TaxTMI 
TaxTMI 
2019 (8) TMI 1413
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....ars. Since the underlying facts in the captioned appeals are identical for levy of penalty u/ s 271D r.w.s 269SS of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short], all these appeals are being disposed off by this common order for the sake of convenience and brevity. 2. Facts, as culled out from the orders of the authorities below show that search and seizure operation u/s 132 of the Act was carried out on 17.02.2016 in the case of M/s Spaze Towers Pvt Ltd. Pursuant thereto, proceedings u/s 153A of the Act were initiated. 3. During the pendency of the assessment proceedings u/s 153A of the Act, on 30.11.2016, M/s Spaze Towers Pvt Ltd filed an application under chapter XIXA of the Act before the Settlement Commission. In the application so filed, M/s Spaze Towers Pvt Ltd offered for tax inter alia, an income of Rs. 52.74 crores on account of bogus purchases recorded in its books of account. M/s Spaze Towers Pvt Ltd. claimed telescoping of expenses of Rs. 16.43 crores incurred by it towards personal expenses of the promoters/directors of the company. 4. While the application filed before the Settlement Commission was pending for settlement, on the....
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....Assessing Officer has treated the personal expenses incurred by M/s Spaze Towers Pvt Ltd as income of the assessee, then the same amount cannot be treated as loan in violation of the provisions of section 269SS of the Act. The ld. counsel for the assessee pointed out that against the deletion of the quantum addition, the revenue has preferred appeal before the Tribunal by taking a specific ground: "Whether on the facts and circumstances of the case, the ld. CIT(A) failed to appreciate that there is no evidence that the amounts shown to have incurred as expenses or invested in assets have been received by the assessee as loan/deposit from M/s Spaze Towers Pvt Ltd in cash and the ledger account and confirmations submitted by the assessee before him showing receipt of amount in cash and repayment by cheque is an afterthought to reduce the tax liability." 11. It is the say of the ld. counsel for the assessee that the revenue authorities are blowing hot and cold in the same breath. On the one hand, the amount spent by M/s Spaze Towers Pvt Ltd is treated as income and on the other hand, the same amount is treated as loan in violation of provisions of section 269SS of the Act. 12. The....
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....y issue stated in the said letter dt. 11.3.2016 and offered a sum of Rs. 53.04 cr., in the present SOF, which shall be dealt with, in the subsequent paras apart from additional surrender of Rs. 1.65 crs in the hands of Sh Arvinder Dhingra (which rs also pending for adjudication before the Hon'ble Bench). Therefore, the total amount offered before the Hon'ble Settlement Commission pertaining to both the applications comes to Rs. 54.69 cr. The applicant accepted that it had recorded inflated purchases to the tune of Rs. 52.74 crs (app) under the head of construction expenses apart from another surrender of Rs. 30.00 lacs and thereby suppressed the profits by Rs. 53.04 cr (app). The applicant used to pay to the said Vendors towards the inflated purchases in question by account payee cheques and the applicant used to get cash after deducting nominal charges as stated in detail in SOF. Para 2.2.1 to para 2.2.4 Telescoping Of Cash Expenses of Directors/Promoters The Ld Pr CIT has objected telescoping of such cash expenses in para No, 2.2.1 to 2.2.3 on the ground that such cash is utilized by Directors/Shareholders for their personal use. The applicant has admitted to have spent cas....
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....he said order) upheld the view taken by the Commissioner (Appeals) in his order dated 6-9-2000. The Tribunal held that the receipt was outside the scope of undisclosed income defined under section 158B(b) of the Act. 7. On these facts, we are of the view that the revenue could not on the one hand, contend that the amount of Rs. 3 lakhs is undisclosed income in the hands of the assessed and at the same time seek to initiate proceedings against the assessed for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000. 8. The revenue, having taken the stand that the income was undisclosed income in the hands of the assessed, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal." 22. Similar view was taken by the Hon'ble High Court of Delhi in the case of R.P. Singh & Co. [P] Ltd 340 ITR 217 wherein the Hon'ble High Court had the occasion to decide on the fact that once the share application money is treated as an undisclosed income of the assessee u/s 68 of the Act, whether the initiation of proceedings u/s 269SS r.w.s 271D of the Act is valid? 23....
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....998-99. Once the amount in question is assessed as the undisclosed income of the assessee in the block assessment for the block period of the assessee, the provision of Section 269SS r/w Section 271D cannot be resorted to. The issue in the present case is covered in favour of the assessee with the decision of Hon'ble Delhi High Court in the case of Standard Brands Ltd., cited supra, wherein held that where the amount was undisclosed income in the hands of the assessee, it could not resort to proceedings under Section 269SS r/w Section 271D of the Act. Accordingly, the issue is decided in favour of the assessee and the order of the CIT(A) is confirmed and the ground of appeal of the Revenue is dismissed." 25. The aforesaid decisions are squarely applicable to the facts of the present appeals. 26. Coming back to the facts of the case as mentioned elsewhere, when the penalty proceedings were initiated by the JCIT, even the JCIT proceeded with the observations of the ld. CIT(A) who has advised to take necessary action as per the provisions of the Act. The JCIT then analyzed the provisions of section 269SS of the Act and after referring to one decision of the Supreme Court and two....
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....n the case of Chamundi Granite 239 ITR 694 relied upon by the JCIT has also held that the ultimate aim of section 269SS is to prevent evasion of tax. Whereas, the facts of the appellants clearly shows that the taxes have been paid by Spaze Towers as per the order of the Supreme Court and there is no evasion of tax. 32. The Hon'ble Supreme Court in the case of Kum. A.B. Shanthi 255 ITR 258 has held that the object of introducing the provisions of section 269SS of the Act is to ensure that the tax payer is not allowed to give false explanation for his unaccounted money. 33. In the present cases, there is no dispute about the sources of money wherefrom the expenditure had been incurred which has already suffered taxation in the hands of the company Spaze Towers and the very same money cannot be considered as representing undisclosed income of the appellants for which false explanation is being given as loan to attract the provisions of section 269SS r.w.s 271D of the Act. 34. On a perusal of the assessment order in the quantum proceedings, the order of the first appellate authority deciding the quantum additions and also the order of the JCIT levying penalty u/s 271D of the Act....