Delhi H.C : the assessee had received a deposit of Rs. 3 lakhs in cash in contravention of s. 269SS of the Act and penalty under s. 271D

High Court Of Delhi

CIT vs. Standard Brands Ltd.

Sections 269SS, 271D

Madan B. Lokur & Vipin Sanghi, JJ.

IT Appeal No. 66 of 2005

4th July, 2006

Counsel Appeared

Sanjeev Sabharwal, for the Appellant : Dr. Rakesh Gupta with Pankaj Dhaudiyal, for the Respondent

ORDER

By the court :

The Revenue is aggrieved by an order dt. 26th July, 2004 passed by the Tribunal in ITA No. 24/Del/2001. The impugned order has been passed in respect of the block period 1st April, 1986 to 31st March, 1997. It appears that the assessee had received an amount of Rs. 3 lakhs in cash from M/s D.S. Imports. According to the AO, the amount represented undisclosed income in the hands of the assessee while according to the assessee it was a deposit made by M/s D.S. Imports. Notwithstanding the fact that the Revenue was of the view that the amount was undisclosed income, penalty proceedings were initiated against the assessee for the violation of provisions of s. 269SS of the IT Act, which provides that loans or deposits in excess of Rs. 20,000 should not be received in cash.

The assessee approached the CIT(A) who passed an order on 6th Oct., 2000 in which it was recorded that the assessee had received a deposit of Rs. 3 lakhs in cash in contravention of s. 269SS of the Act and penalty under s. 271D of the Act was imposable against the assessee.

Feeling aggrieved, the assessee filed an appeal out of which the impugned order dt. 26th July, 2004 has arisen.

4. Insofar as the quantum issue is concerned, the CIT(A) in a separate order dt. 6th Sept., 2000 came to the conclusion (in para 7.2 of the said order) that the addition under s. 158BC of the Act could not be sustained and that the AO could at best have taken action under s. 147 of the Act. Accordingly, the addition of Rs. 3 lakhs was deleted without prejudice to the action that the AO may take for taxing this amount in regular assessment proceedings including proceedings under s. 147 of the Act.

5. Against the order dt. 6th Sept., 2000, the Revenue preferred an appeal before the Tribunal. By an order dt. 6th Oct., 2004, the Tribunal (in para 9 of the said order) upheld the view taken by the CIT(A) in his order dt. 6th Sept., 2000. The Tribunal held that the receipt was outside the scope of undisclosed income defined under s. 158B(b) of the Act.

6. On these facts, we are of the view that the Revenue could not, on the one hand, contend that the amount of Rs. 3 lakhs is undisclosed income in the hands of the assessee and at the same time seek to initiate proceedings against the assessee for violation of the provisions of s. 269SS of the Act which deals with cash deposits or loans in excess of Rs. 20,000. The Revenue, having taken the stand that the income was undisclosed income in the hands of the assessee, it could not resort to proceedings under s. 269SS r/w s. 271D of the Act, as held by the Tribunal.

7. Additionally, we agree with learned counsel for the assessee that since a block assessment could not be sustained, penal action may be permissible (if at all) only after a regular assessment is made.

8. Under these circumstances, in our opinion, no substantial question of law arises in this appeal. Dismissed.

[Citation : 285 ITR 295]

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