The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271D of the Income Tax Act, 1961, as treating personal expenses as income precludes loan classification, and income cannot be taxed twice in the same assessment year.
A Search and seizure operation under Section 132 of the Income Tax Act was carried out on 17.02.2016 in the case of M/s Spaze Towers Pvt. Ltd. Pursuant to the search proceedings under Section 153A of the Income Tax Act, were initiated. The Assessing Officer in the assessment order under Section 153A of the Income Tax Act made addition of the amount in the case of assessee by treating the expenses incurred on Platinum Farm House towards interior/ furniture/ fixtures and are affected by M/s Spaze Towers Pvt. Ltd. and relating to assessee during the year under consideration as income of the assessee.
The CIT (A) deleted the addition made by the Assessing Officer in the hands of the assessee in view of the ITSC order in the case of Spaze Towers Pvt. Ltd. Thereafter, the AO initiated penalty proceedings under Section 271D of the Income Tax Act, in the case of the assessee company on the ground that by accepting loans from M/s Spaze Towers Pvt. L td., the assessee had violated the provisions of section 269SS of the Act, thereby making him liable for penalty provisions under Section 271D of the Income Tax Act.
Mr. Parikshit Agarwal, representing the revenue, has relied on the order of the AO. He submitted that the amount of Rs. 15 lakhs was received by the assessee in cash as is recorded in the CD seized by the Department. Further submitted that Shri Gautam Gupta had failed to confirm the transaction in the form of an affidavit before the Revenue authorities. He submitted that CIT(A) should have taken note of the fact that cash receipt of Rs. 15 lakhs was towards part payment of the finance agreement dt. 28th July, 1998.
The Counsel for the assessee Vivek Vardhan has opposed the submission of the Departmental Representative. He submitted that the amount of Rs. 15 lakhs was assessed by the AO as undisclosed income of the assessee for the block period of the assessee and therefore, the provision of Section 269SS of the Income Tax Act, 1961 does not apply to the facts of the case.
The two member Bench of the tribunal comprising C.N.Prasad ( Judicial member ) and Dr.B.R.R Kumar ( Accountant member ) observed that the Assessing Officer has treated the personal expenses incurred by M/s Spaze Towers Pvt. Ltd as income of the assessee, then the same amount cannot be treated as loan in violation of the provisions of Section 269SS of the Income Tax Act. It was added that the same income cannot be taxed in two hands in the same assessment year and CIT (A) has rightly deleted the additions made by the Assessing Officer.
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