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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED
PER BENCH:
Out of these four appeals, ITA No.47/Ahd/2023 is filed by the Revenue against order dated 22.11.2022 & ITA No.109/Ahd/2023 is filed by the Assessee against order dated 27.01.2023 passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2014-15 and ITA No.108/Ahd/2023 & 192/Ahd/2023 are cross appeals filed by the Assessee and Revenue against order dated 27.01.2023 passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2014-15. All these appeals, pertaining to the same assessee, were heard together and, therefore, as a matter of convenience, all these four appeals are being disposed of by way of this consolidated order.
The grounds of appeal are reproduced as under :-
ITA No.47/Ahd/2023 by the Revenue
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the penalty levied under Section 271(1)(c) of the I.T. Act to Rs.3,05,953/- as against penalty of Rs.1,31,79,630/- levied by the Assessing Officer on the grounds that the additions, which form the basis of the penalty have been deleted by the Hon’ble ITAT without appreciating the facts that department has filed an appeal u/s.260A of the I.T. Act against the order of the
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 3 of 9 Hon’ble ITAT before the Hon’ble Gujarat High Corut and which is still pending. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent.” ITA No.192/Ahd/2023 by the Revenue
“1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in restricting the penalty of Rs.6,83,67,678/- levied under Section 271D of the Act to Rs.5,96,11,178/- despite the facts that the balance amount in respect of which relief has been granted was also accepted by the company in cash as loan in contravention of the provisions of Section 269SS of the Act. 2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in granting relief of Rs.87,56,500/- to the assessee against the penalty levied under section 271D of the I.T. Act despite the fact that in the concluding Para No.12 of the appellate order the CIT(A) has mentioned that Ground of Appeal 1 & 2 are dismissed and also mentioned in the next para that “In the result the appeal is Dismissed”. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent.” ITA No.108/Ahd/2023 by the Assessee “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the penalty of Rs.5,96,11,178/- imposed under Section 271D of the Act solely based on presumptions and conjectures and without considering the submissions, explanation of the appellant. 2. The appellant prays that since the penalties imposed under Section 271D are not lawful as the appellant did not have taken at all any unsecured loans from its Directors. The CIT(A) has also not considered the legality of the case and disposed the appeal by dismissing appeal which is not reasonable. 3. As the penalties imposed were void, illegal or inoperative since inception of the proceedings as the AO himself could not produce any cogent evidence in support of his stand rather merely relied
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 4 of 9 upon presumptions and such arbitrary additions and penalties are not legitimate in the eyes of law.” ITA No.109/Ahd/2023 by the Assessee
“1. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the penalty of Rs.1,89,00,000/- imposed under Section 271E of the Act solely based on presumptions and conjectures and without considering the submissions, explanation of the appellant. 2. The appellant prays that since the penalties imposed under Section 271E are not lawful as the appellant did not have taken or repaid any unsecured loans from its Directors. The CIT(A) has also not considered the legality of the case and disposed the appeal by dismissing appeal which is not reasonable. 3. As the penalties imposed were void, illegal or inoperative since inception of the proceedings as the AO himself could not produce any cogent evidence in support of his stand rather merely relied upon presumptions and such arbitrary additions and penalties are not legitimate in the eyes of law.”
Firstly, we are taking up the appeal filed by the Revenue being ITA No.47/Ahd/2023. The return of income was filed under Section 139(1) of the Income Tax Act, 1961 on 31.10.2015 declaring total loss of Rs.(-) 73,18,039/-. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 12.04.2016 and duly served upon the assessee. The Assessment Order under Section 143(3) of the Act was finalised on 27.12.2016 determining the total income of the assessee company at Rs.16,25,46,276/-. While finalising the assessment, the penalty proceedings under Section 271(1)(c) of the Act were initiated for concealment of income on the issues appearing at Sl. Nos.1 to 7 and 10 as well as initiated penalty for furnishing inaccurate particular of income on the issues appearing at Sl. Nos.8 & 9. After taking into consideration the assessee’s submission, the Assessing Officer levied penalty of Rs.1,31,79,630/- under Section 271(1)(c) of the Act.
Being aggrieved by the Penalty Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 5 of 9 5. The Ld. AR submitted that the Assessing Officer imposed penalty under Section 271(1)(c) amounting to Rs.1,31,79,630/- for concealment of income to the tune of Rs.4,06,21,446/- on the additions sustained by the CIT(A). The quantum of sustained addition is as follows :
Sr. Description of Additions Amount (Rs.) No. 1. Unexplained Expenditure u/s.69C 59,45,153/- 2. Unaccounted Cash Receipts 50,14,800/ 3. Unaccounted Money received for Shares 29,93,693/- 4. Unaccounted Receipts and Expenses 53,06,500/- 5. Unexplained Income 2,05,11,300/- 6. Disallowance of interest incurred on 1,50,000/- unsecured loan addition 7. Disallowance of excessive claim of 7,00,000/- depreciation TOTAL 4,06,21,446
The Ld. AR submitted that the Tribunal vide order dated 13.01.2022 granted relief of Rs.3,96,31,306/- and sustained the addition of Rs.9,90,140/-. The Ld. AR further submitted that the assessee has not made any concealment of income or furnished any inaccurate particulars of income as envisaged under Section 271(1)(c) of the Act. The Ld. AR submitted that the CIT(A) has categorically taken into account all the aspect relating to the quantum addition and the partial relief granted by the Tribunal and, therefore, the Ld. AR relied upon the order of the CIT(A).
The Ld. DR submitted that the Revenue is in appeal as the CIT(A) was not right in deleting the addition to the extent of Rs.3,96,31,306/-. When the Department has filed appeal before the Hon’ble Gujarat High Court in respect of quantum for the said additions, the ld. DR submitted that the assessee has very much concealed the particulars of income as well as furnished inaccurate particulars of income. Therefore, the ld. DR submitted that the CIT(A) was not right in granting partial relief to the assessee.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Tribunal in respect of unexplained expenditure under Section 69C of the Act and unaccounted cash
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 6 of 9 receipt have granted relief to the extent of Rs.3,89,31,306/- and sustained the addition to the extent of Rs.8,40,140/-. The Tribunal’s finding vide order dated 13.01.2022 clearly reveals that the assessee has disclosed all the relevant material before the Assessing Officer during the assessment proceedings and, therefore, the element of concealment of income or furnishing of inaccurate particulars of income will not arise in the present scenario. In respect of disallowance of interest incurred on unsecured loan, the assessee has not prayed this ground and, therefore, the addition was sustained. Thus, this cannot be stated as concealment of income or furnishing of inaccurate particulars of income. Thus, the CIT(A) has rightly granted partial relief to the assessee and there is no need to interfere with the same. Appeal being ITA No.47/Ahd/2023 filed by the Revenue is dismissed.
Now coming to ITA No.108/Ahd/2023 filed by the assessee, the Ld. AR submitted that the Assessing Officer imposed penalty under Section 271D of the Act as the assessee has grossly failed to prove that there was any reasonable cause to accept deposits otherwise than through Bank Draft or through cheque exceeding Rs.20,000/-. The Assessing Officer clearly observed that the assessee has chosen to keep complete silence on the fact that why such amounts were received in cash or bring about any reason to justify such huge cash loans/deposits were accepted by it. Both the assessee and the persons from whom such loans/deposits have been taken in cash have complete access to banking facilities which all the more buttresses the case of the Revenue that it is a willful contravention of the existing law. The Ld. AR further submitted that the Assessing Officer has rightly held that the assessee intentionally accepted the said amount in contradiction of provisions of Section 269SS, therefore, penalty of Rs.6,83,67,678/- was levied on the assessee under Section 271D of the Act.
The Ld. AR submitted that the Assessing Officer has levied the penalty of Rs.1,89,00,000/- and not Rs.2,85,22,600/- in the penalty order under Section 271D and 271E of the Act. However, this amount of Rs.1,89,00,000/- as a part of total amount of Rs.2,85,22,600/- on which penalty proceedings under Section 269SS and 269T have been initiated and since the very initiation of such penalty proceedings under Section 269SS and 269T are illegal and on wrong premises
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 7 of 9 and, therefore, this penalty of Rs.1,89,00,000/- as levied in the Penalty Order under Section 271D and 271E being bad in law may be deleted. Ld. AR submitted that when the Assessing Officer has initiated penalty proceedings under Section 271(1)(c) of the Act to this amount and Rs.2,85,22,600/- the Assessing Officer is contradicting at one place in the Assessment Order under Section 143(3) of the Act. The Ld. AR further submitted that without prejudice to the assessee’s stand the amount of Rs.1,89,00,000/- has been treated as income of the assessee and has been added to his total income and hence such amount of Rs.1,89,00,000/- cannot be treated as cash/loan and, therefore, no penalty under Section 271D and 271E of the Act will be levied. The Ld. AR further submitted that the penalty of Rs.3,97,87,485/- under Section 271D was confirmed by the CIT(A) without any concrete finding. The Ld. AR further submitted that as relates to penalty of Rs.3,78,00,000/- under Section 271D and 271E of the Act for concealment of income, the Assessing Officer has already passed order under Section 271(1)(c) of the Act imposing penalty at 30% and thus it cannot be treated as loan or deposit and will not attract Section 269SS as well as Section 269T of the Act.
We have heard both the parties and perused all the relevant material available on record. In respect of penalty under Section 271D amounting to Rs.6,83,67,678/-, the CIT(A) has confirmed the penalty of Rs.5,96,11,178/-. The CIT(A) while passing the order has taken conclusion that the Directors of the Company Preet Patel and Pravin Patel given cash loans in order to enable the Company to incur various expenses including the investment in land. Other than loan, the CIT(A) reluctantly objected that there can be no other treatment of such amounts given. Similarly, the CIT(A) held that Ghanshyam Gandhi also gave loan of Rs.1,89,00,000/- which is clearly mentioned in the seized documents and in fact the said amount was repaid with interest. This is in violation of the provisions of Section 269SS of the Act as per the observation of the CIT(A). The CIT(A) further pointed out that the cash transactions were undertaken not only to help the Directors to evade taxes but also to let the money given be utilised for purchase of land etc. to keep that transaction also out of tax net. The CIT(A) confirmed the penalty to the extent of Rs.5,96,11,178/- under Section 271D of the Act and deleted the remaining amount relatable to share application/investment. The very
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 8 of 9 objection of the CIT(A) appears to be contradictory when documents shown by the assessee and the findings given by the Tribunal in the order dated 13.01.2022. Since the addition itself was deleted by the Tribunal to the extent of Rs.3,96,31,306/- and the Assessing Officer has taken partial penalty proceedings under Section 271(1)(c) and 271D, the Assessing Officer has not segregated the findings independently and has not pointed out how the violation of Section 269SS has taken place in the present 271D proceedings. Thus, appeal of the assessee being ITA No.108/Ahd;/2023 is allowed.
As relates to ITA No.109/Ahd/2023 filed by the Assessee, the Ld. AR submitted that in respect of confirming the penalty of Rs.1,89,00,000/- imposed under Section 271E of the Act is solely based on presumption and conjectures. In fact, the assessee did not have taken or repaid any unsecured loans from its Directors but in the present case the assessee has given details and explained the amount for which the Tribunal vide order dated 13.01.2022 has granted the relief and, therefore, there is no violation of Section 271E of the Act.
The Ld. DR submitted that the CIT(A) has rightly confirmed the penalty under Section 271E of the Act as the assessee had transaction between Preet Patel and Pravin Patel as well as there is a transaction with Ghanshyam Gandhi which is clearly interest-bearing loan. The Ld. DR relied upon the Penalty Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given explanation before the Assessing Officer as to how the loan was repaid and that explanation in fact was accepted by the Tribunal vide order dated 13.01.2022. Thus, the very finding given by the Tribunal confirms that the assessee has categorically given the explanation related to the repayment of loans which was paid through Preet Patel and Pravin Patel. In fact, Ghanshyam Gandhi also have repaid the loan. Thus, the imposition of penalty under Section 271E of the Act will not sustain. Appeal being ITA No.109/Ahd/2023 filed by the assessee is allowed.
ITA Nos.47, 108, 109 & 192/Ahd/2023 Assessment Years: 2014-15 for 4 appeals Page 9 of 9 15. As regards to Department’s Appeal being ITA No.192/Ahd/2023 is in respect of partial relief granted by the CIT(A) in respect of penalty levied under Section 271D of the Act for which the observations made by us in assessee’s appeal being ITA No.108/Ahd/2023 is in consonance, therefore, appeal of the Revenue is dismissed.
In the result, both the appeals filed by the Revenue are dismissed and both the appeals filed by the assessee are allowed.
Order pronounced in the open Court on this 8th May, 2024.
Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 8th day of May, 2024 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad