THE COMMISSIONER OF INCOME TAX,AURANGABAD vs. POPATLAL M. CHORDIA

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ITA/42/2014HC BombayHCBM03005771201419 January 2015Bench: HON'BLE SHRI JUSTICE A.V. NIRGUDE,HON'BLE SHRI JUSTICE V.K. JADHAV3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court declined to take a different view from the ITAT's decision, stating that all the cases were decided on facts. The Tribunal had accepted the assessee's explanation that the cash amounts received were earnest money for a property sale, rather than loans as initially disclosed by the assessee's son. The ITAT found the assessee's explanation more plausible given the harshness of Section 271 of the Income Tax Act. The High Court found no substantial question of law arising from the ITAT's order. Therefore, the appeals filed by the Commissioner of Income Tax were dismissed.

What were the facts?

The appeals by the Commissioner of Income Tax (Appellant) challenge the orders of the Income Tax Appellate Tribunal (ITAT), Pune Bench. The ITAT had allowed the appeals of Shri Popatlal M. Chordia (Respondent/Assessee) and accepted his explanation to avert penalty proceedings under Sections 271D and 271E of the Income Tax Act. During search and seizure operations, the Assessing Officer (AO) found certain entries in the assessee's books. The AO recorded statements from the assessee's son, who disclosed that certain individuals advanced loans in cash to the assessee, which were subsequently repaid. The assessee later contended that these amounts were not loans but earnest money received under an oral agreement for property sale. The lower authorities rejected this stand, deeming the assessee liable for penalties.

What were the issues?

1. Whether, in the facts and circumstances, the explanation provided by the assessee regarding the nature of the cash transactions (earnest money for property sale) should be accepted over the earlier statement of his son (disclosing cash loans), to avoid penalty under Section 271D and 271E of the Income Tax Act. Assessee's Contention: The ITAT was more inclined to accept the assessee's explanation due to the harsh nature of Section 271 of the Income Tax Act and the specific facts of the case, preferring the assessee's later stand over his son's earlier statement. Revenue's Contention: The judgment does not record specific arguments made by the revenue before the High Court. However, the revenue is appealing the ITAT's decision to accept the assessee's explanation and avert penalties.

Which sections of the Income-tax Act were involved?

Section 271D,Section 271E,Section 271

AI-generated summary — verify with the full judgment below

1 ITA41.2014 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 41 OF 2014 The Commissioner of Income Tax, Aurangabad.

.. Appellant Versus Shri Popatlal M. Chordia, Aurangabad. .. Respondent ---------------- Mr Alok Sharma, Advocate for the appellant Mr Vakil, Advocate for the respondent ---------------- ALONG WITH INCOME TAX APPEAL NO. 42 OF 2014 The Commissioner of Income Tax, Aurangabad.

.. Appellant Versus Shri Popatlal M. Chordia, Aurangabad. .. Respondent ---------------- Mr Alok Sharma, Advocate for the appellant Mr Vakil, Advocate for the respondent ---------------- ALONG WITH INCOME TAX APPEAL NO. 43 OF 2014 The Commissioner of Income Tax, Aurangabad.

.. Appellant

2 ITA41.2014 Versus Shri Popatlal M. Chordia, Aurangabad. .. Respondent ---------------- Mr Alok Sharma, Advocate for the appellant Mr Vakil, Advocate for the respondent ---------------- CORAM : A.V. NIRGUDE & V. K. JADHAV, JJ. DATED: JANUARY 19TH, 2015 PER COURT :- 1. These appeals challenge the judgment and order of Income Tax Appellate Tribunal (ITAT), Pune, Bench-’B’, Pune, in Income Tax Appeals No. 708/PN/2011, 709/PN/2011 and 710/PN/2011. By these judgments, the appeals of the respondent herein were allowed and the explanation he submitted on facts was accepted to avert penalty proceedings. 2. In brief, the facts of these cases are as under: - In search and seizure proceeding, the Assessing Officer found certain entries in certain books of accounts. The Assessing Officer recorded statements of assessee’s son about the entries and he disclosed that certain persons advanced loans

3 ITA41.2014 to the assessee in cash, and in due course of time, the amounts were returned. Subsequently, the assessee took a stand that the amounts which he received from those two persons were not loans. They were earnest amount which he had received towards oral agreement for sale of certain property. The authorities below did not accept this stand and held that the respondent / assessee is liable to pay penalty under Section 271 D and 271 E of the Income Tax Act. In the appeals filed by the assessee, the ITAT held that in the facts and circumstances of the cases as well as in view of the harsh nature of section 271 of the Income Tax Act, they were more inclined to accept the explanation given by the assessee than the statements of his son, which was recorded earlier. 3. Since all these cases were decided on facts, we decline to take a different view though it is possible. There is no substantial question of law arising in these appeals. Hence, appeals stand dismissed. [ V.K. JADHAV, J. ] [ A.V. NIRGUDE, J. ] sgp

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