COMMISSIONER OF INCOME TAX Vs. BANGALORE LEATHER AND LEATHER CRAFTS LTD.

JUDGEMENT

(1.) This appeal is by the Revenue challenging the order passed by the Tribunal which held that the amount received by the assessee by way of cash in excess of Rs. 20,000 is neither a loan nor deposit and therefore section 269SS is not attracted. The assessee is doing job work from M/s. Namasthe Exports Ltd. In fact it is a sister concern. The entire goods manufactured by the assessee is sold to M/s. Namasthe Exports Ltd. and it is not sold to any other person. The assessee is running under loss. The total value of the transactions between the assessee and Namasthe Exports Ltd. is around Rs. 94758,272. However the assessee has received a sum of Rs. 8,15,600 in excess of amounts due to them. The said amount has been received in cash. It is that amount which is described by the Revenue as a loan and it is contrary to section 269SS of the Act and they have initiated proceedings and levied penalty. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Appeals who upheld the order of the assessing authority and dismissed the appeal. In appeal before the Tribunal it has accepted the case of the assessee that the said cash transaction did not fall within the definition of loan or deposit as stipulated in section 269SS of the Act, it was an amount paid in advance for the job work done to facilitate the assessee to survive in the business and therefore the Tribunal held that the said amount did not represent the loan or deposit and section 269SS is not attracted and therefore the penalty imposed was set aside. Aggrieved by the said order, the Revenue is in appeal.

(2.) The learned counsel appearing for the Revenue assailing the impugned order contended that in the arguments before the Commissioner of Income-tax (Appeals) it is admitted that it is only a technical error or a mere breach and therefore there is a clear admission. A breach could happen only when the assessee has acted contrary to section 269SS and therefore the finding of the assessing authority that the said amount represents a loan is valid and legal and the Tribunal was in error in interfering with the said order.

(3.) Per contra, the learned counsel for the assessee supported the impugned order.