Itta/109/2003 Of Commissioner Of Income Tax - Ii Vsp v. M/S Rajam Extractions Pvt. Ltd.srikakula

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. No.109 OF 2003 JUDGMENT: (Per Hon’ble Sri Justice L. Narasimha Reddy) The respondent is a Company and is assessed to tax. For the assessment year 1991-92, it filed returns. In the course ofprocessing of returns, the Assessing Officer pointed out that a sum ofRs.3,00,000/- was received in the form of cash. He proceeded to treatit as loan on the ground that the explanation offered by the respondentis not acceptable. In the appeal preferred before the Commissioner,the order passed by the Assessing Officer was upheld and levied taxthereon. Four years thereafter, the Assessing Officer passed an order,dated 30.09.1996, exercising the power under Section 271D of theIncome Tax Act (for short, ‘the Act’) levying penalty of Rs.3,00,000/-. According to him, the receipt of amount of Rs.3,00,000/- by therespondent was in contravention of Section 269SS of the Act andthereby, the penalty is levied. The respondent carried the matter before the Commissioner of Appeals and order of the Assessing Officer was upheld. Thereupon,he filed the I.T.A.No.796/H/1997 before the Income Tax AppellateTribunal, Visakhapatnam. The Tribunal allowed the appeal throughorder, dated 20.11.2002. Hence, this further appeal by the respondentunder Section 260A of the Act. Heard Sri S.R. Ashok, learned Senior Counsel for the appellant,and the respondent did not enter appearance. There is no denial of the fact that the respondent received a sumof Rs.3,00,000/- in cash. All the same, the amount was reflected in thereturns and it was brought under the purview of tax. The explanation offered by the respondent was that at the inception of its activity,several amounts have been gathered by the shareholders for thepurpose of construction of building and pending finalization ofallotment of shares, the amount was released and treated as loan. The Assessing Authority, however, treated the amount as loan. Therespondent did not feel any inconvenience on account of that order,since it was otherwise agreeable to pay the tax on that amount also. Four years later, the Assessing Officer initiated proceedingsunder Section 271D of the Act proposing to levy 100% penalty and ashow cause notice was issued. The explanation offered by therespondent was not accepted and penalty was imposed. Therespondent was unsuccessful before the Commissioner, but not beforethe Tribunal. The Tribunal took note of two aspects. The first is that theinitiation of proceedings are barred by limitation and the second is thatthe amount of Rs.3,00,000/- cannot be treated either as loan or asdeposit. Section 275 of the Act prescribes the limitation in respect of theproceedings initiated for imposing penalty under various provisions oflaw. As regards the penalty referable to Sections 271D and 271(1)(c )of the Act stipulates period of six months. Admittedly, in the instantcase, the proceedings were initiated long thereafter and nearly fouryears after the order of assessment. That ground alone is sufficient toset aside the order of the Assessing Officer passed under Section271D of the Act. The plea of the appellant that the ground of limitationwas not urged before the Commissioner is hardly of any use. If thefacts in relation to the grounds of limitation are not in dispute, itbecomes the one of law and can be raised at any stage. On merits also, there is nothing on record to support the plea ofthe appellant that the amount was received towards the loan ordeposit. The mere allegation or assertion is not sufficient. When penalty to the extent of 100% is sought to be levied, that too even aftercollecting the tax on the amount, heavy burden rested upon theAssessing Officer to establish that the said amount was received froma person either as loan or deposit. In this behalf, identification of theperson from whom the amount is received, becomes essential. Whenlaw confers extensive powers upon the Assessing Officer either toverify the record or On merits also, there is nothing on record to support the plea ofthe appellant that the amount was received towards the loan ordeposit. The mere allegation or assertion is not sufficient. When penalty to the extent of 100% is sought to be levied, that too even aftercollecting the tax on the amount, heavy burden rested upon theAssessing Officer to establish that the said amount was received froma person either as loan or deposit. In this behalf, identification of theperson from whom the amount is received, becomes essential. Whenlaw confers extensive powers upon the Assessing Officer either toverify the record or to summon the person or even to reopen the proceedings, which havealready become final, it would not be difficult to undertake an exercisein that behalf. As the Tribunal has taken the correct view of the matter,we do not find any basis to interfere with the order under appeal. The appeal is, accordingly, dismissed. There shall be no orderas to costs. The miscellaneous petition filed in this writ appeal shall alsostand disposed of. ____________________ L. NARASIMHA REDDY, J. ______________________ CHALLA KODANDA RAM, J. 09.09.2014KH