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Facts
The assessee's case was reopened based on information from survey proceedings of a third party, alleging receipt of cash loans of Rs. 14,00,000. The assessee denied this, but the Assessing Officer initiated penalty proceedings under Section 271D. The penalty was imposed by the JCIT and upheld by the CIT(A).
Held
The Tribunal held that neither the Assessing Officer nor the CIT(A) provided sufficient evidence or findings on record to demonstrate how the appellant received the cash loans of Rs. 14,00,000 in contravention of Section 269SS. No addition was made by the AO during the assessment.
Key Issues
Whether the penalty levied under Section 271D for alleged cash loans violating Section 269SS is sustainable in the absence of sufficient evidence and findings.
Sections Cited
271D, 269SS, 133A, 143(3), 147, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RATNESH NANDAN SAHAY
Assessment Year: 2011-12 Trilokchand Sirsalewala Joint Commissioner of A-1/7, 202, Income Tax- Range 33(1), Room No. 931, 9th Floor, Best View, Yashodham, Opp. Dindoshi Bus Depot., Kautilya Bhawan, Vs. Goregaon (E.) C-41 to C-43, Mumbai- 400063. G Block, Bandra Kurla Complex, PAN: ABEPS5015N Bandra (E.), Mumbai-400051. (Appellant) (Respondent) Present for: Assessee by : Shri Rakeshkumar Sirsalewala, A.R. Revenue by : Shri P.D. Chougule (Addl. CIT), Sr. D.R. Date of Hearing : 28 . 05 . 2024 Date of Pronouncement : 31 . 05 . 2024 O R D E R Per: Ratnesh Nandan Sahay, Accountant Member:
1. 1. This appeal has been filed by the appellant against the order passed by the Jt. Commissioner of Income Tax, Range 33(1), Mumbai u/s. 271D of the Income Tax Act (‘Act’ in short) vide order dated 30/07/2019 for the A.Y 2011-12 which was subsequently, confirmed in appeal by the Ld. CIT Appeal vide its order no. ITBA/NFAC/S/250/2023- 24/1060060772(1) dated 24/01/2024 for assessment year 2011-12.
2. Following grounds of appeal have been raised: “1. Ground No. 1 - Levy of Penalty u/s. 271D of the Income tax Act, 1961 in violation of provisions of penalty Section 269SS On the facts and in the circumstances of the case, and in law, the Hon'ble CIT (A) has erred in upholding levying penalty of Rs. 14.00 lakhs without appreciating the facts and evidences brought on record. Your appellant is individual. The case of the appellant was re-opened based on details obtained from survey proceedings of a third party wherein it was alleged that the appellant has obtained cash loan of Rs. 14.00 Lakhs. During the reassessment proceedings under section 148, appellant denied acceptance of loan with detailed submission. However, assessing officer passed assessment order accepting income same as returned income and referred the matter to Joint Commissioner of Income Tax for initiating penalty proceedings. The same was duly responded by the appellant. However, Joint Commissioner of Income Tax passed the order under section 271D of the Act levying penalty of Rs. 14.00 Lakhs, which was later upheld by Commissioner of Income Tax (Appeals). The Appellant therefore, prays that the levy of Penalty Rs. 14.00 lakhs be deleted.
2. Ground No. 2- the alleged cash loan transaction of Rs. 7,00,000/- has been inadvertently recorded twice Without prejudice to the above ground, the Hon'ble CIT (A) has erred in confirming the penalty at Rs. 14,00,000/- without appreciating that the alleged cash loan transaction of Rs. 7,00,000/- has been inadvertently recorded twice. Without prejudice to the above ground, the Appellant therefore, prays that the penalty be reduced to Rs. 7,00,000/-.”
3. The brief facts of the case are that the assessee’s case was reopened u/s. 147 of the Act on the ground that the assessee had received loans from various parties the details of which are given in the body of the penalty order u/s. 271D of the Act. The assessee, being an individual, was a broker/agent who was alleged to have received cash loans from various parties. This information was recorded in a diary impounded during a survey operation conducted u/s 133A of the Act on 08/12/2015 in connection with the search carried out in Nadiadwala Group of cases.
4. The assessment for the assessment year under consideration was completed u/s. 143(3) of the Act r.w.s. 147 of the Act on 27/12/2018 and it was held by the AO that the assessee had accepted loan of Rs.14,00,000/- in cash in clear violation of Section 269SS of the Income Tax Act and accordingly, initiated penalty u/s. 271D of the Act. 5. Since, the JCIT/Addl.CIT was only a competent authority to impose penalty u/s 271D of the Act, the matter was referred by the Assessing officer to the Jt. Commissioner of Income Tax, Range 33(1), Mumbai who imposed a penalty of Rs.14,00,000/- u/s 271D of the Act being equal amount of receipt of cash loans in contravention to the provisions of section 269SS of the Act. Aggrieved by the order of the Jt. Commissioner of Income Tax, the appellant preferred appeal before the Ld. CIT Appeal who confirmed the said penalty order.The appellant, therefore, has preferred this appeal. 6. During the course of hearing before us, the appellant submitted that during the assessment proceedings u/s. 143(3) r.w.s 147 of the Act, the assessing officer did not make any addition on this ground that the assessee had taken loans of Rs.14,00,000/- in cash and rather accepted the income returned by the assessee. The assessing officer also did not give any finding as to how he arrived at the conclusion that the loans were received in cash and how the provisions of section 269SS of the Act were violated. The Ld. CIT (Appeals) also did not give any findings on as to how the appellant had contravened the provisions of section 269SS and was liable to pay a penalty of Rs.14,00,000/- u/s. 271D of the Act. 7. The counsel of the revenue simply relied on the order of the Ld. Jt. Commissioner of Income Tax, Range 35(3), Mumbai and the Ld. CIT Appeal. We have considered the rival submissions and it is found that neither the assessing officer nor the Ld. CIT Appeal has brought out on record any evidence or material as to how the appellant received cash loans of Rs.14,00,000/- from different parties. In fact, no addition was made by the Assessing officer u/s 143(3) r.w.s 147 of the Act on this count. In the absence of any clear findings on contravention of section 269SS of the Act, the penalty imposed u/s. 271D of the Act cannot be sustained and, therefore, deleted. 8. In the result, the appeal is allowed. Order pronounced in the open court on 31.05.2024.