AI Drafter 
TaxTMI 
TaxTMI 
2022 (6) TMI 593
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....cts regarding the nature of these receipts and neglecting the facts that the assessee was unable to establish that the receipts of Rs. 2,75,00,000/- were as advance for sale of agricultural land." 4. Before proceeding further, it is necessary to understand the basic facts about the assessee to deal with this appeal. The assessee is an individual derives income from salary, interest & remuneration from various concerns in which he is partner and also earns income from other sources. The assessee filed return of income declaring total income of Rs. 13,06,680/- and agricultural income of Rs. 12,46,718/- on 30.03.2016. A search & seizure operation u/s 132(1) of the IT Act, 1961 was conducted at various premises of Data Group, Alwar on 14.10.2015 of which assessee is one of the members. During the course of search cash of Rs. 4,31,265 was found, further various documents were seized from the residence of the assessee including page no. 71A of Exhibit no. AS-1. 5. During the course of search proceedings, various incriminating documents were found & seized from assessee's residential premises situated at Bank Colony, Alwar on vacation of prohibition order. The assessee, during t....
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....on 07.03.2018 and the assessee was asked to show cause as to why the penalty may not be imposed u/s 271D of the IT Act, 1961 for violation of provisions of section 269SS of the I.T. Act, 1961. 9. In response to this show cause, the A/R of the assessee Sh. Vijay Data, CA submitted that the assessee has not accepted any alleged loan and advances so as to expose himself for the penal consequences as envisaged under section 269SS r.w.s. 271D of the Income Tax Act, 1961, therefore, no penalty is leviable upon the assessee. Nevertheless, the assessee has filed an appeal before Commissioner of Income Tax (Appeals)-IV, Jaipur as per copy of form no. 35 placed on record wherein the alleged acceptance of loan or deposit of Rs. 2,75,00,000/- have been challenged, therefore, he has requested to keep the penalty proceedings in abeyance till the disposal of the appeal and requested to reduce the multiplicity of the proceedings. 10. Based on the submission made the Addl. CIT, Central Circle, Jaipur found that these transactions are mentioned on the documents seized during the course of search proceedings contains the receipt accepted by Sh. Babu Lal Data. It was contended by the Addl. CIT t....
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....ch a huge amount of advances have been said to be received by him. He badly failed to furnish any details in respect of the land against which advances were said to be taken. Also, even the assessee failed to furnish even PAN and address of the persons to whom advances were said to be taken against agricultural land. The assessee submitted that these transactions were entered into through brokers. However, could not provide PAN and complete address of such brokers even. As the assessee has intentionally not furnished the addresses of neither those persons who advanced the money and nor of the brokers to enable this office for any further inquiry either u/s 133(6) or u/s 131 of IT Act, 1961 to be conducted. It is quite strange that assessee is unaware of whereabouts of those persons and of the brokers, from whom he had taken such a huge amount of advances. (iii) On being asked about the present status of land, the A/R simply said that these lands are under dispute and subject to adjudication under Courts and above transaction were made. The question arises that on account of disputed land how one can entered into sale agreements with numbers of persons and if so than why th....
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....of advances are not the advances against the land as claimed but the cash loans (cash credits under the ambit of section 68 of IT Act, 1951)." 11. Based on the above finding of the AO, Addl. CIT taken a view and stated that it is clear in the section that when loan/deposit, taken by the assessee is Rs. 20,000/- or more in cash and other wise by account payee cheque or draft it is violation of section 269SS of the Income Tax Act and attracts penalty under provision of section 271D. Prime facie there is nothing to show on record that it is covered in any exemption listed in provisions of section 269SS of the IT Act. 12. He further stated that the imposition of penalty u/s 271D of IT Act, 1961, in this case is supported by various judicial pronouncements. In the case of Kum. A.B. Shanthi, 255 ITR 258 (SC)(2002) the Hon'ble Apex Court held that the object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. Similar views have also been expressed in the following cases: 1) Sundarsh....
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.... on oral agreement with buyers through a broker Also, due to family disputes, sales agreement could not be executed in writing. Further, names of the person/broker through whom advances were received is clearly mentioned on the seized paper itself, therefore, contents of the same cannot be denied in view of the provision of section 132(4A) of the Act in the absence of any evidence to the contrary. Further, there are also documents available on record, which establish beyond doubt about the receipt of money from such person/brokers, therefore, insufficiency of supplementary evidences for the satisfaction of the Ld. AO cannot be the ground to reject the explanation of the Appellant. Accordingly, the addition made is unwarranted. 3.2.3 The Ld. assessing officer has expressed his doubt that `The question arises that on account of disputed land how one can enter into sale agreements with numbers of persons and if so than why those individuals would give him so much of advances without even knowing the title clearance of the land in question which is subject to rights being accrued by the court order only'. In this respect, it is submitted that the abovementioned statement is ba....
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....o draw your kind attention towards a statement already furnished by the Appellant in 'Details and explanation of documents of entries listed in notice dated 04.09.2017(Annexure 9), his statement is as follows: To Quote (entry no. 17 is relation to page no. 88 of exhibit As-1)"receipt of Rupees 3000000.00 as an advance for sale of agricultural land on 28.05.2015, was cancelled and renewed/roll over on 28.09.2015 for another six months" To Unquote From mere reading of the abovementioned statement, it is evident that the Appellant is required to pay interest on such advance from 28.09.2015 instead of 28.05.2015 (date of transaction). Thus, the term renewed/roll over here is used in context of interest payable on such advances against sale of agricultural land. 3.2.6Further, the Ld. assessing officer has reiterated on the fact that the Appellant has failed to provide cash flow statement or other details which can be only known if the Appellant had maintained books of accounts. The Appellant being partner in multiple firms is not required to maintain books of accounts u/s 44AA of Income-tax Act, 1961 regarding his personal transactions. Accordingly, the in....
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.... s. 148 can be issued simply on the basis of audit report and the CIT's approval of the action under s. 147 without there being satisfaction and application of mind on the part of the Assessing Officer. (iv) ACIT v. Dhariya Construction Co.(2010) 328 ITR 515 (Annexure 13)the Supreme Court in a short order held that AO has to apply his mind to the information, if any, collected and must form a belief thereon.(para 10) (v) BIR ARINA ENTERPRISES PVT. LTD. vs. ITO (1993) 204 ITR 0258 JKHC (Annexure 14), it has been held that the notices issued under sec. 148 do not disclose any basis for the belief of the ITO justifying the issuance of the notices. The notices appear to have been issued mechanically. The record of the IT authorities only shows a note of the ITO that the petitioner herein had allegedly escaped liability, without there being any basis or supporting evidence for such a belief. It is true that the High Court cannot see the adequacy of the record on the basis of which the opinion is formed by the ITO, but there must be some record to formulate the opinion. In the absence of any record worth the name, the action appears to have been taken either merely ....
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....ggregate amount remaining unpaid ; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more. To Unquote From plain reading of the above-mentioned section, it can be explicitly observed that section 269SS of Income Tax Act, 1961 is applicable when any assessee has taken loan or deposit aggregating to Rs. 20000 or more otherwise than by an account payee cheque or account payee bank draft. Since, Section 271D of Income Tax Act, 1961 can be attracted only when there is violation of Section 269SS of Income Tax Act, 1961, thus, it is pertinent that following pre-requisites must be cumulatively satisfied before levying penalty: (i) The Appellant has taken loan or deposit from a party (ii) The amount is Rs. 20,000 or more, taken otherwise than by an account payee cheque or account payee bank draft. 4.25ince, in the present case, the Ld. Additional Commissioner of Income- Tax has imposed penalty u/s 271D of Income Tax Act, 1961, thus, this implies that he has purported that the appellant has taken either loan or deposit amoun....
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....ellant has received Rupees 1,00,00,000.00 from Mr. B.S Gupta on 01.04.2015. But the question arises whether it is cash loan or advance against sale of agricultural land. For this purpose, it is submitted as under: The word '' clearly denotes that the amount has been received for land. This implies that the amount which has been received has to do something with land. Here, for an instance, even if it is assumed for argument sake but not admitted that the Appellant has taken cash loans and not advance for sale of land. Then, this cash loans taken must be for purchase of land which is the only purpose for which cash loans in relation to land can be taken. However, we would like to bring it to your kind notice that the Appellant has not purchased any of the agricultural land in the concerned assessment year. For proof, refer seized document page no. 71 of exhibit AS-1 i.e. annexure 2. Therefore, the Ld. AO's presumption that the seized paper at Page 71A pertains to cash loans taken or given by the Appellant is not corroborated by any evidence under the facts and circumstances of the present case in hand. Since, the Appellant had no reason to obtain cash loans from....
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....nces against sale of agricultural land was not covered under the scope of section 269SS of Income Tax Act, 1961. Further, the word specified sum was made effective w.e.f. 01.06.2015 and the assessee has received the amount during the Assessment Year 2016-17 before 01.06.2015, therefore, the said amount received also falls out the purview of the definition of the specified sum in the Assessment Year 2016- 17. 4.7 In pursuant of above explanation, it is submitted that the transaction as considered cash loans by the Ld. AO are not actually loans or deposits. Therefore, condition (i) for imposing penalty u/s 271D of Income Tax Act, 1961 has failed to be satisfied. In other words, since the amount received is neither loan or deposits, thus, section 269SS of Income Tax Act, 1961 is not applicable, let alone section 271D of Income Tax Act, 1961. Since, both the conditions (as mentioned in para 4.1 above) were required to be applied cumulatively, thus, non application of condition (i) sets aside the need to even consider condition Hence, it can be concluded that penalty imposed by the Ld. Additional is erroneous, since, section 271D of Income Tax Act, 1961 is not applicable in the....
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.... 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 assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); (iii) "loan or deposit" means loan or deposit of money; (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. Looking to the above provision being amended transactions in the AY 2015-16 are definitely not specified sum as the entire amount received are before 31-03-2015. Transactions that are for the AY 2016-17 the Addl. CIT has listed sum on which penalty was imposed. However, dates are not listed in that table and therefore, Ld. CIT(A) on perusing the seized material to link it with the dates to ascertain whether they were received before 01-06-2015 or after. The table on page of the order by the Addl. DIT is reproduced below with the addition of dates extracted from the seized material; Sr. No. Name of person Amount Date from page 71A of Ann. AS-1 1 Shri B. S. Gupta 10000000 01.04.2....
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....see. Thus, it is beyond doubt that Pg 71A (PB 1) relate to amount received against Ramgarh land. 2. It is submitted that as per section 292C it is presumed that the contents of the books of accounts and other documents found in the possession or control of any person in the course of search are true. Therefore, when the paper clearly indicates that the amount is received against the land at Ramgarh, the same cannot be considered as loan or advance in as much as any sum of money received as advance in relation to transfer of immovable property, whether or not the transfer takes place is also roped in the ambit of section 269SS only from 01.06.2015. Therefore, amount received by the assessee as advance in relation to transfer of immovable property is not covered by section 269SS prior to 01.06.2015 and hence, Ld. CIT(A) has rightly deleted the levy of penalty. 3. Without prejudice to above, it is submitted that AO has considered the sum received by the assessee against Ramgarh land as unexplained cash loan and made addition for the same u/s 68 of the Act. Thus, once the sum so received is considered as undisclosed income, the same cannot be at the same time be treat....
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.... 246 ITR 571 (Del) (HC) Para 22 of the decision reads as under: "22. The record of the proceedings shows that the AO had discarded the theory of the assessee having taken any loan. He accepted the surrender of the amount as income of the assessee. It was open to the AO not to accept the surrender, treat the amount as loan and then petitioner liable to penalty under s. 271D for noncompliance with s. 269SS. The AO cannot be hold the permitted to treat the amount of loan as income for the purpose of assessing tax thereon while framing the assessment and at the same time to treat it as a loan for the purpose of s. 269SS read with s. 271D and subject the transaction to penalty. Such proceedings would be self contradictory. For non-compliance with the provisions of s. 269SS, the genuineness of the transaction as loan was doubted by the AO and so the amount was surrendered by the assessee. The surrender was accepted by the AO as income of the assessee. It ceased be a loan and, therefore, the very foundation for initiating the proceedings for and levying penalty under s. 271D was lost." CIT VS. Standard Brands Ltd. 285 ITR 295 (Del.) (HC) Para 8 & 9 of the decision reads ....
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....icultural land owned by the assessee. During the course of the assessment proceeding the assessee contended that as regards the details of all six persons from whom such advance against sale of agricultural land was received, it is submitted that such advances were received through broker(s) in open market, which is a normal and prevailing practice. All the transactions have been entered through broker. The names of all theses persons have been given by the broker(s). At present, the brokers are not in touch with the assessee. This written submission of the assessee is in accordance with the seized material found during the course of search and assessee has accepted the facts stated in that paper and once the assessing officer has considered the holding of the land, details of the amount received as advance for the sale of agricultural land all the details and facts arising out of the seized documents support the contention raised by the AR of the assessee and on the contrary department has not challenged this basic arguments of the assessee that he has received the money as on account of sale of agricultural land. Till the date of transaction of advance received by the assessee th....
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....e of the person making the payment and the name of the broker already written on the face of the page seized. The content of this page is also explained in the statement recorded at the time of search and in the absence of the contrary finding available on record the evidence placed before us cannot be ignored and a side and decide the issue ignoring this important document found at the time of search. The Ld. Assessing officer expressed his doubt that when the land is disputed how one can enter into sale agreement with these number of persons and that substantial amount has been given knowing to the fact the land is under disputes. On this issue the Ld. AR of the assessee stated that the law neither restricts a person from selling a land in case of family disputes nor objects receipt of advance from buyers and thus the doubt of the Ld. AO has no merits. The Ld. AR draw our attention to the fact that the Ld. AO does not accept the money in relation to land on page 71A but when the explanation of page 88,89,90 and 91 renewal of this advances and accepted the amount is received with the name of the broker is written. This being the amount reflected on this page 71A. Thus, the version....