The Commissioner Of Income Tax-I,Chandigarh v. Adarsh Kumar Goel.j (Oral

I.T.A. No. 594 of 2008. IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 594 of 2008 Date of Decision: November 27, 2008. The Commissioner of Income Tax-I,Chandigarh. ---Appellant Versus M/s Sona Paper Boards Ltd..--Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE L.N. MITTAL Present:Ms. Urvashi Dhugga, standing counsel for appellant. *** ADARSH KUMAR GOEL.J (ORAL) This appeal has been preferred by the Revenue under Section260 A of the Income Tax Act, 1961 against the order of the Income TaxAppellate Tribunal, Chandigarh Bench 'A' passed in I.T.A.No.569/CHANDI/2006 dated 28.2.2008 for the Assessment Year 2002-03,proposing following substantial question of law for consideration:- “ Whether on the facts and circumstances of the case andin law, the ITAT was right in holding that acceptance ofloan by way of transfer/adjustment entries does notviolate the provisions of section 269SS and thereforedoes not attract penalty u/s 271-D of the Income TaxAct?” The assessing office has imposed penalty under Section 271-Dfor alleged violation of Section 269-SS on the ground that the assessee I.T.A. No. 594 of 2008. accepted loans by adjustment entries. The CIT(A) deleted the penalty byholding that the transaction was genuine and no violation of Section 269-SSwas involved. The said view has been upheld by the Tribunal in followingterms:- “ We, therefore, conclude on this aspect by holding that a 'loan'or 'deposit' created by a mere constructive receipt by way of bookadjustment or account adjustment cannot by itself bring the transactionwithin the purview of Section 269SS of the Act. In the instant case, in sofar as item Nos. 2 & 3 amounting to Rs. 4,68,000/- are concerned, ourattention has been drawn to pages 48, 51, 57 & 59 of the paper Bookwherein are placed the relevant statement of account of the parties. Forinstance, in the case of Vinod Kumar (i.e. Item No.3) it is observed that theassessee has credited the account of the said person by a sum of Rs.3,28,000/- for the amount paid by the said person on behalf of assessee to Sh.Shanti Lal Sethia, whose account is placed at page 48 of the Paper Book.The assessee had borrowed sums from Sh. Shanti Lal Sethia, whose accounthas been debited by a sum of Rs.3,28,000/- being amount repaid by Sh.Vinod Kumar albeit on behalf of assessee. Such transaction of constructivereceipt from Sh. Vinod Kumar has been considered as violative of Section269SS. We have held that such transactions do not fall within the ambit ofSection 269SS of the Act. Therefore, the penalty exigible thereon has beenrightly deleted by the CIT (Appeals). Staying further on this point, we havealso noticed from the account of Sh. Shanti Lal Sethia placed at page 48 thatthe assessee had earlier received sums from this creditor by way of the modeprescribed under Section 269SS of the Act. It is also noticed, that thegenuineness and the bonafides of the transaction has not been doubted by I.T.A. No. 594 of 2008. the Revenue. Therefore, to the extent acceptance of the loans amounting toRs.4,68,000/- is concerned, the CIT (Appeals) is right in concluding thatthere is no violation of the provisions of Section 269SS of the Act andhence penalty is deleted to that extent.” The Tribunal relied upon the judgement of Hon'ble SupremeCourt in the case of Asstt. Director of Inspection (Investigation) Vs. Kum.A.B. Shanthi, 255 ITR 258., to the effect:- “ If there was a genuine and bona fide transaction and if for anyreason the taxpayer could not get a loan or deposit by account payee chequeor demand draft for some bona fide reasons, the authority vested with thepower to impose penalty has got discretionary power.” We have heard learned counsel for the appellant. I.T.A. No. 594 of 2008. the Revenue. Therefore, to the extent acceptance of the loans amounting toRs.4,68,000/- is concerned, the CIT (Appeals) is right in concluding thatthere is no violation of the provisions of Section 269SS of the Act andhence penalty is deleted to that extent.” The Tribunal relied upon the judgement of Hon'ble SupremeCourt in the case of Asstt. Director of Inspection (Investigation) Vs. Kum.A.B. Shanthi, 255 ITR 258., to the effect:- “ If there was a genuine and bona fide transaction and if for anyreason the taxpayer could not get a loan or deposit by account payee chequeor demand draft for some bona fide reasons, the authority vested with thepower to impose penalty has got discretionary power.” We have heard learned counsel for the appellant. From the findings recorded by the Tribunal, it is clear that noevasion of tax was involved in the transaction question. The amount wasreceived through the Bank. There was no passing of cash amount. In thesecircumstance, the matter was clearly covered by the judgement of Hon'bleSupreme Court in the case of Asstt. Director of Inspection (Investigation)Vs. Kum. A.B. Shanthi, 255 ITR 258. No substantial question of law is thus involved. Accordingly, the appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (L.N. MITTAL) JUDGE