VANISHREE RESORTS LTD,,PUNE vs. JOINT COMMISSIONER OF INCOME-TAX, RANGE - 13,, PUNE

This appeal filed by the assessee Vanishree Resorts Ltd., against the order of ld.Commissioner of Income Tax(Appeals)-8, Pune dated 28.01.2018 emanating from the order under section 271D of the Act passed by the JCIT, Range-13, Pune. The assessee has raised the following grounds of appeal: “1. The learned CIT(A) erred on facts and in law in upholding the penalty u/s 271D of the Act. She failed to appreciate the facts and submissions made in this behalf in its proper perspective.

None appeared for the appellant assessee. It is observed that on last four occasions hearing was adjourned as none appeared on behalf of the appellant assessee. On 30.09.2021, the ld.Authorised Representative(ld.AR) for the assessee appeared and requested for an adjournment and accordingly case was adjourned. However, after that no one has attended on 22.12.2021, 15.02.2022, 23.05.2022 and 27.07.2022. Since there is consistent non-compliance by the appellant assessee, we have decided the case on merit.

The ld.Departmental Representative(ld.AR) for the Revenue took us through the order under section 271D and ld.CIT(A)’s order.

To appreciate the facts of the case, we are reproducing relevant part of the ld.CIT(A)’s order. “6. In Ground N0.1, the appellant has alleged that the AO has erred in imposing penalty of Rs. 7,99,000/- u/s. 271D of the Act. Vide written submissions dated 18/01/2018 various cash deposits have been explained as below:- Sr.No. Date Receipt Payment Explanation 1 11/06/2012 3,30,000 - Wrong entry of cash 2 12/06/2012 - 3,30,000 receipt was made in our books on 11/06/2012 hence same was rectified by reverse entry on 12/06/2012. As such this amount is neither acceptance nor repayment of any loan or deposit. 3 12/10/2012 1,40,000 - This amount was received on account of subscription dues from the chit subscriber of A.Y. 2013-14 Vanishree Resorts Ltd., [A] Sheeba Kuries ltd. And wrongly deposited in our bank account. Hence, the entry was shown as receipt from Sheeba Kuries Ltd. As such in facts it was not in nature of loans or deposit received. 03/11/2012 1,10,000 - Wrong entry of cash 5 03/11/2012 1,10,000 - receipt was made in our books on 03/11/2012 6 05/11/2012 - 2,20,000 hence same was rectified by reverse entry on 05/11/2012 on 05/11/2012. As such this amount is neither acceptance nor repayment of any loan or deposit. 7 01/12/2012 50,000 Cash pertaining to Sheeba Kuries Ltd. Was 8 31/12/2012 25,000 wrongly deposited in 9 23/02/2012 34,000 our bank account. Therefore, the same was shown as receipt from Sheeba Kuries Ltd. As such in facts it was not in nature of loans or deposit received Total 7,99,000 7. Regarding entry of Rs.3,30,000/- appearing at Sr. No.1 above, it has been stated that a sum of Rs.3,30,000/- was wrongly entered in the cash book on 11/06/2012 which was reversed on 12/06/2012. However, nothing has been filed on record before the AO or before me to substantiate the claim that the relevant entry was reversed. The appellant has further stated that a sum of Rs. 3,30,000/- has been withdrawn on 12/06/20,2 from his bank account by way of a self cheque. This is of no relevance as the relevant cash deposit has-been made on 11/06/2012 whereas the withdrawal is on 12/C6/2012 i.e. a day after the deposit had already been made. Hence the contention of the appellant explaining the above mistake is without any basis. 8. Regarding, the next deposit of Rs. 1,40,000/- received on 12/10/2012, it has been contended that the said amount pertained A.Y. 2013-14 Vanishree Resorts Ltd., [A] to the subscription amount received from the chit subscribers of its sister concern Sheeba Kuries Ltd. which were wrongly credited in the cash book of the appellant. It is stated that the management of the appellant and he sister concern was the same and therefore the mistake apparent. This explanation cannot be accepted. First and foremost the appellant has not provided any details regarding the management of both the concerns. Moreover, the AO has rightly observed that chit fund companies are governed by strict laws and the subscriptions received from subscribers cannot be deposited elsewhere as that is considered a serious flaw under the Companies Act. It is interesting to note that even regarding cash deposits appearing at Sr.No. 5, 6 & 7 of Rs.50,000/- on 01/12/2012. Rs. 25.000/- on 31/12/2012 Rs. 34,000/- on 23/02/2013, the appellant has given the same excuse. This clearly shows that the appellant’s explanation is an afterthought because a mistake can happen once but not repeatedly like in the present case. Cash deposits discussed above have been made at sufficient intervals hence they cannot be read to be a mistake. Hence the explanation of the appellant regarding these all these entries cannot be accepted.

Regarding cash deposits of Rs.1,10,000/- each on 03/11/2012 the appellant has stated that these amount were wrongly entered in the cash book on 03/11/2012 which were reversed on 05/11/2012. However, nothing has been filed on record before the AO or before me to substantiate the claim that the relevant entry was reversed. The appellant has further stated that a sum of Rs.1,10,000/- each has been withdrawn on 03/11/2012 and 05/11/2012 from his bank account by way of a self cheque. A copy of bank account has been filed to reflect the same. Regarding the withdrawal made from the bank account on 03/11/2012 of an identical amount, it can be considered that the deposit made, on 03/11/2012 is out of this amount. However, another deposit of the same amount has been made on 03/11/2012 whereas the withdrawal is on 05/11/2012. Hence the benefit of mistaken entry cannot be given to the appellant as the deposit to this extent is before the date of withdrawal.

On the basis of the above analysis it seen that the appellant has on the pretext of mistakes has made considerable cash deposits in his books of account. It is a recurring practice and therefore cannot be overlooked in the garb of a mistake. The explanation given by the appellant is not acceptable in the light of the facts already discussed above. However, benefit of Rs.1,10,000/- is being given as the appellant has been able to demonstrate that the said sum was withdrawn from bank and deposited on the same day. Accordingly, the penalty levied by the AO is reduced to Rs./6,89,000/- and upheld to this extent Ground No.1 is Partly Allowed.”

We have heard the ld.DR for the Revenue and perused the records. It is observed that both the ld.JCIT and ld.CIT(A) has considered the submission made by the appellant assessee and passed the order after taking into consideration the submission of the assessee. Before us, no evidence has been filed to establish that there was sufficient cause for cash deposits. It is also a fact that assessee had made the cash deposits on various dates. The explanation submitted by the assessee before the ld.CIT(A) has been perused and we are of the view that the ld.CIT(A) has rightly rejected the explanation for the reasons mentioned in the order. Therefore, we uphold the order of ld.CIT(A). Accordingly, appeal of the assessee is dismissed.

In the result, appeal of the assessee is dismissed.