THE PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. DEVCHAND B PATEL

This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short, 'the act, 1961') is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad-Bench 'A' dated 31.05.2019 in the IT(SS)A.No. 276/Ahd/2010 for the A.Y. 2001- 02 (Falling within the block period 01.04.1990 to 20.10.2000. 2. The Revenue has proposed following question of law as substantial question of law for the consideration of this Court : “Whether in the facts and on the circumstances of the case, the Appellate Tribunal was right in C/TAXAP/738/2019 ORDER deleting the penalty levied u/s. 271D of Rs.2,68,23,300/- without considering the diary seized and inventorized as per Annexure A-1 during the course of search, which contains the sharafit transactions of the assessee with Shri Jivraj V.Desai & Group?”

The proposed question of law pertains to the deletion of penalty levied under Section 271D of the Act. Section 269SS of the Act prohibits every persons to accept any loan or deposit exceeding the specified sums other than by way of cheque or account payee cheque or use of electronic clearing system through Bank accounts. When any person pay or accept any loan or deposit in contravention of provisions of Section 269SS of the Act, then he would be liable to pay by way of penalty under Section 271D of the Act, a sum equal to the amount of loan and/or deposit so taken or accepted.

According to the Assessing Officer, the respondent assessee accepted loan or deposit in cash from Shri Jivraj V. Desai, and therefore, penalty under section 271D was levied amounting to Rs.2,68,23,300/-.

The Tribunal while allowing the appeal of the respondent- assessee observed as under : C/TAXAP/738/2019 ORDER “26. As observed while deciding the appeals against levy of penalty under section 271E of the Act, we find that department is unable to establish that the assessee has any transaction of Shri Jivraj V. Desai. There is no material possessed by the Revenue showing acceptance of any loan or deposits by the assessee from Shri Jivraj V. Desai. Revenue has mis-constructed or misinterpreted the seized material as well as statement of Shri Arvindbhai A. Shah, alleged author of the diary. We have discussed this evidence while deleting the addition of Rs. 13,79,300/- in the quantum appeal i.e. IT(SS)A. no.271/Ahd/2010. Taking into consideration all these material facts, we are of the view that no penalty is imposable upon the assessee under section 271D of the Act. We allow both the appeals and delete the impugned penalty.”

In view of the aforesaid finding of fact given by the Tribunal that the Appellant-Revenue is not able to establish that assessee accepted any loan or deposit from Shri Jivraj V. Desai. In absence of any material showing acceptance of any loan or deposits by the respondent-assessee, we are of the opinion that the Tribunal has rightly deleted the penalty levied under Section 271D of the Act. C/TAXAP/738/2019 ORDER

In the result, this appeal fails and is hereby dismissed as no substantial question of law arises out of the impugned order of the Tribunal. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) KUMAR ALOK