Income Tax Appellate Tribunal - Delhi
Dcit, Central Circle-1, Gurugram vs Platinum Towers P.Ltd, New Delhi on 5 January, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. C. N. Prasad, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 1307/Del/2020 : Asstt. Year: 2013-14
DCIT, Vs M/s Platinum Towers Pvt. Ltd.,
Central Circle-1, K-91, Second Floor, Lajpat Nagar-II,
Gurugram122016 New Delhi 110024
(APPELLANT) (RESPONDENT)
PAN No. AAECP5640G
Assessee by : Sh. Parikshit Agarwal, CA
Revenue by : Sh. Vivek Vardhan, Sr. DR
Date of Hearing: 01.01.2024 Date of Pronouncement: 05.01.2024
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Re venue against the order of Ld. CIT(A)-3, Gurgaon, dated 16.0 3.2020 for the A.Y. 2013-14.
2. The Revenue has raised the following grounds of appeal are as under:-
" i) W h et h e r o n t h e f a c t s a n d in t h e c i r cu m s ta n c e s o f t h e ca s e , th e Ld . C I T( A ) h a s e r r ed in d el e ti ng t h e p en al t y u / s 2 7 1D o f t h e A ct r el yi ng on th e o rd e r of t h e H on ' bl e I TA T wh e r ei n it w a s h el d th a t th e pa y m en t of R s . 2 , 00 ,0 0 ,0 0 0 /- m a d e b y M / s Sp a z e T o w e rs P u t. Lt d . t o th e a s s ess e e w a s no t a l oa n t r a n sa ct i on m a d e in c on t ra v en ti on o f th e pr o v i si on s o f s e c ti o n 2 6 9 SS of t h e I n c o me Ta x A c t .
ii ) W h et h e r o n t h e f a c t s a n d in t h e c i r cu m s ta n c e s o f t h e ca s e , th e Ld . C I T (A )h a s er r e d in d el e tin g t h e p en a l t y u / s 2 7 1 D o f t h e A ct de spi t e t h e f a c t t h a t f r om th e fu n ds fl ow su b mit t e d by Ms Sp a z e T ow e r P v t. Lt d . b e f or e t h e Ho n ' b l e S et t l em ent C o mmi s si on i t i s e v id ent th a t M/ s S p a ze T ow e r P v t . Ltd . ha d di s ch a rg ed t h e l ia b il it i es o f t h e a s se s s e e by ma k in g pa ym ent s i n ca sh w h i ch i s v i ola t ion o f th e pr o v i si on s o f s e c ti o n 2 6 9 SS of t h e A ct .
2 ITA No. 1307/Del/2020M/s Platinum Towers Pvt. Ltd.
ii i) W h et h e r o n t h e f a c t s a n d in t h e c i r cu m s ta n c e s o f t h e ca s e , th e Ld . CI T (A )h a s er r e d in d e l et in g t h e p e na l ty r el yin g on th e o rd e r of th e Hon 'b l e I TA T w h e r ein i t wa s h el d th a t si nc e M/ s S pa ze To w e r s Pv t . Lt d . in cu r r e d e xp end i t u r e to wa r d s t h e p e rs on a l n e e ds of th e di r e c t o r s/ p r o mo t er s , t h e sa m e wa s a ck n o w l ed g ed a s li a bi li ty by t h em bu t th e s a m e ca n n ot b e con s tr u ed a s l oa n o r d ep os i t d es p it e a dm i s s i on of t h e a s s e s s e e b e f or e th e C I T ( A) in qu a n tu m a p p el lat e pr o c e ed in g s t h a t t he s e c a sh t ra n sa cti on s w e r e m a d e b et w ee n t w o s epa r at e en ti ti e s on r e t u rna b l e b a si s a s l oa n / d ep o sit s in vi ol a ti on o f th e p r o v is i on s o f s e c ti on 2 6 9 SS of t h e A ct .
iv ) W h et h e r o n t h e f a c t s a n d in t h e c i r cu m s ta n c e s o f t h e ca s e , th e Ld . C I T (A )h a s e r r ed in d el eti ng th e p e n a lt y r e lyi ng on t h e o rd e r o f th e Hon ' b l e I TA T w h e r ein i t wa s he l d th a t p en a l t y u s 2 71 D is w it h ou t a n y s at i s fa ct i on a n d t h e r ef o r e , n o s u ch p en a lt y c a n b e l e vi e d."
3. A Search and seizure operation u/s 132 o f the Act was carried out on 17.02.2016 in the case of M/s Spaze Towers Pvt. Ltd. Pursuant to the search proceedings u/s 15 3A of the Act were initiated. The Assessing Officer in the assessment order u/s 153A of the Act made addition of the amount in the case of assessee by treating the expenses incurred on Platinum Farm House towards interior / furniture/ fixtures and are effect by M/s Spaze Towers Pvt. Ltd. and relating to assessee during the year under consideration as income of the assessee. The ld. C IT(A) deleted the addition made by the Assessing Officer in the hands of the assessee in view of the Hon'ble ITSC order in the c ase of Spaze Towers Pvt. Ltd. Thereafter, the AO initiated penalty proceedings u/s 271D of the Act in the case of the assessee company on the ground that by accepting loans from M/s Spaze Towers Pvt. L td., the assessee had vio lated the provisio ns of section 269SS of the Act, thereby making him liable for penalty provisions u/s 271D of the Act. Penalty u/s 271D amounting Rs.2,00,00,000/- was thereafter imposed by JCIT, Central Range, Gurgaon in the case o f assessee. The s imilar issue in 3 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
one of the cases of the group covered u/s 153A s tands adjudicated by the Co-ordinate Bench of ITAT Delhi 'D' Bench in the case of M/s K.S. Chawla & Sons (HUF) ITA No. 5614/Del/2019 (lead judgment) & others dated 28.08.2019 has adjudicated as under on similar facts in other group cases as hereunder:
"16. We have hea rd the rival submissions and have given thoughtful conside ra tion to the orders o f the authorities below. We have also carefully pe rused the assessment orde r and or de r of the first appe llate author ity in quantum pro ceedings. The undisputed fact is that the Se ttlement Commission, while accepting the settlement offer of additional income of Rs. 52.74 crores on acc ount of bogus purc hases has also accepte d the telescoping of perso nal expenses of the promoters/ directors aggrega ting to Rs. 16.43 c rores. The relev ant findings of the Se ttlement Commission read as under:
"An action of Se arch / Sur vey was conduc ted o n applicant u/s 132 of the Income Ta x Act, 1962 (Act) on 17.02.2016. The applicant submitted letter dt. 11.3.2016 to Ld DD1T- Investigation Unit-Ill, Gurgaon (even w ell be fore receiving copies of seized documents), Stating the discre pancies in re cords totaling to R s. 81.00 c rs . (and not undisc losed income or surrender as sta ted in the rule-9 report by Ld Pr CIT). It is respectfully submitte d that the applic ant has addressed and conside red each and eve ry issue s tated in the sa id lette r dt. 11.3.2016 and offered a sum of Rs . 53.04 c r ., in the present S OF, which shall be de alt with, in the subsequent paras apart from additio nal surrende r o f Rs. 1.65 crs in the hands o f Sh Arvinder Dhingra which is also pending for adjudication befo re the Hon'ble Benc h). Therefo re, the total amount affirmed be fore the 4 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
Hon'ble Settlement Commission pertai ning to both the applic ations comes to Rs.54.69 cr. The applicant accepted that it had recorde d inflated purchases to the tune o f Rs.52.74 crs (app) under the head of cons tructio n expenses apart from another s urre nde r of Rs .30.00 lacs and thereby suppressed the pr ofits by Rs. 53.04 cr (app) . The applic ant used to pay to the said Vendo rs towards the inflated purc hases in que stion by acco unt payee cheques and the applicant used to ge t cas h afte r deduc ting no minal cha rges as state d in detail in S OF.
Para 2.2.1 to para 2.2.4 Telescoping Of Cash Expe nses of Dire ctors/Promoters The Ld Pr CIT has objecte d to telescoping o f such cash expenses in para No , 2.2.1 to 2.2.3 on the ground that such c ash is utilized by Directo rs/Shareholde rs for their pe rsonal use. The applicant has admitte d to have spent cash (out of cash receive d through inflated purchases) on var ious activities as s tated in detail in SOF totaling to Rs. 14,70,67,358/- S ince, the cash is spent out of available cash in hand gene rated out of additional income o ffered for ta x, which has been duly recorded in C ash F low statement submitted at page No. 27-30 of SOF , and the cas h expenses so incurre d have not been claimed as e xpe nses in computing additio nal income offered before Ho n'ble Bench, the s ame deserves to be de ducte d out of Cas h Flow and thereby telesco ping set o ff of cas h s hould be allo wed to that extent.
17. It is also not in dispute that ta king a leaf out of the statement of fac ts and fund flo w statement filed by M/s Spaze Tow ers Pvt Ltd, the Assessing Officer had made additio n in the hands of the captioned appe llants by trea ting the te lescoped personal expens es as income of the promote rs/dir ectors. This means that a t this stage, the Assessing Office r w as convinced that the telescoped perso nal expenses, 5 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
incurre d by M/s S paze Towe rs Pvt. Ltd, we re nothing but income o f the promote rs/dire ctors.
18. When this a ddition w as agitated be fore the Id. CIT(A), the I d. CI T(A), tak ing a leaf out of the decision of the Settlement Commission, came to the conclusion that the same inc ome cannot be taxe d in two hands in the same a ssessment year and, accor dingly , delete d the additio ns.
19. Ho wever, while dele ting the addition, the Id. CIT(A) though observed that the same should be conside red as lo ans/deposits in the hands of the promoters/directors in the light of the re leva nt provisio ns o f the A ct.
It is true that the Id. CIT(A) nowhe re directed the Assessing Officer to initia te pe nalty proceedings but it is equally true that prio r to this decis ion of the ld. CIT(A), the Assessing Office r never took a view that the impugned te lescope d expenses incurre d by M/s S paze Towers Pvt Ltd wa s in fact, loan/de posit given by the said company to the pro mote rs/ directors.
20. Deho rs the fate o f quantum additions, the As sessing Officer canno t tre at the same amount as income of the appellants as well as loans/ depos its in the hands of the appellants.
21. The Hon'ble Delhi High Co urt in the case of Standard Brands Ltd [supra] held a s under:
"6. Aga ins t the order date d 6-9- 2000, the reve nue preferred an appe al before the Income Tax Appellate Tribunal. B y an order da ted 6-10-2004, the Tribunal (in paragra ph 9 of the said order) uphe ld the vie w taken by the Commissio ner (Appea ls) in his order dated 6- 6 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
9-2000. The Tribunal held that the receipt was o uts ide the scope o f undisclose d incom e defined unde r section 158B(b) of the Act.
7. On these fac ts, we are o f the vie w that the revenue could not on the o ne hand, co ntend that the amount of 3 lakhs is undisclose d income in the hands of the assessed and at the s ame time seek to initiate proceedings aga inst the assessed for vio lation of the provisio ns of section 269SS of the Act which deals with c ash de posits or lo ans in excess of Rs . 20,000.
8. The revenue, ha ving take n the stand that the income was undisclose d incom e in the hands of the assessed, it could no t resor t to proceedings under section 269SS read with sec tio n 271D o f the Act, as held by the Tribunal."
22. Similar view w as ta ken by the Hon'ble High Court of De lhi in the case of R.P. Singh & Co . [P] Ltd 340 ITR 217 w here in the Hon'ble High Court had the occasion to decide on the fact that once the share applic ation money is treated as an undisclose d income o f the assessee us 68 of the Act, whether the initiation of proceedings u/s 269SS r.w.s 271D of the Act is valid?
23. On these facts, the Hon' ble High Court o bserved as unde r:
"6. Mr. Kochar, learne d counse l for the assessee , submitted that the said question does not arise in the case at hand in as much as bo th the Commissioner of Income-ta x ( Appea ls) and the Tribunal have recorde d a finding that once the Assessing O fficer has treated it as an undisclose d income, it could not have proceeded on the foundation tha t it is a deposit. In our cons ide red opinion, this submiss ion canvassed by Mr. Kocnar has substantial fo rce and the question ra ised by the Re venue re ally does no t arise in this c ase . Needless to say that the said question may arise where the facts 7 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
would be diffe rent but the same has no relevance to the case at hand. In view of the afo resaid analysis, the appeal being devoid o f merit stands dismissed without any order as to cos ts"
24. The co-ordinate bench in the case o f G.S. Entertainment ITSS 437/MUM/2004 had the occasio n to consider s imilar issue . The relev ant findings of the co-ordinate bench read as unde r:
"2. The lea rned D epartmental Re presentative has re lie d on the o rder of the AO. He submitted that the amount of Rs . 15 lakhs w as receive d by the assessee in cash as is recorded in the CD seized by the Depa rtment. He submitted that Shri Gautam Gupta has failed to confirm the transaction in the form of affidavit befo re the Revenue authorities . He submitte d that CIT( A) should have taken note o f the fac t that cash receipt of Rs. 15 lak hs was towards part payment o f the finance a greement dt. 28th July, 1998.
3. The learne d Co unsel fo r the assessee has opposed the s ubmiss ion of the le ar ned De partmental Representa tive. He s ubmitted that the amount of Rs . 15 lak hs was assessed by the AO as undisclose d income of the assessee for the block period o f the assessee and therefore, the provision o f Section 269SS of the IT Act, 1961 does not apply to the facts of the case . He submitted that the issue is covered in favour of the assessee with the dec isio n of the Hon' ble Delhi High Court CIT v.Standard Brands Ltd. (2006) 204 CTR (De l) 48 : ( 2006) 285 ITR 295 ( Del) .
4. We have considered the riv al submissions. We find that it is not a case of regular assessment of the assessee. The block assessment o f undisclose d incom e fo r the block period w as framed by the AO and the amount o f Rs. 15 lakhs w as added as undisc losed income o f the assessee fo r the financial year 1998- 99. Once the amount in 8 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
question is assessed as the undisclosed income of the assessee in the block assessment for the blo ck perio d of the assessee, the provisio n o f Section 269SS r/w Section 271D canno t be resorte d to . The issue in the present case is c overed in favo ur of the assessee with the dec is ion of Hon ble De lhi High Court in the c ase of Standar d Brands Ltd., cited supra, where in held that where the amount w as undisclose d income in the hands o f the assessee , it could no t resort to proceedings under Section 269SS r/ w Section 271D o f the Ac t. Accordingly, the issue is decided in favour of the ass essee and the order o f the CIT(A) is co nfirmed and the ground of appe al of the Revenue is dismissed."
25. The aforesaid de cisions are square ly applicable to the fac ts of the present appeals.
26. Coming back to the facts o f the case as mentioned elsewhere , when the penalty proceedings were initiated by the JCIT, e ven the JCIT proceede d with the observations o f the Id. C IT(A) who has advised to take necessary action as pe r the provis io ns o f the Ac t. The JCIT then a naly zed the prov isions o f section 269SS o f the Ac t and afte r referring to o ne decision of the Supreme Court and two decis ions of the Hon'ble High Cour t o f Kolk ata and Karnatak a High Court, was co nv inced tha t there is a violatio n of pro visions o f section 269SS o f the Act and, there fore , penalty u/s 271D of the Act is leviable and levied penalty accordingly .
27. I t is a matter of fac t that Spaze Towers was inflating its purc hases and cash so generated was spent o n the personal needs o f the directo rs/pro moters in the form of ceremonial func tio ns, farm house constructio n etc. Now here the actual cas h changed hands, but were s pent on personal expenses o f the promote rs/directors . Mere ly because the promoters/directors agreed to re pay the liability, the 9 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
same cannot be construed as taking lo ans from Spaze Towers. Since Spaze Towe rs ha s incurred personal expenses of the promoters/ direc tors , the sam e cannot be construed as loans.
28. In o ur considered opinion, there must be a c lear finding based o n cogent and re liable mater ial that the appella nts took or accepted any loan or depos it in cash from Spaze Towers. In the absence of any cogent finding, it canno t be assumed that the appellants took or accepte d lo ans/ de posits othe rw ise than by an acco unt payee cheque to invoke the prov isions of section 269SS of the Act. F acts o n recor d clearly show that Spa ze Towers categorically dec lared/admitted of hav ing incurre d personal expenditure on be half of the promoters/ direc tors be fore the Settlement Commission which has been acce pted by the Settlement Commission in its order date d 24.05.2018.
29. The Assess ing Officer, at first, treated the s aid trans action as income of the assessee which is evident from the appellate proceedings in re spect of the quantum additions. This also clearly shows that the Assessing O fficer was not sure whe ther S paze Towers has given any c ash lo an to the promoters/directors . Since Spaze Towers inc urred expenditure towards the personal needs of the direc tors/ promote rs, the same was acknow ledged as liability by the direc tors/ promote rs but the same canno t be construed as loan or deposit within the framewo rk o f section 269SS o f the A ct.
30. Considering the facts in totality, in our considered opinio n the transac tio n is de v oid of a ny lende r - bo rrowe r re latio nship. In o ther words , the amount which is the subject matter of c onside ration in the present cases is out of ta x paid from income/disclo sed sources of Spaze Tower s.
10 ITA No. 1307/Del/2020M/s Platinum Towers Pvt. Ltd.
31. The Hon' ble Karna tak a High Court in the case of Chamundi Granite 239 ITR 694 re lied upon by the JCIT has also held that the ultimate aim of se ction 269SS is to preve nt evasion o f tax. Whereas, the facts of the appellants clearly shows that the taxes have bee n paid by Spaze To wers as per the order of the Supreme Cour t and there is no ev asio n of tax.
32. T he Hon' ble S upreme Cour t in the case of Kum. A .B . Shanthi 255 ITR 258 has he ld that the object of intro duc ing the pro visions o f section 269SS of the Act is to ensure that the tax paye r is not allo wed to give fa lse explanation for his unaccounted money.
33. In the prese nt cases, there is no dispute about the sources o f money where from the e xpenditure ha d been incurr ed w hich has already s uffere d taxa tio n in the hands of the company Spaze Towers and the ve ry s ame money ca nno t be conside red as representing undisclose d income of the appellants for which false explanation is being give n a s lo an to a ttract the provisions of sectio n 269SS r.w.s 271D of the Ac t.
34. On a perusal of the assessment o rder in the quantum proceedings, the order of the first appellate authority deciding the quantum additions and also the orde r of the JCIT le vying penalty u/s 271D o f the Act, we find that the assessment o rder as well as the order of the JCIT are devo id of any satisfaction regarding initiation of pena lty procee dings u/s 271D of the Act.
35. The Hon' ble S upreme Court in the case o f Jai Laxmi Rice Mills Ambala City [supra] has he ld that pena lty u/s 271D is w ithout any satisfaction and, there fore , no such penalty can be levied. The relev ant findings of the Hon 'ble Supreme Court read as under:
11 ITA No. 1307/Del/2020M/s Platinum Towers Pvt. Ltd.
"I n these appeals, we are concerned with the question as to whe ther penalty proceeding under Section 271D of the Income Tax Act (hereinafter referred to as "the Act") is independent of the assessment proce eding and this question arises for c onsideration in respect o f Assessment Years 1991-1992 and 1992-1993 under the following circumstances: In respec t of Assessment Y ear 1992-1993, assessment order w as passed o n 26.02.1996 o n the basis o f CIB info rmation infor ming the Departm ent that the assessee is e ngaged in large sca le purchase and sale o f wheat, but it is not filing income tax re turn.
Ex-par te procee dings were initiate d, which res ulted i n the aforesa id order , as pe r w hich net ta xable inco me of the assessee was assessed at Rs . 18,34,584/ -. While framing the a ssessment, the Assess ing Office r a lso o bserved that the assessee had co ntr avene d the provisio ns of Section 269SS o f the Act and because of this the Assessing Office r was satisfied that penalty proc eedings under Section 271E of the Act were to be initiated.
3. The as sessee carr ied out this or der in appeal. The Commissioner of Income Ta x (Appeals) allowed the appe al and set aside the assessment order with a direction to frame the assessment de no vo afte r affording ade qua te o pportunity to the assessee .
4. After remand, the Assessing Officer passe d fres h assessment order . In this assessment o rder , ho wever, no satis fac tion regarding initiation of penalty procee dings under Sectio n 271E of the Ac t w as recorde d. It so happe ned that on the basis of the o riginal assessment orde r dated 26.02.1996, show ca use notic e was given to the assessee and it resulted in passing the penalty order date d 23.09.1996. T hus, this penalty o rde r was passe d befo re the appe al of the assessee a gainst the or iginal assessment order was heard and 12 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
allo wed thereby setting aside the assessment o rde r itse lf. It is in this back drop, a questio n has arise n as to w hether the penalty order , whic h was passe d on the basis o f or iginal assessment order and when that assessment order ha d be en set aside, could still survive.
4. T he T ribunal as we ll as the High Court has held that i t could not be so for the simple re ason tha t when the original as sessment order itself wa s set aside, the sa tis faction reco rded there in for the purpose of initiation of the penalty proceeding under Section 271E wo uld also not surv ive . This according to us i s the co rrect pro position o f law state d by the High Court in the impugned order.
5. As pointed out a bove , inso far as, fresh assessment or der is concerne d, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act , though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act.
Thus, insofar as penalty unde r Se ction 271E is co ncerned, it was without any s atisfaction a nd, therefore , no such penalty could be levie d.
These a ppea ls are , acco rdingly, dismissed."
36. The I d. DR ha d relied upon the decision of the Ho n'ble S upreme Court in the case of Adinath Builder s Pvt Ltd [s upra] . We are o f the conside red o pinion that the Hon'ble Supreme Court has dismisse d the SLPs filed by the revenue and the I d. DR has relied upon the head notes, which cannot be conside re d as judgment of the Hon'ble Supreme Co urt as the Hon'ble Supreme Court has simply dismissed the SLPs without a ssigning any re aso n.
13 ITA No. 1307/Del/2020M/s Platinum Towers Pvt. Ltd.
37. Cons idering the facts of the cases in hand from all pos sible angles, we do not find them to be fit cases for levy of pe nalty u/s 271D of the Ac t. We, accordingly , direct the Asses sing O fficer to delete the pena lty levied in re spect of the captioned appellants for all the assessment ye ars under co nsideration. By this consolidate d order , all the a ppe als are a llo wed and disposed off acc ordingly.
38. In the result, all the above captioned appeals are allo wed".
4. Similarly, the issue of Section 271D in case of Sh. Aman Sharma who was also covered in the group cases of the Spaze Towers Pvt. L td. stands adjudicated by the Hon' ble High Court in the case of Pr. CIT Vs. Aman Sharma in ITA No. 100 /2022 order dated 31.01.2023. For the sake of ready reference , the entire order of the Hon'ble High Court is reproduced as under:
"The present appeal has been filed under section 260-A of the Income Tax Act, 1961 (for short 'Act 1961') seeking setting aside of order dated 28-8-2019 passed by Income-tax Appellate Tribunal, Delhi Bench 'D' passed in ITA5652/Del/2019 whereby appeal filed by the respondent-assessee against order dated 20-5-2019, has been allowed.
2. The case in brief is that on 17-2-2016, a search under section 132 of Act 1961 was carried out at the premises of Spaze Towers Pvt. Ltd, where books of account are maintained. The respondent was one of the directors of Spaze Towers Pvt. Ltd, and subsequently, a notice under section 153-A of the Act was issued to him to on 28-11- 2016 asking him to file his return of income. In response to the said notice, the respondent filed his return of income for the assessment year 2015-2016 declaring an income of Rs. 94,11,350/-. The assessment of the case of the respondent, under section 153 (1) (B) was completed on 26-12-2017 (A-1) and the Assessing Officer made the following additions in the returned income:--14 ITA No. 1307/Del/2020
M/s Platinum Towers Pvt. Ltd.
"1. Addition of Rs. 3,00,000/- on account of cash receipts from M/s Spaze Towers Pvt. Ltd to meet personal household expenses.
2. Addition of Rs. 45,91,675/- on account of unrecorded investment in gold and diamonds.
3. Addition of Rs. 75,00,000/- on account of unrecorded expenses on a marriage function of the daughter of the respondent during the year."
3. Feeling aggrieved, the respondent preferred an appeal before the CIT (A), who vide order dated 20-8-2018 (A-2) confirmed addition of Rs. 5,91,675/- out of total addition of Rs. 45,91,675/- and deleted all other additions amounting to Rs. 1,18,00,000/-. In this order, it has further been held that for the same assessment year, Spaze Towers Pvt. Ltd had approached the learned Settlement Commission on 30-11-2016 and made disclosure of income and also disclosed that on various occasions, the Company had advanced certain amounts to the respondent, which were on returnable basis.
4. Consequent to the directions contained in the dated 20-8-2018, penalty proceedings under section 271D of the Act 1961, for contravention of the provisions of Section 269SS of the Act 1961, were initiated by JCIT, Central Range, Gurugram and a show cause notice was issued to the respondent. Vide order dated 14-1-2019 (A-3), a penalty of Rs. 1,23,91,675/- under section 271D of Act 1961 was imposed upon the respondent.
5. Feeling aggrieved against the aforementioned order, the respondent preferred an appeal before CIT (A), who vide order dated 20-5-2019 confirmed the impugned penalty and dismissed the appeal of the respondent.
6. The respondent then filed an appeal before ITAT and his appeal was allowed on 28-8-2019 (A-5) and it was observed that the Company Spaze Towers Pvt. Ltd was inflating its purchase and cash so generated was spent on the personal needs of the directors/promoters in the form of ceremonial functions, farm house construction etc and in the process nowhere actual cash changed hands, but was spent on personal expenses of promoters/directors. It has further been observed that merely because 15 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
the petitioners/directors agreed to repay the lability, the same cannot be construed as taking loans from the company and since it had incurred personal expenses of the promoters/directors, the same cannot be construed as loans.
7. Now, the revenue-department has approached this Court seeking setting aside of order dated 28-8-2019.
8. Similar issue has come up for consideration before Hon'ble Delhi High Court in a case of CIT v. Standard Brands Ltd. [2006] 155 Taxman 383/285 ITR 295/2006 SCC Online Del. 1696, whereby the revenue department was seeking setting aside of order dated 26-7-2004,which was passed in respect of block period April 1, 1986 to March 31,1997. As per assessing Officer, the assessee had received an amount of Rs. 3 lakhs in cash from M/s D.S. Imports. The amount represented undisclosed income in the hands of the assessee but as per assessee, it was a deposit made by M/s D.S. Imports. Hon'ble Delhi High Court dismissed the appeal of the revenue and held that the revenue could not, on the one hand, contend that amount of Rs. 3 lakhs is undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000/-. The Revenue having taken the stand that the income was undisclosed income in the hands of the assessee, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal.
9. Reference at this stage can further be made to judgment of Hon'ble Delhi High Court in a case of CIT v. R.P. Singh & Co. (P.) Ltd. [2012] 21 taxmann.com 50/340 ITR 217 wherein the appeal of the revenue was dismissed and the operative para of the judgment reads as under:--
"Mr. Kochhar, learned counsel for the assessee, submitted that the said question does not arise in the case at hand inasmuch as both the Commissioner of Income-tax (Appeals) and the Tribunal have recorded a finding that once the Assessing Officer has treated it as undisclosed income, it could not have proceeded on the foundation that it is a deposit. In our considered opinion, this submission canvassed by Mr. Kochar has substantial force and the question raised by the Revenue really does not 16 ITA No. 1307/Del/2020 M/s Platinum Towers Pvt. Ltd.
arise in this case. Needless to say that the said question may arise where the facts would be different but the same has no relevance to the case at hand. In view of the aforesaid analysis, the appeal being devoid of merit stands dismissed without any order as to costs".
10. In the present case as well, once the Assessing Officer has treated the personal expenses incurred by M/s Spaze Towers Pvt. Ltd as income of the assessee, then the same amount cannot be treated as loan in violation of the provisions of Section 269SS of the Act 1961. The same income cannot be taxed in two hands in the same assessment year and CIT (A) has rightly deleted the additions made by the Assessing Officer.
11. Learned counsel for the appellant has not been able to cite any law contrary to the above.
12. In view of the above discussion, the present appeal is dismissed."
5. In view o f the order of the Co-ordinate Bench of ITAT and the judgment of Hon' ble High Court o f Punjab & Haryana in other group cases of the assessee on similar fac ts as reproduced above, we hold that penalty imposed by the Revenue authorities u/s 271D cannot be sustained in this c ase.
6. In the re sult, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 05/01/202 4.
Sd/ - Sd/- (C. N. Prasad) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 05/01/2024 *Subodh Kumar, Sr. PS*