JCIT, Ghaziabad v. Shri R.K. Nagpal, Ghaziabad

ITA 3954/DEL/2011 | 2005-2006
Pronouncement Date: 11-11-2011 | Result: Dismissed

Appeal Details

RSA Number 395420114 RSA 2011
Assessee PAN AATPN1038J
Bench Delhi
Appeal Number ITA 3954/DEL/2011
Duration Of Justice 2 month(s) 12 day(s)
Appellant JCIT, Ghaziabad
Respondent Shri R.K. Nagpal, Ghaziabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 11-11-2011
Assessment Year 2005-2006
Appeal Filed On 30-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH I DELHI ] BEFORE MS. DIVA SINGH JM AND SHRI K. D. RANJAN AM I. T. APPEAL NOS. 3954 & 3955 (DEL) OF 2011. ASSESSMENT YEAR : 200506. JT. COMMISSIONER OF INCOME-TAX SHRI R. K. N AGPAL R A N G E : 2 VS. PROP. CHEMI INTERNATIONAL G H A Z I A B A D. 57 2 ND FLOOR PALIKA BAZAR G H A Z I A B A D. P A N / G I R NO. AAT PN 1038 J. ( APPELLANT ) ( RE SPONDENT ) ASSESSEE BY : SHRI KAPIL GARG ADV.; DEPARTMENT BY : SHRI A. K. MONGA SR. D. R. ; O R D E R. P E R B E N C H : THESE APPEALS BY THE REVENUE FOR ASSESSMENT YEAR 2 005-06 ARISE OUT OF SEPARATE ORDERS OF THE LD. CIT (APPEALS) GHAZIABAD AND ARE DIRECTE D AGAINST CANCELLING THE PENALTY UNDER SECTION 271-D AND SECTION 271-E OF THE INCOME TAX A CT 1961 [HEREINAFTER REFERRED TO AS THE ACT]. THESE WERE HEARD TOGETHER AND ARE BEING DISP OSED OF FOR THE SAKE OF CONVENIENCE BY THIS CONSOLIDATED ORDER. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE [EXC EPT FOR THE AMOUNT] ARE REPRODUCED AS UNDER :- 1. THAT LD. CIT (APPEALS) HAS WRONGLY DELET ED THE PENALTY UNDER SECTION 271-D / 271-E OF I. T. ACT 1961 AMOUNTING TO RS.3 24 726/- / RS.3 25 000/- TREATING IT THAT NO CONTRAVENTION OF PROVISION OF S ECTION 269-SS / 269-T WAS MADE 2 I. T. A. NOS. 3954 & 3955 (DEL) OF 2011 BY THE ASSESSEE WITHOUT APPRECIATION THE FACT THAT THE ASSESSEE HAS ACCEPTED LOAN FROM M/S. NOIDA CEMENT PVT. LTD. THROUGH SHRI NARES H TALWAR; 2. HENCE ORDER OF THE LD. CIT (APPEALS) DESERVES TO BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT T HE ASSESSEE IS PROPRIETOR OF M/S. CHEMI INTERNATIONAL GHAZIABAD U.P. AND WAS ENGAGED IN THE RELEVANT YEAR IN THE WHOLESALE TRADING BUSINESS OF CHEMICALS. THE ASSESSEE IMPORTED CHEMI CALS FROM ABROAD. AS ON 18/01/2005 THE ASSESSEE WAS REQUIRED TO DEPOSIT CUSTOM DUTY AND CL EARING AND FORWARDING CHARGES OF RS.3 23 602/- ON IMPORT OF CHEMICALS WHICH HAD ARR IVED ON THE PORT. SINCE THE ASSESSEE WAS NOT HAVING SUFFICIENT FUNDS THE ASSESSEE APPROACHED HI S FRIEND SHRI NARESH TALWAR TO ARRANGE MONEY. SHRI NARESH TALWAR WAS EMPLOYED IN M/S. NOI DA CEMENT PVT. LTD. AS AN ACCOUNTANT AND AT HIS REQUEST THE MANAGEMENT OF THE COMPANY AGREED TO PAY LOAN TO M/S. CHEMI INTERNATIONAL. ON 19/01/2005 M/S. NOIDA CEMENT PVT. LTD. MADE D RAFTS FOR DEPOSIT OF CUSTOM DUTY AND CLEARING AND FORWARDING CHARGES. THE ASSESSING OFF ICER DURING THE COURSE OF ASSESSMENT SUSPECTED THE ENTRIES ON THE GROUND THAT THE ASSESS EE HAD CIRCUMVENTED THE STATUTORY PROVISIONS. HE ALSO REFERRED TO TAX AUDIT REPORT WHEREIN IT HAS BEEN MENTIONED THAT IT WAS NOT POSSIBLE FOR THE AUDITORS TO VERIFY WHETHER LOANS OR DEPOSITS WERE T AKEN OR ACCEPTED OTHERWISE THAN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT AS THE NECESSARY EVI DENCE WAS NOT IN THE POSSESSION OF THE ASSESSEE. THE LD. AO THEREFORE CONCLUDED THAT TH E ASSESSEE DID NOT DELIBERATELY PRODUCE EVIDENCE REGARDING PAYMENT OR ACCEPTANCE OF LOAN OT HERWISE THAN ACCOUNT PAYEE CHEQUE OR DRAFT. HE ALSO NOTED THAT THE CONFIRMATION RECEIVED FROM M /S. NOIDA CEMENT PVT. LTD. SHOWED THAT UNSECURED LOAN HAS BEEN SQUARED UP DURING THE YEAR ITSELF. FROM THESE FACTS THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE LOAN WAS CLAIMED TO HAVE BEEN TAKEN FROM SHRI NARESH TALWAR BUT HIS ACCOUNT HAD BEEN MANIPULATED TO SUITE THE R EQUIREMENT OF THE ASSESSEE. SHRI NARESH TALWAR HAD BEEN SHOWN AS LENDER OF MONEY. THE ACCO UNT OF SHRI NARESH TALWAR SHOWED FREQUENT CASH TRANSACTIONS WHICH SHOWED ASSESSEES MALAFIDE INTENTION TO BRING HIS OWN MONEY THROUGH M/S. NOIDA CEMENT PVT. LTD. IN THE ACCOUNT OF SHRI NARESH TALWAR. THIRD PARTY WAS INVOLVED JUST TO PROVE THAT THE MONEY WAS NEEDED FO R BUSINESS EXIGENCIES WHICH WAS NOT FOUND TO BE CORRECT. THE ASSESSING OFFICER FURTHER NOTED THAT THE MAIN OBJECT TO INTRODUCE PROVISION OF SECTION 260-SS AND 269-T WAS TO CURB THE CIRCULATIO N OF UNACCOUNTED MONEY. THE AO DID NOT 3 I. T. A. NOS. 3954 & 3955 (DEL) OF 2011 AGREE WITH THE CONTENTION OF THE ASSESSEE. HE OBSER VED THAT THERE WAS DELIBERATE INTENTION TO CHANNELIZE MONEY BY CONTRAVENING SECTION 269-SS. T HE LD. ASSESSING OFFICER THEREFORE CONCLUDED THAT THE ASSESSEE HAD NOT ACCEPTED / REPA ID THE LOANS THROUGH ACCOUNT PAYEE CHEQUE OR DRAFT AND THUS VIOLATED PROVISIONS OF SECTION 269-S S AND 269-T. HE THEREFORE IMPOSED PENALTY UNDER SECTIONS 271-D AND 271-E OF EQUAL AMOUNT. 4. ON APPEAL IT WAS EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE HAD RECEIVED ACCOUNT PAYEE DRAFTS FROM M/S. NOIDA CEMENT PVT. LTD. FOR PAYMENT OF CUSTOMS DUTY AND CLEARING AND FORWARDING CHARGES THROUGH SHRI NARESH TALWAR. CORR ESPONDINGLY THE ASSESSEE MADE JOURNAL ENTRIES OF LOAN IN RESPECT OF THESE TWO PARTIES. T HERE WAS NO ELEMENT OF CASH INVOLVED EITHER AT THE TIME OF RECEIPT OF LOAN OR AT THE TIME OF REPAY MENT. THEREFORE PROVISIONS OF SECTION 269-SS AND 269-T OF THE ACT WERE NOT APPLICABLE. THE LD. CIT (APPEALS) ON CONSIDERATION OF FACTS OBSERVED THAT SINCE NO ELEMENT OF CASH WAS INVOLVED EITHER AT THE TIME OF RECEIPT OF LOAN OR AT THE TIME OF PAYMENT OF LOAN PROVISIONS OF SECTION 269- SS / 269-T WERE NOT APPLICABLE AND CONSEQUENTLY PENALTIES UNDER SECTION 271-D AND 271- E OF THE ACT WERE NOT ATTRACTED. HE ALSO OBSERVED THAT THE ASSESSING OFFICERS REFERENCE TO AUDITORS REMARK WAS REDUNDANT AND IRRELEVANT BECAUSE SUCH REMARKS WERE AS PER AUDIT MANUAL AND W ERE NORMAL REMARKS WITHOUT CONNOTING ANY SPECIFIC LAPSE ON THE PART OF THE ASSESSEE. THE LD . CIT (APPEALS) ACCORDINGLY CANCELLED THE PENALTIES IMPOSED UNDER SECTION 271-D AND 271-E OF THE ACT. 5. BEFORE US THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT TAKEN LOAN IN CASH FROM M/S. NOIDA CEMENT PVT. LTD. NOR HAD REPAID THE LOAN IN CASH. THEREFORE PROVISIONS OF SECTION 269-SS AND 269-T ARE NOT APPLICABLE. HE THEREFORE SUPPORTED THE ORDER OF THE LD. CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. UNDER SECTION 269-SS NO PERSON SHALL AFTER 30/6/1984 TAK E OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT EXCEEDING RS.20 000/- OR MORE. IF A PERSON RECEIVES IN CONTRA VENTION OF PROVISIONS OF SECTION 269-SS ANY LOAN OR DEPOSIT PENALTY UNDER SECTION 271-D WILL B E LEVIABLE WHICH WILL BE EQUAL TO AMOUNT OF 4 I. T. A. NOS. 3954 & 3955 (DEL) OF 2011 LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. SIMILARLY U NDER SECTION 269-T NO BRANCH OF BANKING COMPANY OR A CORPORATE BANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT DRAWN IN THE NAME OF A PERSO N WHO HAD MADE THE LOAN OR DEPOSIT IF THE AMOUNT IS OF RS.20 000/- OR MORE. IN A CASE THE AS SESSEE REPAYS ANY LOAN OR DEPOSIT REFERRED TO UNDER SECTION 269-T OTHERWISE THAN THE MODES PRESCR IBED UNDER SECTION 269-T HE SHALL BE LIABLE TO PAY PENALTY OF EQUAL AMOUNT OF THE LOAN OR DEPOS IT. FROM THE FACTS STATED ABOVE IT IS CLEAR THAT THE ASSESSEE IN ORDER TO MAKE PAYMENT ON ACCOUNT OF CUSTOMS DUTY AND CLEARING AND FORWARDING CHARGES OBTAINED LOAN THROUGH BANK DRAFTS THE PHOT O-COPIES THEREOF HAVE BEEN PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF BANK DRAFTS THAT TH E ASSESSEE HAD RECEIVED LOAN OF RS.3 24 726/- THROUGH CROSSED DEMAND DRAFTS. THE SAID DRAFTS WER E ISSUED ON ACCOUNT OF CUSTOMS DUTY DRAWN ON BANK OF PUNJAB LTD. THE ASSESSEE HAD ALSO FILED A CONFIRMATORY LETTER WHEREIN IT HAS BEEN STATED THAT M/S. NOIDA CEMENT PVT. LTD. HAD RECEIVE D CHEQUE NO. 265896 DATED 25/02/2005 FOR RS.3 25 000/- DRAWN ON PUNJAB NATIONAL BANK FROM CH EMI INTERNATIONAL GHAZIABAD AGAINST THE DEBIT BALANCE OF UNSECURED LOAN PAID BY THEM THROUG H SHRI N. K. TALWAR. FROM THESE FACTS IT IS EVIDENT THAT THE ASSESSEE HAD NEITHER HAD RECEIVED CASH LOAN FROM M/S. NOIDA CEMENT PVT. LTD. THROUGH NARESH KUMAR TALWAR NOR HAD REPAID THE LOAN IN CASH. THEREFORE THE PROVISIONS OF SECTION 269-SS AND SECTION 269-T HAVE NOT BEEN VIOL ATED. CONSEQUENTLY PENALTY UNDER SECTION 271-D AND 271-E OF THE ACT IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (APP EALS) DELETING PENALTIES U/S 271D & 271E OF THE ACT. 7. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 11 TH NOVEMBER 2011. SD/- SD/- [ DIVA SINGH ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH NOVEMBER 2011. * MEHTA * 5 I. T. A. NOS. 3954 & 3955 (DEL) OF 2011 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.