ITO, WD-9(3), KOLKATA, KOLKATA vs. M/S TODI FARM AND RESORT PVT. LTD., KOLKATA

O R D E R

Per Dr. Arjun Lal Saini, AM:

2. That the assessee reserves the right to amend, alter or add to any ground(s) of appeal before or at the time of hearing of the appeal.” 3.The brief facts qua the issue are that the assessee company incorporated on 16.08.2006 and the share capital on incorporation of the company was at M/s. Todi Farm and Resort Pvt. Ltd. Assessment Year: 2007-08 Rs.1,50,000/- which was received in cash and no bank account was maintained by the assessee company. The assessee also purchased agricultural land at Sanganer, Jaipur at a consideration of Rs.27,50,000/- and also took unsecured loan from Swastik Enterpirises amounting to Rs.3,00,000/- other than by account payee cheque and paid to the seller of the land. Assessee purchased a piece of agricultural land for Rs.29,00,000/- at Jaipur Rajasthan from two individuals. It was observed by the AO that the payment for the entire purchase of land was facilitated by a loan creditor, Viz, M/s Swastik Enterprises for Rs. 3,00,000/- paid directly to the said two sellers and a further sun of Rs. 26,00,000/- paid directly to the said two sellers and a further sum of Rs.26,00,000/- paid again directly by the promoter directors and their relatives which was subsequently accounted for in the books as share application money. Therefore, assessing officer held that the assessee has violated the provisions of section 269SS of the Income Tax Act, 1961 and therefore, the AO imposed penalty u/s 271D of the Act at Rs.29,00,000/-. 4.Aggrieved by the penalty order passed by the AO, the assessee filed an appeal before the ld. CIT(A) who has deleted the penalty. The ld CIT(A) observed thata perusal of the observations of the ld. Additional Commissioner( Assessing officer) clearly brings out the fact that he accepts that the said payments were made by drafts. During the appeal proceedings, the assessee has in fact filed copies of the drafts by which the payments were made. These were obviously available with the AO as well as the ld. Additional Commissioner. Copies of the account payee demand drafts produced were the following: Sl. In favour of Draft No. Amount Date Made in No.

1. Kharun Begum 276230 9,00,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 2. Narmada Devi 276226 5,50,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 3. Khatun Begum 276231 4,00,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 4. Narmada Devi 276229 2,00,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 5. Narmada Devi 276228 4,50,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 6. Narmada Devi 26227 1,00,000/- 11.08.2006 Allahabad Bank, Jaipur 0211867 Page | 2 M/s. Todi Farm and Resort Pvt. Ltd. Assessment Year: 2007-08 The above amounts come to a total of Rs 26 lakhs. As regards the rest of the Rs. 3 lakhs, the assessee has shown them to be payments through two cheques with Nos.390102 drawn against lndian Overseas bank for Rs 1.50 lakh and 390102 drawn on lndian Overseas Bank for an amount of Rs 1.50 lakh both dated 1.6.2006 in the name of Khairun Begum and Narmada Devi respectively. As regards, the other cheques payments, the assessee produced the relevant bank accounts.After going through these payments the CIT(A) observed that there was nothing on record to show that any cash payments were actually made by any of the payers. The assessee has also filed the sale deeds inwhich the names of the sellers have been reflected. The ld CIT(A) observed that the Ld additional commissioner got himself misguided by the fact that the assessee company did not have any bank accounts at the time of the payments. This was an admitted fact by the assessee himself and borne out by the facts and circumstances at the time of the sale transaction. The assessee did not have a bank account at the time of the said transaction because the assessee company had, as of that time, still not been incorporated. But since the transaction had to be completed assoon as possible for reasons of the promoters, the payments were made to the sellers and the necessary book entries made into the books of account of the assessee company after it was incorporated. The mode of conveyance of the said payments had also been shown to be not in cash. Therefore, ld CIT(A) held that there is no any violation of provisions of section 269SS of the Act and therefore, he deleted the penalty u/s 271D of the Act.

5. Not being satisfied with the order of ld. CIT(A), the Revenue is in appeal before us. The Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.On the other hand, the Page | 3