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30-08-2019, Rohan Developers, Section 269SS, 271D, Tribunal Mumbai

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4 months 2 weeks ago #10681 by amit
Section - 269SS, 271D, 292C, 132, 153A
Order Date - 30-08-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - Rohan Developers Pvt. Ltd.
Respondent - ACIT
Citation - 919Taxpundit11
Appeal No. - ITA No.43/Mum/2017
Asstt. Year - 2011-12



This appeal in ITA No.43/Mum/2017 for A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-50, Mumbai in appeal No.CIT(A) 50/IT-723/2014-15 dated 2011-12 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D of the Income Tax Act, 1961.

2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271D in the facts and circumstances of the case.

3. The brief facts of this issue are that the assessee is a real estate developer. A search and seizure action u/s.132 of the Act was carried out on 26/05/2011 at the premises of the assessee and other companies and entities promoted by Shri Harresh N Mehta and late Shri Jitendra N Mehta alongwith Directors and employees of the companies etc. “Rohan Group” headed by Shri Harresh N Mehta is one of the leading builders of the South and the Central Mumbai and mainly engaged in construction of residential buildings and redevelopment of old and dilapidated buildings. The group has redeveloped over 50 buildings and constructed over 2.5 million sq.ft of residential space. Apart from M/s. Rohan Developers Pvt. Ltd., i.e. assessee herein, other main concerns are M/s. Goodwill
Properties Pvt. Ltd; M/s. Silver Arch Builders and Promoters Pvt. Ltd.

3.1. During the course of search and seizure action, certain loose papers were found and seized by the search team. One Shri Samir Shah, finance broker who was arranging funds for the assessee, assessee’s group companies and entities through various parties was also searched u/s.132 of the Act simultaneously. During the course of search proceedings, various loose papers relating to loans arranged by him for his clients including the assessee were found and seized. Out of the said seized papers, loose paper bearing page No.206 of Annexure -1 pertained to the assessee herein. According to the ld. AO, this page indicated payment of cash loans amounting to Rs.20,24,50,000/- by Shri Samir Shah to the assessee. Shri Samir Shah submitted his explanation in the post search proceedings and thereafter, in the hands of Shri Samir Shah, the assessment order was passed u/s.143(3) r.w.s. 153A of the Act on 31/03/2014 wherein a separate addition on account of alleged cash loans given to the assessee in the sum of Rs.20,24,50,000/- based on loose paper sheet page No.206 of Annexure-1 was made. In addition to this, another addition of Rs.3,47,81,569/- was also made on account of alleged receipt of interest in cash by Shri Samir Shah. It is pertinent to note that both assessee as well as Shri Samir Shah were assessed by the very same Assessing Officer. Based on this assessment proceedings and the seized document loose paper sheet page No.206 of Annexure A-1, penalty proceedings were initiated u/s.271D of the Act on the assessee for receipt of cash loans in the sum of Rs.20,24,50,000/- allegedly from Shri Samir Shah for violation of provisions of section 269SS of the Act. The assessee in reply to the show-cause notice vide letter dated 11/09/2014 stated as under before the ld. AO:-

"i) Page No. 206 of Annexure A-l does not represent any cash loan.

ii) The addition was made in the case of Samir Shah because they could not furnish the deta ls before the AO.

iii) During the post assessment proceedings, the identity of various loan parties as mentioned on page 206 along with creditworthiness was substantiated before the AO with documentary evidence.

iv) It is contended that the loans appearing on page No. 206 are accepted through banking channel and shown in the books of account of the assessee company and hence penalty u/s. 271D cannot be levied."

3.2. The Addl. CIT (the ld. AO herein) did not heed to the aforesaid contentions of the assessee and proceeded to levy penalty u/s.271D of the Act amounting to Rs.20,24,50,000/- in the hands of the assessee by observing as under:-

"6. It is evident from the above discussion that the assessee had accepted loans in cash in contravention of provisions of section 269SS of the Income Tax Act and hence, liable for penalty u/s. 271D of the Income Tax Act. Reliance is placed on decisions of

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