Sanjay Agarwal , New Delhi vs Assessee

Sanjay Agarwal, Addl. CIT, 23/5, Kala Bhawan, Cent. Range III, Shakti Nagar, Vs. New Delhi. New Delhi. AAFPA0065L

(Appellant) (Respondent)

Appellant by : Sh. Sanjeev Bindal, C.A Respondent by : Sh. B.R.R. Kumar, Sr. DR

Date of hearing: 17.02.2015 Date of pronouncement: 16.04.2015

ORDER PER I.C. SUDHIR, J.M.

The assessee has questioned the first appellate order on the sole

ground that the ld. CIT(A) has erred in confirming the penalty levied u/s

271D of the Act at Rs. 35,50,000/- without appreciating the complete facts

and circumstances of the case.

2. We have heard and considered the arguments advanced by the

parties in view of the orders of the authorities below, material available on

record and the decisions relied upon.

3. The relevant facts are that the AO levied penalty u/s 271D at Rs.

31,50,000/- for accepting cash loan from Rite Pac Industries Private ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 2

Limited in contravention of provision of section 269SS of the Act. The ld.

CIT(A) has also upheld the penalty with this observation that the assessee

kept on changing its stand about the transaction and no response was

received from the AO on the submission made before the ld. CIT(A) by the

assessee by way of remand report.

4. In support of the ground the ld. AR reiterated submissions made

before the authorities below and referred page nos. 1 to 236 of the paper

book i.e. copies of ledger account of M/s Rite Pac Industries Pvt. Ltd. in the

books of the assessee for the assessment year under consideration,

assessment passed u/s 153A/143(3) of the Act, acknowledgement of filing

of return of income, computation of assessable income for the year along

with balance sheet, MOUs for sale and cancellation of sale of Civil Lines

property addressed by Rite Pac Industries Pvt. Ltd., bank statement for the

assessment year under consideration, bank statement of relevant period of

Rite Pac Industries Pvt. Ltd., purchase deed of Civil Line property, sale

deeds of Civil Line property sold to different persons on 01/08/2005 for

different area and consideration, CBDT Circular No. 387 dated 06/07/1984,

and written submissions filed before the ld. CIT(A) that the cash

transactions in question were within the family concerns and the assessees

are outside the ambit of penalty u/s 271D of the Act. In support he placed

reliance on several decisions including the following one:

· G.D. Subraya, Sherga vs. ITO (2006) 10 SOT 378 (Bang.);

ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 3 · Dr. B.G. Panda vs. DCIT (2000) 111 Taxman 86 (Cal.);

· Mohan Karkare vs. DCIT (1995) 52 ITD 236 (Ind.).

5. The ld. DR on the other hand, placed reliance on the orders of the

authorities below with this contention that the ld. CIT(A) has dealt with the

issue in detail.

6. Considering the above submission, we find that the ld. CIT(A) while

reproducing the submission of the assessee before him in para no. 3.5 of

the first appellate order has noted in para no. 3.6 that he had forwarded the

submission of the assessee to the AO for his comments vide letter dated

09/08/2012 and there was no response from the AO till the date of passing

of the first appellate order. In the said submission of the assessee the

assessee had also submitted that sufficient opportunity was not given to

the assessee by the AO and the penalty order was passed within four days

of the notice. The assessee had also furnished his explanation in the said

submission. For a ready reference the said submission of the assessee

reproduced in para no. 3.5 of the first appellate order is being reproduced

hereunder:

(i) ".........on perusal of the penalty order, it would be seen that the said proceedings were initiated by the Addl. CIT, Central Range 3 New Delhi by issue of the first notice on 24/06/2011 and the penalty order was passed on 28/06/2011 - within just 4 days. The ld.

Addl. CIT did not appreciate the facts correctly before imposing the penalty. It was submitted on behalf of the appellant that M/s Rite Pac Industries Pvt. Limited, a company in which the family of the ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 4

appellant has interest, wanted to buy the 1/5 th co-ownership share of the appellant in a property (16, Ram Kishore Road, Civil Lines, Delhi) from the appellant and for which it gave money to the appellant in cash on imprest account (to meet the construction cost of the property) and which was duly recorded in the regular books of account in the routine manner. Since sometimes later in June, 2005 the said company thought otherwise as the other co-owners were not willing to retain the property for a long period and withdrew the option to buy the said share in the property, the appellant returned the said money during the relevant previous year itself and not on 03/05/2006 as mentioned in the penalty order. This entire property was sold by the co-owners including the appellant to someone else during the relevant A.Y. for Rs. 240 lacs in which the appellant's share was Rs. 48 lacs. Necessary short term capital gain of Rs. 4,19,871/- on its sale was duly declared in the return of income filed in due course and which has also been accepted u/s 153A/143(3) of the IT Act by the AO. Photocopies of the assessment order, balance sheet, computation of the assessable income for the relevant period, copies of the letter for sale of civil lines property addressed by M/s Rite Pac Industries Pvt. Ltd., bank statement of the appellant and M/s Rite Pac Industries Pvt. Ltd. for refunding the amounts of Rs. 36,50,000/- during the relevant period are enclosed in the paper book 1 to 125 for your kind appreciation"

7. Since undisputedly the AO has not examined the correctness of the

above submission, during the remand proceedings, we in the interest of

justice set aside the matter to the file of the AO to examine the above

submission of the assessee and the documents filed in support, which as

per the assessee are already on the record of the authorities below and ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 5

decide the issue afresh after affording opportunity of being heard to the

assessee. While deciding the issue afresh the AO will also examine that

there was actually no change of stand of the assessee on the explanation

regarding the receipt of Rs. 31,50,000/- to establish its bonafide for non-

application of the penal provision u/s 271D of the Act.

8. The ground is thus, allowed for statistical purposes.

9. In the result, the appeal is allowed for statistical purposes.

Order pronounced in the open court on 16/04/2015

Sd/- Sd/-

(T.S. KAPOOR) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 16.04.2015 *Kavita

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi.

TRUE COPY By Order

ASSISTANT REGISTRAR ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 6

Sl. Description Date No. 1. Date of dictation by the Author 13.04.2015 2. Draft placed before the Dictating Member 15.04.2015 3. Draft placed before the Second Member 16.04.2015 4. Draft approved by the Second Member 16.04.2015 5. Date of approved order comes to the Sr. PS 16.04.2015 6. Date of pronouncement of order 16.04.2015 7. Date of file sent to the Bench Clerk 16.04.2015 8. Date on which file goes to the Head Clerk 9. Date of dispatch of order ITA No. 1545/D/2013 Mr. Sanjay Aggarwal 7