NABIL JAVED ,DELHI vs. ITO, WARD- 63(3), NEW DELHI

The Assessee has filed these two Appeals against the

respective Orders of the Ld. CIT(A)-20, New Delhi pertaining to

assessment year 2013-14.

read as under:-

(Appeals) has erred in law and facts of the case while

enhancing addition of Rs.3,00,000/- made by the AO to

Rs.58,00,000/- under section 68 of the Income Tax Act,

1961 which is beyond the powers of Ld. Commissioner of

Income Tax (Appeals). As such, the addition of

Rs.55,00,000/- is bad in law and may please be deleted.

(Appeals) has erred in law and facts of the case while

making addition of Rs.55,00,000/- under section 68 of

the Income Tax Act, 1961 without appreciating that the

provisions of section 68 of the Income Tax Act, 1961 are

not applicable to the facts of the case. As such, the

addition of Rs.55,00,000/- is bad in law and may please

be deleted.

(Appeals) has erred in law and facts of the case while

making addition of Rs.55,00,000/- under section 68 of

the Income Tax Act, 1961 without appreciating the facts

of the case and submissions of assessee. As such, the

addition of Rs.55,00,000/- is bad in law and may please

be deleted.

(Appeals) has erred in law and facts of the case while

confirming addition of Rs.3,00,000/- under section 68 of

the Income Tax Act, 1961 originally made by ld. AO

under section 28(iv) of the Income Tax Act, 1961 without

appreciating the facts of the case and submissions made

by the assessee. As such, the addition of Rs.3,00,000/- is

bad in law and may please be deleted.

or withdraw any of the above grounds at the time of

hearing.

of income on 25.9.2013 declaring net taxable income of Rs.

5,82,679/-. The return was processed u/s. 143(1) of the Income Tax

Act, 1961 (in short “Act”). Later the case was selected for scrutiny

through CASS and notice u/s. 143(2) of the Act dated 3.9.2014 was

issued and subsequently notice u/s. 142(1) of the Act alongwith

questionnaire also issued. In response thereto, the assessee’s AR

attended the proceedings from time to time and filed necessary

details. The assessee is engaged in the business of trading of metal

and sale and purchase of live stock. The assessee is engaged in the

business of trading of metal and sale and purchase of live stock. The

AO observed that assessee has shown loan of Rs. 88,00,000/- from

his wife, Mrs. Shahina Quereshi, during the year under consideration.

Out of Rs. 88,00,000/-, the assessee explained that Rs. 63,000/-

was received from Mrs. Shahina Qureshi directly and Rs. 22,00,000/-

received by the assessee as advance against sale of his proty and

Rs. 3,00,000/- was wrongly considered in the name of his wife rather

the same was transferred by assessee’s own account and hence,

should be considered as capital not unsecured loan. The AO did not

accept the explanation filed by the assessee in respect of Rs. 3 lacs

and made the alleged addition of Rs. 3 lacs by stating that no

satisfactory explanation was filed by the assessee. Before the Ld.

CIT(A), the assessee appealed and filed bank statement in his

account and bank account of Mrs. Shahina Qureshi, to show that the

amount of Rs. 3 lacs was transferred from assessee’s own account

not from his wife account and plea that the addition of Rs. 3 lacs

should be deleted. Ld. CIT(A) observed from the bank statement of

Mrs. Shahina Qureshi’s account, that the amount of Rs. 58,00,000/-

was transferred from the bank account of Paramount Trading Co.

(the proprietorship concern of the assessee) to Mrs. Shahina

Qureshi’s and the same was not considered in the books of the

assessee. During the year consideration, the payments of Rs.

58,00,000/- were paid by M/s Paramount Trading Co. to Mrs.

Shahina Qureshi for the payment made to Shadiq Qureshi. In respect

of the same, the assessee filed before the Ld. CIT(A) that the said

payment of Rs. 58 lacs made to Mrs. Shahina Qureshi was kept in

the separate account in the name of Mrs. Shaheena Nabeel to

distinguish the same from the loan account of Mrs. Shahina Qureshi

as both transactions were of different nature. But Ld. CIT(A) did not

accept the contention of the assessee and made the alleged addition

of Rs. 58 lacs as unexplained cash u/s. 68 of the Act. Against the

action of the Ld. CIT(A), Assessee is in appeal before the Tribunal.

Income Tax (Appeals) has erred in law and facts of the case while

enhancing addition of Rs.3,00,000/- made by the AO to

Rs.58,00,000/- under section 68 of the Income Tax Act, 1961 which

is beyond the powers of Ld. Commissioner of Income Tax (Appeals).

As such, the addition of Rs.55,00,000/- is bad in law and may please

be deleted. He further submitted that Ld. CIT(A) has wrongly made

the addition of Rs.55,00,000/- under section 68 of the Income Tax

Act, 1961. As such, the addition of Rs.55,00,000/- is bad in law and

may please be deleted. It was further submitted that Ld.

Commissioner of Income Tax (Appeals) has erred in law and facts of

the case while making addition of Rs.55,00,000/- under section 68 of

the Income Tax Act, 1961 without appreciating the facts of the case

and submissions of assessee. As such, the addition of Rs.55,00,000/-

is bad in law and may please be deleted. It was further submitted

that Ld. CIT(A) while confirming addition of Rs.3,00,000/- under

section 68 of the Income Tax Act, 1961 originally made by AO under

section 28(iv) of the Income Tax Act, 1961 without appreciating the

facts of the case and submissions made by the assessee. As such,

the addition of Rs.3,00,000/- is bad in law and may please be

deleted. In view of above, he requested to delete the additions in

dispute and allow the appeal of the assessee.

authorities below and stated that Ld. CIT(A) has rightly enhanced the

addition which does not need any interference on our part.

that the amount of Rs. 58 lacs was transferred by the assessee

through banking channel only. The account ledger of the Axis Bank

of M/s Paramount Trading Co. was also filed by the assessee before

the Ld. CIT(A) to explain that the amount was transferred out of the

explained sources of the assessee. However, there is no incidence of

pre cash deposit before transfer, neither any such incidence was

discussed by the Ld. CIT(A). We also note that the provisions of

section 68 are applicable in case where the credit was received by

the assessee. However, in the present case, the position is entirely

different, as the amount of Rs. 58 lacs was not received by the

assessee rather the amount was paid by the assessee to his wife out

of his explained sources. Hence, the addition in dispute made in the

hands of the assessee should not be taxed and therefore, the same is

hereby deleted and accordingly, the appeal of the assessee stands

allowed.

to penalty made u/s 271D of the Act wherein the following grounds

have been raised.

the case while confirming penalty u/s. 271D of the

IT Act, 1961 of Rs. 22 lacs without appreciating

the facts of the case and submissions of the

assessee. As such, penalty of Rs. 22 lacs is bad in

law and may please be deleted.

the case while confirming penalty u/s. 271D of the

Act of Rs. 22 lacs without appreciating that the

provisions of Section 269SS of the I.T. Act, 1961

are not applicable in the case of assessee. As

such, penalty of Rs. 22 lacs is bad in law and may

please be deleted.

withdraw any of the above grounds at the time of

hearing.

loan of Rs. 88,00,000/- from his wife, Mrs. Shahina Quereshi, during

the year under consideration. Out of Rs. 88,00,000/-, the assessee

explained that Rs. 63,000/- was received from Mrs. Shahina Qureshi

directly and Rs. 22,00,000/- received by the assessee as advance

against sale of his proty and Rs. 3,00,000/- was wrongly considered

in the name of his wife rather the same was transferred by

assessee’s own account and hence, should be considered as capital

not unsecured loan. In respect of Rs. 22,00,000/-, received by the

assessee as advance against sale of his property, the AO levied the

penalty u/s. 271D of the Act and Ld. CIT(A) has also confirmed the

penalty levied by the AO on the ground that the impugned amount is

in the nature of loan. Against the Ld. CIT(A)’s action, the Assessee is

in appeal before the Tribunal.

confirmed the penalty of Rs. 22 lacs u/s. 271D of the Act without

appreciating that the provisions of Section 269SS of the Act are not

applicable in the case of the assessee. As such, penalty of Rs. 22 lacs

is bad in law and may be deleted. He further submitted that the

issue in dispute is squarely covered by the decision of the ITAT, ‘G’

Bench, New Delhi in the case of Sunil Kumar Sood vs. JCIT passed in

ITA No. 1831/Del/2016 (AY 2007-08) vide order dated 20.6.2018.

below.

especially the impugned order as well as the ITAT, ‘G’ Bench decision

dated 20.6.2018 in the case of Sunil Kumar Sood vs. JCIT (Supra). I

note that assessee received advance money of Rs. 22 lacs from the

four parties for the property no. 3498, Gali Sangrasha, Bara Hindu

Rao, Delhi – 6. Due to some reasons, the deal was not materialized

and the purchaser parties agreed to take another property which is in

the name of assessee’s wife. The said amount was transferred to his

wife’s account i.e., Mrs. Shahina Qureshi. I further note that there is

no denial on the part of the AO that the amount of Rs. 22 lacs was

received by the assessee from his wife, Mrs. Shahina Qureshi.

However, while levying the penalty u/s. 271D of the Act, the AO did

not appreciate the fact that the provisions of section 269SS of the

Act are not applicable on the loan transaction between husband and

wife. Thus, the question of levying of penalty u/s. 271D of the Act

does not arise on the impugned transaction, hence, I delete the

penalty in dispute and allow the appeal of the assessee. My aforesaid

view is fortified by the ITAT, ‘G’ Bench, New Delhi in the case of

Sunil Kumar Sood vs. JCIT passed in ITA No. 1831/Del/2016 (AY

2007-08) vide order dated 20.6.2018 wherein it has been held as

under:-

“9. We have considered the rival arguments

made by both the sides, perused the orders of the

A.O and the ld. CIT and the paper book filed on

behalf of the assessee. We have also considered

the various decisions relied upon by both the sides.

We find the assessment order u/s 143(3) of the Act

in the instant case was passed on 09.12.2009.

Penalty notice u/s 271D was issued to the assessee

on 28.08.2014. Thus, there is gap of more than

four and half years from the date of completion of

assessment order and initiation of penalty

proceedings. Although there is no time limit

prescribed for initiation of penalty proceedings

under the said provisions, however the courts are

invariably holding that such proceedings should be

initiated within a reasonable time. Since in the

instant case such penalty proceedings have been

initiated after a gap of more than four and half

years from the completion of assessment

proceedings u/s 143(3) of the Act, therefore,

initiation of penalty proceedings, in our opinion, is

barred by limitation.

9.1 Even otherwise also, the transaction is

between husband and wife. Various benches of the

Tribunal are holding that transaction of loan

between husband and wife does not attract the

provisions of section 269SS of the Act. The Kolkata

Bench of the Tribunal in the case of Tuhinara

Begum Hoogly Vs. JCIT Range 2, Hoogly ITA No.

2256/Kol/2014 order dated 04.10.2017 under

somewhat similar circumstances cancelled the

penalty levied u/s 271D of the Act by observing as

under:

“6. We have heard the rival submissions and we are of the view that the facts of the present case and the facts of the case referred to ITAT Kolkata in the case of

Dr.B.G.Panda are identical . The Tribunal in the aforesaid case held as follows :-

"Section 269SS is applicable to the deposits or loan. It is true that both in the case of a loan and in the case of a deposit, there is a relationship of debtor or creditor between the party giving money and the party receiving money. In the case of deposit. the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money and the benefit normally being the earning of interest from the party who customarily accepts deposit. In the case of loan it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of a borrower although the person who lends the money may also stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest ITA N0.2256/Kol/2014-Tuhinara Begum A.Y.2010-11 3 was involved. This was neither a loan nor a deposit. At the same time. the words 'any other person' are obviously a reference to the

depositor as per the intention of the Legislature. The communication/ transaction between the husband and wife are protected from the legislation as long as they are not for commercial use. Otherwise, there would be a powerful tendency to disturb the peace of families. to promote domestic broils, and to weaken or to destroy the feeling of mutual confidence which is the most enduring solace of married life. In the instant case, the wife gave money to husband for construction of a house which was naturally a joint venture for the property of the family only. This transaction was not for commercial use. The amount directly received by the husband. i.e .. the assessee. was to the extent of Rs. 17.000 only and the balance amount of Rs. 26.000 was given by payment directly to the supplier of the material required for the construction of the house. Though the expenditure was apparently incurred by the husband being the karta/head of the family, it could not be said that the wife could not have any interest of her own in this house being constructed. The transaction was neither loan nor any gift as no 'interest' element was involved and there was no promise to return the amount with or without interest. It was clear that the money given by the wife was a joint venture of the family.

Taking into consideration overall facts and circumstances of the case, it could be said that the aforesaid piece of legislation was not applicable in the instant case. By taking the liberal view and applying the golden rule of interpretation, the assessee had a reasonable cause within the meaning of section 27 3B. Therefore. the penalty should be deleted.

had taken the loan from his wife for the purchase

of house which is for the benefit of the whole

family, therefore, following the decision cited

[supra], we hold that penalty levied u/s 271D of

the Act in the instant case is not justified. We,

therefore, set aside the order of the ld. CIT(A) and

direct the Assessing Officer to cancel the penalty so

levied. Grounds raised by the assessee are

allowed.”

Order pronounced on 27-11-2018.

Sd/- (H.S. SIDHU) JUDICIAL MEMBER Dated :27-11-2018

SR BHATANGAR