Govind Kripa Buildmart Pvt. Ltd., ... vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 876 & 877/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2008-09

M/s Govind Kripa Buildmart cuke Joint Commissioner of Pvt. Ltd., Jaipur. Vs. Income Tax, Central, Jaipur.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALCS 1446 C vihykFkhZ@Appellant izR;FkhZ@Respondent

vk;dj vihy la-@ITA No. 904 & 905/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Deputy Commissioner of cuke M/s Shree Govindkripa Income Tax, Central Circle- Vs. Buildmart Pvt. Ltd., A-2, Rana 1, Jaipur. Pratap Nagar, Jhotwara, Jaipur.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALCS 1446 C vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri K.L. Moolchandani (Adv) & Shri R.K. Khunteta (CA) jktLo dh vksj ls@ Revenue by : Mrs. Rolee Agarwal (CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 20/04/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 15/05/2015 2 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

These are the cross appeals filed by the assessee as well as by

the revenue arise against the orders dated 25/09/2013 and 26/09/2013

for A.Y. 2008-09. The effective grounds of all the appeals are as under:-

Grounds of Assessee's appeal ITA No. 876/JP/2013

"1 On the facts and in the circumstances, the ld. CIT(A) has factually and legally erred in ignoring the fact that the penalty proceedings got time barred in view of the latest judgment of Hon'ble Rajasthan High Court in the case of Shri Jitendra Singh Rathore without appreciating the facts of the case in right perspective, particularly when the same view was taken by the Hon'ble High Court earlier also and was followed respectfully by the Hon'ble ITAT, Jaipur Bench, Jaipur. Such view has been accepted by the Department also as no Reference or SLP has been filed against such view of the Judicial Authorities.

Thus, it is virtually a 'covered point'. Not following the view taken by the Hon'ble Jurisdictional High Court and the Hon'ble local ITAT, Bench is contrary to the Judicial Discipline and deserves to be quashed summarily.

2. On the facts and in the circumstances of the case the learned CIT(Appeals) has factually and legally erred in upholding the penalty U/s 271D of the Act to the extent of Rs. 4,42,28,772/- out of Rs. 6,34,38,484/- as levied by the A.O. without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed by the Authorities Below deserves to be deleted."

3 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

Grounds of Assessee's appeal ITA No. 877/JP/2013

"1 On the facts and in the circumstances, the ld. CIT(A) has factually and legally erred in ignoring the fact that the penalty proceedings got time barred in view of the latest judgment of Hon'ble Rajasthan High Court in the case of Shri Jitendra Singh Rathore without appreciating the facts of the case in right perspective, particularly when the same view was taken by the Hon'ble High Court earlier also and was followed respectfully by the Hon'ble ITAT, Jaipur Bench, Jaipur. Such view has been accepted by the Department also as no Reference or SLP has been filed against such view of the Judicial Authorities. Thus, it is virtually a 'covered point'. Not following the view taken by the Hon'ble Jurisdictional High Court and the Hon'ble local ITAT, Bench is contrary to the Judicial Discipline and deserves to be quashed summarily.

2. On the facts and in the circumstances of the case the learned CIT(Appeals) has factually and legally erred in upholding the penalty U/s 271E of the Act to the extent of Rs. 99,50,000/- out of Rs. 1,77,00,000/- as levied by the A.O. without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed by the Authorities Below deserves to be deleted."

Grounds of Revenue's appeal ITA No. 904/JP/2013

"1 On the facts and in the circumstances of the case, the ld. CIT(A), Central, Jaipur has erred in deleting penalty U/s 271D on cash deposits totaling to Rs. 1,92,09,712/- (Rs. 6,34,38,484 (cash deposits for penalty as per JCIT)-Rs. 4,42,28,772 (cash deposits for penalty as per CIT(A) ignoring following facts.

(i) That Rs. 35,10,000/- was paid in cash to the assessee by two persons -Shri Rajendra Prasad and Shri Rajkumar.

4 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

(ii) That cash of Rs. 1,19,54,712/- received against sale of land has to be considered as 'deposit' within the meaning of section 269SS.

(iii) That CIT(A) had held herself held earlier in the order for confirming certain amount, that share application money is 'deposit' within the meaning of section 269SS whereas this logic was not followed for the amount of Rs. 37,45,000/- shown as share application money in the balance sheet."

Grounds of Revenue's appeal ITA No. 905/JP/2013

"1 On the facts and in the circumstances of the case, the ld. CIT(A), Central, Jaipur has erred in restricting the penalty U/s 271E of the IT Act to Rs. 99,50,000/- out of Rs. 1,77,00,000/- imposed by the JCIT, thus deleting Rs. 77,50,000/- representing amount of cancellation of booking of land and its repayment ignoring that advance cash deposits against sale of land should be considered as "deposit" falling within the meaning of Section 269SS."

2. All the grounds of appeals filed by the assessee as well as the

revenue for A.Y. 2008-09 are against confirming the penalty U/s 271D

and 271E of the Income Tax Act, 1961 (hereinafter referred as the Act)

at Rs. 4,42,28,772/- and Rs. 99,50,000/- respectively. The revenue was

against the appeal on deleting of penalty under these Sections at Rs.

1,92,09,712/- and Rs. 77,50,000/- respectively. The assessee is a

company and the assessee has Income from property business,

development of township. Search and seizure operation was carried out

U/s 132(1) of the Act on 16/11/2007 at the business premises of 5 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

assessee. During the course of search and seizure operation,

documents/loose papers were found and seized. The case was

scrutinized U/s 143(3) of the Act. This is the first year of

commencement of property business of the assessee. The assessee had

purchased land during the year. During the year under consideration,

the assessee had purchased land for its Global City Project (240 Bigha

approx) in village- Chakbad. The land was purchased @ Rs. 24.51 lacs

per bigha and total amount of Rs. 11.00 crores was paid up to the date

of search. Certain expenses too were incurred during the year, which

have been shown as work in progress. No sales were made during the

year. During the year under consideration, the assessee had shown the

following figures appearing under various heads on the liabilities side of

the balance sheet as on 31/03/2008.

i) Paid up share capital Rs. 1,00,000/- ii) Share Application money Rs. 37,45,000/- pending allotment iii) Unsecured loans Rs. 12,63,58,964/- iv) Current liabilities Rs. 70,38,288/-

The Assessing Officer further observed that share application money

pending allotment totaling Rs. 37,45,000/- are mainly advances

received from various parties and not share application money.

Unsecured loans received totaling Rs. 12,63,58,946/- and creditors 6 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

totaling Rs. 70,73,288/- too are advances and loans. The Assessing

Officer gave the reasonable opportunity of being heard to file the

confirmation from the parties from whom money received were either

shown under the various heads as mentioned above. The assessee did

not furnish full particulars of these parties, their PAN and sources of

funds advanced to the assessee out of the total parties. One of the

Director of the company namely Sh. Shankar Lal Khandelwal had been

making purchase and sale considerations of properties and also

operating bank accounts in the names of some parties in which

unaccounted cash/cheque were deposited and withdrawal and unitize

for making investment in properties or given money and then name to

the assessee company concerns in the garb of share application money

and loans. Such receipts of money in the name of these persons also

appear in the books of assessee during the year under consideration.

The names of these parties are as under:

1. Anita Kumawat

2. Sushil Jhalani

3. Sona Jhalani

4. Meena Gupta

5. Dilip Kumawat

6. Gopal Lal Saini

These persons had filed affidavits on oath before the Assessing Officer

stating therein that they had no connection with the dealings in 7 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

purchase and sale of properties made in their names by Sh. Shankar Lal

Khandelwal. Further they had connection with the bank accounts

opened in their names and deposits and withdrawal made from these

bank accounts or any deposit or withdrawals made in their names in

Shankar Khandelwal's concerns. It has been held by the Assessing

Officer that the assessee company was in possession of unaccounted

funds which was utilized in its unaccounted parallel property business.

The assessee had failed to prove the genuineness of transaction and

creditworthiness of the person giving unexplained cash credits

received/introduced by the assessee during the year. The ld Assessing

Officer gave the schedule of the persons with description, names of the

parties, amount received by the assessee, mode of payment on page

Nos. 4 to 7. When there was no satisfactory explanation from the

assessee company with evidence, the ld Assessing Officer treated these

deposits unexplained cash credits U/s 68 of the Act. He made addition

U/s 68 of the Act at Rs. 7,16,02,224/-. The ld Assessing Officer as per

chart given on page No. 8 of the assessment order also made

disallowance U/s 40A(3) by giving the detailed observations on pages 8

to 11 at Rs. 5,13,95,252/-. The ld Assessing Officer also initiated

penalty proceedings U/s 269SS and 269T of the Act. As per Section 8 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

271D and 271E of the Act, these penalties can be imposed by the Joint

Commissioner of Income Tax (JCIT), therefore, the ld Assessing Officer

made reference to the JCIT, Central Range, Jaipur vide letter dated

23/2/2012 and ld Assessing Officer stated that during the assessment

proceedings for A.Y. 2008-09, he found that the assessee had accepted

advances/loans/deposits from various parties amounting exceeding Rs.

20,000/- in cash (and not by account payee cheque or by account

payee draft) in violation of the provisions of Section 269SS of the Act.

As per Annexure-A appended to the assessment order, the assessee

had received loan and advances during the year otherwise than by

account payee cheque and accordingly penalty notice U/s 274 read with

Section 271D dated 30/12/2009 was issued to the assessee by the

Assessing Officer by which the assessee was asked to explain as to why

penalty proceedings U/s 271D of the Act for accepting

advances/loans/deposits exceeding Rs. 20,000/- in cash should not be

initiated against it.

2.1 Similarly, the Assessing Officer also referred vide its letter dated

23/2/2012 penalty U/s 271E to the JCIT, which was initiated during the

assessment proceedings for A.Y. 2008-09, it was found by the

Assessing Officer that the assessee had repaid certain sums of money 9 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

to various parties of amount exceeding Rs. 20,000/- in cash and

violated the provisions of Section 269T of the Act. The Assessing Officer

also appended a list alongwith assessment order of repayment of loans

more than Rs. 20,000/-. The Assessing Officer also issued notice U/s

274 read with Section 271E dated 30/12/2009 to the assessee by which

the assessee was asked to explain as to why proceeding U/s 271E of

the Act for repaying advances/loans/deposits exceeding Rs. 20,000/- in

cash should not be initiated in the case of assessee. The ld JCIT

reproduced the amount received and paid more than Rs. 20,000/- in

penalty orders. The ld JCIT before imposing penalty under both the

sections gave reasonable opportunity of being heard vide letter No.

1181 dated 23/2/2012. The A.R. of the assessee filed reply on

02/3/2012 before the JCIT, which has been reproduced in penalty order

by the JCIT. The AR of the assessee submitted that as per original show

cause notice, the proceeding would get time barred on 31/3/2012 so

your honour has desired to finalize the proceeding in the financial year

itself. However, during the course of discussion held while proceedings

in April, 2012 having considered the date of the reference made to your

office in Feb., 2012 and proceedings having been initiated by JCIT only

in the month of Feb., 2012. In the circumstances, it would be befitting 10 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

to being this fact on record and adjourn the proceedings to the first or

second week of April, 2012. The ld JCIT held that AR of the assessee

appeared on 26th March, 2012 but there was no such commitment of

taking the proceedings in April, 2012. Had it been so, the notice would

not have mentioned time barring dated as 31/3/2012 and the hearings

would not have been so frequently conducted. Also, the AR did not

even bother to quote the relevant provisions according to which the

case was getting time barred beyond March, 2012 as per his

understanding. It is more than clear that because the counsel was not

prepared with the reply, he resorted to such a measure. Needless to

mention that in spite of having ample time at his disposal, because the

first notice of violation of provision of section 269SS was served on

30/12/2009 and thereafter almost more than a month's time was

available to the assessee to file the reply. However, nothing substantial

was submitted in the reply.

At this point, it is imperative to quote proviso to section 275(1)(a) which talks of bar of limitation for imposing penalty- "provided that in a case were the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeal) U/s 246 or u/s 246A and the Commissioner (Appeals) passes the order on or after the first day of June 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings 11 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

in the course of which action for imposing of penalty has been initiated are completed, or within one year from the end of the financial year in which the order of the CIT(A) is received by the Chief Commissioner or Commissioner whichever is later."

In this case order of CIT(A) was received on 31/03/2011 so one year

from the end of the financial year is 31st March, 2012. Further, the

proceedings in the course of which action for imposition of penalty was

initiated by the A.O. were completed by 31st Dec., 2009 and end of the

relevant Financial Year then is 31.03.2010. So as per the above section

time barring date in this case is 31/03/2012 because it is one year from

the end of the financial year in which the order of the CIT was received

so there was no confusion on time barring date. Had the AR been so

confident of the time barring date to be beyond 31/3/2012, he should

have quoted the relevant provisions of the Act and also the date. This

not being the case it was AR's futile attempt to procrastinate the case.

The ld JCIT also considered the assessee's reply dated 30/2/2012 on

merit also, which has been reproduced on page Nos. 5,6,7 and 8 of the

penalty order. The assessee had also sought inspection on record on

26/3/2012. After considering the assessee's reply, the ld JCIT has held

as under:

12 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

i. In respect of the contention of the assessee that at no stage none of the assessing or appeal authorities had ever opined that the said transactions were loans and deposits within the meaning of Sec. 269SS of the Act, it is stated that this argument of the assessee is factually incorrect. The A.O. has very categorically stated in the note to the assessment order that "The assessee had received loans and advances during the year otherwise than by account payees which attract the provisions of Section 269SS- Annexure-I of such receipts is attached" and subsequently penalty notice u/s 275D read with Sec. 271-272 for violation of provision of Sec. 269SS was also issued on 30/12/2009 by the A.O. alongwith the assessment order. So the A.O. was very sure from the very beginning that the assessee had accepted loan/deposits/advances in cash of more than Rs. 20 thousands rupees.

ii. Second contention of the assessee is that since the A.O. could not ascertain the exact nature of these receipts the said addition of cash receipts were made by the A.O. by resorting to the deeming provisions and addition u/s 68 was made. In the regard it is stated that addition made by the A.O. u/s 68 of the receipts has no bearing on the violation of the provisions of Sec. 269SS. Even if the addition was made by the A.O. u/s 68 after treating the receipts as unexplained cash credit, but still the transaction was done in cash such that the provisions of Sec. 269SS 13 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

were violated (this issue will be elaborately discussed in the subsequent paras). Although the additions made by the A.O. u/s 68 were knocked out by the appellate authorities but that does not mean the money was not received from the various parties. So there is a disconnect between the two sections.

iii. The third argument put forth by the assessee's AR is that the said receipts were only advances for plot/land booking and repayment thereof on cancellation of booking and such advance moneys and repayment thereof, so the provisions of Sec. 269SS do not come into play. The AR has quoted various definitions and plethora of judgments in this regard. In so far as case laws are concerned they are differentiable and not directly applicable to the instant case. They have been considered and the issue needs to be understood in the right perspective. The assessee is engaged in the business of purchase and sale of plot(s) of land. During the concerned year, the assessee company has received certain sums of money more than Rs.

20,000/- otherwise than by A/c payee cheque/draft. The assessee states that they were advances in lieu of sale of plots of land. The assessee is a trader of plots of land and so the advance received is nothing but trade deposit. He further examined the legal position of advances/deposits and object

of insertion of Section 269SS on pages 9 to 13 and finally he held that it 14 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

is a fit case for levy of penalty U/s 271D of the Act as no reasonable

cause has been furnished for violation of provisions of Section 269SS of

the Act. Thus, he imposed penalty at Rs. 6,34,38,484/- U/s 271D of the

Act, which is equivalent of deposit amount.

2.2 Similar findings given by the ld JCIT in the order of Section 271E

of the Act. He reproduced the assessee's reply dated 30/3/2012 on

page 5 to 7 of the penalty order. He examined the legal position of

advances and object of introduction of Section 269SS of the Act. He

further held that the object of Section 269T is not to tax any income. It

is not a charging section, its object, on the other hand, is to counteract

evasion of tax in certain cases. The said section only provides a mode

of repayment of certain deposits either by bank draft or account payee

cheque with a view to plug the leakage of revenue. The advance is

nothing but a kind of deposit. In fact, the nomenclature does not make

much sense if the intent of the section is clear. He also referred the

department circular No. 345 dated 28th June, 1982 wherein purpose of

introduction of Section 269T has been explained. He further relied on

the decision in the case of Chaubey Overseas Corporation Vs. CIT 303

ITR 9 (All.). The assessee's company had repaid Rs. 73 lacs in cash to

one Shankarlal on 07/11/2007 against the return of share application 15 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

money. He further held that this calls for raising a very valid issue as to

why the assessee made repayment of such huge amount of money in

cash when assessee is a company and the transactions would have

been made through account payee cheques/drafts. It is not

understandable as to what prevented the assessee to avoid the banking

channel. Even if share application money cannot be considered to be a

loan within the meaning of Section 269T it partakes of the character of

a deposit, since it is repayable in specie on refusal to allot share and is

repayable if recalled by the applicant, before allotment of shares and

the conclusion of the contract. Hence the acceptance of share

application money in cash amounting to Rs. 20,000 or more violates the

provisions of section 269SS and repayment of the same violates the

provision of Sec. 269T. He further relied on the decision of Hon'ble

Jharkhand High Court in the case of Bhalotia Engineering Works Pvt.

Ltd. Vs. CIT 275 ITR 399 on repayment of loan in cash. Finally he

imposed penalty U/s 271E at Rs. 1,77,00,000/-, which is equivalent to

repayment of deposit amount.

3. The assessee challenged the penalty before the ld. CIT(A), who

had allowed the penalty partly. The ld CIT(A) had considered the

Hon'ble Jurisdictional High Court decision in the case of CIT Vs. Jitendra 16 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

Singh Rathore (2013) 257 CTR (Raj) 18 after receiving the remand

report from the JCIT on limitation. The ld JCIT also referred the ITAT

Chandigarh Special Bench's decision in the case of Dewan Chand Amrit

Lal Vs. DCIT (2006) 283 ITR (A.T.) 23 wherein the Hon'ble Special

Bench had followed the judgment of Hon'ble Supreme Court in the case

of CIT Vs. Dhadi Sahu (1993) 199 ITR 610 (SC) and Varkey Chacko Vs.

CIT (1993) 203 ITR 885 (SC) . The ld JCIT held that the Hon'ble

Jodhpur Bench of ITAT failed to consider the finding of the Hon'ble

Special Bench in case of Dewan Chand Amrit Lal Vs. DCIT (supra) even

though the order was passed on 30/11/2005 i.e. after the date on

which the Special Bench had passed its order in favour of the

department on the same facts. He also not agreed with the submissions

of the assessee that Special Bench's findings in case of Dewan Chand

Amrit Lal Vs. DCIT (supra) was on different facts. The ld JCIT held that

Special Bench's decision in the case of Dewan Chand Amrit Lal Vs. DCIT

(supra) is squarely applicable on the case of assessee and two aspects

must be firmly borne in mine, namely who may impose the penalty and

in what measure. He further referred the Hon'ble Supreme Court's

decision in the case of CIT vs. Dhadi Sahu and Varkey Chacko Vs. CIT

(supra) wherein it has been held that validity of penalty proceedings 17 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

has to be seen with reference to the authority empowered to impose

the penalty on the relevant date. Therefore, notice dated 30/12/2009

issued by the Assessing Officer in both the penalties without any

jurisdiction as he is not empowered to issue notice and impose penalty

under both the Sections. The Hon'ble Karnataka High Court in the case

of Shanbhag Restaurant Vs. Deputy CIT (2004) 266 ITR 393 has held

that the period of six months has got to be computed from the date of

issue of notice by the DCIT/JCIT, therefore, limitation cannot be

computed from the date of issue of notice by the Assessing Officer. The

department has filed revision petition in case of Jitendra Singh Rathore

passed by the Hon'ble Rajasthan High Court, therefore, same is not

final. The only ruling on this is to be considered i.e. ITAT Jodhpur

Bench's decision in the case of Jitendra Singh Rathore or Special Bench

of ITAT, Chandigarh decision in the case of Dewan Chand Amrit Lal Vs.

DCIT. The Special Bench's decision has a more persuasive value.

Accordingly, he held that notice dated 10/03/2009 issued by the

Assessing Officer was nonest. The ld JCIT had issued notice under both

the sections on 24/2/2012 and penalty order was passed on 30/3/2012,

which was well within time. The ld CIT(A) also gave the finding on merit

on page Nos. 11 to 17 and held that the ld CIT(A)'s finding in quantum 18 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

addition was not specific, therefore, it has not been accepted by him

and he also held that the Hon'ble ITAT had also not adjudicated the

order of the ld CIT(A) in quantum appeal that deposits were advanced

for land and confirmed the order of the CIT(A) for addition of Rs.

4,95,82,259/-. The ld CIT(A) had quantified the deposits not advanced

for land at Rs. 81,35,272/- as per order of CIT(A) and the Hon'ble ITAT

in quantum appeal. Therefore, she reverified these loans and found that

these are cash deposits not for the land. It comes within the purview of

Section 269SS for violation of which a penalty U/s 271D is required to

be imposed. She also treated cash payment of Rs. 1,19,54,712/- being

advance against the land deal after considering the Hon'ble ITAT Jaipur

Bench decision in the case of Laddu Lal Ghessa Lal HUF Jaipur Vs. DIT

ITA No. 953/JP/2011 dated 02/2/2012. She further verified the share

application money as claimed by the assessee with evidence, which

were not supported with proper evidence and quantified at Rs.

3,09,93,500/- as no evidence was filed before the ld CIT(A) to verify

these deposits were for share allotment. She further held that moreover

as per balance sheet for the year under consideration, the various share

capital was only Rs. 1 crore so the company was not authorized to take

Rs. 3,98,38,500/- as share application money. As per balance sheet on 19 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

31/3/2011, the share application money as on 31/3/2010 was reflected

at Rs. 37,45,000/- and on 31/3/2011 at Rs. 37,45,000/- and not Rs.

3,98,38,500/-. The paid up share capital as on 31/3/2011 was shown at

Rs. 3,50,000/- and as on 31/3/2012 at Rs. 1,56,00,000/- while the

share application money pending allotment is consistent at Rs.

37,45,000/-, therefore, she concluded that submissions of the AR were

not supported by the audited accounts of the appellant brought on

record. She further clarified that in the balance sheet of A.Y. 2009-10,

this amount of Rs. 3,98,38,500/- was not reflected as the share

application money and for amount of Rs. 3,09,93,500/- shares were not

allotted even after lapse of four years as per the admission of the

appellant himself. Accordingly, she held that cash deposited at Rs.

3,60,93,500/- were not for share application money. She further relied

on the decision of Hon'ble Jharkhand High Court in the case of Bhalotia

Engineering Works Pvt. Ltd. Vs. CIT (supra) wherein repayable of

deposit for share has been considered by the Hon'ble High Court. She

further relied on the decision of Hon'ble Delhi High Court in the case of

CIT Vs. M/s Samora Hotels Pvt. Ltd. dated 23/2/2012 ITA No. 313/2006

wherein cash received from the promoter were claimed paid for

authorized share capital but cash received was for the authorized 20 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

capital. The appellant too had not reflected the amount of Rs.

3,98,38,500/- in its balance sheet for this year and subsequent

assessment as share application money. The authorized share capital

for this year was Rs. 1 crores so it could not possible for payment of

amount of Rs. 3,98,38,500/- as share application money. In subsequent

three years also, the share application money had consistently been

shown at Rs. 37,45,500/- while in this assessment order, the unsecured

loans had been shown at Rs. 12,63,58,945/-. The plea taken by the AR

of the assessee that these transactions are genuine and established by

it and section 273B is applicable on it but these arguments of the AR

were not found convincing to her. Finally she upheld the penalty of cash

deposit of Rs. 4,42,28,772/-.

3.1 The assessee also challenged before the CIT(A) that the penalty

U/s 271E is barred by limitation as penalty order by the JCIT on

30/3/2012 for which the ld A.O. issued notice on 30/12/2009. The

assessee also relied on same case narrated for penalty U/s 271D of the

Act. The ld CIT(A) gave the same finding as given for 271D penalty that

is notice dated 10/3/2009 was nonest. Show cause notice by the ld JCIT

on 24/2/2012 and penalty order was passed on 30/03/2012, which was

well within time.

21 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

3.2 He further considered the case on merit and verified the cash

deposits were advanced for land. He held in para 15 that there is no

evidence for Rs. 81,35,272/- that these cash deposits were received for

purchase of land. Out of this, the assessee returned back Rs.

13,50,000/-. He further held that the ld CIT(A) in quantum appeal had

not given categorical finding that these cash receipts against the

purchase of land. Even in second appeal, the Hon'ble ITAT has not held

these receipts for land. He himself has verified the purpose of cash

receipts and held that these were not advanced for land. Accordingly,

he held that Rs. 13.5 lacs repaid cash is covered U/s 269T of the Act

and liable to impose penalty U/s 271E of the Act. The assessee's claim

that Rs. 3,98,38,500/- were received in cash for issue of shares, out of

this the assessee returned back Rs. 86 lacs in cash. Similar findings as

given in penalty order U/s 271D on cash receipt against the share

capital has been given that there is no evidence with assessee that

except Rs. 37,45,000/-, remaining Rs. 3,60,93,500/- was not for share

application, it authorized share capital was Rs. 1 crores only. Thus he

conformed penalty U/s 271E of the Act at Rs. 99.5 lacs. .

4. Now the assessee is in appeals before us. The ld AR for the

assessee argued that the penalty orders got barred by limitation as the 22 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

ld Assessing Officer initiated penalty proceedings by issuing the notice

on 30/12/2009 (Page 118 of PB) U/s 271D and 271E of the Act. The ld

JCIT issued show cause notice on 24th February, 2012 for imposing both

the penalties but the assessee had objected before him that logic to

issue notice under these Sections after 2 years when the proceeding

completed in December, 2009. The second appeal also had decided by

the ITAT against these additions in quantum appeal wherein no findings

have been given by the ld CIT(A) as well as Hon'ble ITAT that these

transactions were loans and deposits within the meaning of Section

269SS/269T of the Act. The ld Assessing Officer has also made addition

U/s 68 of the Act as unexplained credit. The penalty proceeding had

become time barred within the meaning of Section 275(1)(c) of the Act

as held recently by the Hon'ble Rajasthan High Court in the case of CIT

Vs. Jitendra Singh Rathore (supra) by following their own judgment in

the case of CIT Vs. Hissaria Brothers [2007] 211 CTR 156 (Raj). The ld

AR further drawn our attention that recently the Hon'ble Bombay ITAT

in the case of M/s Lodha Builders (P) Ltd. Vs. ACIT ITA No. 475 to

481/M/2014 order dated 27th June, 2014, the Hon'ble ITAT had

considered the identical issue and held that penalty U/s 271D and 271E

is covered by Section 275(1)(c) of the Act for limitation purpose. He 23 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

particularly drew our attention that Hon'ble ITAT Mumbai had

considered the Hon'ble Rajasthan High Court's decision in the case of

CIT Vs. Hissaria Brothers, CIT Vs. Jitendra Singh Rathore (supra) and

ACIT Vs. Dipak Kantilal Takvani (2013) 39 Taxmann.com 53 (Rajkot

Trib) (TM( wherein it has been held that penalty U/s 271D and 271E is

covered U/s 275(1)(c) as per this Section, six months is allowed to

complete the penalty from the end of the month in which action was

initiated. Therefore, he prayed to delete the penalty imposed by the ld

JCIT, confirmed by the ld CIT(A).

5. At the outset, the ld Sr. DR supported the order of the ld CIT(A)

and argued that the assessee's appeals were pending in quantum

before the appellate authority and the Hon'ble ITAT has passed order in

quantum application on 06/5/2011, which was received in the office of

CCIT later on and this penalty is covered U/s 275(1)(a) of the Act. As

per this Section, the limitation starts from after the expiry of financial

year, in which the proceedings in the course of which action for

imposition of penalty has been initiated, or completed within one year

from the end of the financial year, in which the order of Commissioner

received by the Principal Chief Commissioner, whichever period expired

later. The ld JCIT has initiated penalty proceeding on 24/2/2012 by 24 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

issuing show cause notice under these Sections to the assessee. The

Assessing Officer was not empowered to issue notice U/s 271D and

271E of the Act, which is void abinitio. He himself referred the penalty

to the JCIT on 23/2/2012 and notice was issued on 24/2/2012, finally,

the penalty was imposed on 30/3/2012. Therefore, the penalty imposed

under both the Sections within time.

6. We have heard the rival contentions of both the parties and

perused the material available on the record. The ld Assessing Officer

sent the penalty notice on 30/12/2009 for both the Sections (PB page

No. 118). After a long period, he referred the penalty proceeding to the

JCIT vide letter dated 23/2/2012. Thereafter, ld JCIT had given show

cause notice on 24/2/2012. This issue has been challenged by the AR of

the assessee before the ld JCIT as well as before the ld CIT(A) but they

held that these penalties are covered under the proviso to Section

275(1)(a) of the Act. Therefore, it is not barred by limitation but this

issue has been dealt by the Hon'ble jurisdictional High Court in the case

of CIT Vs. Hissaria Bros & CIT Vs. Jitendra Singh Rathore (supra), which

has been recently considered by the ITAT Mumbai Bench in the case of

Lodha Builders (P) Ltd. Vs. ACIT (supra) and this issue has been

decided in great length after considering the various decisions of the 25 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

various courts including the Tribunal. Thereafter it has been decided

that for imposition penalty U/s 271D and 271E is covered U/s 275(1)(c)

of the Act. As per Section 271(1)(c) of the Act, this order was to pass

after the expiry of financial year, in which the proceeding, in the course

of which action for imposition of penalty has been initiated, or

completed, or within six months from the end of the month, in which

action for imposition of penalty is initiated, whichever period expire

later. The Assessing Officer initiated the penalty proceeding under both

the Sections on 30/12/2009. As per this section, it had to complete by

30th September, 2010 whereas actual penalty orders were passed on

30/3/2012 which got barred by limitation. Accordingly, we delete the

penalty imposed U/s 271D and 271E of the Act.

7. On merit also, these cash receipts are not covered U/s 269SS of

the Act as there was no loan or deposit envisaged U/s 269SS as these

are the business transactions. The ld CIT(A) wrongly held on the basis

of quantum appeal decided by the CIT(A) as well as the ITAT that these

are the loan and deposit in cash as covered by Section 269SS of the

Act.

8. The ld AR has submitted that these are business transactions and

not covered U/s 269SS, which can be verified from the order of the ld 26 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

CIT(A) as well as order of the Hon'ble ITAT. The Hon'ble ITAT had

deleted the additions made by the Assessing Officer U/s 68 of the Act

as well as U/s 40A(3) of the Act and also held that these were business

transactions.

9. The ld DR relied upon the order of the Assessing Officer and

argued that no where these aspects has been considered by the ld

CIT(A) as well as the Hon'ble ITAT in quantum appeal. Therefore, she

relied upon the order of the ld CIT(A) vehemently and prayed to

confirm the penalty.

10. We have heard the rival contentions of both the parties and

perused the material available on the record. On merit also, these cash

transactions also are not covered U/s 269SS and 269T of the Act as

these were business transactions made for purchase of land/share

application money which has been received by the assessee and

refunded back to the concerned parties. It can be verified from the

order of the ld CIT(A) in quantum which has been reproduced by the

Coordinate Bench on page No. 17 for Rs. 6,87,500/- and mentioned

amount was paid for booking of plots by Shri Anil Dhandia, Rs. 15,000/-

by M.S. Chaudhary paid as share capital. Rs. 54 lacs were received from

Shri Rampal Yadav and Shri Surja Ram for which the assessee has filed 27 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

affidavit which has been reproduced by the CIT(A) in his order on page

20 where the assessee's reply has reproduced and purpose of payment

has been shown by the assessee for purchase of land, therefore, these

are the receipt for business purposes. The remaining amount of Rs.

18.5 lacs received by the assessee through cheque from Shri Rakesh

Kumar Gupta, which has been held by the ITAT as stand explained. As

the assessee was in property business in purchase and sale of land

which reflects from the order of the Assessing Officer that the assessee

had purchased land during the year under consideration from its global

city project (240 bigha approx) in village Chakbad. The total amount of

Rs. 11 crores were paid up to the date of search. The assessee had

shown in balance sheet, share application money pending for allotment

at Rs. 37,45,000/-, which is for business purpose. However, unsecured

loan at Rs. 12,63,58,946/- had been shown but these were not loan

envisaged U/s 269SS/269T of the Act as the Hon'ble Supreme Court has

held in the case of Kedarnath Jute Mfg. Co. Ltd. Vs. CIT (Central),

Calcutta [1971] 82 ITR 363 (SC) that particular deduction will depend

on the provisions of law relating thereto not on entries of books of

account be decisive or conclusive in the matter. The ld AR has filed all

evidences before the lower authorities with confirmation, which has 28 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

been partly accepted by the CIT(A) in her penalty appeal order that

these are the business receipts but partly as deposit in form of

loan/advances. The ld CIT(A) in his quantum appeal order dated

31/3/2011 on paragraph 3.3.2 has held that almost all the entries are in

relation to advance received against booking/sale of plot, which is also

found correct by the Assessing Officer as per remand report submitted

by the Assessing Officer. In most of the cases, the appellant company

has issued the allotment letter to all the parties either in this year or in

subsequent year. The Assessing Officer has verified these details by

going through the registration form submitted by the party for plot

booking, most of the advances have been received through cheques.

Further the appellant has filed confirmation letter in various cases, the

appellant has even further filed the copy of bank statement of different

parties. These evidences have been sent and verified by the Assessing

Officer. The Assessing Officer in his remand report has not given any

adverse comment about the various entries mentioned on different

serial numbers. Finally he deleted the remaining additions made by the

Assessing Officer. Therefore, we find that the order passed by the ld

CIT(A) is not based on evidences and held that in quantum appeal, the

ld CIT(A) as well as ITAT has not considered the nature of the 29 ITA 876,904,877 & 905/JP/2013_ M/s Govind Kripa Buildmart P Ltd. Vs. JCIT

transaction has been given wrong finding. As discussed above,

specifically with reference to page numbers of the order of the CIT(A)

as well as ITAT, therefore, we reverse the order of the ld CIT(A).

Accordingly, the assessee's appeals are allowed and revenue's appeals

are dismissed.

11. In the result, both the assessee's appeals are allowed and both

the revenue's appeals are dismissed.

Order pronounced in the open court on 15/05/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 15th May, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- M/s Govind Kripa Buildmart Pvt. Ltd., Jaipur.

2. izR;FkhZ@ The Respondent- The JCIT/DCIT, Central, Jaipur.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 876, 904, 877 & 905/JP/2013) vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar