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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
The appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) Delhi / CIT(A) passed u/sec271D and U/sec250 of the Act. 1. The Learned Joint Commissioner of Income Tax 27(1) erred in levying penalty u/s 271D amounting to Rupees 24,50,000/- Rupees twenty four Lakhs fifty thousand as well as CIT(A) National Faceless Appeal Centre (NFAC) erred in confirming the same.
Bhalachandra P. Dalvi.Mumbai. - 2 - 2.1 The Appellant has received rupees 18,50,000/- Rupees Eighteen Lakhs fifty thousand cash against sale of flat and Rs.6,00,000/- amount raised from Lenders which amount was less than Rupees twenty thousand out of Rupees Six Lakhs, Rupees four lakhs seventy five thousand is already taxed as income and balance Loans are accepted as genuine and each Loans less than Rs.20,000/- considering above facts and circumstances no penalty u/s 271D can be levied and same be deleted.
2.2 The Joint CIT 27(1) as well as CIT(A) NFAC has taken stand contrary to the finding in the Assessment order passed u/s 143(3) read with section 147 order dated 22nd March, 2016
3. The Learned CIT(A) NFAC has erred in dismissing appeal without considering the request for adjournment as well as without giving proper opportunities and without considering the finding given in the assessment order and considering all these circumstances penalty levied Rs. 24,50,000/- u/s 271D be deleted. 2. The brief facts of the case are that, the assessee is an individual derives income from salary, house property and business. The assessee has filed the return of income for the A.Y 2007-08 on 23.04.2009 disclosing a total income of Rs.2,71,136/-,subsequently the assessee has filed the revised computation of income with the total income of Rs. 3,41,590/-.Whereas the Assessing Officer (AO) has received information from the Investigation Wing, Mumbai that the assessee has made cash deposits of Rs. 26,93,000/- with Bank of Baroda, Ghatkopar (East) branch during period Bhalachandra P. Dalvi.Mumbai. - 3 - 01.04.2007 to 31.03.2009. On enquiry, the A.O found that the assessee has made cash deposits of Rs. 11,87,000/- in savings bank account with Bank of Baroda. The AO has reason to believe that the income has escaped assessment and issued notice u/sec 148 of the Act. In compliance to notice, a letter dated 05.01.2016 was filed to consider the return of income filed on 23.04.2009 as a due compliance. Whereas the AO found that the assessee has made cash deposits of Rs.9,60,500/- in bank account No. 137810100010062 with Bank of Baroda, Ghatkopar branch and entered into a transaction of immovable property. The assessee was called to explain the sources of cash deposits in the F.Y 2007-08. Whereas the AO found that the assessee has purchased a flat as per agreement dated 31.05.2007 for a consideration of Rs. 30,42,000/- and Subsequently the deal was cancelled and the property was sold to Shri M Kishore Patel for Rs.30,50,000/- and the assessee was called to explain the sources of purchase. Whereas the AO has dealt on the facts with respect to business income and the explanations of the cash deposits. The A.O found that the assessee has made cash deposits in the bank out of the loans received from friends and relatives, cash withdrawals with other banks. Since the Bhalachandra P. Dalvi.Mumbai. - 4 - assessee could not substantiate with the clear facts and sources of cash deposits, the A.O made an addition of unexplained cash deposits u/sec 68 of the Act of Rs. 4,75,000/- and assessed the total income of Rs.8,16,594/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 22.03.2016.
Subsequently, the AO has initiated penalty proceedings and issued show cause notice u/sec 271 D of the Act, as the assessee has obtained cash deposits and loans from Mr. Kishore M Patel of Rs. 18,50,000/- and others Rs.6 lakhs, all aggregating to Rs. 24,50,000/-. Whereas the assessee has filed the detailed explanations dated 20.05.2016 mentioning that the assessee has received the amount from Mr. Kishore M Patel towards the sale consideration of the flat and further Rs.6 lakhs was obtained from the various persons, where the loan from each person is below Rs. 20,000/- and therefore the provisions of Sec. 271 D and U/sec 269SS of the Act are not applicable. Whereas the AO was not satisfied with the explanations and observed that the assessee has received loan of Rs. 18,50,000/- and was later adjusted towards sale consideration in the same financial year, therefore the AO is of the opinion that there Bhalachandra P. Dalvi.Mumbai. - 5 - is violation of provisions of Sec. 271D of the Act. Similarly in respect of cash deposits of Rs.6lakhs, where the assessee has obtained loans from the various parties each below Rs. 20,000/- and since no information was filed with respect to the identity, creditworthiness and evidence of the parties, the A.O. invoked the provisions of Sec.269SS of the Act and has levied penalty of Rs. 24,50,000/- and passed the order u/sec 271 D of the Act dated 07.07.2016.
Aggrieved by the penalty order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has confirmed the action of the AO and sustained the penalty and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Hon’ble Tribunal.
5. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the levy of penalty u/sec 271D of the Act overlooking the facts and findings that, the assessee has entered into agreement for purchase of flat and since the deal could not go through due to non compliance of financial transactions and the agreement of sale was registered in the name of Mr. Kishore M Patel, Bhalachandra P. Dalvi.Mumbai. - 6 - and the assessee has received Rs.18,50,000/- towards the sale consideration. Further in respect of Rs.6 lakhs, the assessee has obtained loans from the various parties each below Rs. 20,000/- and there is no contravention of provisions U/sec 269SS of the Act. In the assessment proceedings, the A.O has made an addition of unexplained cash deposits/loans u/sec 68 of the Act of Rs.4,75,000/- and made assessment u/sec 143(3) r.w.s 147 of the Act. The Ld.AR substantiated the submissions with the synopsis, judicial decisions and factual paper book and prayed for allowing the assessee appeal.Per Contra, the Ld. DR relied on the order of the CIT(A).
We heard the rival submissions and perused the material on record. The Ld. AR submitted that the CIT(A) has erred in not considering the explanations of the assessee before the lower authorities. The assessee has received the sale of consideration in respect of flat and whereas the assessee has purchased a flat from the builder under construction flat No. 803 on 8th floor in building No. 68, Palace Shiv Sagar at Tilak Nagar, Mumbai by registered agreement dated 29.05.2007 for a total consideration of Rs. 30,42,000/- and the amount was payable in installments.
Bhalachandra P. Dalvi.Mumbai. - 7 - The Ld. AR demonstrated the agreement placed at page 94 to 112 of the paper book and as per the agreement, the assessee at the time of registration of agreement on 29.05.2007 has paid only Rs.1 lakh out of the total purchase consideration payable to the builder and remaining amount to be paid in installments as referred at Para 3 internal page 7 of the agreement(at page 100 of paper book). Whereas the assessee has made the payment of Rs.1 lakh out of his salary income and business income and the amount was paid on 17.05.2007 from his bank account. Further the Ld. AR submitted that due to circumstances beyond the control, the assessee could not purchase the property and has sold the property to Mr. Kishore M Patel as per the agreement of sale registered on 06.12.2007 placed at page 34 to 43 of the paper book. The assessee has sold the property as per the registered agreement of sale for a consideration of Rs. 30,50,000/- and received the sale consideration in cash and through banking channel. The Ld.AR contentions are that the assessee has received the cash and bank payments from the purchaser as per the confirmation of accounts submitted as under:
Bhalachandra P. Dalvi.Mumbai. - 8 - Bhalachandra P. Dalvi.Mumbai. - 9 - Bhalachandra P. Dalvi.Mumbai. - 10 - 7. The assessee has received the part sale consideration in cash on different dates i.e on 04.12.2007 Rs. 6 lakhs, 26.12.2007 Rs. 5 lakhs, 29.12.2007 Rs.1,50,000/-, 31.12.2007 Rs. 5,00,000/- and on 16.01.2008 Rs. 1 lakh and all aggregating to Rs.18,50,000/-. Further the assessee also received the sale consideration by cheques on 08.01.2008 Rs.3 lakhs and Rs 1 lakh on 16.01.2008 aggregating to Rs. 4 lakhs. The Ld. AR contentions are that the assessee has received the sale consideration in lieu of agreement of sale and therefore the transaction is totally a sale transaction and not loan. The Ld. AR submitted that the assessee has purchased the flat through agreement of sale which is under construction on 29.05.2007 for a total consideration of Rs. 30,42,000/- which is not disputed. The contentions of the Ld. AR that the provisions of Sec. 269SS of the Act shall not apply in respect of sale transactions were the amounts are received in cash prior to amendment in finance Act 2015 and hence no penalty u/sec271D of the Act is warranted. Further when the A.O has made addition U/sec68 of the Act in respect of cash loans each being below Rs.20,000/- and the same cannot be liable for penalty U/sec271D of the Act The Ld.AR relied on the fallowing judicial decisions as under:
Bhalachandra P. Dalvi.Mumbai. - 11 - 1.CIT Vs. Jai Laxmi Rice Mills Ambala City, [2015] 379 ITR 521 2. Cit Vs. Madhukar B. Pawar Bombay HC, [2008] 218 CTR 59.
3. Gopal Sarkar Vs. ACIT, 21 taxmann.com 132 Kal 4. DIT(E) Vs. Young Men Christian Association, 49 taxmann.com 172.
ITO Vs. Smt Gurmeet Kaur, 27 taxmann.com 173 Jodhpur 6. CIT Vs. Shyam Corporation, 218 Taxmann 136 Gujrat HC 7. CIT Vs. Standard Brands Ltd, [2006] 155 taxmann 383 Delhi HC 8. CIT Vs. Kailash Chandra Deepak Kumar, [2009] 317 ITR 351 Allahabad HC 9. CIT Vs. Khartri Lal & Co. [2005] 144 Taxmann 178 (P & H HC) 10. Pankaj Investment Vs. ACIT, 46 ITR (T) 345 Mumbai.
Dillu Cine Enterprises (P) Ltd Vs. ACIT, [2002] 80 ITD 484 12. Karnataka Ginning & Pressing factors Vs. JCIT, [2001] 77 ITD 478 (Mumbai) 13. CIT Vs. Speedways Rubber (P) Ltd, [2010] 326 ITR 31 14. Hindusthan Steel Ltd Vs. State of Orissa, 83 ITR 26.
OMEC Engineeris Vs. CIT, 294 ITR 599 16. CIT Vs. Mudhav Enterprises (P) Ltd, 356 ITR 588, Guj
We find that the assessing officer in the asseseement order U/sec143(3) r.w.s.147 of the Act has made addition of cash loans below Rs.20,000/-each aggregating to Rs.6,00,000/- as unexplained cash deposits u/sec 68 of the Act of Rs. 4,75,000/- and also initiated penalty U/sec271(1)(c) of the Act, and again invoked the penalty provisions of section271D of the Act is not acceptable. On the second issue of sale consideration received by the Bhalachandra P. Dalvi.Mumbai. - 12 - assessee, we find the revenue has not disputed the genuiness of purchase and sale of the flat by the assessee. Whereas the assessee has entered into agreement for purchase of under construction flat and since the deal could not go through due to non compliance of financial transactions and subsequently the agreement of sale was registered in the name of Mr. Kishore M Patel which is not disputed and the assessee has received the sale consideration in lieu of agreement of sale as per the confirmation dealt in the above paragraphs and found the submissions made by the Ld. AR are realistic. We Considering the facts, circumstances, and the ratio of judicial decisions, set-aside the order of the CIT(A) and direct the Assessing officer to delete the penalty and allow the grounds of appeal
in favour of the assessee. 9. In the result the appeal filed by the assessee is allowed. Order pronounced in the open court on 17.01.2024.