TaxTMI 
TaxTMI 
2025 (6) TMI 400
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....2 of the Act which indicated that the assessee had actually taken on money of Rs. 1.37.73,000/- in cash during the F.Y. 2018-19 and provisions of section 269SS are clearly attracted before arriving at a conclusion that AO could not corroborate the same by bringing any material on record which proves that the amount mentioned in the diary is received during the year. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in not appreciating the facts that the assessee company does not have any reasonable and satisfactory explanation which shows that no penalty u/s 271D of the Act can be levied in this case. 4. On the facts and in the circumstances of the case and in law, the Ed. CTI (A) has erred in holding that section 269SS of the LT. Act 1961 is a deeming provision, hence not applicable in this case. 5. The appellant craves leave to add, alter modify, delete and amend any of the grounds, as per the circumstances of the case." 3. Brief facts of the case as culled out from the records are that the assessee is a limited company, engaged in the business of construction and property development since last many years. A ....
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....e the alleged sum received for providing additional amenities, there is no violation of provisions of sec. 269SS of the Act, and, therefore, no penalty is leviable. However, Ld.AO was not satisfied with these submissions and levied penalty of Rs. 1,37,73,000/- u/s. 271D r.w.s. 269SS of the Act observing as follows:- "5.4 From the above analysis it is crystal clear that 269SS of the I.T. Act is not a deeming provision and it is relevant to mention here that amount received more than 20,000/- cash mode in relation to transfer of immovable property whether or not transfer taken place the same is covered under Specified Sum as mentioned in Section 269SS. In this case, the assessee company has accepted cash more than 20,000/- in respect of sale of immovable property from customer in violation of Section 269SS of the Income Tax Act, 1961. 5.5 The extra amount received by the assessee company over and above the sale consideration in only in connection with the row house. The charges recovered from customer are incidental to the sale of immovable property such as additional amenities. The amount received by assessee in cash having direct nexus with sale consideration and ....
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....eveloper makes similar type of construction for all of its customers, but sometimes, the customers want some modification/additional requirements like size of the rooms, quality of tiles and sanitary wears, flooring etc. and for such additional requirements, which are not part of regular deal of sale of immovable property, the builder/developer charges extra amount and the alleged amount of Rs. 1,37,73,000/- was for the very same purpose for providing additional amenities/requirements to the customers based on their specific request. The Ld.CIT(A) was satisfied with these contentions and deleted the impugned penalty u/s. 271D of the Act observing that the assessee had not violated the provisions of sec. 269SS of the Act. 6. Aggrieved, the Revenue is in appeal before this Tribunal. 7. Ld.DR vehemently argued supporting the observations of the AO in the penalty order u/s. 271D of the Act. 8. On the other hand, learned counsel for the assessee supported the order of the Ld.CIT(A) and referred to the following written submissions:- "1. BACKGROUND 1.1 The Assessee is a company formed under the Companion Act, 1956, and is in the business of construction and pro....
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....nt nor it is envisaged at that stage. It has no direct nexus with the sale consideration. Such additional work is undertaken strictly for and on behalf of the customer, and is in the nature of reimbursement of the cost incurred for such additional work so undertaken on his behalf. 2.5 The management generally is not directly involved for such extra amenities. Such work is generally undertaken by the contractor at the site directly. For this purpose, a diary is maintained, which is kept in the office of the builder with an employee for ready reference. 3. THE SEARCH OPERATION 3.1 In the morning hours of 21.08.2018, a search and seizure operations were carried out against Tapadia Group at Aurangabad, which covered the Assessee. The search lasted for four consecutive days and was concluded on 24.08.2018 at 10:45 pm. 3.2 In course of the search, a diary was seized (Annexure A, Item No. 3), which included two pages in which certain details concerning 12 rowhouse purchasers were jotted down. The entries were not made by the any of the management personal, nor the diary was found within the control and possession of the management. The details were jott....
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.... The effect of the disease is that it slowly damages the neurons of the brain. More particularly, during the period of search proceedings, Mr. Tapadia was unable to walk and was having difficulties in swallowing and speaking. 5.3 Some of the relevant aspects of the statement are as under: (i) Mr.Tapadia gave satisfactory explanation to various queries. (ii) No discrepancy in the accounts was noticed. No unaccounted asset in the form of cash or other assets was found. (iii) No incriminatory material was found. It was only that Mr. Tapadia was compelled to offer alleged undisclosed income with respective to two documents/loose papers, which two disclosures were purely to buy peace and to avoid litigation. (iv) As far as the present appeal is concerned, the relevant question and answer are Q & A 12. In this answer, the director surrendered Rs. 1,37,73,000/-towards provision of additional amenities. A very important aspect is that, additionally, independently, he also disclosed Rs. 1,07,85,000/-, being 30% of the total sale consideration on account of profit of 12 rowhouses, over and above the agreement values. As such, these two disclosures....
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.... of additional amenities was credited independently to profit and loss account under the head "Amenities charges received". 6.2 The return of income was filed on 02.10.2019, which included the amount so surrendered. 7. ASSESSMENT PROCEEDING 7.1 In course of the assessment proceeding, the Assessee placed on record all the relevant documents and explanations to the satisfaction of the assessing officer ['A.O.']. Admittedly, there was full and proper compliance by the Assessee to all notices and requirements of the A.O., which is evident from the fact that the provisions of section 144 were not invoked, which would have been the case had there been any non-compliance. 7.2 The A.O. passed assessment order on 04.06.2021 u/s 143 (3) of the Act, accepting the returned income, except for making a petty disallowance of Rs. 72,665/- out of the depreciation claimed. (Refer: Pages 32 to 35) 7.3 Very significantly, the books of accounts and the book result have not been rejected. This is very crucial because, as pointed out at para 6.1 above, the surrender in the form of extra amenities was distinct than the surrender towards extra profit fro....
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.... (v) Without prejudice, assuming but not admitting that the Assessee had received any cash during the year, the alleged receipt was merely for providing additional amenities to the customers, in terms of the very statement being relied upon by the A.O. The amenities were not related to the transfer of the rowhouse but were to satisfy the demand of the customers for getting best possible amenities. The same was not mandatory but optional. (vi) Generally, the work for additional amenities start after the maximum amount of the consideration is made. The amenities were different for different customers, depending upon the requirement of the customers. (vii) Without prejudice, even the diary shows that the entire sum of Rs. 137 lacs were not received. paid. In fact, amount of Rs. 70.01 lacs was not received at all by the Assessee. (viii) Without prejudice, the levy of penalty u/s 271D is discretionary. The customers insisted upon accepting cash payment towards providing of the additional amenities. In terms of the provisions of section 273B, the Assessee had reasonable cause for accepting the cash from its customers. 8.2 Pertinently, the A.O. ha....
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....per agency to get such additional work done -individually and on their own. On the other hand, logistically and economically, they find more feasible and convenient to seek assistance of the already available facilities existing at the site to get such additional work done. It is only as per such specific request and demand of such customers that such additional work in the form of extra services of interior is undertaken at the site by using the existing facilities. 6. However, the fact remains that such additional amenities are desired only by few, and not by all. Such additional work is only qua a particular customer, undertaken strictly as per his/her personal choice. It is not a part of the flat/ rowhouse agreed to be transferred by the builder and the consideration agreed to be paid by the buyer. Such work is totally independent to the main agreement to transfer the flat; neither such work is a part of the agreement /negotiation at the time of entering into the agreement nor it is envisaged at that stage. It has no direct nexus with the sale consideration. 7. Even in the Assessee's case, only 12 customers, who were desirous of having such additional work....
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....s/documents were seized and inventorised as Annexure-A wherein notings suggested that the appellant company has received on money of Rs. 1,37,73,000/- from the customers. During the course of statement of Shri Jugalkishore C. Tapadia u/s 132(4) on 24.08.2018 vide question No. 12, he was asked to explain on money received of Rs. 1,37,73,000/-. In reply, Shri Tapadia stated that amount of Rs. 1,37,73,000/- had been received by the appellant over and above the agreement to sale value, for provision of additional amenities in the project 'Flora Phase-I' and therefore, to buy peace of mind and not to enter into protracted litigation he was offering amount of Rs 1,37,73,000/- as additional income in the hands of the appellant company for AY 2019-20. Total disclosure of Rs. 3,02,02,990/- including the amount of Rs 1,37,73,000/- was made in the hands of the appellant company for the year under consideration. The AO accepted the additional income offered by the appellant including of Rs. 1,37,73,000/- on account of additional money received from the customers According to the AO, the appellant had taken an amount more than two lakh rupees from persons otherwise than by an account pa....
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....ept from any other person any loan or deposit exceeding Rs. 20,000/- or more otherwise than by an account payee cheques or an account payee bank draft. In the present case, the appellant being the company has accepted deposits in cash exceeding 20,000/- from its customers which was prohibited under the provisions of section 269SS of the Act. During the course of search a diary was seized which contained some entries of amounts received from the customers. Director of the Appellant was asked to explain the notings in the diary. According to the appellant, the director of the appellant company, to buy peace of mind, declared an amount of Rs. 1,37,73,000/- as cash received for providing additional amenities to the customers. Just to avoid the litigation and not to distract the focus from the business the appellant declared the said amount as income. In the present case, it was only under peculiar circumstances that the appellant had surrendered the amount as income just to buy peace and avoid litigation. The diary does not specify the year for which the alleged transactions have been recorded. Moreover, the notings in the diary themselves suggest that the declaration was not based on ....
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....accepted by the search party as well as the Ld. AO during penalty proceedings. Therefore, this fact is undisputed 5.5 However, the Ld. AO while passing the penalty order has stated that the extra charges recovered from the customers are in respect of additional amenities and are, therefore, incidental to the sale of immovable property. The amount received by the appellant in cash is having direct nexus with sale consideration and the same has been received in violation of Section 269SS. Further, the Ld. AO placed reliance on the Explanation to section 1941A defining the term 'consideration for transfer of any immovable property' which includes all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges or similar nature, which is incidental to transfer of the immovable property. On this basis, the Ld. AO concluded that incidental charges recovered from customer are in relation with sale of immovable property and the same covered u/s 269SS of the Act. On this basis the Ld. AO levied the penalty. 5.6 However, the appellant has submitted that Section 269SS of the Act i....
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....earch carried-out u/s. 132 of the Act at the premises of the assessee on 21/08/2018, certain loose papers/ documents were seized along with a small diary maintained with the Accountant containing certain entries. Based on the contents of the diary, the amount was arrived by the Revenue authorities, which was total of some entries amounting to Rs. 1,37,73,000/-. When the assessee was confronted during the course of search proceedings about the alleged sum, it was specifically stated that this amount has been received towards provisions of additional amenities in one of the projects undertaken by the assessee and received from respective customers. It was also stated that the expenses has already been accounted for in the regular books of accounts. Further, the assessee offered an amount of Rs. 2,45,58,000/- as undisclosed income which compressed of 30% of the sale consideration of row houses totaling to Rs. 3,59,50,000/- and Rs. 1,37,73,000/- as additional amount received. 12. Now, in the instant appeal, we are only concerned with the sum of Rs. 1,37,73,000/- which the Ld.AO has observed that assessee has received the said sum in cash against the transfer of immovable properties ....
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....posit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act: ^90[Provided also that the provisions of this section shall have effect, as if for the words "twenty thousand rupees", the words "two lakh rupees" had been substituted in the case of any deposit or loan where,-- (a) such deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member; or (b) such loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member.] Explanation.-For the purposes of this section,- (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; [(ii) "co-operative bank", "primary agricultural credit society" and "primary co-op....
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....tion,- (a) "agricultural land" means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (aa) "consideration for transfer of any immovable property" shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property; (b) "immovable property" means any land (other than agricultural land) or any building or part of a building; (c) "stamp duty value" shall have the same meaning as assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56. 14. We note that the seized diary based on which the amount of Rs. 1,37,73,000/- has been arrived by the search team, the Ld.CIT(A) has made a detailed discussion in para 5.4 of the impugned order wherein the Ld.CIT(A) has observed that the notings in the diary themselves suggests that the declaration was not based on any actual amounts received because the entries in diary are itself inconsistent with the ....
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....ve consideration in cash over and above the agreed sale consideration for transfer of immovable property in the form of row house in absence of any material found during the course of search. Same is the situation for all the row houses allotted to 12 customers, the reference of which is available in the seized diary. Under these given facts, it can be safely concluded that no specific sum as referred in section 269SS of the Act has been received in any mode otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system against transfer of immovable property. The specified sum in sec. 269SS of the Act is defined to include 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. Since the facts placed before us, clearly demonstrates that the alleged sum of Rs. 1,37,73,000/- is received over and above the agreed sale consideration of row house for additional work relating to interior and other finishing work as per the choice of the customer and the total consideration for transfer of the immovable property in the form of row houses has been rec....