RAJESH VITTHAL BADADE,PUNE vs. JOINT COMMISSIONER OF INCOME-TAX, RANGE - 6, PUNE

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ITA 611/PUN/2019Status: DisposedITAT Pune18 May 2022AY 2014-155 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amounts received and repaid were in the nature of advance for sale of land, not loans. Therefore, the transactions did not attract the provisions of sections 269SS and 269T of the Act.

What were the facts?

The assessee received Rs. 12.00 lakh in cash as advance for the sale of agricultural land, which was deposited in FDRs. Subsequently, the sale did not materialize, and the amount was withdrawn from FDRs and returned in cash to the buyers. The AO levied penalties for violating sections 269SS and 269T.

What were the issues?

Whether the cash receipt and repayment of Rs. 12.00 lakh constituted a loan or advance for property sale, and if penalties under sections 271D and 271E were leviable.

Which sections of the Income-tax Act were involved?

Section 269SS,Section 269T,Section 271D,Section 271E

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Bharat Shah
For Respondent: Shri Suhas Dabade

आदेश / ORDER PER R.S. SYAL, VP : These two appeals by the assessee arise out of different orders passed by the CIT(A)-4, Pune on 26-02-2019 confirming the penalties imposed by the Assessing Officer (AO) u/s.271D and 271E of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) amounting to Rs.12.00 lakh each in relation to the A.Y. 2014-15. Since both the appeals are based on similar facts, we are, therefore, proceeding to dispose them off by this common order.

2.

Briefly stated, the facts of the case are that the assessee is a Tea and Coffee seller, who filed his return declaring total income at Rs.2,61,930/-. During the course of assessment proceedings, the AO observed that the assessee had shown interest received on savings bank account amounting to Rs.990/-. As per ITS data, the assessee received interest on FDRs kept in Vishweshwara Bank at Rs.1,28,990/-. On being called upon to explain the position, the assessee submitted that he received interest of Rs.1,28,990/- on FDRs totalling to Rs.30,12,796/-. The excess amount of interest was on FDRs amounting to Rs.12.00 lakh, which was explained by the assessee through his letter, as reproduced in the assessment order, stating that he was negotiating for selling some agricultural plot at Mauje Lavi, Taluka Velha, District Pune to Mr. Sampat G.

1.

Mandhare and Mrs. Dropadabai Fakirrao Harpale and on that account he received Rs.5.00 lakh and Rs.7.00 lakh respectively from these two persons. The said amount of Rs.12.00 lakh was received as advance against the sale of property that was fix deposited in the bank till the completion of the final sale deed.

Since the sale did not fructify, the amount was withdrawn from the FDR account and returned. The AO made the addition of interest earned on Fixed Deposit by accepting the receipt of loan and its repayment to the two persons. During the course of the penalty proceedings, the AO recorded statement of these two persons who deposed to have paid Rs.5.00 lakh and Rs.7.00 lakh respectively to the assessee towards an agreement for purchase of land. Not convinced, the AO levied penalty of Rs.12.00 lakh u/s 271D of the Act for receipt of loan in violation of section 269SS of the Act and u/s 271E of the Act for repayment of loans Rs.12.00 lakh in cash in violation of section 269T of the Act. The ld. CIT(A) affirmed both the penalties. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

3.

Having heard the rival submissions and gone through the relevant material on record, it is found as an admitted position that the AO recorded statement of Mr. Sampat G. Mandhare and Mrs. Dropadabai Fakirrao Harpale, who had given sum of Rs.5.00 lakh and Rs.7.00 lakh respectively to the assessee as advance for purchase of the land. Here it is relevant to mention that the AO accepted in the assessment that the amounts were received and repaid by the assessee from these two persons, which is fortified by the fact that he did not make any addition towards the source of the deposit of FDRs in the assessment. Both of them appeared before the AO and admitted to have entered into an agreement with the assessee for purchase of his land and the amounts were given as advance for purchase of the land. Ultimately, the transaction did not go through and the assessee had to withdraw the amount from the bank for repaying the sums to these two persons. On the above analysis of the facts, it clearly emerges that the amount received by the assessee in cash was in the nature of receipt of advance for sale of land and not receipt of any loan violating the mandate of sections 269SS. Similar is the position qua the repayment of advances not attracting the mischief of section 269T of the Act. In that view of the matter, there can be no question of imposing or confirming any penalty on receipt of advance and its repayment against sale of property under the concerned sections.

4.

In the result, both the appeals are allowed. Order pronounced in the Open Court on 18th May, 2022.

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