2014 (10) TMI 1058

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.... Rs. 5,10,00,000/- on account of loans received from Geojit Credits Pvt. Ltd. by book entries and Rs.3,70,000/- on account of various deposits received allegedly by way of book entries. From the following transactions it was seen that they were not made by account payee cheques/bank drafts but were made by way of book entries: Sl. No. Name of the party from whom loan/deposit accepted Amount accepted as commission (Rs.) 1. M/s. Amiant Stock Management Consultants P. Ltd. 75,010 2. M/s. Madura Capital Services P. Ltd. 6,00,000 3. M/s. Fresh Capital Market Services 1,60,000 4. Mr. Linesh 1,00,000 5. Mr. Balasubramanian J. 1,50,000   Total 10,85,010   Sl. No. Ledger Folio No. Cheque No. Date Amount 1. 57 191212 22.10.2007 7,00,00,000 2. 61 191106 07.11.2007 7,50,00,000 3. 64 191121 22.11.2007 6,00,00,000 4. 71 191181 18.12.2007 5,00,00,000 Total 25,50,00,000   Sl.No. Name of the Party Amount 1. M/s. Madura Capital Market Services Pvt. Ltd. 13,00,000 2. ZMr. Amit Kumar Vini Bhai Patel 1,50,000 3....

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....s. Being so, the CIT(A) confirmed the levy of penalty u/s. 271D of the Act of Rs. 2,17,002/- being 20% of Rs.10,85,010/- made by the Assessing officer. 6. Regarding the deposits received through other than account payee cheques/bank drafts at Rs.18,50,000/-, after examining the bank certificates furnished before the Assessing officer, the CIT(A) noticed that transactions of M/s. Madura Capital Market Services Pvt. Ltd. and Mr. Vishal M. Kapadia at Rs.4,00,00/- were not by account payee cheques. Also for M/s. Padinjarathala Securities Ltd. only part of the transaction amounting to Rs.1,61,793/- was by account payee cheque out of Rs.3,11,793/-. According to the CIT(A), deposits of Rs.13 lakhs from M/s. Madura Capital Services Pvt. Ltd., Rs.4 lakhs from Mr. Vishal M. Kapadia and Rs.1,50,000/- from M/s. Padinjrathala Securities Ltd. whereby payments other than account payee cheques. Hence, he confirmed the levy of penalty @20% on Rs. 18,50,000/-, 1.e., Rs.3,70,000/-. Against this, the assessee is in appeal before us. 7. Regarding second set of deposits related to loan repayment from M/s. Geojit Credits Pvt. Ltd. amounting to Rs.25,50,00,000/-, it was submitted before the CIT(A....

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....he I.T. Act, so as to invite the rigour of the penal provision of S.271D of the Act. It is the case of the Department that the assessee has accepted cash loan in contravention of the provisions under S.269SS. It was also submitted that the CIT(A) admitted additional evidence and adjudicated the issue without calling for remand report from the Assessing officer which is violation of Rule 46A of the I.T. Rules. Whereas the assessee's consistent stand has been that there was no cash loan, and whatever has happened was only by way of journal entries in the books of the assessee in respect of various transactions relating to the assessee and the various parties. Further it was submitted that the certificate collected from Axis Bank shows that substantial payments were made by way of account payee cheque, being so, the provisions of sec. 271D cannot be applied. The claim of the assessee that there was no cash flow between the assessee and various parties and whatever happened was only by way of passing of journal entries in the books of the assessee needs to be verified from the records of the assessee-firm. However, from the records available before us, we are not able to decide the iss....

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....que Nos. 191212, 191106, 191121 and 191181. Without examining the copy of cheques physically, she deleted the penalty which is not proper. In our opinion, it is just and proper to remit the entire issue to the file of the Assessing officer to conduct necessary enquiry and the assessee has to produce necessary evidence in support of its claim and if the assessee fails to produce the necessary evidence, the Assessing officer is at liberty to take adverse inference and decide accordingly. 11. In the result, both the assessee and the revenue appeals are partly allowed for statistical purposes. 12. Coming to the levy of penalty u/s. 271E of the Act in I.T.A. No. 185/Coch/2014 and in I.T.A. No. 217/Coch/2014, the brief facts are that during the course of assessment proceedings, the Assessing officer imposed penalty of Rs.2,29,531/- on account of amounts paid as commission by way of book entries and penalty of Rs.5,10,00,000/- on account of repayment of loan to Geojit Credits Pvt. Ltd. by book entries and Rs. 2,36,165/- on account of various payments made to parties by way of book entries. The Assessing officer made these additions as in the following transactions it was seen that t....

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....de to adjust security deposit against commission from various companies that all the payments of commission were accepted by way of book entries. The CIT(A) observed that the parties involved are franchisees of the assessee who are supposed to maintain certain minimum security deposit with the assessee having regard to the total volume of business undertaken by them and as per the franchisee agreement, the assessee has to pay commission to these agents. According to the CIT(A), this commission is transferred by way of book entries by debiting the commission payable account and crediting security deposit accounts concerned, after deduction of applicable tax at source. The CIT(A) further observed that since these transactions are going in the security deposit account, they cannot be treated as commission payments exclusively and they are in the nature of deposits to be maintained by the franchisees. Being so, the CIT(A) confirmed the levy of penalty u/s. 271E of the Act of Rs. 2,29,531/- being 20% of Rs.11,47,665/- made by the Assessing officer. 15. Regarding second set of deposits related to loan repayment from M/s. Geojit Credits Pvt. Ltd. amounting to Rs.25,50,00,000/-, it was ....