TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1862
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....the ld. AR has submitted that the matter in ITA No. 951/JP/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount of levy of penalty and the default of the other section of the Act. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 951/JP/2024 is taken as a lead case. Based on the above arguments we have also seen that for these appeals grounds are similar, facts are similar, and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. 951/JP/2024. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 951/JP/2024 on the following grounds; "1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the levy of penalty of Rs. 8,47,900/- u/s 271D of the Act. 2. The appellant craves to alt....
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.... reply dated 19.08.2015. The next date for hearing was fixed on 26.08.2015. On this date the assessee appeared and stated that he has no evidences or further submission to file. The explanation submitted by the assessee is not found to be satisfactory in absence of supporting evidences. Admittedly the amount of Rs. 8,47,900/- represented cash deposited in assessee's bank account by different persons as mentioned in para 1 above. Prima facie the amount lying in assessee's bank account belongs to the assessee, the source of which is explained to be the amount received from different persons. The assessee has failed to produce any satisfactory evidence to substantiate his claim that the amount deposited in his bank account was owned by these depositors and used by them for their own purpose and that his account was merely used as a facilitating mechanism to help such depositors. Therefore the deposit of Rs. 8,47,900/- represents loan or deposit in the name of different persons and as such loan or deposit was accepted by the assessee in cash, provisions of Section 269SS of the Act have been contravened. As per section 271D, if a person takes or accepts any loan or deposit in....
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....ersons in cash after cancellation of demand drafts. It is very much hard to believe that the persons interested in doing liquor business were not having any bank account and hence the appellant accepted & repaid the amount form these persons in cash. Thus the appellant accepted the amounts in cash without any reasonable cause. Therefore I do not find any excuse to take a divergent view from the view of the AO. Hence I uphold the order of the AO wherein the penalty u/s 271D of the Act for an amount of Rs. 8,47,900/- was levied. Accordingly, all the grounds of appeal are dismissed. 6. In a result, the appeal is dismissed." 7. As the assessee did not find any favors from the order so passed by the ld. CIT(A) the appeal has been preferred the present appeal before this tribunal on the grounds as reproduced here in above. The ld. AR appearing on behalf of the assessee has placed his written submission to support the grounds so raised and written submission reads as follows : 1. The assessee is a salaried employee working in an insurance company as sales manager. During the year assessee's wife, his friends and close relatives decided to apply for l....
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.... issued show cause notice dt. 30.07.2015 u/s 271D of the Act. The assessee explained that amount of Rs. 8,47,900/- deposited in the bank account was not loan but the amount belong to the different persons who have deposited the same in his bank account for the purpose of purchasing the demand draft in respect of their application for allotment of liquor license by the Excise department and since the license was not allotted the amount was repaid to such depositors. The AO, however, rejected the explanation of assessee by holding that the assessee has failed to produce any satisfactory evidences to substantiate his claim that the amount deposited in his bank account was owned by these depositors and used by them for their own purpose and that his account was merely used as a facilitating mechanism to help such depositors. Accordingly he treated the same as loan or deposit in the name of different persons received in cash which is in contravention of provision of sec. 269SS of the Act and thus imposed penalty of Rs. 8,47,900/- u/s 271D vide order dt. 26.08.2015. 5. Before CIT(A) assessee filed detailed submission along with additional evidences. The Ld. CIT(A) called for rem....
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....le ITAT, Jaipur Bench in case of Sunil Kumar Vs. Addl. CIT ITA No.203 & 204/JP/2018 order dated 09.01.2019. The relevant finding of ITAT at Para 5 is as under:- "Even otherwise the initiation of penalty proceedings U/s 271D and 271E of the Act is based on the premises that the assessee has taken this amount of Rs. 3,36,000/- from one Shri Shreeram and it was also repaid by the assessee to the said person but since the receipt and payment was in cash, therefore, it was held to be in violation of provisions of Section 269SS and 269T of the Act. It is pertinent to note that when the explanation of the assessee that the said amount was deposited by the said person in the bank account of the assessee for the purpose of taking a D.D. in favour of the Excise Department for participating in the tender of liquor shops then it would not fall in the ambit of loan or deposits as contemplated in the provisions of Section 269SS and 269T of the Act. Therefore, once it is not a loan taken by the assessee for his requirement but the explanation was accepted by the Assessing Officer that this amount was deposited by Shri Shreeram for his requirement of participating in the tender of the liq....
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....re. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more. Hon'ble Supreme Court in case of ADIT(Inv.) Vs. Kum. A.B. Shanthi (2002) 255 ITR 258, 263 has also observed that the object of introducing s. 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the tax payer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main object of s. 269SS was to curb this menace. From the above it can be noted that the object for enacting section 269SS is to prohibit the tax payers in explaining the unaccounted cash found in course of search as representing loan taken from or deposit made by various persons. In the pre....
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....ine transaction or not. In this behalf, the first appellate authority after appreciating the evidence on record has observed in para 3 of its judgment as under: "After careful consideration of the matter, I find that the appellant is a contractor doing business in a remote area of Nokha Tehsil. The appellant had to make spot payments to the labour, etc. and for that the appellant needed cash. Therefore, the appellant borrowed the money from sister concern at the work site. Therefore, it is only a technical breach of law and for a mere technical breach, no penalty is exigible. Therefore, the penalty levied by the Dy. CIT, Bikaner, is cancelled because the source of the deposits has not been disbelieved by the AO. Therefore, the penalty is cancelled." 9. The Tribunal in the appeal filed by the Revenue has also considered this aspect and in para 6 of its judgment has observed as under: "We have considered the rival submissions. The learned Authorised Representative. contended that the transactions between two sister concerns are not covered by the provisions of s. 269SS. For the purpose he has relied upon four judgments. In the case of Muthoot M. George Bank....
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..... It is required to be noted that the powers of this Court are limited as to correct substantial error of law, if any. Whether a particular transaction is genuine or otherwise is a question of fact and if it has been found by the appellate authority that the assessee had shown reasonable cause for accepting the money in cash, the finding of fact given by the appellate authority, which is affirmed by the Tribunal is not required to be interfered with by this Court as it cannot be said that any substantial question of law arises for determination of this Court and whether the assessee has made out a case for accepting the amount in cash, finding on such aspect can be said to be finding of facts based on material on record. Whether a particular finding of fact is correct or not, is not a question which could be examined by this Court in this appeal." CIT Vs. Speedways Rubber (P) Ltd (2010) 326 ITR 31 (P&H) (HC) The head note of this case is as under:- "Penalty under s. 271D-Contravention of s. 269SS-Assessee accepted share application money being Rs. 20,000 in cash-Penalty levied under s. 271D deleted by CIT(A) holding that transaction was bona fide and defa....
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....ness exigencies also for payments to labourers and lenders- Transactions being genuine and Assessee having offered reasonable explanation justifying those cash transactions, impugned penalty u/s 271D was not leviable-Penalty imposed on Assessee deleted-Assessee's Appeal allowed. In view of above, penalty of Rs. 8,47,900/- confirmed by Ld. CIT(A) u/s 271D & 271E is uncalled for and be directed to be deleted. 8. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S. No. PARTICULARS Page No. Filed before AO/ CIT(A): 1. Copy of submission filed before Ld. CIT(A) 1A-7A CIT(A) 2 Copy of submission on remand report filed before Ld. CIT(A) 8A CIT(A) 3. Copy of index of paper book filed before Ld. CIT(A) 9A CIT(A) 4. Copy of submission dt. 24.10.2016 filed before CIT(A) 1-4 CIT(A) 5. Copy of remand report dt. 20.03.2018 submitted by AO to CIT(A) 5-8 Both 6. Copy of assessee's submission dt. 23.07.2018 in response to above remand report before CIT(A) 9-16 CIT(A) 7. Copy of reply filed before Additional Commissio....
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....ose persons for allotment of liquor shop. The ld. AO considered the explanation of the assessee and the assessment was completed u/s. 143(3) of the Act without making any addition. Considering this set of facts and provision of section 269SS cover the loan or deposit and the transaction is out of the ambit of that loan or deposit even that aspect did not attract the penalty. The ld. AR in support of the arguments also relied upon the decisions as cited herein above. 10. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). The ld. DR vehemently opposed to the contention of the assessee that the 10 persons alleged to have given the money for making the DD were not having bank account. As is evident from the affidavit from the affidavit of Shri Vinod Kumar Saini and Shri Ramsingh that he does not have any bank account and is having the PAN issued by the Income Tax department. Whereas Shri Dhanalal, Shri Lokesh, Smt. Usha Kumari, Shri Hanuman, Shri Mahendra Kumar Ms. Babita are doing agricultural activity not having bank account cannot be believed. So far as regards the....
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....e of liquor they have by using the account of the assessee made the demand draft. The bench noted from the copy of the affidavit filed by the assessee that all the affidavit suggest are having on the stere type drafting wherein it is stated that at the time of making the demand draft they have no bank account. That affidavit does not speak what was the position when the assessee received the money back whether at that time also the assessee was not having bank account. Thus, all these affidavits are not disclosing the correct fact for the proceeding of both the penalty. Even the ld. DR submitted that it is next to impossible to have the PAN number by some of the party and not having the bank account. Therefore, the contention of the assessee in the interest of justice needs to be verified first that what was the position when the money received back and at the time money was given. The bench also note that the assessee's wife who being stated to be teacher and she being not having bank account is also not clarified from the records. Thus, we are of the considered view that the facts of the case is cryptic and not spelling out the truth and at the same time the records produced by t....