,000 26,00,000 Vallamkonda Chandra Sekhar GNR/BNDL-1 (Page No.13 to 18) 4,90,000 29,00,000 24,10,000 Syed Nazeer GNR/BNDL- 12 43,80,000 57,00,000 13,20,000 Smt.Ramanadham Sasikala 21,00,000 45,00,000 24,00,000 Boyapati Kishore Kumar 20,00,000 56,00,000 36,00,000 Total 1,83,70,000 3,07,00,000 1,23,30,000 12.1. The Ld.CIT(A) did not accept the contention of the assessee that he did not receive the additional receipts, since the assessee has failed to produce the books of accounts and also did not produce the buyers before the AO for verification of the facts. The fact of non receipt of the additional receipts should be supported by the books of accounts and with the relevant expenditure. The Ld.CIT(A) held that for arriving the total sales the additional receipts also required to be considered but no separate addition required to be made on account of unaccounted receipts and....
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....ot establish with relevant material that the income admitted by the assessee was additional income over and above the normal profits with evidence. Though the turnover as per Profit and loss account was Rs. 12,61,34,334/- , the assessee increased the turnover with a sum of Rs. 99,65,600/- to compensate the deficiencies of survey and filed the return of income. Otherwise the return would have resulted in lesser income to that extent. Neither the revenue nor the assessee could place the material relating to the expenditure claimed with regard to the unaccounted receipts. The revenue did not bring any material to establish that there was no expenditure incurred by the assessee relating to the unaccounted receipts. In the absence of the books of accounts it is unascertainable whether the assessee had booked the entire expenditure relating to accounted and unaccounted receipts. In the absence of any specific material with regard to the expenditure relating to unaccounted receipts, we hold that it is judicious to estimate the income on total receipts inclusive of unaccounted sales instead of making separate addition. The returned income of Rs. 1,00,93,430/- was after admission of additio....
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....discussed in revenue's appeal and upheld the determination of total turnover at Rs. 13,84,64,334/- and confirmed the estimation of income at 11% as reasonable, therefore, ground Nos. 3 and 4 of the appeal of the assessee are dismissed. In the result, appeal of the assessee is dismissed. Cross Objection No.80/Viz/2017 17. Ground Nos. 1 and 5 are general in nature which does not require specific adjudication. 18. Ground No.2 is related to the estimation of income at Rs. 1,52,31,076/- by estimation of income @ 11% on total turnover. This ground is adjudicated by us in revenue's appeal and upheld the order of the Ld.CIT(A), therefore, this ground is dismissed. 19. Ground No.3 is related to the addition of Rs. 2,15,000/- unrecorded interest. This ground is not pressed by the Ld.AR during the appeal hearing, therefore, this ground is dismissed as not pressed. 20. Ground No.4 is related to the separate addition of Rs. 1,23,30,000/- This issue was decided against the revenue and in favour of the assessee in revenue's appeal. Hence, no further adjudication considered necessary. 21. In the result, appeal of the revenue, cross appeal filed by the assessee are dismissed an....
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....sued by the assessee represents the share capital contribution for the joint business venture to be promoted by three of them. The assessee also submitted that on the face of the receipt purpose of the cash received was also noted as share capital but not as a loan. Since the assessee could not contribute his share of capital immediately to start the proposed business venture both Sri P Prabhakar Rao and Sri Naga Prasad have asked the assessee to treat the said amounts as advance for purchase of flats and accordingly the flats were sold to both of them. The assessee argued, that since the amount received was share capital of the firm and the same was transferred to his account by way of journal entries for sale of flat, it should not be treated as loan in cash and accordingly requested to drop the penalty proceedings. The assessee also explained before the Addl.CIT with regard to the ledger account copy titled as 'LIC Colony / CBR Towers Shri Satya Sri Prabhakar Rao from 1.4.2007 to 31.03.2008', found during the survey and supplied to the assessee stating that it was not maintained by him and not aware of the contents. The assessee also further stated that he has not paid any inter....
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....kar towards capital for BRP projects or as capital contribution in M/s SK Constructions as claimed by the assessee the question of returning the amount after project loan is obtained does not arise. Also it is to be noted that there is clear prescription of interest payment mentioned at Rs. 2.50 per month till the repayment. Hence the amount taken is clearly a loan. 2. Ledger account as available is in the impounded material SS & SK/A/1 at page no. 19 of P.Prabhakar clearly mentions that the amounts are given In cash and also there is interest payment mentioned there In. 3. The submission of the assessee that the amounts taken are capital contribution in M/s SK Constructions are self serving and after thought and make believe submissions because (a) The assessee himself says that M/s SK Constructions has not filed any return of income. The very existence of the firm M/s SK Constructions has not been disclosed in any form of return of Income. This shows that the submis sions regarding the firm M/s SK Constructions is an after thought and is self serving and make believe arrangement created by the a ssessee to explain the loan taken by him in cash from thes....
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.... initiated the penalty proceedings u/s 271D and concluded the proceedings within the time period of six months and accordingly upheld the validity of penalty. The Ld.CIT(A) also relied on the decision of coordinate bench of ITAT, Hyderabad in the case of Shri Rao Subba Rao vs Addl.CIT,Range -6,Hyderabad in ITA No.170 &171/Hyd/2016 dated 17.02.2017. 27. With regard to the second proposition of financial exigency the assessee submitted before the Ld.CIT(A) that there was reasonable cause for non-compliance of provisions u/s 269SS of the Act, since, the assessee had accepted the loan due to financial exigencies. The assessee argued before the Ld.CTI(A) that the factors like genuineness of loan transaction, emergent financial requirement and ignorance of provisions etc. permits the tax authorities to drop the penalty as per section 273B of the IT Act. However, the Ld.CIT(A) rejected the contention of the assessee since the business expediency was not established. 27.1 The Ld.A.R of the asseessee also stated before the Ld.CIT(A) that Sri P Prabhakar Rao has given a site for development to the assessee and the assessee had spent a sum of Rs. 22,70,000/- for the development expenses....
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....loans but he could not get the same. So he had associated with others as partners for acquiring the funds for smooth execution of the project. The assessee had approached Sri P. Prabhakar Rao for capital contribution who has given the amount as capital. The assessee stated that for execution of projects in time frame, the assessee had to receive the amounts from Sri P.Prabhakar Rao in cash and the same was recorded in the books of accounts also. The genuineness of the transaction was proved and the repayment was also proved with documentary evidence. Therefore, argued that there is a reasonable cause for accepting the loans and there is no case for initiating penalty u/s 271D. Accordingly requested to cancel the penalty. 28. With regard to the reasonable cause, the Ld.CIT(A) dismissed the appeal of the assessee stating that the assessee failed to establish the business exigencies with the tangible evidence. The assessee's claim with regard to capital contribution to SK Interiors and development of site in respect of Sri P Prabhakar Rao was also held to be not established by the assessee and rejected the claim of the assessee which is discussed in detail in para No.5.4. to 5.4.4 ....
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....appellant the partnership was discontinued as appellant could not obtain the bank loan and Shri P. Prabbakar Rao expressed his inability to continue as a partner and requested the appellant to repay his capital with interest. 5.4.3. As the loan receipt to the tune of Rs. 68,48,000/-- in cash from Mr. P. Prabhakar Rao pertained to financial year 2007-08, in my view, the claim of capital contribution by Mr. P. Prabhakar Rao to M/s, SK Interiors Constructions has nothing to do for the relevant Assessment Year 2008-09 i.e. for the period ending on 31.03.2008 as the firm itself came into existence only on 05.09.2009 and corresponding bank account in the name of MIs. SK Interiors was opened only on 19.10.2009 with opening balance of Rs. 5,000/- by cash (A/c No.545401010050201 with Union Bank of India, Labbipet). 5.4.4. The claim of appellant that Mr. P. Prathakar Rao gave his site for development to appellant and appellant had spent Rs. 22,70,000/- for development expenses on behalf of Shri P. Prabhakar Rao was not established either before Addl. Commissioner of Income Tax or during appeal proceedings i.e., no evidence in respect of this claim was produced either before....
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....etc. were not furnished by the assessee either before the Ld.CIT(A) or before the Addl.CIT during the penalty proceedings. There is no evidence having opened the separate bank account for this purpose to handle the transactions. In page No.26 to 35 of the paper book the assessee had furnished the acknowledgments having received the amounts on various dates and given receipts on the letter head mentioning on the face of it stating the amounts were received towards share capital of the syndicate. However in this aspect also the assessee failed to furnish any evidence with regard to the details of the syndicate, members of the syndicate, objects of the syndicate, common bank account and the income tax return etc. The assessee also did not open any bank account to deposit the pooled funds and to make the transactions. Therefore, argued that mention of syndicate and contribution to capital is nothing but an effort made by the assessee to circumvent the provisions of section 269 SS of the Act, and the Ld.DR argued that the amounts received by the assessee are nothing but the cash loans which attracts the provisions of section 269SS and consequent penalty u/s 271D of the Act. The recei....
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....4.07.2007 Rs.4,14,000 Share capital for syndicate 19.07.2007 Rs.13,50,000 Capital for construction syndicate 18.02.2007 Rs.15 lakhs Capital for BRP Road Project belonging to Smt. And others interest payable @Rs.2.50 per month. 18.02.2007 Rs.5 lakhs For the capital in addition to the above mentioned single receipt. The Ld.AR further argued that the above amounts were received either for the specific project or for the capital for syndicate. Since the impounded material clearly indicates that the amounts were received towards share capital or capital contribution of the various projects, there is no case for holding that they are the loans for contravening the provisions u/s 269SS of the Act. The Ld.AR further stated that subsequently the amounts were adjusted towards the sale of flats as mentioned by the Ld.CIT(A) in his appeal order. The assessee had sold one flat in Sri Satya Towers, Gunadala for a sum of Rs. 23,10,000/- on 05.09.2012 and the corresponding entries were made in the sale document. Similarly, one more apartment was sold by the assessee to Sri Sk.Abdul Rahim, Hyderabad for a consideration of Rs. 14,35,000/- an....
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....009, the details of the Royal Hotel Project, the names of the partners, the common bank account and any documentary evidence was not made available. Therefore, merely mentioning Royal Hotel Project does not support the case of the assessee that sum was received towards the share capital. The assessee had received the sum of Rs. 5 lakhs on 23.02.2009 from Sri P Prabhakar Rao and the same was utilized by him in his own business and the assessee has not opened separate bank account for the purpose of specific project of Royal Hotel project which establishes that there was no such project and the amount of Rs. 5 lakhs was a cash loan advanced by Sri P.Prabhakar Rao to the assessee. Similarly the amounts received vide page No.26 to 35 were mentioned as syndicate capital or share capital of syndicate also not supported by any evidence with the documentation and the bank account. It is obligation on the part of the assessee to furnish the documentary evidences with regard to the nature of syndicate, nature of the project, details of the project and the accounts in writing with regard to the construction of the project or the syndicate with the members etc. No such evidence was placed by t....
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....hip deed of S.K. Interiors has nothing to do with the cash loans, since the advances were taken in 2007-08 and there was no partnership deed executed by both of them before accepting the loan. As rightly held by the Ld.CIT(A), we hold that the assessee's claim of capital contribution by Sri P Prabhakar Rao to M/s SK Construction has nothing to do with the relevant assessment year 2008-09 as the firm itself has come into existence on 05.09.2009 and the bank account of SK Interiors was opened on 19.10.2009. 32. Had the assessee received the sums towards share capital or for specific project the assessee would have opened the common bank account in the name of the firm or the shareholders or the partners for the benefit of the syndicate of respective project and operated the same for common business venture. In case of non-commencement of the syndicate or the project the amount would have been returned to members of syndicate from the common bank account directly. In the absence of any such evidence, the contention of the assessee that the amounts were received as capital contribution is unacceptable and we hold that the sums received by the assessee are nothing but the cash loans.....
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....red in deleting the penalty of Rs. 37,45,000/- representing the sale of flats to the assessee and we are unable to accept the contention of the Ld.CIT(A) and accordingly we set aside the order of the Ld.CIT(A) and confirm the penalty levied by the Addl.CIT. In this case though the Ld.CIT(A) held that the cash loan was Rs. 68,48,000/- he has not given enhancement notice, therefore, we confirm the penalty levied by the Addl.CIT to the extent of Rs. 67,19,000/-. 34. In respect of the loan taken from Sri TSVG Naga Prasad for a sum of Rs. 6 lakhs it was mentioned on the face of in receipt in page No.51 that the amount was received for construction of the flat or house. The same fact was recorded in the sale deed. Therefore, we do not find any infirmity in the Ld.CIT(A) order and the same is upheld. In the result the appeal of the revenue is allowed and the cross objection and the cross appeal of the assessee are dismissed. I.T.A. No.488/Viz/2017 35. For the assessment year 2009-10, the assessee had received Rs. 22,00,000/- from Sri P.Prabhakar Rao which is part of the total loan of Rs. 90,48,000/- discussed in appeal No.499 of 2008-09. Out of which Rs. 68,48,000/- was relate....
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....0 crore was additional income over and above the normal profits, and accordingly computed the income estimating the net profit at 12.5% on gross receipts of Rs. 3,37,80,000/- and separately made the addition of Rs. 17,76,000/- relating to the unsecured loan of Ms. V Malleswari and made separate additions representing other receipts of income, income from house property, interest received, professional fee received etc,, admitted by the assessee in the return and determined the total income at Rs. 1,67,84,108/-. 37. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) held that the admission of Rs. 1.00 crore was not over and above the normal profits and it is the total income for the year under consideration. The Ld.CIT(A) held that the income admitted by the assessee was inclusive of all the receipts accordingly directed the AO to accept the income admitted by the assessee at Rs. 95,80,310/-. With regard to the other receipts also, the Ld.CIT(A) was not convinced with the order of the AO and deleted the additions. For ready reference, we extract relevant part of the order of the Ld.CIT(A) in para No.5.3.5 to 5.3.7 which reads as unde....
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....dition. 38. Aggrieved by the order of the Ld.CIT(A), the revenue carried the matter before the Tribunal. 39. We have heard both the parties and perused the material placed on record. In revenue's appeal, ground No.1 and 5 are general in nature which does not require specific adjudication. 40. Ground No. 2 is related to the addition of Rs. 17,76,000/- unsecured loan taken from V.Malleswari. The revenue's case is that a sum of Rs. 17,76,000/- was accepted during the year but not related to the earlier year. The case of the assessee is that the loan was related to the earlier year and brought forward balance but not accepted during the year, hence the addition cannot be made in the year under consideration. The assessee filed return of income, computation statement and the ledger account copy of V.Malleswari as at the end of March 2013 in paper book. The account copy in page No.20 filed in the paper book shows that the balance as on 31.03.2013 was Rs. 18 lakhs which was brought forward to the assessment year under consideration, therefore, the unsecured loans relating to V.Malleswari is an opening balance, but not the loan accepted during the year. The revenue did not place a....
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....he revenue. Cross Objection No.85/Viz/2017 42. The Cross Objection filed by the assessee was not pressed during the appeal hearing, therefore the Cross Objection is dismissed. I.T.A.No.500/Viz/2017, CO No.82/Viz/2017 43. The Addl.CIT initiated penalty u/s 271D against the assessee for accepting the loan from Sri S.Ram Prasad for a sum of Rs. 1,20,00,000/- in violation of provisions of section 269SS of the Act. During the course of survey conducted u/s 133A, the AO found that the assessee had received loan of Rs. 1,20,00,000/- otherwise than by crossed cheque. The Addl.CIT observed that out of the total sum of Rs. 1,20,00,000/- an amount of Rs. 84,99,000/- was accepted through cheque, hence, the balance amount of Rs. 35,01,000/- was treated as a cash loan and levied the penalty of Rs. 35,01,000/- u/s 271D of the Act. 44. Aggrieved by the order of the Addl.CIT, the assessee went on appeal before the CIT(A) and submitted that the loan taken by him was Rs. 95,99,000/-, but not Rs. 1,20,00,000/- as stated by the Addl.CIT in his order. The Ld.AR further submitted before the Ld.CIT(A)that the assessee he had inadvertently failed to furnish the details of the loans received ....
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....Ram Prasad of Rs. 1,20,00,000/-. The total amount including interest come to Rs. 1,92,00,000/- out of which an amount of Rs. 20,50,000/- was paid as interest upto 23.08.2011. Regarding the balance payment the same was settled by giving away 2(Two) Flats in Sri Satya Towers." 46.1. The material found during the course of survey was unsigned affidavits and unsigned ledger account. The assessee contended before the Addl.CIT during the penalty proceedings that the loan taken from Sri Ramprasad was Rs. 95,99,000/- but not Rs. 1,20,00,000/-. The analysis of the impounded material (pen text) is as under: Loose sheet No.28&29 is unsigned affidavit which reads as under: Receipt (on stamp paper of Rs. 100/- On this 26th day of_______2012 Given to : Golla Narayana Rao, S/o Radhakrishna Murthy, aged 56 years, R/o Krishna Dist., Vijayawada, Mogalrajapuram, Vijayasraddha Towers, Flat No.F.O.F.4. Given By : Surapaneni Ram Prasad, S/o Late Lakshmi Perumal, Aged, 56 years, R/o Krishna Dist., Vijayawadas, Suryaraopet, Dornakal Road Nature : Earlier upto 01.10.2010 you have borrowed a sum of Rs. 1,20,00,000 (Rupees One Crore Twenty Lakhs Only) ....
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.... of the loose sheet No.30 found and impounded during the survey in the premises of the assessees reveals that the assessee had taken the loan of Rs. 1,20,00,000/- from Shri Prasad for interest of Rs. 3.00 per month which worked out Rs. 68,40,000/- for 19 months from 01.11.2011 and the aggregate amount payable worked out to Rs. 1,92,00,000/- which was adjusted by sale flats to the extent of Rs. 1,35,85,000/- and the amount so far given was Rs. 48,80,000/- and the balance payable was Rs. 17,11,000/- inclusive interest for 20th month. Loose sheet No.28 and 29 unsigned affidavit confirms the above fact. The statement was recorded from the assessee during the course of survey on 10.10.2013 and the assessee has confirmed the above fact and also stated that a sum of Rs. 20,50,000/- was paid as interest up to 23.08.2011. Out of the contents recorded on the loose sheet the assessee did not dispute the sale of flats and the adjustment of the loan taken towards the sale of flat and disputing the acceptance of loan Rs. 1,20,00,000/-. It is settled principle that contents found during the course of survey on loose sheet is true and correct in entirety but cannot be partially correct and partial....
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.... the tax effect pertaining to the amount disputed by the Revenue is less than the monetary limit of Rs. 20 lakh fixed by the CBDT in Circular No. 03/2018, dated 11.07.2018, which is in supersession of its Circular No. 21/2015 dated 10.12.2015, in relation to filing of appeals before the Income Tax Appellate Tribunal. Taking into consideration the above, and also the fact that the CBDT Circular under reference applies retrospectively even to pending appeals, we hold that the appeal filed by the Revenue is not maintainable and liable to be dismissed in limine. Accordingly, we dismiss the appeal of the Revenue as well as the cross objection. ITA No.489/Viz/2017 49. The issue in this appeal is related to confirming the penalty of Rs. 8,00,000/- for violation of provisions u/s 269T levied under section 271E of the Act. The assessee had made the repayment of Rs. 8,00,000/- to Shri P.Prabhakar Rao in violation of the provisions of section 269T of the Act, Therefore, the Ld.Addl.CIT invoked the provisions of Section 271E and levied the penalty of Rs. 8,00,000/-. On appeal the Ld.CIT(A) confirmed the penalty. 50. In this order, in revenue's appeal in ITA 499/Viz/2017, as per the de....
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....s Rs. 1,20,00,000/-, and the amount of Rs. 1,35,85,000/- was adjusted for sale of flats, hence we accept the contention of the Ld.AR that the payment of Rs. 48,80,000/- represents the interest and out of which a sum of Rs. 36,60,000/- was paid during the impugned assessment year. The Ld.AR during the course of hearing argued that Section 269T is applicable for repayment of loan but not for payment of expenditure which is required to be allowed as deduction. Payment of interest in cash required to be considered u/s 40A(3) of the Act but not u/s 269T of the Act. As per section 269T, the assessee is not permitted to make the payment of principal or principal along with the interest, otherwise than crossed cheque. For ready reference, we extract section 269T of the Act which reads as under : Mode of repayment of certain loans or deposits. 269T. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan....
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....oan or deposit of any nature; (iv) "specified advance" means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place. This view is supported by the decision of the coordinate bench of ITAT in the case of MV Raghavulu Vs. ACIT, Kakinada Range in I.T.A. No.362/Viz/2011. Since the payment of Rs. 36,60,000/- represents the interest, respectfully following the decision of coordinate bench in the case cited supra, we hold that the provisions of section 269T are not applicable and consequently the penalty u/s 271E is not leviable. Therefore we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Cross Objection No.84/Viz/2017 53. Appeal No.502/Viz/2017 is related to the levy of penalty of Rs. 38,75,000/-, representing sum of Rs. 36,60,000/- for repayment of loan in cash to Shri S.Ramprasad and Rs. 2,15,000/- to Shri P.Prabhakar Rao. The Ld.CIT(A) deleted the penalty in the case of Shri S.Ramprasad, therefore, the assessee filed cross objection supporting the order of the Ld.CIT(A). With regard to the penalty of Rs. 36,60,000/- paid to Shri S.Ram Pr....