Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs M/S. Chahat Garments Pvt. Ltd., New ... on 6 April, 2018
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "B": NEW DELHI
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 5341/Del/2015
(Assessment Year: 2010-11)
ACIT, Vs. Chahat Garments Pvt. Ltd,
Central Circle-28, Room NO. A-19, Gagan Vihar Extn,
317, ARA Centre, Jhandewalan New Delhi
Extn, New Delhi PAN:AACCC5467G
(Appellant) (Respondent)
Revenue by : Ms Ashima Neb, Sr. DR
Assessee by: None
Date of Hearing 23/01/2018
Date of pronouncement 06/04/2018
ORDER
PER PRASHANT MAHARISHI, A. M.
1. This appeal is preferred by assistant Commissioner of Income Tax, Central Circle-28, New Delhi for Assessment Year 2010-11 against the order of the Commissioner of Income Tax (Appeals)-29, New Delhi dated 05/06/2015 wherein penalty levied by the Ld. Additional Commissioner of Income Tax, Central Range-5, New Delhi of Rs. 65,10,000/- under section 271 E of the Act was deleted.
2. The revenue has raised the following grounds of appeal:-
"1. That the Ld. CIT(A) erred in deleting the penalty levied by the Addl.
Commissioner of Income Tax of Rs. 65,10,000/- u/s 271E for violating the provisions of section 269T of the Income Tax Act.
2. That the Ld. CIT(A) erred in admitting additional evidence i.e. agreement of the assessee with TIDCO without appreciating the fact that none of the conditions mentioned in Rule 46A(1) of the Income Tax Rules were satisfied.
3. That the Ld. CIT(A) erred in deleting the penalty levied by the Addl.
Commissioner of Income Tax of Rs. 65,10,000/- u/s 271E without providing any opportunity to the Addl. CIT, who imposed penalty, under rule 46A to examine the additional evidence i.e. agreement of the assessee with TIDCO.
Page | 1 ACIT Vs. Chahat Garments Pvt. Ltd, ITA No. 5341/Del/2015 (Assessment Year:2010-11)
4. That the Ld. CIT(A) erred in deleting the penalty levied by the Addl.
Commissioner of Income Tax of Rs. 65,10,000/- u/s 271E without appreciating the fact that the agreement of the assessee with M/s TIDCO was a camouflage as no sale-purchase transaction actually took place between the assessee and M/s TIDCO and payments of Rs.65,10,000/- made by the assessee to M/s TIDCO were actually repayment of loan/deposit covered u/s 269T.
5. That the grounds of appeal are without prejudice to each other."
3. The brief facts of the case shows that search and seizure operation under section 132 of the income tax act was carried out on 28/9/2010 on the Triveni group of cases. Assessment under section 153C of the income tax act in case of assessee was completed on 28/3/2013 at Nil income. The Ld. Assessing Officer intimated on 26/3/2013 for initiation of penalty u/s 271D of the Income Tax Act for the violation of the provisions of section 269T of the Act on the cash payment of Rs. 6510000/- on various dates made by the assessee to M/s Triveni infrastructure Development Co Ltd. There were 13 occasions on which amounts ranging from Rs. 70000/- to Rs. 1350000/- was paid in cash by the assessee to the above company. Hence, show cause notice was issued on 8/7/2013 which was replied by assessee on 29/1/2014.
4. The assessee contested before the adjudicating authority that the assessee has received advance for sale of land from that company and such sum are now been refunded are part of the advances to that company as the transaction could not be materialised due to certain legal hurdles. Therefore, that company demanded its money back. It was stated that there is enough cash withdrawals and cash availability in the books of the assessee company out of which the above amount has been refunded to that particular company who required the money urgently. It was further stated that the identity of both the companies is duly established as both are assessed to income tax. Therefore it was stated that the amount refunded in cash does not fall under the provisions of section 269T as the refund was not towards "loan or deposit" taken by the company which is clearly evident from the balance sheet of the Page | 2 ACIT Vs. Chahat Garments Pvt. Ltd, ITA No. 5341/Del/2015 (Assessment Year:2010-11) company and part of the assessment records. Hence the penalty proceedings may be dropped.
5. The Ld. adjudicating authority considered the explanation of the assessee and rejected it as assessee could not produce any supporting evidences for the above claim. He further held that seized documents available on record shows the different facts. According to him a daybook was seized and marked as Annexure A16 from the office premises of TIDCO Ltd during the course of search which reveals that it has been maintained in the nature of receipts and payments. On the receipts side the various amounts received from various parties have been recorded and on the payment side the outflow of the amount so received is recorded. Therefore according to him the total amount of Rs. 65,10,000/- has been received from assessee company by that company. He further held that on looking at the seized documents it is basically running day to day statement of receipts and payments and most of the entries on the receipts side are apparently recorded in the form of cheque. He further analysed in para No. 3.4 of his order the detailed transaction and also enclosed the copies of such seized documents. Therefore he levied the penalty under section 271E of the income tax act as there is a clear-cut violation of section 269T of the income tax act for the amount of cash deposit of Rs. 6 510000/-. Thus penalty order under section 271E was passed on 30/1/2014 levying penalty of Rs. 6510000/-.
6. The assessee aggrieved with the order of the Ld. adjudicating authority preferred an appeal before the Ld. CIT (A). The Ld. CIT (A) also in para No. 3.1 of his order noted that appellant during the appellate proceedings filed an agreement dated 1/1/2008 evidencing that there was an agreement between the assessee and TIDCO for the sale of the property located in village Jait, Mathura for a total consideration of Rs. 6.51 crores and pursuant to which they have received Rs. 6 5.10 Lacs. He therefore forwarded this agreement to the Ld. assessing officer for the comments which was objected by the AO. However the Ld. assessing officer as per Page | 3 ACIT Vs. Chahat Garments Pvt. Ltd, ITA No. 5341/Del/2015 (Assessment Year:2010-11) the direction of the Ld. CIT (A) stated that assessee has produced the same in original and has been verified. Therefore Ld. CIT (A) has held that the Ld. Assessing Officer has not disputed transaction of sale of any property between the appellant and other company. Appellant also submitted that since the assessee was involved in getting completed about 90 cases of assessment in the case of the Triveni Group on account of search action the above agreement was not produced before the Ld. assessing officer. Based on the above facts the Ld. CIT (A) deleted the penalty holding that the transaction between the assessee and TIDCO do not fall in the definition of deposit or loan as it relates to the sale of property in terms of agreement dated 1/1/2008.
7. Revenue aggrieved with the order of the Ld. CIT (A) has preferred an appeal before us. It was submitted by the Ld. Department Representative that the Ld. CIT (A) has not verified the veracity of the agreement produced before him. In fact it should have been examined by Ld. CIT (A) the sum is being paid by the assessee pursuant to the transaction of purchase of immovable property. She submitted that Ld. CIT (A) has not verified that why the transaction of the sale and purchase of property has not happened or the above agreement is a arrangement made by the assessee to circumvent the provisions of the law on the documents found during the course of search. She therefore submitted that there is no finding given by the Ld. CIT (A) about the real transactions between the parties. She further stated that the number of transactions involved in cash from the appellant to the TIDCO itself apparently, if read with the impounded material, do not suggest that these are the transactions for any real estate transaction between the parties. She vehemently referred to the Annexure's attached by the Ld. Adjudicating authority stating that against each transaction of cash payment there is an identical transactions of the cheque payment also therefore it is impossible to show that these transactions are for the purpose of real estate. In the Page | 4 ACIT Vs. Chahat Garments Pvt. Ltd, ITA No. 5341/Del/2015 (Assessment Year:2010-11) end, she submitted that Ld. CIT (A) has deleted the penalty without looking into the merits of the case.
8. Despite notice none appeared on behalf of the assessee. Therefore, the issue is decided on merits of the case based on information available on record.
9. We have carefully considered the rival contention and also perused the orders of the lower authorities. The brief facts shows the assessee has made a cash payment of Rs. 6510000/- on various dates to M/s Triveni Infrastructure Development Co Ltd. by 13 transactions during the month of January 2001. The above information has been gathered during the course of search and seizure operation carried out by the income tax Department where these seized Annexure A-16 found from the office premises of M/s TIDCO shows that it has received the above payment from the assessee and therefore penalty was levied under section 271E of the income tax act. Ld. CIT (A) deleted the above penalty holding that there was a real estate transaction between the parties which did not happen and therefore the above sum has been repaid by the assessee and therefore it does not fall into the definition of "loan or deposit". He accordingly deleted the penalty. We do not agree with the view expressed by the Ld. CIT (A) that the transactions entered into by the assessee is for purchase and sale of the real estate. Our finding is based on the finding of the Ld. additional Commissioner of income tax in para No. 3.4 of his order wherein it has been stated that there is an opening balance of Rs. 40417/- and there are various cheque transactions mentioned stating the amount as well as the cheque number in the seized documents. There are also the names of some person such as Mr Amit Mishra of M/s Trivedi media Ltd who is unconnected with the transactions of the real estate between the parties. The Ld. adjudicating authority has also mentioned that the submission of the assessee is totally contrary to the facts of the case and the seized documents. The Ld. CIT (A) has not dealt with the seized material at all in his order. Further Ld. CIT (A) has accepted the Page | 5 ACIT Vs. Chahat Garments Pvt. Ltd, ITA No. 5341/Del/2015 (Assessment Year:2010-11) version of the assessee without examining the same or providing the assessing officer an opportunity to investigate the facts stated by the assessee. The Ld. CIT (A) also not verified about the particulars of the property which was proposed to be transacted at Rs. 65 crores. There is no mention in the order of the Ld. CIT (A) about the various terms and conditions of those agreements. There is also no reference whether such agreements was registered or not. There is no verification also whether the property existed in the books of seller or not. All these facts shows that the Ld. CIT (A) has accepted the version of the assessee without making any investigation or allowing any investigation by the Ld. assessing officer. In view of the above facts, we set aside the whole appeal of the revenue back to the file of the Ld. CIT (A) with a direction to further investigate the facts about the transaction stated by the assessee and corroborate the same with the seized documents found during the course of search and then examine whether they relate to any loan or deposit or to any other transactions. Needless to say that proper opportunity of hearing is granted to the assessee and the Ld. assessing officer.
10. In the result, appeal of the revenue is allowed for statistical purposes.
Order pronounced in the open court on 06/04/2018.
-Sd/- -Sd/-
(H.S.SIDHU) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 06/04/2018
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
Page | 6
ACIT Vs. Chahat Garments Pvt. Ltd,
ITA No. 5341/Del/2015
(Assessment Year:2010-11)
ITAT, New Delhi
Page | 7