IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH ‘B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.1135/Hyd/2012 : Assessment year 2005-06
Dy. Commissioner of Incometax Central Circle 6, Hyderabad
V/s. Smt. G.Venkat Lakshmi,
Hyderabad.
( PAN - ADBPG 1396 H)
(Appellant) (Respondent)
Cross Objection No.129/Hyd/2012
(in ITA No.1135/Hyd/2012) : Assessment year 2005-06
Smt. G.Venkat Lakshmi,
Hyderabad.
( PAN - ADBPG 1396 H)
V/s. Dy. Commissioner of Income-tax
Central Circle 6, Hyderabad
(Appellant) (Respondent)
Assessee by : Smt. Amisha S.Gupt DR
Department by : Shri J.J.Varun
Date of Hearing 5.11.2012
Date of Pronouncement 9.11.2012
O R D E R
Per Saktijit Dey, Judicial Member:
This appeal by the Revenue and cross objection by the assessee
are directed against the order of the Commissioner of Income-tax(Appeals) I,
Hyderabad date 25.5.2012 for the assessment year 2005-06. Since a ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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common issue is involved, these appeals are being disposed off with this
common order for the sake of convenience.
2. The only issue involved in the appeal of the Revenue relates to
the action of the CIT(A) in cancelling the penalty of Rs.24,01,500 levied by
the Assessing Officer for the assessment year 2005-06 under S.271D of the
Act. By the cross-objection, the assessee merely supports the action of the
CIT(A) in cancelling the penalty.
3. Briefly, the facts of the case are that in the course of assessment
proceedings, the Assessing Officer noticed that during the relevant financial
year, the assessee has purchased a land, and for purchasing the land, the
assessee has received cash loan of Rs.24,01,500 from M/s. Lahari Green
Park, which happens to be the proprietary concern of the assessee’s husband,
Shri G.Hari Babu. The Assessing Officer made addition of the aforesaid
amount under S.68 of the Act, while completing the assessment. The
assessee challenged the addition made before the CIT(A). The CIT(A) deleted
the addition made under S.68 of the Act, by observing that the cash loan
taken by the assessee from M/s. Lahari Green Park has been shown in the
Receipts and Payments Account, and therefore, no addition can be made
under S.68 of the Act. The Assessing Officer noting that the CIT(A) while
deleting the addition made under S.68 of the Act, had observed that the
assessee had taken cash loan, was of the view that there is contravention of
the provisions of S.269SS of the Income-tax Act6, as cash loan was accepted
by the assessee. The Assessing Officer therefore, initiated proceedings for
imposition of penalty under S.271D of the Act. The assessee, in her
explanation, submitted before the Assessing Officer that since the CIT(A) has
observed that there is no cash credit under S.68 of the Act, there cannot be
any violation of the provisions of S.269SS of the Act. It was further ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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submitted by the assessee that though land was purchased in the name of
the assessee, the payment was made by M/s. Lahari Green Park. At the end
of the year, when the land was registered, the land account was debited in
the books of M/s. Lahari Green Park and the party in whose name, the land
was purchased, i.e. the assessee, was credited in the books of M/s. Lahari
Green Park., Thus, in effect, there was no cash loan received by the assessee
and as such there was no contravention of the provisions of S.269SS of the
Act. The Assessing Officer, however, did not accept the explanation of the
assessee, by holding that the character of the transaction between M/s.
Lahari Green Park and the assessee, is a loan which has been taken by the
assessee in cash, and therefore, the penal provisions of S.271D are attracted.
With the aforesaid conclusion, the Assessing Officer imposed penalty of
Rs.24,01,500 under S.271D of the Act, vide order of penalty dated
25.5.2012.
4. The assessee challenged the imposition of penalty, by filing an
appeal before the CIT(A). In the course of hearing before the CIT(A), it was
contended by the assessee that M/s. Lahari Green Park had purchased the
land in question in the name of the assessee by passing journal entry in the
books. Subsequently, the land was transferred to M/s. Lahari Green Park at
the same value, and the assessee has not derived any benefit out of this
transaction. It was contended that in reality, there was no cash transfer by
M/s. Lahari Green Park to the assessee, but only book entries were made at
the time of purchase and at the time of sale. The sale consideration was paid
directly by M/s. Lahari Green Park to the vendor. It was contended by the
assessee that she neither received the money nor made any payment to M/s.
Lahari Green Park and hence no penalty under S.271D can be imposed. It
was further contended by the assessee that the cash payment by M/s. Lahari ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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Green Park has been considered in the assessment of the proprietor, Shri
G.Hari Babu, and disallowance has been made under S.40A(3).
5. The CIT(A) after considering the contentions raised by the
assessee came to a conclusion that though there is no dispute to the fact that
the consideration for purchase of land was paid in cash, however, the
assessee was never in receipt of the cash. The transaction was entered in
the books of M/s. Lahari Green park, by passing journal entries in the name
of the assessee and the cash was paid by the creditor, directly to the vendor
towards sale consideration of the land. It was further observed by the CIT(A)
that M/s. Lahari Green Park has made the payment in cash to the seller of
the property directly, without involving the assessee. The CIT(A) observed
that provisions of S.269SS come into play, only when the assessee accepts
cash loans. Since in the present case, no cash loan was accepted by the
assessee and since it only represents a journal entry, no penalty can be
imposed under S.271D of the Act.
6. Being aggrieved by the relief granted by the CIT(A), Revenue is
in appeal before us.
7. The learned Departmental Representative submitted that the
CIT(A) was not correct in holding that the assessee has not received the loan
in cash, when the CIT(A) while deciding the quantum appeal fo the assessee,
has observed that the assessee has received cash loans from M/s. Lahari
Green Park. The learned Departmental Representative submitted that there is
clear violation of the provisions of S.269SS, and therefore, imposition of
penalty under S.271D should be sustained. ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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8. The learned Authorised Representative for the assessee, refuting
the arguments of the learned Departmental Representative submitted that
the assessee has never accepted any cash loan in contravention of the
provisions of S.269SS of the Act. There were only journal entries made at
the time of purchase and at the time of sale in the books of M/s. Lahari Green
Park. The learned Authorised Representative for the assessee submitted that
the CIT(A) being convinced with the fact that the assessee has not accepted
any cash loan has correctly deleted the penalty imposed by the Assessing
Officer under S.271D of the Act. He also relied upon various decisions
against the imposition of penalty, duly furnishing copies thereof in the paperbook.
9. We have heard rival submissions and perused the materials on
record. We have also examined the decisions relied upon by the learned
Authorised Representative for the assessee. The only issue to be decided in
the present appeal is as to whether the assessee has accepted cash loan from
M/s. Lahari Green Park, in contravention of S.269SS of the Act, so as to
invite the rigour of the penal provision of S.271D of the Act. It is the case of
the Department that the assessee has accepted cash loan in contravention of
the provisions under S.269SS, whereas the assessee’s consistent stand has
been that there was no cash loan, and whatever has happened was only by
way of journal entries in the books of the firm in respect of the transactions
between the proprietary concern, M/s. Lahari Green Park and the vendor,
without her knowledge or involvement. This claim of the assessee that there
was no cash flow between the proprietary firm and the assessee, and
whatever happened was only by way of passing of journal entries in the
books of the proprietary concern needs to be verified from the records of the
firm. However, from the records available before us, we are not able to
decide the issue as to whether the assessee has taken cash loan as stated by ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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the department, or there are only journal entries as claimed by the assessee,
since material to that effect have not been furnished before us. We
therefore, deem it just and proper to remit the matter to the file of the
Assessing Officer, to verify the fact as to whether the assessee has actually
received cash loan from M/s. Lahari Green Park or there were mere journal
entries to that effect. If ultimately, it is found that no cash loan was actually
received by the assessee in the course of the transaction and there were only
journal entries to that effect. then no penalty can be levied under S.271D of
the Act. The Assessing Officer shall accordingly redecide the issue of
applicability of the penal provisions of S.271D of the Act to the facts of the
present case, in accordance with law, keeping in view our aforesaid direction,
and after giving reasonable opportunity of hearing to the assessee.
10. Since the cross-objection of the assessee merely support the
order of the CIT(A), the same does not call for any independent adjudication.
The same is thus rendered redundant, and it is accordingly dismissed as
such.
11. In the result, Revenue’s appeal is allowed for statistical purposes,
and the assessee’s cross objection is dismissed.
Order pronounced in the Court on 9.11.2012
Sd/- Sd/-
(Chandra Poojari) (Saktijit Dey)
Accountant Member Judicial Member
Dated/- November, 2012 ITA No.1135/Hyd/2012 & CO No.129/Hyd/2012
Smt. G.Venkat Lakshmi, Hyderabad.
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Copy forwarded to:
1. Smt. G.Venkat Lakshmi, Plot No.723A,Raod No.26, Jubilee
Hills, Hyderabad.
2.
3.
4.
Dy. Commissioner of Income-tax Central Circle 6, Hyderabad
Commissioner of Income-tax(Appeals)-I, Hyderabad
Commissioner of Income-tax Central Hyderabad
5 Departmental Representative, ITAT, Hyderabad.
B.V.S.
