Bhowmick Raj Singh Vs JCIT (ITAT Raipur)
The appeal before the Income Tax Appellate Tribunal (ITAT), Raipur arose from the order of the Commissioner of Income Tax (Appeals), which had upheld a penalty of ₹27 lakh under Section 271D for the alleged violation of Section 269SS of the Income-tax Act for Assessment Year 2010-11. The assessee also raised additional grounds challenging the validity of the penalty on the basis that the Assessing Officer (AO) had not recorded satisfaction for initiating penalty proceedings under Section 271D in the assessment order and that the penalty was barred by limitation.
The assessee was engaged in the wholesale trading of gutka, pan masala and Reliance Telecom products. The return of income was filed declaring income of ₹21,08,410, and the assessment under Section 143(3) determined the total income at ₹34,73,630.
After completion of assessment, the Joint Commissioner observed that the assessee had received cash deposits aggregating to ₹27 lakh from five prospective buyers. According to the Revenue, these cash receipts exceeded ₹20,000 and were accepted in violation of Section 269SS. The assessee explained that the amounts were trade advances received against orders, deposited into the bank and utilised for purchasing goods from the principal supplier. Upon receipt of goods, supplies were made to the buyers and their accounts were settled. The assessee maintained that these receipts were trading advances and not loans or deposits.
