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21-12-2018, Sahara India Mutua, Section 617, 148, 269SS, HIGH COURT OF CALCUTTA

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7 months 3 hours ago #8400 by amit
Section - 617, 148, 269SS, 147, 68, 37, 260A
Order Date - 21-12-2018
Favouring - Assessee
Court - HIGH COURT OF CALCUTTA
Appellant - CIT
Respondent - Sahara India Mutual Benefit Co. Ltd.
Justice - I.P.Mukerji & Amrita Sinha
Citation - 119Taxpundit196
Appeal No. - ITA 510 of 2008
Asstt. Year - 1997-98

Order

PER : I.P. MUKERJI, J.:-

On 12th August, 2008, and 13th August, 2008 a division bench of this court admitted the above two appeals under Section 260A of the Income Tax Act, 1961 on the following substantial question of law:

“Whether on the facts and circumstances of the case, the Learned Tribunal was justified in law in holding that contravention of Section 269SS by the assessee cannot be a reason for re-opening the assessment under Section 147 of the Act?”

Section 269SS is as follows:

“269SS. Mode of taking or accepting certain loans and deposits and specified sum. No person shall, after the 30th day of June, 1984 , take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,-

(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or

(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or

(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more:

Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,-

(a) the Government;

(b) any banking company, post office savings bank or co- operative bank;

(c) any corporation established by a Central, State or Provincial Act;

(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956 );

(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing notify in this behalf in the Official Gazette:”

ITA 454 of 2008

The respondent/assessee filed a return for the assessment year 1992-93 declaring an income of Rs.64,150/-. This was later revised to a claim of loss of Rs.49,34,173/-. The original assessment under Section 143(3) was made on 28th March, 1995 on an income of Rs.5,05,40,440/-. However, in the assessment year 1997-98 certain cash credits representating deposit and share capital, to the extent of Rs.26,18,63,800/- were found as unexplained. On this basis the assessment for the year 1992-93 was reopened by the Income Tax department. A notice under Section 148 issued by the department to the respondent assessee dated 31st March, 2001 asking them to explain why for the above deposit in gross violation of Section 269SS, the case of the said earlier assessment year 1992-93 should not be reopened under Section 147. The allegation against the assessee was that the deposits collected during the assessment year 1992-93 were also unexplained.

The assessee according to the department had not discharged its obligations under Section 68 read with 269SS of the said Act. The stand of the department was justified by recourse to the explanation to Section 37 which laid down that any expenditure incurred by an assessee for any purpose which was an offence or which was not permitted by law shall be deemed not to have been incurred. Therefore, since the expenditure in respect of the said deposit was not to be allowed, the income of the respondent assessee was said to have escaped assessment.

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