IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `E', NEW DELHI
Before Sh. G. C. Gupta, Vice President And Sh. N. K. Saini, AM
ITA No. 4410/Del/2013 : Asstt. Year : 2007-08
Deputy Commissioner of Vs M/s Mahagun Technologies Pvt.
Income Tax, Central Circle-03, Ltd., B-66, Vivek Vihar,
New Delhi Delhi-110095
(APPELLANT) (RESPONDENT)
PAN No. AACCB3143L
Assessee by : Sh. Rakesh Gupta, Adv.
Revenue by : Sh. P. Dam Kanunjna, Sr. DR
Date of Hearing : 24.03.2015 Date of Pronouncement : 22.06.2015
ORDER
Per N. K. Saini, AM:
This is an appeal by the department against the order
dated 22.04.2013 of ld. CIT(A)-IV, New Delhi.
2. The only ground raised in this appeal reads as under:
" 1. That the Ld. Commissioner of Income
Tax(Appeals) erred in law and on facts of the case in
deleting the penalty imposed u/s 271D of Rs.
53,53,316/-.
3. Facts of the case in brief are that the assessee filed its return of
income on 03.07.2009 declaring an income of Rs. 10,560/- and the
assessment was completed u/s 153A/143(3) of the Income Tax Act,
1961 (hereinafter referred to as the Act) at Rs. 58,13,876/-. The AO
2 ITA Nos. 4410/Del/2013
Mahagun Technologies Pvt. Ltd.
noted that as per the accounts of M/s Mahagun Developers Ltd. in the
books of the assessee an amount of Rs. 50,05,316/- was transferred
which included air conditioners worth Rs. 19,68,769/- and building work
in progress amounting to Rs. 30,36,547/-. He also noted that a sum of
Rs. 3,48,000/- had been paid as lease rent on 28.06.2006 on behalf of the
assessee. The AO issued a show cause notice to the assessee to explain
as to why penalty u/s 271D of the Act should not be imposed on the
aforesaid transactions. The assessee submitted that there was no
acceptance of any loans/advances in cash as required u/s 271D of the
Act and the adjustments between the associate company was made by
passing necessary journal entries. However, the AO was not satisfied
with the submissions of the assessee and levied the penalty of Rs.
53,53,316/- u/s 271D of the Act.
4. Being aggrieved the assessee carried the matter to the ld. CIT(A)
and made the written submissions which is incorporated in para 5.1 of
the impugned order, for the cost of repetition, the same are not
reproduced herein.
5. The ld. CIT(A) after considering the submissions of the assessee
observed that there was a relationship of landlord and tenant between the
assessee and M/s Mahagun Developers Ltd. He further observed that
there was no cash loan/deposit taken by the assessee from M/s Mahagun
Developers Ltd. and that the journal entries were made in the books of
3 ITA Nos. 4410/Del/2013
Mahagun Technologies Pvt. Ltd.
accounts of the assessee in order to acknowledge the debt incurred in
connection with renovation of the building and other expenses by the
tenant and value of air conditioners transferred. Therefore, there was no
violation of the provisions of section 269SS of the Act and accordingly
penalty levied by the AO u/s 271D of the Act was deleted.
6. Now the department is in appeal. The ld. DR supported the order
of the AO but could not controvert the findings given by the ld. CIT(A).
In his rival submissions the ld. Counsel for the assessee reiterated the
submission made before the authorities below and further submitted that
there was no receipt of loan or deposit in cash and only journal entries
were passed. Therefore, the ld. CIT(A) was fully justified in deleting the
penalty levied by the AO u/s 271D of the Act. The reliance was placed
on the judgment of the Hon'ble Jurisdictional High Court in the case of
CIT Vs Worldwide Township Projects Ltd. (2014) 106 DTR (Del) 139.
7. We have considered the submissions of both the parties and
carefully gone through the material available on the record. In the
present case, it is an admitted fact that the assessee did not receive any
loan or deposit from M/s Mahagun Developers Ltd. The amount was
credited in the account of the said company on account of lease rent,
value of air conditioners and building work in progress, those entries
were in the form of adjustment between the assessee and the associate
company but no cash was involved. On a similar issue the Hon'ble
4 ITA Nos. 4410/Del/2013
Mahagun Technologies Pvt. Ltd.
Jurisdictional High Court in the case of CIT Vs Worldwide Township
Projects Ltd. (supra) held as under:
"Section 269SS indicates that it applies to a transaction where
a deposit or a loan is accepted by an assessee, otherwise than
by an account payee cheque or an account payee draft. The
ambit of the Section is clearly restricted to transaction
involving acceptance of money and not intended to affect cases
where a debit or a liability arises on account of book entries.
The object of the Section is to prevent transactions in currency.
This is also clearly explicit from clause (iii) of the explanation
to Section 269SS of the Act which defines loan or deposit to
mean "loan or deposit of money". The liability recorded in the
books of accounts by way of journal entries, i.e. crediting the
account of a party to whom monies are payable or debiting the
account of a party from whom monies are receivable in the
books of accounts, is clearly outside the ambit of the provision
of Section 269SS of the Act, because passing such entries does
not involve acceptance of any loan or deposit of money. In the
present case, admittedly no money was transacted other than
through banking channels. M/s PACL India Ltd. made certain
payments through banking channels to land owners. This
payment made on behalf of the assessee was recorded by the
assessee in its books by crediting the account of M/s PACL
India Ltd. In view of this admitted position, no infringement of
Section 269SS of the Act is made out. CIT Vs Noida Toll Bridge
Co. Ltd. : 262 ITR 260, relied on."
8. In the present case also the account of the associate concern M/s
Mahagun Developers Ltd. was credited by the assessee by passing a
journal entry and it did not involve acceptance of any loan or deposit or
money. Therefore, the provisions of Section 269SS of the Act were not
5 ITA Nos. 4410/Del/2013
Mahagun Technologies Pvt. Ltd.
applicable and the penalty levied by the AO u/s 271D of the Act was
rightly deleted by the ld. CIT(A). We do not see any infirmity in the
order of the ld. CIT(A) on this issue.
9. In the result, the appeal of the department is dismissed.
(Order Pronounced in the Court on 22/06/2015)
Sd/- Sd/-
(G. C. Gupta) (N. K. Saini)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 22/06/2015
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
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