TaxTMI 
TaxTMI 
2024 (2) TMI 577
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the penalty u/s 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Pvt. Ltd. before the Hon'ble Settlement Commission it is evident that M/s Spaze Tower Pvt. 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 Ld. CIT (A)has erred in deleting the penalty relying on the order of the Hon'ble ITAT wherein it was held that since M/s 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 affirmed 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. 52.74 crs (app) under the head of construction expenses apart from another surrender of Rs. 30.00 lacs and thereby suppressed the profits by Rs. 53.04 cr (app). The applicant used to pay to the said Vendors towards the inflated purchases in question by account payee cheques and the applicant used to get cash after deducting nominal charges as stated in detail in SOF. Para 2.2.1 to para ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 69-2000. 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 3 lakhs is undisclosed income in the hands of the assessed and at the same time seek to initiate proceedings against the assessed for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000. 8. The revenue, having taken the stand that the income was undisclosed income in the hands of the assessed, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal." 22. Similar view was take....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hi 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 where the amount was undisclosed income in the hands of the assessee, it could not resort to proceedings under Section 269SS r/w Section 271D of the Act. Accordingly, the issue is decided in favour of the assessee and the order of the CIT(A) is confirmed and the ground of appeal of the Revenue is dismissed." 25. The aforesaid decisions are squarely applicable to the facts of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oters 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 ITR 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 Court in the case of Kum. A.B. Shanthi 255 ITR 258 has held that the object of introducing the provisions of section 269SS of the Act is to ensure that the tax payer is not allowed to give false explanation for his unaccounted money. 33. In the present cases, there is no dispute about the sources of money wherefrom the expenditure had been incurred which has already suffered ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. 5. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said notice, the respondent filed his return of income for the assessment year 2015-2016 declaring an income of Rs. 94,11,350/-. The assessment of the case of the respondent, under section 153 (1) (B) was completed on 26-12-2017 (A-1) and the Assessing Officer made the following additions in the returned income:- "1. Addition of Rs. 3,00,000/- on account of cash receipts from M/s Spaze Towers Pvt. Ltd to meet personal household expenses. 2. Addition of Rs. 45,91,675/- on account of unrecorded investment in gold and diamonds. 3. Addition of Rs. 75,00,000/- on account of unrecorded expenses on a marriage function of the daughter of the respondent during the year." 3. Feeling aggrieved, the respondent preferred an appeal before the CIT (A), who vide order dated 20-8-2018 (A-2) confirmed addition of Rs. 5,91,675/- out of total addition of Rs. 45,91,675/- and deleted all other additions amounting to Rs. 1,18,00,000/-. In this order, it has further been held that for the same assessment year, Spaze Towers Pvt. Ltd had approached the learned Settlement Commission on 30-11-2016 and made disclosure of income and also disclosed that on various occasions, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000/-. The Revenue having taken the stand that the income was undisclosed income in the hands of the assessee, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal. 9. Reference at this stage can further be made to judgment of Hon'ble Delhi High Court in a case of CIT v. R.P. Singh & Co. (P.) Ltd. [2012] 21 taxmann.com 50/340 ITR 217 wherein the appeal of the revenue was dismissed and the operative para of the judgment reads as under:- "Mr. Kochhar, learned counsel for the assessee, submitted that the said question does not arise in the case at hand inasmuch as both the Commissioner of Income-tax (Appeals) and the Tribunal have recorded a finding that once the Assessing Officer has treated it as undisclosed income, it could not have proceeded on the foundation that it is a deposit. In our considered opinion, this submission canvassed by Mr. Kochar has substantial force and the question raised by the Revenue really does not a....