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2018 (11) TMI 1418
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....2012-13 & 2015-16 are directed against the common order of Ld.CIT(A) in ITA Nos.259 to 262/17-18 dated 25.06.2018 confirming the levy of penalty u/s.271D of the Act made by ld. Assessing Officer. 2.1 ITA Nos.2195 & 2197/Chny/2018 for assessment years 2014-15 & 2015-16 are the appeals against the common order of Ld.CIT(A) in ITA Nos.263 & 264/17-18 dated.25.06.2018, and ITA Nos.2199, 2201, 2203 & 2205/Chny/2018 for assessment years 2012-13 & 2015-16 are directed against the common order of Ld.CIT(A) in ITA Nos.255, 256, 257 & 258/17-18 dated 25.06.2018 confirming the levy of penalty u/s.271E of the Act made by ld. Assessing Officer. 3. Shri S.Sridhar represented on behalf of the Assessee, and Dr.Srinivasa Rao represented on behalf of the Revenue. 4. The facts in all the appeals are identical and consequently, it was submitted by ld.A.R that in regard to levy of penalty u/s.271D of the Act, the appeal in ITA No.2198/Chny/2018 can be taken as a sample and in regard to levy of penalty u/s.271E of the Act, the appeal in ITA No.2199/Chny/2018 can be taken as a sample. ITA No.2198/Chny/2018 -Sec.271D 5. Ld. Counsel for the assessee submitted that the assessee is a company. ....
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....the loans were produced before the ld. Assessing Officer. It was a submission that the assessee company never paid Dr. A.M Arun any interest. It was a submission that prima facie the assessee had shown the reasonable cause for taking the funds in cash from Dr. A.M Arun, who had in turn taken the loan in cash from Shri J. Dinakaran. It was a submission that the fact that the assessee has not paid any interest to Dr. A.M Arun, clearly showed that the transaction between the assessee and the Dr. A.M Arun was in the form of running account. It was a submission that Dr. A.M Arun would withdraw the cash from the assessee company's current bank account and repay the same to Shri J. Dinakaran. It was a submission that the assessee being a company, could not take a loan from Shri J. Dinakaran directly as taking of the loan was specifically barred from individuals. It was a submission that the assessee had shown reasonable cause for taking of the cash from Dr. A.M Arun and in view of the provisions of the section 273B of the Act, penalty levied u/s.271D was not exigible and the same was liable to be deleted. 5.1 It was an alternate prayer that the total of the transactions in cash between....
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.... was a submission that on appeal, before the ld.CIT(A) the assessee had also relied upon the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs.Idhayam Publications Ltd., reported in [2006] 285ITR 221(Mad.) wherein the Hon'ble Madras High Court had held that the director having deposited funds in the form of cash in the current account of an assessee-company and also withdrawing the same from the current account, the same cannot be treated as loan or deposit. It was a submission that the Ld.CIT(A) without considering any of the explanation submitted by the assessee, confirmed the levy of penalty u/s.271D of the Act. It was a submission that provisions of the section 271D clearly shows that the same was for contravention to provisions of the section 269SS and perusal of the provisions of the section 269SS showed that it was under Chapter-XXB of the Income Tax Act, 1961, which was for the purpose of "counteracting evasion of tax". It was a submission that there was no unaccounted transactions in the present case and in fact, no additions on account of unaccounted transactions have been made in the case of assessee-companies, or in the case of Dr. A.M Arun. It was....
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.... subsequent occasion taken another Rs. 5,000/- in cash, then the provisions of the section 269SS stood violated and provisions of the section 271D of the Act was exigible. Ld.D.R drew our attention to the provisions of the section 269SS(c) to say that the words used were "the amount or the aggregate amount referred to clause (a) or (b)". It was a submission that each transaction was to be considered not individually, but in aggregate and thus, the alternate prayer of the assessee in respect of the peak credit of the loans could not be agreed to. It was a further submission that the claim of assessee that the director of the assessee company, Dr. A.M Arun has been penalized for the same amount, and therefore, the assessee company should not be penalized, would not be acceptable in so far as the company is a different entity from Dr. A.M Arun, who is an assessee in his individual capacity. It was a submission that nothing has been brought on record to show that Dr. A.M Arun had taken the loan from Shri J. Dinakaran on behalf of the assessee company, or that Dr. A.M Arun acted on behalf of the assessee company. The Revenue was absolutely correct in levying the penalty under sections 2....
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....levied u/s.271E of the Act, it was submitted by ld.A.R that the penalty has been levied on account of the withdrawal in cash by Dr. A.M Arun for the purpose of repayment to Shri J. Dinakaran in respect of loan taken by Dr. A.M Arun on behalf of the assessee company. It was a submission that Dr. A.M Arun has also been penalized for repayment of the loan and clearly the penalty has been levied multiple times for the same amount. It was a submission that the provisions of the section 269SS and 269T of the Act was for the purpose of curtailing unaccounted transactions whereas in the present case, the transactions were fully accounted and had been done only on account of commercial exigencies. It was a submission that as the amounts had been taken in cash by Dr. A.M Arun from Shri J. Dinakaran, the same had to be repaid in cash itself, as that was the condition under which the loans had been taken by Dr. A.M Arun from Shri J. Dinakaran. It was a submission that consequently the funds had been withdrawn from assessee's bank account for the repayment of the loan by Dr. A.M Arun to Shri J. Dinakaran. 9. In reply, the ld.D.R submitted that nothing has been brought on record to justify th....
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.... details produced before the AO in respect of the cash payment made by Dr.A.M.Arun to the two assessee's herein. The utilization details given before the AO shows break-up of the purposes for which the amount received from Dr.A.M.Arun has been used. The first page of the cash flow chart is attached herewith as follows: Utilization of Payment of amount received from Dinakaran Date Amount received by Dr.AM Arun Banks/NBFC- loan repayments Vasan Denta l Hospi tal salary Employees salary Doctor's Professional fees Critical Vendor's payments Hospital rent payment Statutory payment Total Opening Bank Balance including Operational Cash Balance Amount received from JD Total all Bank Balance Total payments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 3-Jan.12 1,200,000 - - -- - - - - - 15,943,936 1,200,000 17,143,936 17,048,320 4.Jan.12 700,000 - -- - - - ....
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....,200,000 45,319,189 29,258,914 12.Jul.12 - - - - - - - - - - - - 13.Jul.12 4,400,000 - - - - 4,596,233 - - 4,596,247 35,774,811 4,400,000 40,174,811 27,230,560 14,Jul.12 1,200,000 - - 1,611,508 - - - - 1,611,523 27,370,177 1.200,000 28,570,177 33,047,512 14.Jul.12 - - - - - - - - - - - - - 16.Jul.12 4,600,000 - - - - 3,663,498 - - 3,663,514 35,001,845 4,600,000 39,601,845 40,959,307 17.Jul.12 16,700,00 - - - 3,926,657 - - 331,231 4,257,905 24,709,560 16,700,000 41,409,560 38,571,855 18 Jul 12 - - - - 3,793,938 - - 214,067 4,008,025 24,440,754 - 24,440,754 38,196,538 20 Jul 12 - 6,758,288 - - - - - - - 23,908,567 ....
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....there is another Rs. 25.00 lakhs cash taken and Rs. 44.67 lakhs rent payment is mentioned. The opening bank balance as on 5th January is Rs. 4.18 Cr., from this, we reduced the cash taken earlier of Rs. 30.00 lakhs, then we are still left with Rs. 3,88,61,000/- and after reducing the expenses as on 5th January of Rs. 1.40 Cr., there is still a balance of Rs. 2.48 Crs., which clearly does not justify the requirement of taking the cash of Rs. 25.00 lakhs from Dr.A.M.Arun. Thus, cash flow produced by the assessee itself goes against the claim of the assessee for its reasonable cause. Perusal of 5th January, 2012, opening cash & bank shows Rs. 4.18 Crs. Cash Receipts of Rs. 11.00 lakhs and total closing balance of Rs. 4.29 Crs. and total expenses of Rs. 12.40 Crs. How this Rs. 12.40 Crs. was met, is not coming out of the cash flow. What is the nature of the Rs. 12.40 Crs expenditure? Thus, the cash flow submitted itself is questionable. Thus, the claim of reasonable cause of the assessee clearly stands unsubstantiated. It is true that if the assessee really needs emergency funds for business exigencies, taking of cash can be considered as a reasonable cause but that has not been est....
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....g why he found that such a transaction would not come under the exception clause of Sec.271D. In the said case, the AO had categorically given a finding that the submission of the assessee was that the loans have been taken in cash for the purpose of depositing in the assessee's bank account for drawing Demand Drafts in the name of the creditors was false, in so far as, all the creditors were regular suppliers of the assessee and the assessee had made frequent credit purchases. In the present case also the A.O has rejected the assessee's explanation in respect of the cash flow by saying that it lacks clarity. However, as mentioned earlier, a perusal of the cash flow clearly shows that the cash was not required to be taken and the assessee had adequate funds available with it to meet its requisite expenditure. 15. A perusal of the decision in the case of Shri P.Muthukaruppan v. JCIT reported in 375 ITR 243 [Madras] shows that the Hon'ble Jurisdictional High Court had held that the entire transaction between the assesse, a financier, and the financier who was also financing a large number of persons was apparently to evade tax which came to light after a survey was conducted and s....
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....ay, same bank, money transfer takes less than a few seconds and even if it is in different banks, bank transfer would take the maximum time of two to three hours. The cash flow shows that the money deposited in cash on a particular day and the expenditure coming after more than two days. This being so, along with the fact that the moneys deposited by Dr.A.M.Arun in the assessee's bank account were unaccounted cash of Shri J.Dinakaran shows that the decision in the case of M/s.Idhayam Publications Ltd., are not applicable to the facts of the assessee's case. Thus, the assessee has failed to prove with reasonable cause, the reason for the receipt of cash from Dr.A.M.Arunin violation of the provisions of Sec.269SS leading to the consequential levy of penalty u/s.271D of the Act. 17. When the language of the provision is crystal clear, the object of the purpose of the enactment of the said provision would no more have any say in the matter. A plain reading of Sec.271D establishes that it is a mandatory provision and a person contravening the provisions of Sec.269SS of the Act in any manner cannot escape from the payment of the penalty of equivalent amount so received as loan or depo....