ITO, New Delhi v. M/s Vipur Auto Pvt. Ltd.,, New Delhi

ITA 4737/DEL/2009 | 2006-2007
Pronouncement Date: 24-05-2010 | Result: Dismissed

Appeal Details

RSA Number 473720114 RSA 2009
Assessee PAN AABCV5530C
Bench Delhi
Appeal Number ITA 4737/DEL/2009
Duration Of Justice 5 month(s) 9 day(s)
Appellant ITO, New Delhi
Respondent M/s Vipur Auto Pvt. Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 24-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 24-05-2010
Date Of Final Hearing 24-05-2010
Next Hearing Date 24-05-2010
Assessment Year 2006-2007
Appeal Filed On 15-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H: NEW DELHI BEFORE SHRI C.L.SETHI JM & SHRI R.C. SHARMA AM I.T. A. NO.4737/DEL OF 2009 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER M/S VIPUL AUTO PRIVATE LTD. WARD 17(3) NEW DELHI. VS B-412-414 ANSAL CHAMBER -I 3 BHIKAJI CAMA PLACE NEW DELHI. PAN : AABCV5530C APPELLANT RESPONDENT APPELLANT BY: SHRI N.K. CHAND RESPONDENT BY: SHRI RAJESH ARORA ORDER ER C.L. SETHI JM: THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A ) DATED 30.10.2009 DELETING THE PENALTY OF RS.47 95 500/- IMPOSED BY A DDL. COMMISSIONER OF INCOME-TAX U/S 271E OF THE INCOME-TAX ACT 1961 (TH E ACT) FOR ASSTT. YEAR 2006-07. 2. IN THIS CASE THE ACIT RANGE-17 NEW DELHI HAD IMPOSED PENALTY OF RS.47 95 500/- U/S 271E FOR VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT. IN THE ASSESSMENT MADE BY THE AO U/S 143(3) O F THE INCOME-TAX ACT 1961 DATED 29.12.2008 THE AO NOTED THE FACT THAT D URING THE YEAR THE 2 ASSESSEE HAS REPAID THE LOAN OUTSTANDING IN THE NAM E OF ONE SHRI S.S. BERIWALA AMOUNTING TO RS.47 95 500/- OTHERWISE THAN BY CROSSED CHEQUES OR BANK DRAFT IN VIOLATION OF SECTION 269T OF THE ACT. THE AO THEREFORE MADE A REFERENCE FOR LEVY OF PENALTY U/S 271E OF THE ACT TO ADDL. CIT VIDE HIS LETTER DATED 9.6.2009. THE ACIT THEREAFTER PROVI DED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY ISSUING NOTICE DATED 10.6. 2009 U/S 274 READ WITH SECTION 271E TO THE ASSESSEE COMPANY REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271E FOR VIOLATION OF PROVISI ONS OF SECTION 269T SHOULD NOT BE LEVIED. THE ASSESSEE SUBMITTED ITS R EPLY-DATED 19.6.2009 WHERE THE ASSESSEE CONTENDED AS UNDER: (I) THAT THERE WAS NO TRANSFER OF MONEY FROM THE ASSESS EE COMPANY TO MR. S.S. BERIWALA BUT THE TRANSACTIONS WERE MADE BY WAY OF BOOK ENTRY WHEREBY THE AMOUNT STANDING CREDIT IN THE NAM E OF MR. S.S. BERIWALA WAS TRANSFERRED TO THE ACCOUNT OF M/S VIPU L MOTORS P. LTD. AND THEREFORE THE PROVISIONS OF SECTION 269 T WERE NOT APPLICABLE. (II) FOLLOWING DECISIONS WERE CITED IN SUPPORT OF THE PR OPOSITION MENTIONED AT ABOVE ITEM NO.(I):- (A) ACIT VS LALA MURALI LAL & SONS (2004) 2 SOT 543 (LU CK); 3 (B) CIT VS NATWARLAL PURUSHOTTAMDAS PAREKH 303 ITR 5 ( GUJ); (C) CIT VS NOIDA TOLL BRIDGE CO. LTD. 262 ITR 266 (AT) (DEL); AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND I N THE LIGHT OF THE PROVISIONS OF SECTION 269T OF THE ACT ADDL. CIT LE VIED PENALTY OF RS.47 95 000/- AS HE WAS OF THE VIEW THAT THE REPAY MENT OF LOAN TAKEN FROM SHRI S.S. BERIWALA WAS TRANSFERRED TO M/S VIPUL MOT ORS BY WAY OF BOOK ENTRY WHICH GOES TO SHOW THAT THE REPAYMENT OF LOA N WAS MADE OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT WHICH IS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269T OF THE ACT. 3. BEING AGGRIEVED WITH THE ORDER OF PENALTY THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). AFTER CONSIDERIN G THE ASSESSEES SUBMISSIONS AND AOS PENALTY ORDER AS WELL THE VAR IOUS DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE THE LEARNED C IT(A) DELETED THE PENALTY BY OBSERVING AS UNDER: 6. I HAVE GONE THROUGH THE PENALTY ORDER AND WRIT TEN SUBMISSIONS FILED BY THE AR IN THIS REGARD. 7. THE FOLLOWING IS EXTRACT OF THE COPY OF ACCOUNT OF SHRI S.S. BERIWALA IN THE BOOKS OF THE ASSESSEE COMPANY: VIPUL AUTO PVT. LTD. S.S. BERIWALA COPY OF LEDGER A/C 4 DATE PARTICULARS V CH TYPE DEBIT CREDIT ------ ------------- ------------ -------- -- ------ 1.4.2005 OP. BALANCE RS.47 95 000 1.4.2005 TO VIPUL MOTORS P. LTD. JOURNAL BEING THE AMOUNT OF S.S. BERIWALA TRANSFERRED TO VIPUL MOTORS P. LTD. --------------- -------------- 47 95 000 47 95 000/- -------------- --------------- 8. THE ASSESSEE REPAID AMOUNT OF RS.47 95 000/- ON 1.4.2005 TO SHRI S.S. BERIWALA THROUGH BOOK ENTRY A S SHOWN ABOVE. I HAVE GONE THROUGH THE ACCOUNT MAINTAINED IN THE NAME OF SHRI S.S. BERIWALA IN THE BOOKS OF M/S VIPUL MOTORS P. LTD. IT IS SEEN THAT THE ACCOUNT OF SHRI S.S. BERIWALA WAS CREDITED TO RS.47 95 000/- CORRESPONDINGLY ON 1.4.2005. SINCE THERE IS NO TRANSFER OF CASH THE BOOK ENTRY TRANSF ER DOES NOT AMOUNT TO CONTRAVENTION OF PROVISIONS OF SECTION 269T AS HELD IN THE FOLLOWING CASES: ACIT VS LALA MURARI LAL & SONS (2004) 2 SOT 543 (LUCK); CIT VS NATVARLAL PURSHOTTAMDAS PAREKH 303 ITR 5; CIT VS NOIDA TOLL BRIDGE CO. LTD. 262 ITR 260; BOMBAY CONDUCTORS & ELECTRICALS LTD. VS DCIT 56 TTJ (AHD) 580; CIT VS GOVIND KUMAR 119 TAXMAN 110 (RAJ) SUNFLOWER BUILDERS (P) LTD. VS DCIT 61 ITD 227 (PUNE) ITO VS AMAR NATH SHIVRAJ (HUF) 1 SOT 346 (AGRA) ACIT VS GUJARAT AMBUJA PROTEINS LTD. 3 SOT 811 (AHD) 5 9. IN VIEW OF THE ABOVE DISCUSSION THERE IS NO CASE F OR LEVY OF PENALTY IN RESPECT OF THE AMOUNT OF RS.47 95 000/-. HENCE THE DEPARTMENT IS IN APPEAL. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 5. PROVISIONS OF SECTION 269T PROVIDES THAT NO BRAN CH OF A BANKING COMPANY OR A COOPERATIVE BANK AND NO OTHER COMPANY OR COOPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAS MADE THE LOAN OR DEPOSIT. THEREFORE IN ORDER TO ATTRACT THE PROVISIONS OF SE CTION 269T IT MUST BE ESTABLISHED THAT THERE IS A REPAYMENT OF ANY LOAN O R DEPOSIT BY THE CONCERNED COMPANY OR BANK OR FIRM OR OTHER PERSON REFERRED TO IN SECTION 269T OF THE ACT MADE WITH IT OTHERWISE THAN BY ACCOUNT PAYEE C HEQUES OR ACCOUNT PAYEE BANK DRAFT IN THE NAME OF PERSON WHO HAS MADE THE LOAN OR DEPOSIT IF THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WITH INTERES T OR THE AGGREGATE AMOUNT OF LOAN OR DEPOSIT HELD BY SUCH PERSON TOGETHER WIT H INTEREST EXCEEDS THE SPECIFIED LIMIT. NOW THE QUESTION ARISES WHETHER THE TRANSFER OF ANY AMOUNT OF LOAN OR DEPOSIT FROM ONE ACCOUNT TO ANOTHER IN T HE BOOKS OF ANY ASSESSEE 6 WOULD AMOUNT TO REPAYMENT OF THE LOAN OR DEPOSIT WI THIN THE MEANING OF SECTION 269T OF THE ACT. IN THE PRESENT CASE THE ASSESSEE HAS PLEADED BEFORE US THAT THE ASSESSEE WAS UNDER BONAFIDE AND HONEST BELIEF THAT SQUARING OFF OR ADJUSTMENT OF ANY AMOUNT OF LOAN OR DEPOSIT BY TRAN SFERRING THE AMOUNT TO THE ACCOUNT OF OTHER PARTY IN THE BOOKS OF THE ASSE SSEE WOULD NOT AMOUNT TO THE REPAYMENT OF LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269T OF THE ACT INASMUCH AS THERE WAS NO TRANSFER OF MONEY FROM THE ASSESSEE COMPANY TO THE PERSON CONCERNED FROM WHOSE ACCOUNT THE LOA N OR DEPOSIT WAS TRANSFERRED TO THE OTHER PERSON BY WAY OF BOOK ENTR Y. IN THIS RESPECT THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE VA RIOUS DECISIONS AS RELIED UPON BEFORE THE LEARNED CIT(A) AND AS ARE MENTIONED IN PARA 8 OF CIT(A)S ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE HAS AL SO RELIED UPON THE DECISIONS OF THE ITAT NEW DELHI BENCH H IN THE C ASE OF ITO VS M/S VIJAY LAKHSHMI PRINTING WORKS P. LTD. ITA NO.4653/ DEL/2009 ORDER DATED 18.2.2010 WHERE ALSO THE ASSESSEES EXPLANATION WAS FOUND TO BE BONAFIDE IN RESPECT OF THE REPAYMENT OF LOAN BY WAY OF TRANSFER OF BOOK ENTRY FROM ONE PERSON TO ANOTHER WITHOUT THERE BEING ANY TRANSFER OF CASH MONEY. 6. IN THE PRESENT CASE WE FIND THAT ASSESSEE HAD P ASSED A BOOK ENTRY ON 31.3.2005 IN ITS BOOKS OF ACCOUNTS BY WHICH THE AC COUNT OF S.S. BERIWALA WAS CREDITED FOR AN AMOUNT OF RS.47 95 000/- AND A CCOUNT OF M/S VIPUL 7 MOTORS P. LTD. WAS DEBITED. IN OTHER WORDS THE AS SESSEE HAD CREDITED THE AMOUNT OF RS.47 95 500/- IN THE ACCOUNT OF S.S. BER IWALA BY DEBITING THE SAID AMOUNT TO THE ACCOUNT OF M/S VIPUL MOTORS P. L TD. ON 31.3.2005. THEREAFTER ON 1.4.2005 I.E. ON THE VERY NEXT DAY ASSESSEE PASSED A BOOK ENTRY IN ITS BOOKS BY WHICH THE ACCOUNT OF M/S S.S. BERIWALA WAS DEBITED AND ACCOUNT OF M/S VIPUL MOTORS P. LTD. WAS CREDITE D. IT IS THUS CLEAR THAT THE SUM OF RS.47 97 500/- WAS FIRST CREDITED IN THE ACCOUNT OF S.S. BERIWALA ON 31.3.2005 AND THEN THE SAME ACCOUNT WAS DEBITED WITH THE SAME AMOUNT ON 1.4.2005 AND CORRESPONDING CONTRA ENTRIES AT B OTH THE POINTS OF TIME WERE MADE IN THE ACCOUNT OF M/S VIPUL MOTORS P. LTD . HOWEVER IT IS NOT UNDERSTOOD AS TO WHY ON 31.3.2005 THE LAST DAY OF THE YEAR AN AMOUNT OF RS.47 95 000/- WAS FIRST TRANSFERRED FROM THE ACCOU NT OF M/S VIPUL MOTORS P. LTD. TO THE ACCOUNT OF SHRI S.S. BERIWALA AND THEN A REVERSE ENTRY OF THE SAME AMOUNT WAS MADE ON THE VERY NEXT DAY I.E. ON 1.4.2005 THE FIRST DAY OF NEXT YEAR. IT IS NOT CLEAR AND KNOWN WHAT WAS T HE INTENTION AND PURPOSE OF MAKING SUCH ENTRY WHETHER IT WAS THE CASE WHER E THE ASSESSEE DID NOT LIKE TO RETAIN THE CREDIT ENTRY IN THE NAME OF M/S VIPUL MOTORS (P) LTD. IN THE BALANCE SHEET AS ON 31.3.2005 FOR SOME MOTIVES INT ENT AND PURPOSES WHICH SUIT TO THE ASSESSEES SOME INTEREST. HOWEVER IN THE PRESENT APPEAL WE ARE CONCERNED ABOUT THE SECOND ENTRY PASSED BY THE ASSE SSEE ON 1.4.2005 BY 8 WHICH THE ACCOUNT OF S.S. BERIWALA WAS DEBITED AND THE ACCOUNT OF M/S VIPUL MOTORS P. LTD. WAS CREDITED BY THE CORRESPOND ING AMOUNT OF RS.47 95 000/-. THE AO HAS LEVIED THE PENALTY U/S 271E IN CONTRAVENTION OF PROVISIONS OF SECTION 269T IN RESPECT OF THE AFORES AID SECOND ENTRY BY DEBITING THE ACCOUNT OF SHRI S.S. BERIWALA AND THE CREDITING THE ACCOUNT OF M/S VIPUL MOTORS P. LTD. IT SEEMS THAT NO PROCEEDI NGS IN RESPECT OF THE FIRST ENTRY PASSED ON 31.3.2005 BY WHICH THE ACCOUNT OF S HRI S.S. BERIWALA WAS CREDITED AND THE ACCOUNT OF M/S VIPUL MOTORS WAS DE BITED BY THE CORRESPONDING AMOUNT OF RS.47 95 000/- HAS BEEN TAK EN BY THE AO FOR CREDITING THE ACCOUNT OF SHRI S.S. BERIWALA BY BOOK ENTRY. BE THAT AS IT MAY WE ARE CONCERNED WITH THE ISSUE AS TO WHETHER PENAL TY U/S 271E CAN BE IMPOSED IN RESPECT OF THE TRANSACTION EFFECTED BY W AY OF BOOK ENTRY PASSED ON 1.4.2005 BY WHICH THE ACCOUNT OF SHRI S.S. BERIW ALA WAS DEBITED AND THE ACCOUNT OF M/S VIPUL MOTORS P. LTD. WAS CREDITED. T HERE IS NO DISPUTE THAT PENALTY U/S 271E IS ATTRACTED FOR VIOLATION OF PROV ISIONS OF SECTION 269T OF THE ACT AS SECTION 271E PROVIDES THAT IF A PERSON R EPAYS ANY LOAN OR DEPOSIT REFERRED TO IN SECTION 269T OTHERWISE THAN IN ACCOR DANCE WITH THE PROVISIONS OF THAT SECTION HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO REPAID. IT IS ALSO PERTINENT TO NOTE THAT SECTION 273B WHICH IS A NON OBSTANTE CLAUSE PROVI DES THAT NOTWITHSTANDING 9 ANYTHING CONTAINED IN THE PROVISIONS OF INTER ALIA SECTION 271E NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE A S THE CASE MAY BE FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IF HE PRO VES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THUS IN THE PRESENT C ASE IF THE ASSESSEE HAS BEEN ABLE TO PROVE AND ESTABLISH THAT THERE WAS REASONAB LE CAUSE FOR THE FAILURE REFERRED TO IN SECTION 271E NO PENALTY U/S 271E SH ALL BE IMPOSABLE. WE THEREFORE HAVE TO SEE AS TO WHETHER THE ASSESSEE IN THE PRESENT CASE HAS BEEN ABLE TO PROVE AND ESTABLISH THAT THERE WAS REA SONABLE CAUSE FOR THE ASSESSEE FOR REPAYMENT OF LOAN TO SHRI S.S. BERIWAL A BY WAY OF BOOK ENTRY BY WHICH THE ACCOUNT OF SHRI S.S. BERIWALA WAS DEBI TED AND THE ACCOUNT OF M/S VIPUL MOTORS P. LTD. WAS CREDITED IN THE BOOKS OF THE ASSESSEE WITHOUT THERE BEING ANY TRANSFER OF ACTUAL MONEY FROM ONE P ERSON TO ANOTHER. IN THIS RESPECT THE ASSESSEE HAS RELIED UPON VARIOUS DECIS IONS WHERE A VIEW HAS BEEN TAKEN THAT MERE TRANSFERRING THE AMOUNT OF LOA N OR DEPOSIT FROM ONE PERSON TO ANOTHER BY WAY OF BOOK ENTRY WOULD NOT HI T BY THE PROVISIONS CONTAINED IN SECTION 269T OF THE ACT. THE LIST OF THE DECISIONS HAVE ALREADY BEEN REFERRED TO BY THE CIT(A) IN HIS ORDER WHICH HAS ALSO BEEN REPRODUCED HEREINABOVE BY US. 7. IN THE LIGHT OF THE PECULIAR FACTS OF THE PRESEN T CASE WHERE A CREDIT ENTRY WAS FIRST MADE IN THE ACCOUNT OF SHRI S.S. BE RIWALA BY DEBITING THE 10 ACCOUNT OF M/S VIPUL MOTORS P. LTD. ON THE LAST DA Y OF THE FINANCIAL YEAR 2004-05 AND THEN REVERSING THE ENTRY ON THE VERY N EXT DAY I.E. FIRST DAY OF THE NEXT FINANCIAL YEAR 2005-06 BY DEBITING THE AC COUNT OF SHRI S.S. BERIWALA AND CREDITING THE ACCOUNT OF M/S VIPUL MO TORS P. LTD. IT IS CLEAR THAT THERE WAS NO TRANSFER OF ACTUAL MONEY FROM ASS ESSEE TO SHRI S.S. BERIWALA BUT THE CREDIT OR DEBIT HAS BEEN MADE BY P ASSING A MERE BOOK ENTRY. IN THESE CIRCUMSTANCES THE ASSESSEES BELIEF THAT PROVISIONS OF SECTION 269T WOULD BE APPLICABLE ONLY TO THE TRANSACTIONS WHERE TRANSFER OF ACTUAL MONEY IS INVOLVED CAN BE SAID TO BE BONAFIDE MORE PARTI CULARLY IN THE LIGHT OF THE VARIOUS DECISIONS WHERE A VIEW HAS BEEN TAKEN THAT SECTION 269T HAVE NO APPLICATION IN CASE OF ANY TRANSACTION MADE BY WAY OF PASSING CONTRA BOOK ENTRY. THEREFORE WITHOUT GOING TO THE QUESTION AS TO WHETHER THE TRANSACTION OF REPAYMENT OF LOAN OR DEPOSIT FROM ONE PERSON TO ANOTHER BY WAY OF PASSING A MERE CONTRA BOOK ENTRY IN THE ACCOUNTS OF THE ASSESSEE WOULD BE HIT BY THE PROVISIONS OF SECTION 269T OF THE ACT W E HOLD THAT IN THE PRESENT CASE NO PENALTY U/S 271E IS IMPOSABLE UPON THE ASS ESSEE INASMUCH AS THE ASSESSEE HAS BEEN ABLE TO SHOW AND ESTABLISH SUFFIC IENT AND REASONABLE CAUSE FOR TRANSFER OF AMOUNT FROM THE ACCOUNT OF S.S. BER IWALA TO THE ACCOUNT OF M/S VIPUL MOTORS BY WAY OF BOOK ENTRY OTHERWISE TH AN BY PAYMENT THROUGH 11 ACCOUNT PAYEE CHEQUE OR DRAFT. FOR THE REASONS GIV EN ABOVE WE THEREFORE UPHOLD THE ORDER OF CIT(A) IN DELETING THE PENALTY. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 9. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 24 TH MAY 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (R.C. SHARMA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH MAY 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XIX NEW DELHI 5. DR ASSISTANT REGISTRAR