SHREE DILIP PURSHOTTAMBHAI PATEL,,VADODARA vs. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-3,, BARODA

Learned counsel takes us through the CIT(A)’s detailed discussion in rejecting assessee’s averments during the course of lower appellate proceedings as under:-

4 As far as transaction of Rs.1,50,000/- with Shri Manoj Thakor is concerned, the assessee has submitted that he was awarded a contract by M/s SSNNL in F.Y. 2004-05 and one of the clauses of the contract required him to deposit a sum of Rs.3,00,0007-with M/s SSNNL. The assessee had subcontracted the work to M/s Gayatri Construction, who was asked by the assessee to deposit half of Rs.3,00,000/- with M/s SSNNL. Shri Manoj Thakor a/c M/s Gayatri Construction, deposited half of Rs.3,00,000/- i.e. Rs.1,50,000/- with M/s SSNNL, on behalf of the assessee. It is not disputed that the sum of Rs.1,50,000/- deposited by Shri Manoj Thakor was ultimately assessee's responsibility. There is nothing on record to show that Shri Manoj Thakor or M/s Gayatri Construction were ever obliged through any binding contract, to deposit any sum with M/s SSNNL. The money deposited by Shri Manoj Thakor with M/s SSNNL was, in the ultimate analysis, a loan advanced to the assessee, to enable him to meet 'his contractual liabilities with M/s SSNNL, by depositing the requisite sum with M/s SSNNL. Since the nature of the transaction was loan and since the same was returned in cash, the provisions of section 269T and 271E are very well attracted in this case and assessee's arguments to the contrary in this regard are rejected.

5 As regards repayment of Rs.25,000/- to Shri Bhimjibhai Sama, the assessee has argued that since the repayment was made in two instalments each of less than 20.000/-, the provisions of section 269T/271E are not attracted. This proposition is again, contrary to the provisions. As per section 269T, if the aggregate amount of loan together with interest, on the date of repayment, is more than Rs.20,000/-, the repayment must be made as per provisions of section 269T, which prohibits cash payments. Payment in cash instalments of less than Rs.20,000/- each does not absolve the assessee from the penal provisions of sect/on 271E for violation of section 269T of the Act.

6 The assessee has a/so paid cash of Rs.95,000/- each to Shri Kanubhai Patel and Shri Bhaveshbhai Patel. The assessee has explained that he had purchased a piece of land with the above two persons as co-owners and these two persons had given him Rs.95,000/- each to develop the land. A.Y :- 2011-12 However, since the relevant permissions from the competent authorities could not be obtained, the amounts received from them were returned back in cash. However, there is no contemporary evidence on record to substantiate the claim that it was not loan. The assessee has furnished a copy of confirmations from both of these persons, but the same appears to be an afterthought, as the same has been obtained after the Assessing Officer detected the violation, as is evident from date of confirmation viz. 28.11.2013 in the case of Shri Kanubhai J. Patel. The language of both the confirmations is same. It is obvious that the assessee had treated the sums in question as loans in his books of accounts, therefore, repayment of the same in cash is a violation of the provisions of section 269T of the Act and the assessee is liable to suffer the consequences of the provisions of section 271E of the Act.”

Learned authorized representative thereafter submits very fairly that the assessee does not press for his challenge made to correctness of the impugned penalty relevant to cash payment of Rs.95,000/- in case of Shri Kanubhai Patel. He then reiterates assessee’s pleadings that both the lower authorities have erred in law as well as on facts in confirming in levying the impugned penalty. The Departmental Representative on the other hand supports the above extracted finding of the learned CIT(A) confirming the penalty.

We notice in this backdrop of the case that the hon’ble apex court in the case of Asst Director of Inspection (Investigation). vs. Kum A B Shanthi, (2002) 255 ITR 258 (SC), explained the object of introducing section 269SS (on identical lines) to be that of eradication of evil practice of making false entries in account books followed by consequent explanation qua the same. The hon’ble juri ictional high court’s judgment in case of CIT vs. Bhagwati Prasad Bajoria (HUF), [2003] 263 ITR 487 (Guj.) also reiterates the same. We notice in this backdrop of the facts that the lower authorities do not dispute assessee’s explanation qua genuineness of the impugned transactions. We however are of the opinion that the Shri Dilip Purshottambhai Patel vs. ACIT A.Y :- 2011-12 impugned penalty does not automatically flow in case of any contravention made to the statutory provision under section 269T of the Act. We therefore follow above stated legal position to accept assessee’s contention challenging correctness of the impugned penalty in case of the remaining three cases as Assessing Officer as well as the CIT(A) have not doubted the genuineness of the impugned transactions. We accordingly direct the Assessing Officer to delete the impugned penalty. Assessee’s corresponding grounds are therefore accepted. This assessee’s appeal is partly allowed.

""यथ" / The Respondent. 3. संबं"धत आयकर आयु$त / Concerned CIT 4. आयकर आयु$त(अपील) / The CIT(A) 5. 'वभागीय "*त*न"ध, आयकर अपील"य अ"धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड/ फाईल / Guard file.