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CaseIQ

Commissioner Of Income-Tax v. Noida Toll Bridge Co. Ltd.

Delhi High Court

Jan 28, 2003

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The Revenue filed an appeal under section 260A of the Income-tax Act, 1961 against the Income-tax Appellate Tribunal, New Delhi's order dated May 16, 2002 in I.T.A. No. 238.Delhi of 2002 pertaining to assessment year 1998-99. The respondent (an assessee special purpose vehicle) was promoted by Infrastructure Leasing and Finance Services Ltd. (IL&FS) (circa 30% holding) to construct and operate a bridge on the Yamuna on a build-own-operate-and-transfer basis. For the project the assessee had to pay Rs. 4.85 crores to the Government of Delhi for land acquisition. The Assessing Officer initiated penalty proceedings under section 271D on the view that section 269SS had been contravened because the payment was not made in the prescribed manner. The record shows the payment was made by IL&FS by an account payee cheque to the Delhi Government and the amount was debited to the assessee's books. The Assessing Officer levied a penalty of Rs. 4.85 crores under section 271D; the assessee's appeal to the Commissioner (Appeals) failed and the assessee succeeded before the Tribunal which deleted the penalty. The Revenue sought leave to appeal to the High Court presenting two substantial questions of law.

Legal Issues Presented

“Whether the Income-tax Appellate Tribunal has erred in deleting the penalty imposed under section 271D of the Act by holding that the appellant did not contravene the provisions of section 269SS of the Income-tax Act?”
“Whether the order of the Income-tax Appellate Tribunal is perverse on both law and merits?”

Arguments of the Parties

Revenue / Assessing Officer

The Assessing Officer's position was that the assessee had violated section 269SS because the payment of Rs. 4.85 crores to the Delhi Government was not made in the manner prescribed by section 269SS, warranting penalty under section 271D.
At the High Court stage the Revenue framed two substantial questions of law challenging the Tribunal's deletion of the penalty and alleging perversity on law and merits.

Respondent / Assessee

The payment of Rs. 4.85 crores had been made by IL&FS by an account payee cheque to the Delhi Government and the amount was debited to the assessee's books.
No payment in cash was made either by the assessee or on its behalf, and no cash loan was accepted by the assessee.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court examined the Tribunal's factual findings and agreed with them. The Tribunal had found that: (i) the transaction was effected by an account payee cheque; (ii) no payment was made in cash by the assessee or on its behalf; (iii) no loan was accepted by the assessee in cash; and (iv) the Rs. 4.85 crores was paid by IL&FS (which holds over 30% of the assessee) and recorded in the assessee's books by a journal entry crediting IL&FS's account. On these facts the Court concluded that the provisions of section 269SS were not attracted. Because the Tribunal's conclusions were essentially factual and established absence of cash payment, the Court held there was no substantial question of law arising from the Tribunal's order.

Holding and Implications

DISMISSED

The appeal was declined and dismissed. The direct effect is that the Tribunal's order deleting the penalty under section 271D stands. The opinion states that no substantial question of law arises; the court did not announce any broader legal principle beyond affirming that, on the stated facts (no cash payment and payment by account payee cheque recorded in the books), section 269SS did not apply.

Show all summary ...

1. This appeal by the Revenue under section 260A of the Income-tax Act, 1961 (for short “the Act”), is directed against the order, dated May 16, 2002, passed by the Income-tax Appellate Tribunal, New Delhi (for short “the Tribunal”), in I.T.A No. 238.Delhi of 2002, pertaining to the assessment year 1998-99. According to the Revenue, the said order involves the following substantial questions of law:

“1. Whether the Income-tax Appellate Tribunal has erred in deleting the penalty imposed under section 271D of the Act by holding that the appellant did not contravene the provisions of section 269SS of the Income-tax Act?

2. Whether the order of the Income-tax Appellate Tribunal is perverse on both law and merits?”

2. Briefly stated, the facts giving rise to the present appeal are that the respon-dent-assessee, referred to as the “special purpose vehicle”, was promoted by one Infrastructure Leasing and Finance Services Ltd. (for short, the “IL & FS”), with 30 per cent, holding, to construct and operate a bridge on the river Yamuna on a build, own, operate and transfer basis.

3. For undertaking the said project the assessee had to make a payment of Rs. 4.85 crores to the Government of Delhi in relation to the acquisition of land for the said project.

4. While completing the assessment of the assessee for the assessment year 1998-99, the Assessing Officer initiated penalty proceedings under section 271D of the Act as he was of the view that the assessee had violated the provisions of section 269SS of the Act because the payment of Rs. 4.85 crores to the Delhi Government was not made in the manner prescribed in section 269SS of the Act. We may note at this stage itself that the said payment had in fact been made by IL & FS vide account payee cheque to the Delhi Government and the amount was debited to the account of the assessee in its books of account.

5. Not being satisfied with the reply filed by the assessee to the show cause notice, the Assessing Officer levied a penalty of Rs. 4.85 crores under section 271D of the Act on the assessee for alleged violation of the provisions of section 269SS of the Act.

6. Aggrieved, the assessee preferred appeal to the Commissioner of Income-tax (Appeals) but without any success. The assessee carried the matter in further appeal to the Tribunal. By the impugned order, the Tribunal had deleted the said penalty. 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 assessee 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 through IL & FS, which holds more than 30 per cent, of the paid-up capital of the assessee, by journal entry in the books of account of the assessee by crediting the account of IL & FS.

7. 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 & 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.

8. We accordingly decline to entertain the appeal. Dismissed.