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Income Tax Appellate Tribunal, DELHI BENCHES “F” : DELHI
Before: SHRI AMIT SHUKLA & PRASHANT MAHARISHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “F” : DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.No. 3892/Del/2015 Assessment Year 2009-10 DCIT, G.K. Dairy & Milk Products Pvt. Circle-10(1) LTd. New Delhi. vs. B-5, Pragati Chambers, Ranjit Nagar, New Delhi 110 008 PAN AAACG3118J (Appellant) (Respondent) For Revenue : Shri Surender Pal, Sr. DR For Assessee : Shri Garvit Batra, CA Date of Hearing : 11.10.2018 Date of Pronouncement : 07.01.2019 ORDER PER AMIT SHUKLA, J.M.
The aforesaid appeal has been filed by the department against impugned order dated 30.3.2015 passed by Ld. CIT(A)-XV, New Delhi in relation to the penalty proceedings u/s 271E for the assessment year 2009-10. The revenue is aggrieved by deletion of penalty of Rs. 23,43,000/- which was imposed upon u/s 271E for violation of section 269T.
The facts in brief are that Assessee Company is engaged in the business of manufacturing and trading of dairy products. During the course of assessment proceedings the AO observed that assessee has repaid following amount relating to the AO for loan/deposit in violation of section 269T:-
S. No. Name of the person Amount (Rs.) 1 Shri Gopal Dixit 1,38,000/- 2 Om Ayurvedic Store 22,05,000/-
In response to the show cause notice by the Assessing Officer, the assessee submitted that it has not taken any loan from M/s. Om Ayurvedic General Store, because it is a customer of the assessee for which it has been maintaining a current account for its sales. The assessee had received advance from the said party against the orders during the financial year 2007-08 and therefore, said payment is not covered u/s 269T. With regard to the payment of Rs. 1,38,000/- repaid to Shri Gopal Dixit it was submitted that said amount was transferred from salary account of the Director. However, AO did not agree with the contention of the assessee and held that the transfer entries were clearly in the nature of payment other than account payee cheque and hence there is a violation of section 269T. 4. Before the Ld. CIT (A) assessee submitted following facts :- “During the year under appeal, the assessee company had brought forward outstanding liability of Rs.24,09,923/- payable to M/s Om Ayurvedic & General Store (OAGS) which represents Rs.18,80,004/- towards temporary short term advances received by the company from them besides opening balance of Rs.5,29,919/-. Rs.l,38,000/- was also payable to Mr. Gopal Dixit. Liability of OAGS was overdue. Since it is temporary advances on short term basis, the OAGS was insisting the company to repay it immediately. The company was postponing it for 2 months more but OAGS were reluctant not to extend it, therefore, Sh. Gopal Dixit - one of the director of the company had intervened and undertaken the liability of OAGS of Rs.22,05,000/- on his personal account and had requested the appellant company to credit this amount to his personal account maintained in the company and debit the account of OAGS by the same amount of Rs.22,05,000/-.In this manner, the liability of
OAGS was settled and paid by the company on 01.04.2008 by passing transfer entry in the book of accounts of the appellant company. Copy of accounts of Mr. Gopal Dixit and of OAGS for the financial year 2008-09, the year under appeal are attached herewith from page No.1 to 5 of the paper book.” 5. Ld. CIT(A) deleted other addition holding that it is quite clear from the facts that M/s.Om Ayurvedic General Store has been a customer of the assessee company and this amount of Rs. 22,05,000/- was shown as advance against the said party received in financial year 2007-08 and earlier period. On perusal of the copy of the ledger account, he noticed that on different dates sales have been booked against the said party and there was an opening balance of Rs. 5,29,919/- as on 1.4.2007 and as on 31.3.2008 there was a closing balance of Rs. 24,09,923/-. Thus, such an advance cannot be treated as in the nature of deposit or loan and hence it does not fall within the scope of 269T.
After hearing both the parties on perusal of the relevant finding given in the impugned orders, we find that it is not in dispute that amount received by the assessee from one of the party, M/s Om Ayurvedic General Store (OAGS) was in the nature of trade advance received by the assessee company for which assessee has booked sales against the said party. The copy of account as examined by the Ld. CIT(A) of the said party clearly reflects that an advance received from the customer was is in the nature of trade advance, then such advance cannot be reckoned as deposit or loan so as to attract provision of section 269T. In so far as transfer of entry in the case of Director Shri Gopal Dixit, Ld. CIT(A) has held as under:-
“6.3 Further, it is seen that in effect, through this transferred entry the appellant company has transferred the liability with respect to M/s Om Ayurvedic products to its own Director Sh. Gopal Dixit.
Such a transfer has been made through a transfer entry in the books without making actual payment. Keeping in view the decision of Hon'ble Delhi High Court in the case of CIT vs. Worldwide Township Projects ltd. (supra), which was relied upon by the appellant, which was with regard the issue of violation of section 26955, which is similar to the provision of section 269T, no penalty can be levied, whether liability record in the books is set off by way of general entries. Similarly, the appellant's case is also covered by the decision of Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) and of the Allahabad High Court in the case of CIT vs. Saurabh Enterprises (supra). Keeping in view the above, I hold that this was not a fit case for levy of penalty u/s 269T. In view of the above, the order of penalty is cancelled.” 7. Apart from that the assessee has clearly brought on record that the short term advance received by the assessee company from OAGS, sum of Rs. 1,38,000/- was payable to Shri Gopal Dixit who had undertaken the liability of. OAGS on his personal account and requested the assessee company to credit this amount to his personal account maintained in the company and debit the account of the said party by the sum amounting of Rs. 22,05,000/- it was in this manner the liability of OAGS was settled and paid by the assessee company on 1.4.2008 by passing a transfer entry in the books of accounts of the assessee company. Under these facts it cannot be held that penalty is levied in violation of Section 269T and accordingly, we do not find any infirmity in the order the Ld. CIT (A) and the same is affirmed. In the result appeal of the department is dismissed. Order pronounced in the open Court on 7th January, 2019. Sd/- sd/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 7th January, 2019
Veena Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘G’ Bench, Delhi 6. Guard File.