Case Number: ITA 5623/DEL/2019
Appellant: Surinder Pal Singh Chawla, New Delhi
Respondent: JCIT, Central Range, Gurgaon
Assessment Year: 2011-12
Case Filed On: 2019-06-28
Order Type: Final Tribunal Order
Date of Order: 2019-08-28
Pronounced On: 2019-08-28
This case involves an appeal filed by Surinder Pal Singh Chawla against the order of the Joint Commissioner of Income Tax (JCIT), Central Range, Gurgaon. The appeal was filed on 2019-06-28, and the order was pronounced on 2019-08-28. The primary issue in this case was related to the imposition of penalty under Section 271D of the Income Tax Act, 1961, for allegedly violating the provisions of Section 269SS by accepting loans in cash.
Surinder Pal Singh Chawla, the appellant, is based in New Delhi. The appeal was filed against the assessment order passed by the JCIT, Central Range, Gurgaon, for the assessment year 2011-12. The main contention in the case was the imposition of penalty under Section 271D of the Income Tax Act, 1961, for allegedly violating the provisions of Section 269SS by accepting loans in cash.
During a search and seizure operation carried out on 17.02.2016 in the case of M/s Spaze Towers Pvt Ltd, it was found that the company had made bogus purchases and incurred personal expenses for its promoters/directors, including Surinder Pal Singh Chawla. The personal expenses were treated as income in the hands of the promoters/directors. The Settlement Commission later accepted an additional income of Rs. 52.74 crores on account of these bogus purchases and allowed the benefit of telescoping of personal expenses of Rs. 16.43 crores.
The appellant raised the following grounds of appeal:
The Tribunal heard the representatives of both sides and carefully perused the case records. The Tribunal noted that the Settlement Commission had accepted the additional income offered by M/s Spaze Towers Pvt Ltd and allowed the benefit of telescoping of personal expenses. The Tribunal observed that the same amount could not be treated as income and loans simultaneously.
The Tribunal also referred to the decision of the Hon’ble Delhi High Court in the case of Standard Brands Ltd. (285 ITR 295), which held that the revenue could not treat the same amount as undisclosed income and also initiate proceedings under Section 269SS of the Act.
The Tribunal found that the penalty imposed under Section 271D of the Act was not justified as there was no clear finding that the appellants had taken or accepted any loan or deposit in cash from M/s Spaze Towers Pvt Ltd. The Tribunal also noted that the penalty proceedings were initiated on the basis of the CIT(A)’s observations, which is not permissible as per the law.
The Tribunal, therefore, directed the Assessing Officer to delete the penalty levied in respect of Surinder Pal Singh Chawla for the assessment year 2011-12.
The Tribunal allowed the appeal of Surinder Pal Singh Chawla and directed the Assessing Officer to delete the penalty imposed under Section 271D of the Income Tax Act, 1961. The decision was announced in the open court on 28.08.2019.
Order pronounced on this 28th day of August, 2019.
Signed by:
(A.D. JAIN) VICE PRESIDENT
(N.K. BILLAIYA) ACCOUNTANT MEMBER
Date: 28th August, 2019
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Surinder Pal Singh Chawla vs JCIT Central Range, Gurgaon – Penalty Dispute for AY 2011-12
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