Commissioner of Income Tax and Another vs Kailash Chandra Deepak Kumar

The present appeal filed u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), arises out of the order of the Income Tax Appellate Tribunal dated February 26, 1999. It has been admitted, vide order dated February 1, 1999, on the following substantial questions of law:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 1,00,000 is nothing but advance taken by the assessee and the provisions of Section 269SS do not apply to the facts of the case?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the penalty u/s 271D of the Income Tax Act, 1961, in respect of the assessment years 1990-91?

Briefly stated the facts giving rise to the present appeal are as follows:

The present appeal relates to the assessment year 1990-91. The respondent-assessee had accepted various amounts from M/s. Babu Ram Ganga Ram, Suriyawan, Varanasi, during March, 1991, and the total amount came to Rs. 1,00,000. The amount was received otherwise than by way of account payee cheque or bank draft. The assessing authority initiated penalty proceedings u/s 271D of the Act on the ground ; that the respondent-assessee had violated the provisions of Section 269SS of the Act and, vide order dated June 12, 1991, imposed a sum of Rs. 1,00,000 as penalty. In appeal, the penalty was set aside by the Commissioner of Income Tax (Appeals), Varanasi, vide order dated March 16, 1993, which has been upheld by the Tribunal.

We have heard Sri R.K. Upadhyaya learned Counsel for the Revenue and Sri S.K. Garg learned Counsel for the respondent-assessee.

The learned standing counsel submitted that as the assessee had received a sum of Rs. 1,00,000 on different dates in cash from M/s. Babu Ram Ganga Ram, Suriyawan, Varanasi, it had clearly violated the provisions of Section 269SS of the Act thus the penalty u/s 271D of the Act was rightly imposed and the Tribunal was not justified in upholding the deletion of the said penalty.

From the perusal of the order, we find that on the quantum side the assessing authority had added Rs. 1,00,000 which is the same amount as unexplained cash credit u/s 68 of the Act and the Commissioner of Income Tax (Appeals), vide order dated December 1,1993, had held that the aforesaid amount had been taken as advance from M/s. Babu Ram Ganga Ram against subsequent purchase of pulses made from the assessee-respondent. From the order of the Tribunal, we find that against advance of Rs. 1 lakh, pulses worth Rs. 1,02,957 have been supplied to M/s. Babu Ram Ganga Ram, Suriyawan, Varanasi, on various dates which also substantiates that the amounts in question were advanced towards future supply of goods. The provision u/s 269SS of the Act is applicable only in case of loan or deposit and does not cover cash advance for purpose of goods in future. That being the position, in our considered opinion, the provisions of Section 269SS is not applicable to the present case. The Tribunal has not committed any error in upholding the deletion of penalty.

In view of the foregoing discussion, we are of the considered opinion that the appeal has no merit and the appeal is accordingly dismissed.