TaxTMI 
TaxTMI 
2025 (10) TMI 21
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....y the A.O. u/s 271DA of the Act by holding that there was violation of Sec. 269ST of the Act in respect of impugned amount. 2. The learned Commissioner of Income-tax (Appeals), Income Tax Department NFAC, Delhi failed to appreciate that the impugned amount of Rs. 3,00,000/- was a security deposit received in cash to which Sec. 269ST did not apply. 3. The learned Commissioner of Income-tax (Appeals), Income Tax Department NFAC, Delhi further failed to appreciate that no penalty proceedings were initiated during any of the proceedings in case of Appellant - society and that order passed u/s. 271DA is bad in law. 4. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime upto the hearing of this appeal." ITA No. 183/Rjt/2023 for A.Y. 2018-19 is taking as a lead case 3. The brief facts of the case are that the assessee is a registered cooperative society, engaged in manufacturing unit in milk and milk products named as "Amul Pattern". A registered Co-operative Society and part of government sponsored milk system. It collects milk from its member's societies who, in turn collect from individual cattle owners process the ....
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....ntial Commodities Act, 1955, under which the Govt., of India has also notified the Milk and Milk Product Order, 1992 "in the interests of the general public", under which the Appellant is duly registered. Being a perishable by nature as also an item of an essential item of daily consumption on wholesale as well as retail sale, the very nature of business require so highly time-bound, daily, and uninterrupted scheduling of collection, transportation, processing, supply, sale and sale realization. Industry practices and Situational exigencies are also to be respected and provided for while arranging the chain of business transactions. Books of account are audited appeals raised sale invoice at point buyers and time of supply of milk and milk products on daily basis, and each is based on different buyers on same day. Cash amount received which does not exist of Rs. 2,00,000 on each transaction and the same is disposal in bank. Ld. AO did not accept the reply of the appellant and proceed in Penalty u/s. 271DA of the Act. However, Ld. AO/NFAC, however, has held that the cash collection in the year per buyer exceeded Rs. 2,00,000/- per event or occasion because each work contract should ....
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.... agreement for appointment of a distributor is a mutual understanding or an agreement setting out the terms of appointment in writing, it is neither an event nor an occasion or a transaction in the sense in which used in section 269ST or even generally. It is a legal document and not an event as ordinarily understood. The intention of introducing section 269ST is to reduce generation and circulation of black money. It is submitted by assessee here that this intent, as expressed in the Finance Bill, by the Government in the Parliament is not defeated in this case, cash payment, even within permissible limit is received on bank holidays and it is deposited by assessee on a working day. The nature of commodity is such that even the distributors receive cash on retail sales through milk booths and household sale and hence they insist and the assessee has accepted the cash on bank holidays. 8. According to, Circular No. 25/2022 dated 30th December, 2022 it has been clarified that in respect of Co-operative Societies, a dealership / distributorship contract by itself may not constitute an event or occasion for the purpose of clause (c) of Section 269ST. Receipt related to such a deale....
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....contractors are also engaged, who collect processed milk pouches in bulk from the plant and supply to the vendors. The retail Vendora received payment from individual Morning Evening milk buyers in petty sums in Cash in small denomination of Cash. The banks do not accept cash in small denominatons from each vendor because of handling and counting time and accuracy problems involved, Rajkot Dairy has made arrangements with banks to accept small notes for some nominal handling charge. It has been ensured while framing dealer A distributor net work, that in a day, a particular person is not required deposit by CASH in Rajkot Dairy, the Milk collection proceeds in Cash of maximum Rs 2,00,000/- In the event, the collection is in excess of Rs 2,00,000, the same has to be deposited by modes otherwise than in cash as restricted by the section 269 ST of the Income Tax Act. We state that no violation of provisions contained in section 269ST as regards daily Cash deposit receipt by the assessee Rajkot Dairy even in a single case has taken place and therefore we request not impose penalty us 274 r.w.s. 271DA on the basis of annual aggregate figures." 10. Aggrieved by the order of L....
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....h clarifies that the cash receipt from one person are not to be aggregated for the entire year because a contract does not constitute an event or occasion for the purpose of clause 'C' of sec. 269ST. Receipt related to such a dealership / distributorship contract by the Co-operative Society on any day in a previous year, which is within 'the prescribed limit' and complies with clause (a) as well as clause (b) of Section 269ST, may not be aggregated across multiple days for purposes of clause (c) of Section 269ST for that previous year. 13. On the contrary, the Ld. D.R. submitted that the assessee has accepted more than Rs. 2,00,000/- from distributor in aggregate in a year and violated the Section 269ST of the Act. That Ld. D R has relied on the order of the Ld. CIT(A). The Board Circular not applicable to the assessee because since there is no valid contract is there for the sale. The penalty is rightly been levied on the assessee. 14. We have heard the rival contentions the perused the matter available on record 15. We note that the assessee is a registered cooperative society. The assessee is engaged in manufacturing unit in milk products like any other dairy fu....
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.... the Government India" 16. The CIT(A) has acknowledged and considered that the affidavit filed by the assessee during the course of remand proceedings the relevant fact is reproduced: "In respect of one party named Somnath Marketing cash of Rs. 3,00,000/- was received on 28-06-2017 by way of Earnest Money Deposit (EMO) and not by way of cash receipt against sales, which transaction to the best of my knowledge and belief, is to be excluded from the purview of Sec. 269ST of the Income-tax Act, 1961. The Appellant has submitted an Affidavit dated 24/03/2023 in this regard, wherein it has been pointed out that there is only one violation in respect of one party named Somnath Marketing from whom cash of Rs. 3,00,000 was received on 28/06/2017 by way of Earnest Money Deposit (EMD) and not by way of cash receipt against sales." An affidavit submitted by the managing Deputy of Rajkot District Co. operative Milk producers union Ltd., wherein it is stated, 1) That on the basis of entries in cash book and ledger accounts of customer-parties maintained by the said union for F.Y. 2017-18, it is noticed that the amount of cash receipts from any one such party in ....
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....t in the order of Ld. CIT(A) to the extent of penalty issue of accepting EMD and in terms of contract with Somnath Marketing on 28.06.2017 for appointing as distributor, and in respect of EMD the Ld. CIT(A) has confirmed the order of AO. We observed that EMD is Deposit taken for granting of distributorship and not received against the sale hence does not come in purview of Sect. 269 ST of the Act. section 268ST deal with transaction. Hence, the order of the Ld. CIT(A) is set aside and remit back to the filed of the Ld. CIT(A) for fresh adjudication. We observed that the Ld. CIT(A) has considered the affidavit without given an opportunity to the Ld. AO to accept the additional evidence and the same is not tenable. Therefore, the appeal is remitted back to the file of Ld. CIT(A)/NFAC. Hence, the ground no. 1 of the department appeal is also disposed with the above terms. Now we adjudicate the Appeal No. 166/Rjt/2023 A.Y. 2018-19 (Revenue's Appeal) 18. The Revenue has raised the following grounds of appeal: ITA No. 166/Rjt/2023(A.Y. 2018-19)(Revenue's Appeal):- "1. The Ld. CIT(A) has erred in law and/or on facts in deleting the penalty u/s. 271DA of the Income-....
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....1DA of the Income-tax Act, 1961 to Rs. 3,00,000. Despite the detailed findings given by the AO in penalty order and remand report submitted on 28.12.22, 20.01.23, 16.02.23 & 02.03.23. 2. The Ld. CIT(A) has erred in law and/or on facts in coming to conclusion that the AO has not sent specific instance of violation under clause (a) and (b) of section 269ST despite same being brought out in remand report(s) dated 20.01.2023, 16.02.2023 & 02.03.2023. Therefore, observations of Ld. CIT(A) that "The assessing officers has not sent specific instance of violation under clause (a) and (b) of section 269ST is factually incorrect. On the contrary Ld. CIT(A) has relied upon the affidavit submitted by the assessee which itself gives reference to remand report dated 20.10.2023 where specific violations of Rs. 3,90,59,225/- were pointed out by the AO in para 3.5 of the remand report. 3. On the facts and circumstances in law, the Ld. CIT(A) ought to have examined the entries appearing at Para 3.5 of the remand report dated 20.01.2023 before restricting the penalty to Rs. 3,00,000/- only as later verification revealed that the violation of the provision of Section 269ST amounted t....