RUDRA BUILDWELL PROJECT P.LTD,DELHI vs. DCIT, CENTRAL CIRCLE, , NOIDA
Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
Before: SHRI S.RIFAUR RAHMAN & SHRI SUDHIR KUMARRudra Buildwell Projects P. Ltd., vs.
PER S.RIFAUR RAHMAN,AM:
This appeal has been filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-IV, Kanpur (hereinafter referred to as ‘ld. CIT (A)) dated 24.02.2018 for the assessment year 2011-12. 2. At the time of hearing, ld. AR of the assessee submitted that penalty under section 271D of the Income-tax Act, 1971 (for short ‘the Act’) was initiated and penalty was levied for acceptance of cash loan of 2 Rs.3,50,000/- in the assessment u/s 153Cof the Act for the reason that the acceptance of cash loan is in contravention of section 269SS of the Act. 3. Against the order of penalty imposed upon the assessee u/s 271D of the Act, assessee preferred an appeal before the ld. CIT (A) and ld. CIT(A) sustained the penalty levied u/s 271D of the Act. 4. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- “BECAUSE,
(1) the authorities below have erred in law and on facts in imposing/ sustaining the imposition of penalty under section 271D on the ground that "there is violation of provisions of section 269SS of the Act", by taking or accepting any loan or deposit and in cash";
(2) the "CIT(A)", while upholding the levy of penalty under section 271D, has failed to consider and omitted to note that a) the appellant had not taken any deposit or accepted any loan amounting to Rs.3,50,000/-; b) on the other hand the credit of Rs.3,50,000/ - was the contra entry of corresponding sum as had been advanced through cheque to an employee for purchasing car; c) as the employee (to whom advance of Rs.3,50,000 had been made through cheque) did not use the loan amount, he had refunded the same to the appellant d) the contra entry had the effect of negating a pre-existing debit in the same account, which stood ‘self proved' not requiring any confirmating letter or so; and 3
e) the credit was not in the nature of I deposit or loan accepted by the appellant within the meaning of section 26955 of the Act.
should have held that there was no violation of the provisions of section 269SS of the Act and levy of penalty was absolutely illegal, unjust and not sustainable either on facts or in law.”
Ld. AR of the assessee submitted that against the assessment order u/s 153C of the Act, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) deleted the addition on the basis of notices issued u/s 153C is void ab initio and legally non-sustainable and accordingly quashed. Further he relied on the decision of ITAT, Mumbai in the case of Ravi Nirman Nigam Ltd. vs. ACIT in ITA Nos.4140 & 4141/MUM/2023 order dated 28.06.2024 wherein the Bench has considered the submission that quantum reassessment order was quashed as void ab initio without dealing with the other issues on merits. On the same addition, penalty proceedings initiated u/s 271D also does not survive by relying on the decision of Hon’ble Supreme Court in the case of CIT vs. M/s. Jayalakshmi Rice Mills (2015) 379 ITR 521 (SC). 6. On the other hand, ld. DR of the Revenue relied on the orders of the lower authorities and submitted that the quantum appeal was quashed on the technical issue and the penalty was levied on merits of the case. 7. Considered the rival submissions and material placed on record. We observed that the penalty proceedings were initiated u/s 271D and also 4 levied a penalty of Rs.3,50,000/-. We considered the facts available on record that the quantum addition made in the assessment order passed u/s 153C was quashed by the ld. CIT (A) on the basis of absence of valid satisfaction note and no incriminating material seized during the search. Accordingly, it was concluded that notice u/s 153C issued by the Assessing Officer for assessment year under consideration need to be treated as ab initio invalid and legally not sustainable and quashed. Since the penalty levied u/s 271D is against such additions made in the assessment order passed u/s 153C and the same was quashed, accordingly the penalty levied u/s 271D also does not survive. The similar issue was considered by the ITAT Bench in the case of Ravi Nirman Nigam Ltd. (supra) and held as under :- “9. We have heard the rival contentions and perused the material on record. Admittedly, it is a fact on record that the reassessment proceedings, u/s. 147 of the Act in the course of which penalty proceedings u/s. 271D and 271E were initiated have been quashed as void ab initio by the Co-ordinate Bench. This fact was put forth before the ld. CIT(A) by the assessee but has been negated to upheld the penalty imposed by the ld. Assessing Officer. Based on these facts, we have perused the order of the Hon’ble Apex Court in the case of Jayalakshmi Rice Mills (supra), and find that it clearly applies in the present case to hold that with the quashing/annulling of the reassessment order passed in the case of the assessee by the ITAT, the penalty initiated there in u/s. 271D did not survive.
We also take note of the distinguishing facts brought before us in respect of the judicial precedents relied upon by the ld. Sr. DR and we agree with the same. We also note that the contentions put forth by the ld. Sr. DR have been dealt with by the Co-ordinate Bench of ITAT in the case of Karan Empire Pvt. Ltd. (supra) in paragraph 9, wherein it is noted as under:
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“though undeniably, there is a difference in the facts of both the cases as in the case before the Hon’ble Apex Court, the assessment had been set aside with the direction to frame a fresh assessment.
While in the present case before us, the assessment order passed has been held to be invalid, the proposition laid by the Hon’ble
Apex Court Hon’ble Apex Court still applies since the ultimate effect of the facts in both the cases still results in the original assessment order, not surviving, as also the satisfaction recorded therein for the purpose of initiation of penalty proceedings under section 271E/271D of the Act.”
1. Considering the facts on record and the judicial precedents dealt in above, more importantly, by placing reliance on the decision of the Hon’ble Supreme Court, in the case of Jayalakshmi Rice Mills (supra), and the decision of the Co-ordinate Bench of ITAT, Chandigarh in the case of Karan Empire Pvt. Ltd. (supra), which has dealt with the decision of Hon’ble Supreme Court as well as similar contentions put forth by ld. Sr. DR, we delete the levy of penalty u/s. 271E of the Act amounting to ₹11,40,000/-. Accordingly, ground No.1 taken by the assessee is allowed. All other grounds taken by the assessee are thus, rendered academic in nature.
In the result, appeal of the assessee is allowed.”
Respectfully following the above decision, we are inclined to delete the penalty levied u/s 271D of the Act. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 15th day of January, 2025. Dated:15.01.2025 TS
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ITA No.3216/DEL/2018