Pr Commissioner Of Income Tax, Kota v. M/S Shakti Foundation, 112B, Shakti Nagar, Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 30 / 2017 Pr Commissioner Of Income Tax, Kota. ----Appellant Versus M/S Shakti Foundation, 112B, Shakti Nagar, Kota. ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE G R MOOLCHANDANIJudgment 08/05/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal as well as cross objection of the assesseeand confirmed the order of the CIT(A). 2.The department in the memo of appeal has framed thefollowing substantial questions of law: “(1) Whether the Tribunal was legallyjustified in deleting the penalty ofRs.82,56,589/- levied u/s. 271D byholding that the transfer by way of bookentries was bonafide and was not to evadetaxes specifically when accordingly tosection 269SS deposit/loan of moneycannot be accepted otherwise then by anaccount payee cheque/draft? (2) Whether the Tribunal was legallyjustified in upholding the findings of theCIT(A) and deleting the penalty leviedu/s.271D by interpreting section 269SSthat it would not apply to journal entriespassed the books of accounts? (3) Whether the Tribunal was legally justified in deleting the penalty ofRs.82,56,589/-leviedu/s.271Dspecifically when assessee failed toestablish any reasonable cause forviolation of provisions of Section 269SS? 3.The CIT(A) in para 10 of its order has held as under: “10. The assessee has not been able toprove that there was any reasonable causefor receiving the above-said loans inviolation of the provisions of section 269SSof the Act. Therefore, I deem it a fit casefor imposing of penalty u/s 271D of the Act.Accordingly, I hereby impose the followingpenalty upon the assessee:- Penalty u/s 271D of the Act for Rs.82,56,589/- accepting loans/deposits aggregating to Rs.82,56,589/- in violation of provisions of section 269SS as per details in para 9 above. I have gone through assessee’s submissionand AO’s findings. In my opinion, section 269SS wasintroduced in the statute to preventintroduction of unaccounted money byshowing cash loans etc. Section 269SS doesnot apply on journal entries passed in thebooks of accounts. Therefore, the AO is directed to deletepenalty of Rs.82,56,589/-. These grounds of appeal are allowed.Ground No.2The assessee contended that the order waspassed on 27.11.2014 whereas all theassessee covered by section 10, 11, 12 &13havebeentransferredtoCIT(Exemption), Jaipur as per CBDTnotification No.52/2014 dated 22.10.2014.The assessee contended that the orderpassed by Addl. CIT was withoutjurisdiction.The assessee failed to show that this case iscovered by section 10, 11, 12 & 13 of theIT Act. This ground of appeal is thereforedismissed.Ground No.4 This ground is general in nature and doesnot require any adjudication.” 4.The Tribunal in para 2.5 has held as under: “2.5 We have heard the rival contentionsand perused the materials available onrecord. It is noted from the the record thatthe Addl. CIT, Kota had imposed the penaltyof Rs. 82,56,589 /- u/s 271D of the Act onthe assessee for accepting loans/ depositsin violation of provisions of Section 269SSof the Act. Before coming to any conclusion,it will in the interest of justice to take intoconsideration the following provisions ofSection 269SS of the Act that the assesseehad actually violated this provision and theAddl. CIT, Kota had imposed the penalty u/s271D of the Act. REQUIREMENT ASTO MODE OF[ACCEPTANCE, PAYMENT OR] REPAYMENTIN CERTAIN CASES TO COUNTERACTEVASION OF TAX [Mode of taking or acceping certain loansand deposits. “2.5 We have heard the rival contentionsand perused the materials available onrecord. It is noted from the the record thatthe Addl. CIT, Kota had imposed the penaltyof Rs. 82,56,589 /- u/s 271D of the Act onthe assessee for accepting loans/ depositsin violation of provisions of Section 269SSof the Act. Before coming to any conclusion,it will in the interest of justice to take intoconsideration the following provisions ofSection 269SS of the Act that the assesseehad actually violated this provision and theAddl. CIT, Kota had imposed the penalty u/s271D of the Act. REQUIREMENT ASTO MODE OF[ACCEPTANCE, PAYMENT OR] REPAYMENTIN CERTAIN CASES TO COUNTERACTEVASION OF TAX [Mode of taking or acceping certain loansand deposits. 269SS. No person shall, after the 30[th] dayof June, 1984, take or accept from anyother person (hereafter in this sectionreferred to as the depositor), any loan ordeposit otherwise than by an account payeecheque or account payee bank draft if, - (a) the amount of such loan or deposit orthe aggregate amount of such loan anddeposit; or (b) on the date of taking or accepting suchloan or deposit, any loan or deposit takenor accepted earlier by such person from thedepositor is remaining unpaid (whetherrepayment has fallen due or not), theamount or the aggregate amount remainingunpaid; or (c) the amount or the aggregate amountreferred to in clause (a) together with theamount or the aggregate amount referredto in clause (b), is [twenty] thousandrupees or more: Provided that the provisions of this sectionshall not apply to any loan or deposit takenor accepted from, or any loan or deposittaken or accepted by,- (a) Government; (b) any banking company, post officesavings bank or co-operative bank; (c) any corporation established by aCentral, State or Provincial Act; (d) any Government comapny[84 ]as definedin section 617 of the Companies Act, 1956(1 of 1956); (e) such other institution, association orbody or class of institutions, associations orbodies which the Central Government may,for reasons to be recorded in writing,notify[85] in this behalf in the Official Gazette: 86 [Provided fruther that the provisions ofthis section shall not apply to any loan ordeposit where the person from whom theloan or deposit is taken or accepted and theperson by whom the loan or deposit takenor accepted are both having agriculturalincome and neither of them has any incomechargeable to tax under this Act.]this section shall not apply to any loan ordeposit where the person from whom theloan or deposit is taken or accepted and theperson by whom the loan or deposit takenor accepted are both having agriculturalincome and neither of them has any incomechargeable to tax under this Act.] Explanation- For the purposes of thissection,- 87[ (i) " banking company" means acompany to which the Banking RegulationAct, 1949 (10 of 1949), applies ad includesany bank or banking institution referred toin section 51 of that Act:] (ii) "co-operative bank" shall have themeaning assigned to it in Part V of theBanking Regulation Act, 1949 (10 of 1949);(iii) "loan or deposit" means loan of depositof money.]” 5.Taking into consideration the observations made by the CIT(A) and the Tribunal, we are are of the considered opinion thatSection 269SS of the Income Tax Act, was introduced in statuteand taking into consideration the applicability of the provisions,the Tribunal has discussed in para 2.5 in detail which reads asunder: Explanation- For the purposes of thissection,- 87[ (i) " banking company" means acompany to which the Banking RegulationAct, 1949 (10 of 1949), applies ad includesany bank or banking institution referred toin section 51 of that Act:] (ii) "co-operative bank" shall have themeaning assigned to it in Part V of theBanking Regulation Act, 1949 (10 of 1949);(iii) "loan or deposit" means loan of depositof money.]” 5.Taking into consideration the observations made by the CIT(A) and the Tribunal, we are are of the considered opinion thatSection 269SS of the Income Tax Act, was introduced in statuteand taking into consideration the applicability of the provisions,the Tribunal has discussed in para 2.5 in detail which reads asunder: “A plain reading of section indicates that itapplies to a transaction where a deposit orloan money is accepted by an assesseeotherwise than by an account payee chequeor an account payee draft. This is alosexplicit from clause (iii) of the explanationto Section 269SS of the Act which defines ''loan or deposit of money. Although in thecase of cut vs. Triumph InternationalFinance (I) Ltd. (supra), it is held that theliability recorded in the books of account byway of journal entries i.e. crediting theamount of party to whom monies payableand debiting the account of a party fromwhom monies are receivable in the books ofaccount is in contravention of provisions ofSection 269T of the Act but in that casealso the penalty was held to be not leviablefor the reason that transaction was bonafide and was not to evade taxes. Inassessee's case also, the transaction isbonafide and it was not to evade taxes. Inthis view of the matter and further perusingthe citations of the case laws (supra), wefind no infirmity in the order of the ld. CIT(A) which is sustained on this issue. Thusthe solitary ground of the Revenue isdismissed.” 6.In that view of the matter, the view taken by the Tribunal isjust and proper and no interference in the order is called for. 7.Hence, the appeal being devoid of any merit deserves to bedismissed and the same is dismissed. (G R MOOLCHANDANI)J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/13