O/TAXAP/918/2017 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 918 of 2017 PRINCIPAL COMMISSIONER OF INCOME TAX, RAJKOT 1, RAJKOT....Appellant(s) Versus JITEN R THACKER....Opponent(s) Appearance: MRS MAUNA M BHATT, ADVOCATE for Appellant(s) No. 1 CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE A.S. SUPEHIA Date : 21/11/2017 ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) appellant- revenue by this appeal under section 260A of Income Tax Act, 1961 (hereinafter referred to as Act ) has challenged order dated 16.06.2017 passed by Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as Tribunal ) in ITA No.103/ Rjt/ 2016, by proposing following question stated to be substantial question of law: Whether on facts and in circumstances of case and in law Income Tax Appellate Tribunal is justified in deleting penalty levied by Assessing Officer under section 271D of Act? Page 1 of 5 HC-NIC Page 1 of 5 Created On Sat Dec 16 10:07:39 IST 2017 O/TAXAP/918/2017 ORDER 2. assessment year is 2007-08 and relevant accounting period is previous year 2006-07. 3. respondent-assessee is individual engaged in business of wholesale trading of agricultural products and oil. assessee is partner in firm M/s Kashish Enterprises. survey action was carried out at premises of M/s Kashish Enterprises on 28-29.10.2010. survey related assessment was finalized under section 143(3) read with section 147 of Act. Thereafter, once again case was reopened under section 147 of Act and notice under section 148 of Act was issued on 21.3.2014. During course of assessment proceedings it was noticed that as per balance sheet of M/s Kashish Enterprises, assessee had introduced capital of Rs.2,50,000/- whereas as per information available on record on basis of impounded material total capital introduced by assessee was Rs.35,00,000/-. As per capital account of firm assessee had made nil withdrawals whereas as per information on record, total withdrawal by assessee firm was shown as Rs.5,00,000/-. assessee was called upon to explain same. assessee submitted that with regard to capital contributed of Rs.35,00,000/- as against Rs.1,50,000/- reflected in books of Kashish Enterprises, out of Rs.35,00,000/-, assessee had received Rs.30,00,000/- from Shri Jayantilal J. Thacker who had executed sale agreement for total sale consideration of Rs.85,00,000/-. Out of this sale consideration Rs.59,00,000/- was received by assessee and his partner Shri Jitendra Thacker in ratio of 50:50 in form of advance which works out to Rs.29,50,000/- each. Page 2 of 5 HC-NIC Page 2 of 5 Created On Sat Dec 16 10:07:39 IST 2017 O/TAXAP/918/2017 ORDER Subsequently sale agreement came to be cancelled and assessee and his partner had to return entire advance amount to Shri Jayantilal J. Thacker. Assessing Officer found that assessee had explained source of Rs.30,00,000/- but failed to explain source of Rs.5,00,000/- and made addition of Rs,5,00,000/- to total income of assessee. 4. Thereafter, on reference made by Assessing Officer to Joint Commissioner of Income-tax, Joint Commissioner of Income-tax, Gandhidham Range initiated proceedings under section 271D of Act. After considering submissions of assessee, Joint Commissioner held that assessee had accepted deposits of Rs.30,00,000/- in cash in financial year 2006-07 from Shri Jayantilal Thacker in contravention of provisions of section 269SS of Act and accordingly, vide order dated 29.9.2014, imposed penalty of Rs.30,00,000/- under section 271D of Act. 5. assessee carried matter in appeal before Commissioner of Income Tax (Appeals), who, vide order dated 27.01.2016 allowed appeal. revenue carried that matter in appeal before Tribunal, which upheld order passed by Commissioner of Income Tax (Appeals). 6. Assailing impugned order, Mrs.Mauna M. Bhatt, learned senior standing counsel for appellant, submitted that assessee had failed to establish that amount received from Shri Jayantilal Thacker in cash was part of sale consideration of properties, thus, cash received was from non-business transaction. It was urged that assessee failed to produce any cogent evidence to prove that Page 3 of 5 HC-NIC Page 3 of 5 Created On Sat Dec 16 10:07:39 IST 2017 O/TAXAP/918/2017 ORDER cash receipt was otherwise than in nomenclature of loans and hence, penalty under section 271D was justified. 7. As can be seen from impugned order, Tribunal has found, as matter of fact, that amount of Rs.30,00,000/- that had been received by assessee was by way of advance in respect of transaction for sale of property, and, therefore, could not be treated as loan or deposit under section 269SS of Act, and consequently, no penalty was leviable under section 271D of Act. 8. Section 269SS of Act, as it stood at relevant time provided that no person shall take or accept from any person any loan or deposit otherwise than by way of account payee cheque or account payee bank draft. section has subsequently been amended by including words any specified sum . However, at relevant time prohibition under section was against acceptance of any loan or deposit otherwise than as provided there under. In facts of present case, both Commissioner (Appeals) as well as Tribunal have found as matter of fact, that amount received in cash by respondent-assessee was by way of advance in respect of transaction of sale of property. Since advance would neither fall within ambit of expression loan or deposit as envisaged under section 269SS of Act, Tribunal was wholly justified in holding that in facts of present case, provisions of section 269SS of Act would not be attracted and deleting penalty levied under section 271D of Act. 9. In view of above discussion, it cannot be stated that Page 4 of 5 HC-NIC Page 4 of 5 Created On Sat Dec 16 10:07:39 IST 2017 O/TAXAP/918/2017 ORDER there is any legal infirmity in impugned order passed by Tribunal so as to give rise to any question of law, much less, substantial question of law, as proposed or otherwise. appeal, therefore, fails and is summarily dismissed. (HARSHA DEVANI, J.) (A. S. SUPEHIA, J.) karim Page 5 of 5 HC-NIC Page 5 of 5 Created On Sat Dec 16 10:07:39 IST 2017 Principal Commissioner of Income-tax, Rajkot-1 v. Jiten R Thacker