TaxTMI 
TaxTMI 
2022 (3) TMI 154
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...." having 220 flats. The assessee had filed its return of income for the assessment year under appeal on 10/10/2016 disclosing total income of Rs. 26,22,610/-. During the course of search u/s 132 at the residence of Shri Vishal Tilva, Partner of the assessee, certain documents pertaining to the assessee firm were seized. It is claimed by the assessee that on the said pages, some petty expense of tea and snack incurred at site had been mentioned. However, the AO contended that said noting was in respect of unrecorded receipts (of on-money in cash) from the members and not the petty expenses as claimed by the assessee. The assessee had objected to the said contention but in the assessment order, the AO made an addition of Rs. 26,50,000/- as unaccounted receipts for the period. 3.1 The assessee filed an appeal before Hon'ble CIT(A)-12, Ahmedabad who vide order dated 02/11/2018 confirmed the order of the AO to the effect that the noting is in respect of on-money receipts but accepted the assessee's contention that only profit of such unaccounted receipts could be added and accordingly confirmed the addition of Rs. 2,38,500/- (@ 9% of Rs. 26,50,000/-). 3.2 The AO in the assessment ....
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....that it is not possible to establish that payment is in excess of Rs. 20000/- from one or more members and it is possible that these amount in cash is received from all members and average amount received per member is less than Rs. 20000/- . As discussed above since the cheque entries mentioned against a particular date have matched with the entries in the bank in denomination of 1000, it is completely justified to conclude that the cash entries are also in the same denomination and hence the assessee's above contention that the average is less than 20000/- is illogical since there is no question of assumptions here as the entries are in black and white countersigned by the managing partner of the firm. There is no doubt that there is violation of provisions of Sec 269SS of IT Act in the case of the assessee and hence it is liable for levying of penalty of Sec 27ID of the IT Act. 6. On perusal of the entries in the seized material as referred above, it is seen that the entries also pertain to the period when the amended provisions of Section 269SS of the Act did not exist. The amended provisions of 269SS have been brought into force by Finance Act, 2015 w.e.f 01.06.2015. T....
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....tional on the ground that it was draconian or expropriatory in nature and that any undue hardship is very much mitigated by the inclusion of section 273B whereby the penalty cannot be imposed if the assessee has a "reasonable cause" for failure to comply to the respective provision. If there was a genuine and bonafide transaction and if for any reason the assessee could not get deposit(s) by account payee cheque or demand draft for some bonafide reasons, the tax authorities have discretionary powers. 5.4 It has been seen that the seized pages 1 to 5 of Annexure BS-1 have been established to have the amounts with three zero suppressed and therefore they were not related to petty site expenses as claimed by the assessee and in reality the amounts were in cash taken by the assessee as on-money from the customers/members towards the booking/sale of constructed units. It cannot be subscribed that the addition made by the AO was merely on the basis of presumptions. More so it is well known and needs no specific evidence that there are always elements of cash on-money in real estate transactions. There is clear violation of provisions of section 269SS as it stands now and thus the asses....
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....ssue are that the assessee is a partnership firm engaged in the business of construction and development of housing projects and during the year under consideration was undertaking housing project viz."Kisan Classic". The cash transactions in alleged violation of section 269SS of the Act and on account of which penalty u/s 271D of the Act has been levied amounting to Rs. 16,00,000/- relate to notings in a diary found in the possession of one of its partners Sh. Vishal Talva during search action. The facts relating to these diary notings, as noted in the Assessment Order and which has not at any stage been disputed by the Revenue are that the said notings pertained to the assessee firm in relation to its Kisan Classic Housing Project and, as reproduced at page 3 of the assessment order, contained notings of amounts in hundreds with dates and signatures against each amount. The signatures were that of Mr. Vishal Talva. That some of the entries had "CHQ" mentioned against it, one of which matched with the cheque entry in the assessees HDFC bank account , but the amount was in thousands i.e 100/- noted in the diary against cheque was Rs. 1,00,000/- deposited against cheque in the bank ....
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....y,- (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official G azette: Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation.-For the purposes of this section,- (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) "co-operative bank" shall have the same meaning as a....
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....the courts as not including incomes. 17. The next contention of the Ld.Counsel for the assesee was that the charge of violation of section 269SS of the Act by the assessee for the levy of penalty must be clearly established, the onus being on the Revenue while in the present case it was all based on surmises and conjectures. 18. We are in agreement with the assessee on this count. The Rule governing construction of provisions imposing penal liability is that such provisions should be strictly construed. The conditions to be fulfilled for imposition of penalty have to be shown to be strictly complied with. It is only if an assessee falls squarely within the letter of law he can be penalized, however inequitable the consequences may be. If the Revenue cannot bring him within the letter of law, the assessee will not be liable no matter that such a construction may cause grave prejudice to the Revenue. The Hon'ble Gauhati High Court in the case of Commissioner of Income Tax vs Maskara Tea Estate (1981) 130 ITR 0955 dealing with the interpretation of penal provisions held that it must be construed strictly as under: "5.We have given our serious attention and consideration to the arg....
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....ling with the application of "the spirit of the law", in interpreting fiscal statutes, Lord Reid observed in IRC vs. Saunders (1958) AC 285, 298 : 34 ITR 827, 838 (HL): "It is sometimes said that we should apply the spirit and not the letter of the law so as to bring in cases which, though not within the letter of the law, are within the mischief at which the law is aimed. But it has long been recognised that our Courts cannot so apply taxing Acts ........" 7. All the principles of construction of taxing statutes were considered by the Supreme Court in Murarilal Mahabir Prasad vs. B. R. Vad (1976) 37 STC 77 and the rule of construction has been laid down succinctly by Chandrachud J. (as his Lordship then was). The rule stated by Rowlatt J. in Cape Brandy Syndicate (supra) which had been approved and adopted by the Supreme Court in a number of cases has been accepted as the correct principle which is applicable in interpreting our taxing statutes. The relevant observations are extracted (p. 111 of 37 STC): "In that famous passage marked by a happy turn of phrase, Rowlatt J., said, there is no equity about a tax. There is no presumption as to a tax. There is no equity about a t....