DCIT CEN CIR 8(4), MUMBAI vs. RAJ DOSHI EXPORTS P.LTD, MUMBAI

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ITA 4880/MUM/2016Status: DisposedITAT Mumbai08 September 2017AY 2012-134 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of the penalty. It noted infirmities in the Hundies and referenced a precedent that an amount cannot be treated as income for assessment and a loan for penalty purposes simultaneously.

What were the facts?

During a search, the assessee was found to have accepted loans of Rs. 55,00,000/- through Hundies. The Assessing Officer levied a penalty under Section 271D for contravention of Section 269SS.

What were the issues?

Whether the penalty under Section 271D was rightly deleted by the CIT(A) considering the validity of the Hundies and the contradictory treatment of the amount as income and loan.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “I” MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN

For Appellant: Shri Shailesh Parmar, AR
For Respondent: Shri Saurabh Kumar Rai, DR, Shri Shailesh Parmar, AR
Hearing: 14/06/2017Pronounced: 08/09/2017

ORDER

PER N.K. PRADHAN, AM

1.

This is an appeal filed by the Revenue. The relevant assessment year is 2012-13. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-50, Mumbai and arises out of the penalty order u/s 271D of the Income Tax Act 1961, (the ‘Act’).

2.

The ground of appeal

filed by the Revenue reads as under:- On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty of Rs.55,00,000/- levied u/s 271D of the Income Tax Act, 1961 holding that the provision of section 269SS are not applicable without appreciating the facts that during the course of assessment proceedings as well as penalty proceedings, the assessee was given an opportunity but he failed to explain the notings on Hundies/promissory notes and no reasonable cause is explained for accepting loan by cash.

3. Briefly stated, the facts of the case are that a search and seizure action u/s 132 was carried out in the business premises of the assessee M/s Raj Doshi Exports Pvt. Ltd. on 26.05.2011. The Assessing Officer (AO) noted that during the course of search one loose paper file was seized (Annexure A-1 to the panchnama). As per page No. 16 to 22 of this loose paper file, the assessee had accepted loans of Rs.55,00,000/- by Hundies during the FY 2011-12 relevant to the AY 2012-13. As the same was in contravention to provision of section 269SS, the Additional CIT, Central Range -10, Mumbai levied a penalty of Rs.55,00,000/- u/s 271D of the Act.

4. Aggrieved by the penalty order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) found that (i) the hundis were not filled up properly, therefore they have little evidentiary value, (ii) the hundis were found in the premises of the assessee, therefore, had any loan been actually given to the assessee, the creditor would have definitely insisted on the hundi being handed over to him (creditor) by the assessee and in

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