ADDL CIT 9(1)3, MUMBAI v. ENCEE DYEING & PRINTING P. LTD, MUMBAI

ITA 2393/MUM/2010 | 2004-2005
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 239319914 RSA 2010
Assessee PAN THJAN2011S
Bench Mumbai
Appeal Number ITA 2393/MUM/2010
Duration Of Justice 10 month(s) 2 day(s)
Appellant ADDL CIT 9(1)3, MUMBAI
Respondent ENCEE DYEING & PRINTING P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 28-01-2011
Assessment Year 2004-2005
Appeal Filed On 26-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI S V MEHROTRA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 2393/MUM/2010 (ASSESSMENT YEAR 2004-05) THE ACIT 9(1)3 AYAKAR BHAVAN M K ROAD MUMBAI-400020 . APPELLANT VS ENCEE DYING AND PTG WORKS PVT LTD PLOT NO.25 CAMA INDUSTRIAL ESTATE WALBHAT ROAD GOREGAON (E) MUMBAI-400063 PAN:AAACE6180Q RESPONDENT APPELLANT BY : SMT ASHIMA GUPTA RESPONDENT BY : NONE O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 1/01/2010 OF THE CIT(A) ARISING FROM THE PEN ALTY ORDER PASSED UNDER SECTION 271D OF THE INCOME TAX ACT 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN THIS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271D OF THE IT ACT WHEN THE PROVISIONS OF SECTION 269SS IS CONTRAVENED BY THE ASSESSEE BY ACCEPTING LOANS/ ADVANCES FROM ITS SIST ER ITA NO. 2393/MUM/2010 2 CONCERN ENCEE OVERSEAS OTHER THAN BY ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE DRAFT 3. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSER VED THAT THE ASSESSEE ACCEPTED THE LOAN FROM ITS SISTER CONCERN OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE THEREBY THE AO HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SE CTION 269SS OF THE INCOME TAX ACT 1961 AND SUBSEQUENT PROC EEDINGS U/S 271D OF THE ACT WERE INITIATED AND THE AO IMPOS ED THE PENALTY OF RS.9 07 437/- VIDE ORDER DATED 10.03.20 08. 3.1 ON APPEAL THE CIT(A) DELETED THE PENALTY LEVI ED BY THE AO PRIMARILY ON THE GROUND THAT THE TRANSACTIONS B ETWEEN THE ASSESSEE AND ITS SISTER CONCERN ARE IN THE COURSE OF BUSINESS AND RUNNING ACCOUNT IS MAINTAINED. 3.2 WE HAVE HEARD THE LEARNED DR. HOWEVER NOBODY HAS APPEARED ON BEHALF OF THE ASSESSEE THEREFORE WE H AD NO PRIVILEGE TO HEAR THE ASSESSEE. THE LEARNED DR HAS SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 269SS OF THE ACT NO LOAN OR DEPOSIT SHALL BE ACCEPTED OTHER WISE THAN BY ACC OUNT PAYEE CHEQUE OR ACCOUNT PAYEE DEMAND DRAFT. THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF THIS SECTION AN D EXPLAINED THAT THESE TRANSACTION ARE ONLY BY WAY OF PASSING G ENERAL ENTRIES IN THE BOOKS OF ACCOUNT. THE LEARNED DR HAS SUBMITTED WHEN THE PROVISIONS OF THIS SECTION SPEC IFICALLY ITA NO. 2393/MUM/2010 3 STIPULATES THAT NO LOAN OR DEPOSITS SHALL BE ACCEPT ED OTHERWISE THAN WITHOUT ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT THEN ANY MODE OF PAYMENT FOR RECEIVING LOAN OR MONEY BY THE ASSESSEE IS A CLEAR VIOLATION OF THE PROVISIONS OF THE ACT AND THEREFORE THE PENALTY LEVIED BY THE AO IS JUSTIFIED. SHE HAS RELIED UPON THE ORDER OF THE AO. 3.3 WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED DR AND PERUSED THE RELEVANT RECORD. THE AO HAS IMPOSED PENALTY BY GIVING THE INTERPRETATION OF SEC TION 269SS OF THE ACT THAT EXCEPT ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT ANY OTHER MODE OF ACCEPTING THE LOAN IS VIO LATION OF THE PROVISIONS OF SECTION 269SS. ON APPEAL THE CIT(A ) HAS RECORDED ALL THE FACTS RELATING TO THE TRANSACTIONS BETWEEN THE ASSESSEE AND ITS SISTER CONCERN AND HELD THAT IT WA S A TRANSACTIONS BETWEEN THE ASSESSEE AND THE SISTER CO NCERN OF THE ASSESSEE DURING THE COURSE OF BUSINESS AND THRO UGH RUNNING ACCOUNT MAINTAINED BY THE PARTIES. WHAT IS SHOWN AS PAYABLE AS PER THE SAID ACCOUNT IS THE CLOSING BALA NCE AT THE END OF THE YEAR AFTER ADJUSTING THE PAYMENT AS MADE . THE CLOSING BALANCE WHICH SIGNIFIED THE OUTSTANDING AMO UNT CANNOT BE DEEMED TO MEAN THAT A DEPOSIT OR LOAN HA S BEEN ACCEPTED AS IT WOULD AMOUNT TO STRETCHING TOO FAR T HE MEANING OF LOAN OR DEPOSIT WHICH IS NOT THE INTENTION O F THE LEGISLATURE. MOREOVER THE GENUINENESS OF THESE TR ANSACTIONS ITA NO. 2393/MUM/2010 4 ARE NOT IN DOUBT. HENCE ON THE FACTS OF THE CASE IT WAS HELD THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UN SECTION 271D. THE PENALTY IMPOSED OF RS.9 07 437/- WAS HEREBY D ELETED. 3.4 IT IS CLEAR FROM THE FACTS RECORDED BY THE LEARNED CIT(A) THAT THE OUTSTANDING CLOSING BALANCE SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS AN AMOUNT PAY ABLE AND SHOWN AS CLOSING BALANCE AT THE END OF THE YEAR AND ARISING FROM THE VARIOUS TRANSACTIONS BETWEEN THE A SSESSEE AND ITS SISTER CONCERN. THEREFORE THIS IS NOT A CA SE OF ACCEPTING ANY DEPOSITS OR LOAN DIRECTLY FROM ITS SI STER CONCERN BUT IT WAS ONLY AN OUTSTANDING AMOUNT AT THE END OF THE PERIOD FROM VARIOUS TRANSACTIONS CARRIED THROUGH BOOK ENTRIES WITHOUT ACCEPTING OR PAYING ANY MONEY. THE REFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARN ED CIT(A) IN DELETING THE PENALTY UNDER SECTION 271D THE SAME I S UPHELD. 4. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JAN 2011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 28 TH JAN 2011 SRL:18111 ITA NO. 2393/MUM/2010 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI