DCIT Vs Deepak Kumar (ITAT Delhi)
ITAT Delhi held that penalty u/s 271D of the Income Tax Act is without any satisfaction and, therefore, no such penalty can be levied. Accordingly, penalty u/s 271D quashed.
Facts- Revenue has preferred the present appeal contesting that CIT(A) has erred in deleting the penalty u/s 271D of the Income Tax Act despite the fact that payment made by M/s. Spaze Towers Pvt. Ltd. to the assessee by making cash payments in violation of provisions of section 269SS of the Income Tax Act.
Conclusion- Hon ‘ble Delhi High Court in the case of Standard Brands Ltd., cited held that where the amount was undisclosed income in the hands of the assessee, it could not resort to proceedings under Section 269SS r/w Section 271D of the Act.
The Hon’ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City has held that penalty us 271D is without any satisfaction and, therefore, no such penalty can be levied.
Held that the ld. CIT(A) has deleted the addition made by Assessing Officer in the hands of appellant in view of order of ITSC in the case M/s. Spaze Towers Pvt. Ltd. and therefore he concluded that the penalty imposed on assessee and two other persons by JCIT Central Range Gurgaon after said assessment order is not sustainable.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal has been filed against the order of CIT(A)-34, New Delhi dated 27.06.2019 for AY 2012-13.
2. The grounds of appeal raised by the revenue are as follows:-
i) Whether on the facts and in the circumstances of the case, the Ld. CIT(4) has erred in deleting the penalty us 271D of the Act relying on the order of the Hon ‘ble ITAT wherein it was held that the payment of Rs.2,38,00,000/- made by M/s Spaze Towers Put. Ltd. to the assessee was not a loan transaction made in contravention of the provisions of section 269SS of the Income Tax Act.
ii) Whether on the facts and in the circumstances of the case, the Id. CIT(A)has erred in deleting the penalty us 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Put. Ltd. before the Hon’ble Settlement Commission it is evident that Ms Spaze Tower Put. Ltd. had discharged the liabilities of the assessee by making payments in cash which is violation of the provisions of section 269SS of the
iii) Whether on the facts and in the circumstances of the case, the Id. CIT(A)has erred in deleting the penalty relying on the order of the Hon’ble ITAT wherein it was held that since Ms Spaze Towers Pvt. Ltd. incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by them but the same cannot be construed as loan or deposit despite admission of the assessee before the CIT(A) in quantum appellate proceedings that these cash transactions were made between two separate entities on returnable basis as loan deposits in violation of the provisions of section 269SS of the Act.
iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty relying on the order of the Hon’ble ITAT wherein it was held that penalty us 271D is without any satisfaction and therefore, no such penalty can be levied.
3. Supporting the penalty order the ld. CIT(DR) submitted that the Ld. CIT(4) has erred in deleting the penalty us 271D of the Act relying on the order of the Hon ‘ble ITAT wherein it was held that the payment of Rs.2,38,00,000/- made by M/s Spaze Towers Put. Ltd. to the assessee was not a loan transaction made in contravention of the provisions of section 269SS of the Income Tax Act. He further submitted that the CIT(A)has erred in deleting the penalty us 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Put. Ltd. before the Hon’ble Settlement Commission it is evident that Ms Spaze Tower Put. Ltd. had discharged the liabilities of the assessee by making payments in cash which is violation of the provisions of section 269SS of the Act. It has also been contended that the Id. CIT(A)has erred in deleting the penalty relying on the order of the Hon’ble ITAT wherein it was held that since Ms Spaze Towers Pvt. Ltd. incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by them but the same cannot be construed as loan or deposit despite admission of the assessee before the CIT(A) in quantum appellate proceedings that these cash transactions were made between two separate entities on returnable basis as loan deposits in violation of the provisions of section 269SS of the Act. The ld. CIT(DR) also pointed out that the Ld. CIT(A) has erred in deleting the penalty relying on the order of the Hon’ble ITAT wherein it was held that penalty us 271D is without any satisfaction and therefore, no such penalty can be levied. The ld. CIT(DR) finally submitted that the first appellate authority has deleted penalty without any justified reason therefore the same may kindly be set aside by restoring that of the Assessing Officer.
4. Replying to the above, the ld. assessee’s authorized representative (AR), supporting the first appellate order, submitted that the penalty was imposed by ignoring the fund flow statement submitted before income tax settlement commission by the M/s. Spaze Towers Pvt. Ltd., which has provided cash fund to the assessee and the ld. CIT(A) considered the same on the right prospective and by considering the order of ITAT Delhi Bench in the case of M/s. K S Chawla & Sons in ITA No. 5614/Del/2019 dated 28.08.2019 and therefore the same may kindly be upheld.
5. On careful consideration of above submission first of all, we note that the ld. CIT(A) has granted relief to the assessee by considering the submissions of assessee noted in para 7 and with following observations and findings:-
8. Decision:-
For the cases under consideration in this common appellate order. On perusal of the Fund Flow Statement submitted before Hon ’ble ITSC, it was revealed that M/s Spaze Towers Pvt. Ltd. has provided cash funds to the appellant(s) as discussed in the penalty order(s) u/s. 271D of the Act as hereunder:-
