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ITO, Ward 18(3) New Delhi Vs. Worthwhile Developers Pvt.Ltd. 304, Himalaya, 65, Vijay Block Laxmi Nagar, New Delhi
October, 07th 2014
                       "H" BENCH, NEW DELHI


                         ITA No. 5323/Del/2013
                        Assessment Year 2007-08
ITO, Ward 18(3)         vs.   Worthwhile Developers Pvt.Ltd.
New Delhi                     304, Himalaya, 65, Vijay Block
                              Laxmi Nagar, New Delhi
                              PAN: AAACW 3382 J

                  Cross Objection No. 109/Del/2014
                        (In ITA 5323/Del/2013)
                              AY 2007-08
Worthwhile Developers P.Ltd. vs.  ITO, Ward 18(3)
New Delhi                         New Delhi
(Appellant)                                      (Respondent)
                  Appellant by:- Sh. Gautam Jain, FCA
              Respondent by:- Shri Rakesh Kumar, Sr.D.R.



      This appeal is filed by the Revenue directed against the order of the
Ld.CIT(Appeals)-XXI, New Delhi dt. 03.07.2013 pertaining to the AY 2007-
08. The Cross Objection is filed by the assessee.

2.     Facts of the case:- The facts are brought out at para 3 of the penalty
order passed u/s 271D of the Act dt. 10.3.2012 which are extracted for
ready reference.
"M/s Worthwhile Developers P.Ltd. and M/s Jai Krishan Estates P.Ltd. made
a MOU on 22.3.2005, M/s Worthwile Developers P.Ltd. invested a sum of
Rs.1,49,42,151/- against purchase of 7885.04 sq.ft. super area of 19 shops
in Krishan Apra Plaza. As per MOU, M/s Jai Krishan Estates P.Ltd. was to
sell the said shops at the prevailing market price and the sale proceeds
collected would then be credited by M/s Jai Krishan Estates P.Ltd. to the
account of the assessee and in lieu of these services M/s Jai Krishan Estates
P.Ltd. would be paid Rs.50/- per sq.ft. of shops sold. The assessee shown
M/s Jai Krishan P.Ltd. as debtor for Rs.66,36,955/- for earlier sale of shops
and transferred the amount in loan account in the current year and for this
year sale also a sum of Rs.45,04,654/- also reflected in the loan account.
Thus, a total amount of loans and advances by the assessee to M/s Jai
Krishan Estates P.Ltd. shown as Rs.1,19,13,736/- in the balance sheet
                                  ÏTA 5323/Del/2013
                         C.O.109/Del/14 (In ITA 5323/Del/2013)
                                     AY: 2007-08
                             Worthwhile Developers P.Ltd.
comprises of Rs.66,36,955/-, 7,72,127/- and Rs.45,04,654/-. Since this
amount has not been advanced by the assessee to M/s Jai Krishan Estates
P.Ltd. by way of adjustments of journal entries only, the provision of 269
SS/269 T clearly apply and therefore penalty proceedings u/s 271D are
rightly initiated by the AO.

3.    The ACIT in the penalty order at para 6 held as follows.

"6.    The submissions filed by the assessee considered but are not relevant
to the facts and circumstances of the case. Accordingly, I am of the view that
the    provisions of Section 269SS is clearly attracted for the sum of
Rs.1,19,13,736/- a sum of money transferred to the loan account in the form
of book entries without in the shape of account payee cheque or account
payee draft.
On a comprehensive consideration, I am of the considered view the assessee
has contravened the provisions of s.269 SS of the I.T.Act, 1961 and is liable
for the penalty u/s 271D of the Act.
Accordingly, a penalty of Rs.1,19,13,736/-, being the amount received in the
form of book entries, is being levied u/s 271D of the Act."

4.    On appeal the First Appellate Authority deleted the penalty on the
ground that the payment has been received through account payee cheque
and as such there is no violation of provisions of S.269SS of the Act.

5.    Aggrieved the Revenue is in appeal before us on the following ground.

"1. Ld.CIT(A) erred in law and on facts of the case in cancelling the penalty of
Rs.1,19,13,736/- imposed by AO u/s 271D of the I.T.Act.""

6.    We have heard Shri "Rakesh Kumar, Ld.Sr.D.R. on behalf of the
Revenue and Shri Gautam Jain, FCA, the Ld.Counsel for the assessee.

7.    On a careful consideration of the facts and circumstances of the case,
on perusal of material on record and orders of the lower authorities, as well
as case laws cited, we hold as follows.

8.    The Hon'ble Delhi High Court in the case of CIT vs. Worldwide
Township Projects Ltd. In ITA 232/2014 judgement dt. 21st May, 2014
lexdocid 463622 at para 8 held as follows.

                                                                         Page 2 of 5
                                   ÏTA 5323/Del/2013
                          C.O.109/Del/14 (In ITA 5323/Del/2013)
                                      AY: 2007-08
                              Worthwhile Developers P.Ltd.
"8.     A plain reading of S.269SS indicates that it applies to a transaction
where a deposit or a loan is accepted by an assessee, otherwise than by an
account payee cheque or an account payee draft. The ambit of the Section is
clearly restricted to transaction involving acceptance of money and not
intended to affect cases where a debt or a liability arises on account of book
entries. The objection of the section is to prevent transactions in currency.
This is also clearly explicit from clause (iii) of the explanation to s.269SS of the
Act which defines loan or deposit to mean "loan or deposit of money". The
liability recorded in the books of accounts by way of journal entries i.e.
crediting the account of a party to whom monies are payable or debiting the
account of a party from whom monies are receivable in the books of accounts,
is clearly outside the ambit of the provision of s. 269SS of the Act, because
passing such entries does not involve acceptance of any loan or deposit of
money. In the present case, admittedly no money was transferred other than
through banking channels, M/s PACL India Ltd. Made certain payments
through banking channels to land owners. This payment made on behalf of
the assessee was recorded by the assessee in its books by crediting the
account of M/s PACL India Ltd. In view of this admitted position, no
infringement of s. 269SS of the Act is made out. This Court, in the case of
Noida Toll Bridge Co.Ltd. (supra), considered a similar case where a company
had paid money to the Government of Delhi for acquisition of a land on behalf
of the assessee therein. The AO levied a penalty u/s 271D of the Act for
alleged violation of the provisions of section 269SS of the Act since the books
of the assessee reflected the liability on account of the lands acquired on its
behalf. On appeal, the CIT(A) affirmed the penalty. The order of CIT was
successfully impugned by the assessee before the ITAT. On appeal this Court
held as under:

       "While holding that the provisions of section 269SS of the Act were not
attracted, the Tribunal has noticed that: (i) in the instant case, the transaction
was by an account payee cheque, )ii) no payment on account was made in
cash either by the assessed or on its behalf, (iii) no loan was accepted by the
assessee in cash, and (iv) the payment of Rs.4.85 crores made by the
assessee though IL and FS, which holds more than 30 per cent of the paid up
capital of the assessee, by journal entry in the books of accounts of the
assessee by crediting the account of IL and FS.

Having regard to the aforenoted findings, which are essentially findings of
fact, we are in complete agreement with the Tribunal that the provisions of
section 269SS were not attracted on the facts of the case. Admittedly, neither
the assessee nor IL and FS had made any payment in cash. The order of the
Tribunal does not give rise to any question of law, much less a substantial
question of law.

                                                                           Page 3 of 5
                                   ÏTA 5323/Del/2013
                          C.O.109/Del/14 (In ITA 5323/Del/2013)
                                      AY: 2007-08
                              Worthwhile Developers P.Ltd.
We accordingly decline to entertain the appeal. Dismissed.

8.1.    Respectfully following the judgement of the Jurisdictional High Court,
we uphold the order of the First Appellate Authority, though for different
reasons and dismiss this ground of the Revenue.

8.2.    The Cross Objection filed by the assessee                  is dismissed as `not

8.      In the result Revenue's appeal is dismissed and assessee 's Cross

Objection also stands dismissed as "not pressed".

        Order pronounced in the Open Court on 24th September, 2014.

                    Sd/-                                 Sd/-
       (GEORGE GEORGE K)                             (J.SUDHAKAR REDDY)
        JUDICIAL MEMBER                              ACCOUNTANT MEMBER

Dated: the 24th Sept. 2014


Copy of the Order forwarded to:
6.Guard File

                                                                  By Order

                                                              Asst. Registrar

                                                                                Page 4 of 5
         ÏTA 5323/Del/2013
C.O.109/Del/14 (In ITA 5323/Del/2013)
            AY: 2007-08
    Worthwhile Developers P.Ltd.

                                        Page 5 of 5
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