SANNIDHI VENKATESWARA RAO,VISAKHAPATNAM vs. JOINT COMMISSIONER OF INCOME TAX, RANGE-1, VISAKHAPATNAM

अपीलधथी की ओर से/ Appellant by : Shri B.Vinay Gandhi, AR प्रत्यधथी की ओर से / Respondent by : Shri Madhkar Aves, DR सुनवधई की तधरीख / Date of Hearing : 13.12.2023 घोर्णध की तधरीख/Date of Pronouncement : 21.12.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member :

These appeals are filed by the assessee against the orders of the Commissioner of Income Tax (Appeal) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/NFA/ S/250/2023-24/1054062121(1) and ITBA/NFAC/S/250/2023-24/ 1054062340(1) dated 30.06.2023, arising out of the penalty orders passed u/s 271D and 271E of the Income Tax Act, 1961 (in short “Act”)

232/Viz/2023, A.Y. 2011-12 Sannidhi Venkateswara Rao, Visakhapatnam dated 30.09.2016 for the Assessment Year (A.Y.) 2011-12. Since the grounds raised in these appeals are identical, these appeals are clubbed, heard together and a common order is being passed for the sake of convenience as under. Facts are extracted from I.T.A.231/Viz/2023.

2. Brief facts of the case are that the assessee HUF, a pharmaceutical distributor, carrying business under the proprietary concern, M/s Ramya Pharmaceuticals at Visakhapatnam, filed his return of income for the A.Y.2011-12 on 11.09.2011, declaring a total income of Rs.8,57,072/-. Subsequently, the case was selected for scrutiny and the assessment was completed by the Assessing Officer(AO) u/s 143(3) of the Act on 27.02.2014 assessing total income at Rs.10,07,072/-, thereby making lumpsum disallowance of Rs.1,50,000/- on account of expenditure which was supported by self-made cash vouchers. Thereafter, the AO had sent a proposal for initiation of penalty u/s 271D of the Act to the office of Joint Commissioner of Income Tax, Range-1, Visakhapatnam, accordingly, penalty proceedings u/s 271D of the Act were initiated by issue of notice dated 14.03.2016 to show cause as to why an order imposing penalty should not be made u/s 271D of the Act for the A.Y.2011-12.. The assessee was asked to submit the details of loans received and repaid by the assessee during the A.Y.2011-12 along with mode of receipt and 232/Viz/2023, A.Y. 2011-12 Sannidhi Venkateswara Rao, Visakhapatnam payment. In response, the AR of the assessee appeared and submitted Power of Attorney along with the details as called for earlier. Thereafter the case was posted for hearing on 23.09.2016, however, since the assessee did not appear on the said date, the proceedings were finalized on the basis of information available on record. From the confirmations obtained during the assessment proceedings and submissions made by the Ld.AR during the course of penalty proceedings, the Ld.AO/JCIT analysed the details of loans advanced and repaid and found that the assessee had received advances by way other than account payee cheques. The assessee has not submitted any proof of bank statement either in the assessment proceedings or in the penalty proceedings, in support of advances received by way of account payee cheques. The assessee’s submissions that they were in the nature of medicine supplied was not accepted as there is a requirement of Drug License for conducting retail trade in medicinal goods and the assessee has not submitted any conclusive proof in the form of drug license etc. pertaining to the persons who advanced loans to him. The AO/JCIT analysed the aggregate of loans of more than Rs.20,000/-, which the assessee had accepted by means other than account payee cheque or account payee bank draft and arrived at the penalty leviable at the sum equal to the 232/Viz/2023, A.Y. 2011-12 Sannidhi Venkateswara Rao, Visakhapatnam amount of loan taken or accepted in contravention of the provisions of section 269SS of the Act u/s 271D of the Act at Rs.16,46,527/-. 3. Aggrieved by the penalty order u/s 271D, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) sustained the penalty levied by the AO/JCIT and dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : A. Order passed by Learned Commissioner of Income Tax (Appeals) is against principles of natural justice since all information submitted before the officer is not considered while passing the order in appeal. B. The learned officer in para 5.4 of the impugned order mentioned that the details of transactions through bank channel were not submitted before him. However, Appellant wishes to submit that the bank statement where the transactions are highlighted was scanned and submitted vide Acknowledgement No.920268131120123 but the same was not considered while passing the impugned order. This is violation of principles of natural justice and hence these proceedings are to be quashed. C. Appellant wishes to submit that the table in Annexure clearly states the name of person from whom loan is received, mode of receipt and reference to bank statements. The penalty may please be adjusted after considering the bank statements. D. Appellant prays to remand the matter back to Assessing Officer for considering the relevant documents and bank statements while computing penalty.

5. The only grievance of the Ld.AR is that the assessee has submitted the details of transactions made through banking channel and submitted 232/Viz/2023, A.Y. 2011-12 Sannidhi Venkateswara Rao, Visakhapatnam the same before the Ld.CIT(A), but the same was not considered. The Ld.AR further submitted that the plea of the assessee seeking remand of the matter to the AO to submit the details before the AO was also not considered by the Ld.CIT(A). The Ld.CIT(A) passed the order ignoring the plea of the assessee in violation of principles of natural justice. He, therefore pleaded to quash the orders passed by the revenue authorities and delete the addition made.

6. Per contra, the Ld.DR contended that the Ld.CIT(A) is justified in sustaining the addition made by the AO/JCIT u/s 271D, as the assessee received the advances other than by account payee cheques, violating the provisions of section 269SS. He, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.

by the assessee are allowed for statistical purpose.

8. Since the appeal of the assessee in I.T.A.No.232/Viz/2023 is also allowed for statistical purpose, mutatis mutandis for the A.Y.2011-12.

9. In the result, appeals of the assessee are allowed for statistical purpose.

Order pronounced in the open court on 21st December , 2023. (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 21.12.2023 L.Rama, SPS