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Case Law Details

Case Name : DCIT Vs Platinum Towers Pvt. Ltd. (ITAT Delhi)
Appeal Number : ITA No. 1307/Del/2020
Date of Judgement/Order : 05/01/2024
Related Assessment Year : 2013-14

DCIT Vs Platinum Towers Pvt. Ltd. (ITAT Delhi)

In a recent case, DCIT Vs. Platinum Towers Pvt. Ltd. (ITAT Delhi), the Income Tax Appellate Tribunal (ITAT) Delhi addressed the issue of whether personal expenses incurred by a company on behalf of its directors could be considered as loans to the directors, thereby violating Section 269SS of the Income Tax Act. The case involved a search and seizure operation conducted on M/s Spaze Towers Pvt. Ltd., which led to proceedings against Platinum Towers Pvt. Ltd. for allegedly accepting loans from Spaze Towers Pvt. Ltd.

The Assessing Officer treated the expenses incurred by Spaze Towers Pvt. Ltd. on Platinum Farm House, which included expenses for interior, furniture, and fixtures, as income of Platinum Towers Pvt. Ltd. The Assessing Officer argued that by accepting these expenses, Platinum Towers Pvt. Ltd. had violated the provisions of Section 269SS, which prohibits accepting loans or deposits in cash exceeding a specified limit.

However, the ITAT Delhi, relying on previous decisions and the findings of the Settlement Commission, held that the personal expenses incurred by Spaze Towers Pvt. Ltd. on behalf of its directors could not be construed as loans or deposits. The Settlement Commission had accepted that these expenses were incurred by Spaze Towers Pvt. Ltd. and were related to personal needs of the directors, which included ceremonial functions and farm house construction.

The tribunal emphasized that there was no lender-borrower relationship between Spaze Towers Pvt. Ltd. and the directors of Platinum Towers Pvt. Ltd. The directors had merely acknowledged the expenses as a liability, but this did not transform the transactions into loans or deposits. Additionally, the tribunal noted that the taxes on these expenses had been duly paid by Spaze Towers Pvt. Ltd., leaving no scope for tax evasion.

Furthermore, the tribunal cited decisions of the High Courts and the Supreme Court, which emphasized that once an amount is treated as undisclosed income in the hands of the assessee, penalties under Section 271D cannot be imposed. It was clarified that penalty proceedings under Section 271D require satisfaction on the part of the assessing officer, which was found lacking in this case.

In light of these findings, the ITAT Delhi concluded that the penalty imposed under Section 271D by the revenue authorities could not be sustained. The tribunal dismissed the appeal of the Revenue, affirming the decision of the CIT(A) to delete the penalty imposed on Platinum Towers Pvt. Ltd.

This case underscores the importance of distinguishing between personal expenses and loans or deposits for tax purposes. It also highlights the need for assessing officers to satisfy themselves before imposing penalties under relevant sections of the Income Tax Act.

FULL TEXT OF THE ORDER OF ITAT DELHI

The present appeal has been filed by the Revenue against the order of Ld. CIT(A)-3, Gurgaon, dated 16.03.2020 for the A.Y. 2013-14.

2. The Revenue has raised the following grounds of appeal are as under:-

“i) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty u/s 271D of the Act relying on the order of the Hon’ble ITAT wherein it was held that the payment of Rs.2,00,00,000/- 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 Ld. CIT(A)has erred in deleting the penalty u/s 271D of the Act despite the fact that from the funds flow submitted by Ms Spaze Tower Pvt. Ltd. before the Hon’ble Settlement Commission it is evident that M/s Spaze Tower Pvt. 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.

iii) 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 since M/s 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. A Search and seizure operation u/s 132 of 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 153A 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. CIT(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 case 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. Ltd., the assessee had violated the provisions 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 of assessee. The similar issue in one of the cases of the group covered u/s 153A stands 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 heard the rival submissions and have given thoughtful consideration to the orders of the authorities below. We have also carefully perused the assessment order and order of the first appellate authority in quantum proceedings. The undisputed fact is that the Settlement Commission, while accepting the settlement offer of additional income of Rs. 52.74 crores on account of bogus purchases has also accepted the telescoping of personal expenses of the promoters/ directors aggregating to Rs. 16.43 crores. The relevant findings of the Settlement Commission read as under:

“An action of Search / Survey was conducted on applicant u/s 132 of the Income Tax Act, 1962 (Act) on 17.02.2016. The applicant submitted letter dt. 11.3.2016 to Ld DD1T- Investigation Unit-Ill, Gurgaon (even well before receiving copies of seized documents), Stating the discrepancies in records totaling to Rs. 81.00 crs. (and not undisclosed income or surrender as stated in the rule-9 report by Ld Pr CIT). It is respectfully submitted that the applicant has addressed and considered each and every issue stated in the said letter dt. 11.3.2016 and offered a sum of Rs. 53.04 cr., in the present SOF, which shall be dealt with, in the subsequent paras apart from additional surrender of Rs. 1.65 crs in the hands of Sh Arvinder Dhingra which is also pending for adjudication before the Hon’ble Bench). Therefore, the total amount affirmed before the

Hon’ble Settlement Commission pertaining to both the applications comes to Rs.54.69 cr. The applicant accepted that it had recorded inflated purchases to the tune of Rs.52.74 crs (app) under the head of construction expenses apart from another surrender of Rs.30.00 lacs and thereby suppressed the profits by Rs. 53.04 cr (app). The applicant used to pay to the said Vendors towards the inflated purchases in question by account payee cheques and the applicant used to get cash after deducting nominal charges as stated in detail in SOF.

Para 2.2.1 to para 2.2.4 Telescoping Of Cash Expenses of Directors/Promoters The Ld Pr CIT has objected to telescoping of such cash expenses in para No, 2.2.1 to 2.2.3 on the ground that such cash is utilized by Directors/Shareholders for their personal use. The applicant has admitted to have spent cash (out of cash received through inflated purchases) on various activities as stated in detail in SOF totaling to Rs. 14,70,67,358/- Since, the cash is spent out of available cash in hand generated out of additional income offered for tax, which has been duly recorded in Cash Flow statement submitted at page No. 27-30 of SOF, and the cash expenses so incurred have not been claimed as expenses in computing additional income offered before Hon’ble Bench, the same deserves to be deducted out of Cash Flow and thereby telescoping set off of cash should be allowed to that extent.

17. It is also not in dispute that taking a leaf out of the statement of facts and fund flow statement filed by M/s Spaze Towers Pvt Ltd, the Assessing Officer had made addition in the hands of the captioned appellants by treating the telescoped personal expenses as income of the promoters/directors. This means that at this stage, the Assessing Officer was convinced that the telescoped personal expenses, incurred by M/s Spaze Towers Pvt. Ltd, were nothing but income of the promoters/directors.

18. When this addition was agitated before the Id. CIT(A), the Id. CIT(A), taking a leaf out of the decision of the Settlement Commission, came to the conclusion that the same income cannot be taxed in two hands in the same assessment year and, accordingly, deleted the additions.

19. However, while deleting the addition, the Id. CIT(A) though observed that the same should be considered as loans/deposits in the hands of the promoters/directors in the light of the relevant provisions of the Act.

It is true that the Id. CIT(A) nowhere directed the Assessing Officer to initiate penalty proceedings but it is equally true that prior to this decision of the ld. CIT(A), the Assessing Officer never took a view that the impugned telescoped expenses incurred by M/s Spaze Towers Pvt Ltd was in fact, loan/deposit given by the said company to the promoters/directors.

20. Dehors the fate of quantum additions, the Assessing Officer cannot treat the same amount as income of the appellants as well as loans/deposits in the hands of the appellants.

21. The Hon’ble Delhi High Court in the case of Standard Brands Ltd [supra] held as under:

“6. Against the order dated 6-9-2000, the revenue preferred an appeal before the Income Tax Appellate Tribunal. By an order dated 6-10-2004, the Tribunal (in paragraph 9 of the said order) upheld the view taken by the Commissioner (Appeals) in his order dated 6- 9-2000. The Tribunal held that the receipt was outside the scope of undisclosed income defined under section 158B(b) of the Act.

7. On these facts, we are of the view that the revenue could not on the one hand, contend that the amount of 3 lakhs is undisclosed income in the hands of the assessed and at the same time seek to initiate proceedings against the assessed for violation of the provisions of section 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000.

8. The revenue, having taken the stand that the income was undisclosed income in the hands of the assessed, it could not resort to proceedings under section 269SS read with section 271D of the Act, as held by the Tribunal.”

22. Similar view was taken by the Hon’ble High Court of Delhi in the case of R.P. Singh & Co. [P] Ltd 340 ITR 217 wherein the Hon’ble High Court had the occasion to decide on the fact that once the share application money is treated as an undisclosed income of 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 observed as under:

“6. Mr. Kochar, learned counsel for the assessee, submitted that the said question does not arise in the case at hand in as much as both the Commissioner of Income-tax (Appeals) and the Tribunal have recorded a finding that once the Assessing Officer has treated it as an undisclosed income, it could not have proceeded on the foundation that it is a deposit. In our considered opinion, this submission canvassed by Mr. Kocnar has substantial force and the question raised by the Revenue really does not 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”

24. The co-ordinate bench in the case of G.S. Entertainment ITSS 437/MUM/2004 had the occasion to consider similar issue. The relevant findings of the co-ordinate bench read as under:

“2. The learned Departmental Representative has relied on the order of the AO. He submitted that the amount of Rs. 15 lakhs was received by the assessee in cash as is recorded in the CD seized by the Department. He submitted that Shri Gautam Gupta has failed to confirm the transaction in the form of affidavit before the Revenue authorities. He submitted that CIT(A) should have taken note of the fact that cash receipt of Rs. 15 lakhs was towards part payment of the finance agreement dt. 28th July, 1998.

3. The learned Counsel for the assessee has opposed the submission of the learned Departmental Representative. He submitted that the amount of Rs. 15 lakhs was assessed by the AO as undisclosed income of the assessee for the block period of the assessee and therefore, the provision of 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 decision of the Hon’ble Delhi High Court CIT v. Standard Brands Ltd. (2006) 204 CTR (Del) 48 : (2006) 285 ITR 295 (Del).

4. We have considered the rival submissions. We find that it is not a case of regular assessment of the assessee. The block assessment of undisclosed income for the block period was framed by the AO and the amount of Rs. 15 lakhs was added as undisclosed income of the assessee for the financial year 1998-99. Once the amount in question is assessed as the undisclosed income of the assessee in the block assessment for the block period of the assessee, the provision of Section 269SS r/w Section 271D cannot be resorted to. The issue in the present case is covered in favour of the assessee with the decision of Hon ble Delhi High Court in the case of Standard Brands Ltd., cited supra, wherein 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. Accordingly, the issue is decided in favour of the assessee and the order of the CIT(A) is confirmed and the ground of appeal of the Revenue is dismissed.”

25. The aforesaid decisions are squarely applicable to the facts of the present appeals.

26. Coming back to the facts of the case as mentioned elsewhere, when the penalty proceedings were initiated by the JCIT, even the JCIT proceeded with the observations of the Id. CIT(A) who has advised to take necessary action as per the provisions of the Act. The JCIT then analyzed the provisions of section 269SS of the Act and after referring to one decision of the Supreme Court and two decisions of the Hon’ble High Court of Kolkata and Karnataka High Court, was convinced that there is a violation of provisions of section 269SS of the Act and, therefore, penalty u/s 271D of the Act is leviable and levied penalty accordingly.

27. It is a matter of fact that Spaze Towers was inflating its purchases and cash so generated was spent on the personal needs of the directors/promoters in the form of ceremonial functions, farm house construction etc. Nowhere the actual cash changed hands, but were spent on personal expenses of the promoters/directors. Merely because the promoters/directors agreed to repay the liability, the same cannot be construed as taking loans from Spaze Towers. Since Spaze Towers has incurred personal expenses of the promoters/ directors, the same cannot be construed as loans.

28. In our considered opinion, there must be a clear finding based on cogent and reliable material that the appellants took or accepted any loan or deposit in cash from Spaze Towers. In the absence of any cogent finding, it cannot be assumed that the appellants took or accepted loans/deposits otherwise than by an account payee cheque to invoke the provisions of section 269SS of the Act. Facts on record clearly show that Spaze Towers categorically declared/admitted of having incurred personal expenditure on behalf of the promoters/ directors before the Settlement Commission which has been accepted by the Settlement Commission in its order dated 24.05.2018.

29. The Assessing Officer, at first, treated the said transaction as income of the assessee which is evident from the appellate proceedings in respect of the quantum additions. This also clearly shows that the Assessing Officer was not sure whether Spaze Towers has given any cash loan to the promoters/directors. Since Spaze Towers incurred expenditure towards the personal needs of the directors/promoters, the same was acknowledged as liability by the directors/promoters but the same cannot be construed as loan or deposit within the framework of section 269SS of the Act.

30. Considering the facts in totality, in our considered opinion the transaction is devoid of any lender – borrower relationship. In other words, the amount which is the subject matter of consideration in the present cases is out of tax paid from income/disclosed sources of Spaze Towers.

31. The Hon’ble Karnataka High Court in the case of Chamundi Granite 239 ITR 694 relied upon by the JCIT has also held that the ultimate aim of section 269SS is to prevent evasion of tax. Whereas, the facts of the appellants clearly shows that the taxes have been paid by Spaze Towers as per the order of the Supreme Court and there is no evasion of tax.

32. The Hon’ble Supreme Court in the case of Kum. A.B. Shanthi 255 ITR 258 has held that the object of introducing the provisions of section 269SS of the Act is to ensure that the tax payer is not allowed to give false explanation for his unaccounted money.

33. In the present cases, there is no dispute about the sources of money wherefrom the expenditure had been incurred which has already suffered taxation in the hands of the company Spaze Towers and the very same money cannot be considered as representing undisclosed income of the appellants for which false explanation is being given as loan to attract the provisions of section 269SS r.w.s 271D of the Act.

34. On a perusal of the assessment order in the quantum proceedings, the order of the first appellate authority deciding the quantum additions and also the order of the JCIT levying penalty u/s 271D of the Act, we find that the assessment order as well as the order of the JCIT are devoid of any satisfaction regarding initiation of penalty proceedings u/s 271D of the Act.

35. The Hon’ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City [supra] has held that penalty u/s 271D is without any satisfaction and, therefore, no such penalty can be levied. The relevant findings of the Hon ‘ble Supreme Court read as under:

“In these appeals, we are concerned with the question as to whether penalty proceeding under Section 271D of the Income Tax Act (hereinafter referred to as “the Act”) is independent of the assessment proceeding and this question arises for consideration in respect of Assessment Years 1991-1992 and 1992-1993 under the following circumstances: In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on the basis of CIB information informing the Department that the assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax return.

Ex-parte proceedings were initiated, which resulted in the aforesaid order, as per which net taxable income of the assessee was assessed at Rs. 18,34,584/-. While framing the assessment, the Assessing Officer also observed that the assessee had contravened the provisions of Section 269SS of the Act and because of this the Assessing Officer was satisfied that penalty proceedings under Section 271E of the Act were to be initiated.

3. The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee.

4. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive.

4. The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order.

5. As pointed out above, insofar as, fresh assessment order is concerned, 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 under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied.

These appeals are, accordingly, dismissed.”

36. The Id. DR had relied upon the decision of the Hon’ble Supreme Court in the case of Adinath Builders Pvt Ltd [supra]. We are of the considered opinion that the Hon’ble Supreme Court has dismissed the SLPs filed by the revenue and the Id. DR has relied upon the head notes, which cannot be considered as judgment of the Hon’ble Supreme Court as the Hon’ble Supreme Court has simply dismissed the SLPs without assigning any reason.

37. Considering the facts of the cases in hand from all possible angles, we do not find them to be fit cases for levy of penalty u/s 271D of the Act. We, accordingly, direct the Assessing Officer to delete the penalty levied in respect of the captioned appellants for all the assessment years under consideration. By this consolidated order, all the appeals are allowed and disposed off accordingly.

38. In the result, all the above captioned appeals are allowed”.

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. Ltd. 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 28-11­2016 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:—

“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 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 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 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 of the order of the Co-ordinate Bench of ITAT and the judgment of Hon’ble High Court of Punjab & Haryana in other group cases of the assessee on similar facts as reproduced above, we hold that penalty imposed by the Revenue authorities u/s 271D cannot be sustained in this case.

6. In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 05/01/2024.

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