TaxTMI 
TaxTMI 
2023 (9) TMI 1213
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.... said sum of Rs. 75.00.000/- as specified sum on facts and in the circumstances of the case. 4. The Ld.CIT(A) erred in law as conclusion on the appeal against the assessment order u/s. 153A of the IT Act and the appeal against penalty u/s 271D of the Act is conflicting in nature. 5. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary." 3. Facts of the case, in brief, are that the Assessing Officer, during the course of assessment proceedings, noticed that the assessee was in receipt of monies by ways other than on account payee cheque or through drafts or use of electronic clearing system which were received from Shri Balakrishna Goud, Managing Partner of M/s. Bharat Engineering Enterprises as an advance of sale consideration of land. In this case, Police Authorities have recovered an amount of Rs. 75,00,000/- in theft case from one Mr. Ravi Kumar. On investigation, it has come to light that the amount was stolen from the residence of the assessee. In the statement recorded by Inspector of Police, Pet Basheerbad P.S on 17/11/2018, the assessee stated that cash of Rs. 75,00,000/- was received by him on a/c of s....
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....rlier by such person from the depositor is (whether remaining has fallen due or not), the amount or the aggregate 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; 6.1 Section 2695S specifies the mode of taking or accepting certain loans, deposits and specified sum. It states that no person shall take or accept from any other person, any loan or deposit or any specific sum other than by account payee cheque or account payee bank draft or through the use of electronic clearing system through a bank acro The question now is, whether the Department can, on the one hand contend that the cash received is undisclosed income in the hands of the appellant and at the same time seek to initiate proceedings against the appellant for violation of the provisions of Section 26955 of the Act by treating it as was 'specified sum'? This question answered by the Hon'ble High Court of Delhi CIT VS. R.P. Singh and Co., Put. Ltd. (2012) 340 ITR 217 (pel). The relevant extract of the ratio is. reproduced below: "5....
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....me, it no longer takes the character of loans, deposits and specified sum for the Department to invoke penalty provisions u/s 269SS r.w.s. 271D of the I.T. Act. Respectfully following the decision of the Hon'ble Delhi High Court cited (Supra), it is held that the penalty of Rs. 75,00,000/- levied by the Addl. Commissioner of Income Tax, Central Range-2, Hyderabad does not sustain and is directed to be deleted. Accordingly, the Ground No. 1 of appeal is allowed. Since the appellant succeeded on the legal issue, there is no need to adjudicate the remaining grounds of appeal which deal with the procedural aspects of the penalty. Hence, they are not adjudicated." 7. It was submitted that the amount which was stolen from the premises of the assessee was treated as explained by the learned CIT (A) in the quantum assessment proceedings, then the said amount had acquired the status of "specified sum" within the meaning of section 271D r.w.s. 269SS of the Act. He had also relied upon the Board Circular No. 220 (F.No.206/17/76 IT(A-II) dated 31.05.1977 to buttress the argument. 8. Per contra, the learned AR had made threefold submissions that the learned CIT (A) in the qua....
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....ived and the time for payment of balance sale consideration and signatures of two witnesses in addition to the purchaser and seller on a revenue stamp which in itself is an enforceable agreement as there were revenue stamps and witnesses to the agreement. Therefore, in the present case, this cash receipt can be treated as an agreement of sale between the appellant and the purchaser. 5.5.2 Further, the sources for cash of Rs. 75 lakhs belong to Shri B. Balakrishna Goud as mentioned in the cash receipt and also accepted by both the appellant and Shri B. Balakrishna Goud in the statements recorded before the Department. This was also stated before the police and the Court/Metropolitan Magistrate who in turn enquired about the application of Section 194A of the Act. Also, the sale consideration mentioned in the final Sale deed No. 5408/2019 is same as was agreed in the argument of sale mentioned in the cash receipt. Therefore, the AO's contention that the amount paid at the time of agreement was not mentioned in the sale deed as the basis for addition cannot sustain as the sale agreement would not be valid if the sale deed is conditional to repayment of the cash advance. B....
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.... j) Hon'ble Gujarat High Court in the case of Aryan Arcade Ltd vs. DCIT (1997) 92 Taxmann 534 k) Hon'ble Supreme Court in the case of Andhra Bank Ltd vs. CIT (1997) 9. It was submitted that the source of cash of Rs. 75.00 lakhs was duly explained by the assessee in the quantum appeal and on the basis of that the learned CIT (A) had deleted the addition of Rs. 75.00 lakhs. 10. Further, the learned Counsel for the assessee drew the attention of the Bench to the assessment order for the year 2019-20 wherein the Assessing Officer has not recorded any satisfaction in the assessment order on the basis of which it can be inferred that penalty can be initiated u/s 271D of the Act. He also drew the attention of the Bench to Para 4.3 in Page 5 of the assessment order of the Assessing Officer. The learned AR had also drew the attention of the Bench to the decision of the Hon'ble Supreme Court in the case of Jayalakshmi Rice Mills Ltd reported in 64 Taxman wherein the Hon'ble Supreme Court had deleted the penalty as there was no satisfaction was recorded by the Assessing Officer. 11. He had also relied upon the decision of the Hon'ble Delhi High C....
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....n the absence of the same, the submission of the assessee is rejected as an afterthought and unsubstantiated. Since, both the payer and payee in transaction possessed valid operational bank accounts, no reasonable cause has been demonstrated for receiving the monies outside the banking channels. Moreover, the assessee could not substantiate the unavoidable circumstances/bonafide reasons under which it accepted the cash more than Rs. 20,000/-, otherwise than by an account payee cheque or account payee draft or use of electronic clearing system through a bank account". 14. It may be relevant to note here that the Coordinate Bench of the Tribunal in the case of Raja Reddy Nalla vs. Addl. CIT in ITA Nos. 520 & 522/Hyd/2022 dated 31/05/2023 while deciding an identical issue had observed as under: "12. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case levied penalty of Rs. 40.00 lakhs u/s 271D of the I.T. Act on the ground that the assessee has violated t....
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....of income filed by the petitioner was accepted by the assessing officer and accordingly, the total income was assessed. In the return of income, petitioner had admitted receiving total income of Rs. 80,84,180.00 which was also accepted by the assessing officer. 16. Subsequently, respondent No. 1 took the view that petitioner had sold immovable properties for a total sale consideration of Rs. 92,13,000.00 out of which he had accepted cash to the tune of Rs. 87,80,000.00 which was in violation of Section 269SS of the Act, attracting penalty under Section 271D of the Act. 17. Before we advert to the reply submitted by the petitioner, we may mention that under Section 269SS of the Act, no person shall take or accept from any other person (referred to as a depositor) any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if the amount of such loan or deposit or specified sum is twenty thousand rupees or more. However, as per the first proviso, the rigor of Section 269SS is not applicable to the G....
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....with the provisions of section 269T. 271E. [(1)] If a person repays any [loan or] deposit [or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit [or specified advance] so repaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 21. Thus, sub-section (1) of Section 271E of the Act provides that if a person repays any loan or deposit or specified advance referred to in Section 269T of the Act otherwise than in accordance with the provisions of that section, he shall be liable to pay by way of penalty a sum equal to the amount of the loan or deposit or specified advance so repaid. Sub-section (2) clarifies that any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 22. From an analysis of Sections 271D and 271E of the Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attracted on a person accepting loan or deposit or specified sum in contravention of Se....
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....made to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act. However, this aspect of the matter was not considered by respondent No. 1 while passing the impugned order. Respondent No. 1 relying upon the Kerala High Court decision in Grihalaxmi Vision (2 supra) noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data Ltd. wherein it was observed that assessing officer has to satisfy himself as to whether penalty proceedings should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No. 1 imposed the penalty under Section 271D of the Act. 25. We are afraid respondent No. 1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). In the said decision as extracted above, Supreme Court had concurred with the view taken by the High Court holding that satisfaction must be recorded i....