Income Tax Appellate Tribunal - Jaipur
Assistant Commissioner Of Income-Tax vs Jag Vijay Auto Financy (P) Ltd. on 25 May, 2000
ORDER
Dinesh K. Agarwal, J.M.
1. This appeal is directed by the Revenue against the order passed by the CIT(A), dt. 5th August, 1993. The Revenue has taken the following ground of appeal :
"On the facts and in the circumstances of the case the CIT(A) has erred in deleting the penalty of Rs. 1,53,200 out of Rs. 1,94,200 levied under s. 269SS of the IT Act."
2. The brief facts of the case are that during the course of assessment proceedings for the asst. yr. 1990-91, it was found by the AO that assessee-company has accepted deposits/loans in cash from the following persons :
Rs.
(1) Smt. Laxmi Devi 1,01,750
(2) Shri Ravindra Kumar 51,450
(3) Shri Sunil Kumar Agarwal 41,000
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1,94,200
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3. The matter was referred to the Dy. CIT, Alwar Range, Alwar, who allowed opportunity to the assessee. It was explained by the assessee that Smt. Laxmi Devi and Shri Ravindra Kumar were having their savings bank account with The Bank of Rajasthan Ltd., Alwar, from where they have transferred the above amounts in the bank account of the assessee-company by transfer vouchers, as the assessee-company was also having its account with same bank, i.e., The Bank of Rajasthan Ltd., Alwar. It was also submitted that the above persons do not have cheque facilities for operating their savings bank account with the Bank of Rajasthan Ltd. It was further explained that the above persons are assessed to tax and the deposits are genuine and, therefore, there is no violation of the provisions of s. 269SS. The assessee has also filed its explanation with regard to the loan of Rs. 41,000 taken from Shri Sunil Kumar Agarwal. The Dy. CIT, Alwar Range, Alwar, did not accept the assessee's explanation and held that the assessee has violated the provisions of s. 269SS and, therefore, he imposed the penalty amounting to Rs. 1,94,200 under s. 271D vide order, dt. 16th March, 1993.
4. On first appeal, the learned CIT(A) has deleted the penalty in respect of first two deposits in the names of Smt. Laxmi Devi and Shri Ravindra Kumar amounting to Rs. 1,01,750 and Rs. 51,450 respectively. However, he confirmed the penalty in respect of their deposit of Rs. 41,000 in the name of Shri Sunil Kumar Agarwal. The assessee filed appeal against the confirmation of penalty of Rs. 41,000 before the Tribunal, Jaipur, which was allowed by the Tribunal vide ITA No. 1332/Jp/93, dt. 5th December, 1994.
5. Now, the Revenue is in appeal before us against the deletion of penalty in respect of two deposits of Rs. 1,01,750 and Rs. 51,450. It was submitted by the learned Departmental Representative that as per s. 269SS, the amount of loan for deposit can be taken only by account payee cheque or account payee draft and not otherwise. Therefore, the assessee has violated the provisions of s. 269SS and the penalty has rightly been imposed by the Dy. CIT, Alwar Range, Alwar. He urged that order passed by the CIT(A) on this account should be reversed and the order passed by the Dy. CIT(A), Alwar, Range, Alwar should be confirmed.
6. On the other hand, the learned authorised representative submits that Smt. Laxmi Devi and Shri Ravindra Kumar were having their savings bank accounts with the same Bank of Rajasthan Ltd. in which the assessee-company is also having its bank account; since both these persons do not have cheque facilities for operating their savings bank account with the bank; therefore, they have transferred their money by signing transfer vouchers into the bank account of the assessee-company; both persons are assessed to tax, the deposits have been accepted as genuine; the transfer of money by transfer vouchers may be treated as compliance of s. 269SS and, therefore, there is no violation of the provisions of s. 269SS. The reliance was also placed towards certain decisions of the Tribunal and it was urged by the learned authorised representative that the CIT(A) has rightly deleted the penalty and his order should be upheld.
7. We have carefully considered the rival submissions of the parties. At the out-set, we would like to mention the scope and effect of s. 269SS, which was elaborated in the following portion of the Departmental Circular No. 387, dt. 6th July, 1984, as under :
"Prohibition against taking or accepting certain loans and deposits in cash 32.1. Unaccounted cash found in the course of searches carried out by the IT Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loan and deposits, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation.
32.2. With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act has inserted a new s. 269SS in the IT Act debarring persons from taking or accepting, after 30th June, 1984, from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount of such loan or deposit or the aggregate amount of such loan and deposit is Rs. 10,000 or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken is Rs. 10,000 or more."
8. After careful reading of the above Departmental Circular, we find that the main object of the section is to counter the device of taking unaccounted cash or unaccounted deposits otherwise by an account payee cheque or account payee draft. We also find that the "payee" has been defined in s. 7 of The Negotiable Instruments Act, 1881, as under :
'"Payee" : The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the "payee".'
9. Since in this case it is an admitted fact that the amount was transferred by the depositors through transfer vouchers, therefore, the amount was credited in the company's bank account through proper banking channels as per spirit of s. 269SS and thus the assessee-company has not violated the provisions of s. 269SS in any manner. We, therefore, uphold the order passed by the CIT(A) in this regard and delete the penalty imposed by the Dy. CIT(A), Alwar Range, Alwar.
10. In the result, the appeal filed by the Revenue is dismissed.