TaxTMI 
TaxTMI 
2023 (6) TMI 723
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....e funds flow submitted by Ms Spaze Tower Put. Ltd. before the Hon'ble Settlement Commission it is evident that Ms Spaze Tower Put. Ltd. had discharged the liabilities of the assessee by making payments in cash which is violation of the provisions of section 269SS of the Act. iii) Whether on the facts and in the circumstances of the case, the Id. CIT(A)has erred in deleting the penalty relying on the order of the Hon'ble ITAT wherein it was held that since Ms Spaze Towers Pvt. Ltd. incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by them but the same cannot be construed as loan or deposit despite admission of the assessee before the CIT(A) in quantum appellate proceedings that these cash transactions were made between two separate entities on returnable basis as loan deposits in violation of the provisions of section 269SS of the Act. iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty relying on the order of the Hon'ble ITAT wherein it was held that penalty us 271D is without any satisfaction and therefore, no such penalty can b....
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....he same may kindly be upheld. 5. On careful consideration of above submission first of all, we note that the ld. CIT(A) has granted relief to the assessee by considering the submissions of assessee noted in para 7 and with following observations and findings:- 8. Decision:- For the cases under consideration in this common appellate order. On perusal of the Fund Flow Statement submitted before Hon'ble ITSC, it was revealed that M/s Spaze Towers Pvt. Ltd. has provided cash funds to the appellant(s) as discussed in the penalty order(s) u/s. 271D of the Act as hereunder:- Sr.No Name of the appellant A.Y. Particulars Payments/expenditure Penalty u/s 271D Imposed (i) Shri Aman Sharma 2016-17 Personal household expense (additional) in cash and unrecorded investment in diamond solitaire Rs. 16,66,833/- (actually Rs. 83,00,000/- as given in grounds of appeal) Rs. 16,66,833/- (actually Rs. 83,00.000/- as given in ground of appeal) (ii) Shri Bharat Bhushan Kumar 2016-17 Unaccounted Investment in jewellery and unaccounted cash seized Rs. 1,85,00,000/- Rs. 1,85,00,000/- (iii) Shri Deepak Kumar 2016-17 Unaccou....
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....e telescoping of personal expenses of the promoters/ directors aggregating to Rs. 16.43 crores. The relevant findings of the Settlement Commission read as under: "An action of Search / Survey was conducted on applicant us 132 of the Income Tax Act, 1962 (Act) on 17.02.2016. The applicant submitted letter d. 11.3.2016 to Ld DDIT-Investigation Unit-Ill, Gurgaon (even well before receiving copies of seized documents), Stating the discrepancies in records totaling to Rs. 81.00 crs. (and not undisclosed income or surrender as stated in the rule-9 report by Ld Pr CIT). It is respectfully submitted that the applicant has addressed and considered each and every 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 is 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.....
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....ually true that prior to this decision of the Id. CIT(A), the Assessing Officer never took a view that the impugned telescoped expenses incurred by M/s Spaze Towers Put Ltd was in fact, loan/deposit given by the said company to the promoters/directors. 20. Dehors the fate of quantum additions, the Assessing Officer cannot treat the same amount as income of the appellants as well as loans/deposits in the hands of the appellants. 21. The Hon'ble Delhi High Court in the case of Standard Brands Ltd [supra] held as under: "6. Against the order dated 6-9-2000, the revenue preferred an appeal before the Income Tax Appellate Tribunal. By an order dated 6-10-2004, the Tribunal (in paragraph 9 of the 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....
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....Departmental Representative. He submitted that the amount of Rs. 15 lakhs was assessed by the A0 as undisclosed income of the assessee for the block period of the assessee and therefore, the provision of Section 269SS of the IT Act, 1961 does not apply to the facts of the case. He submitted that the issue is covered in favour of the assessee with the decision of the Hon'ble Delhi High Court CIT v. Standard Brands Ltd. (2006) 204 CTR (Del) 48 : (2006) 285 ITR 295 (Del). 4. We have considered the rival submissions. We find that it is not a case of regular assessment of the assessee. The block assessment of undisclosed income for the block period was framed by the AO and the amount of Rs. 15 lakhs was added as undisclosed income of the assessee for the financial year 1998-99. 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 wh....
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....he assessee which is evident from the appellate proceedings in respect of the quantum additions. This also clearly shows that the Assessing Officer was not sure whether Spaze Towers has given any cash loan to the promoters/directors. Since Spaze Towers incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by the directors/promoters but the same cannot be construed as loan or deposit within the framework of section 269SS of the Act. 30. Considering the facts in totality, in our considered opinion the transaction is devoid of any lender - borrower relationship. In other words, the amount which is the subject matter of consideration in the present cases is out of tax paid from income/disclosed sources of Spaze Towers. 31. The Hon'ble Karnataka High Court in the case of Chamundi Granite 239 IT 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 C....
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....er in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee. 4. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. 4. The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction rec....