TMI Blog2012 (9) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... of sec. 269SS penalty cannot be imposed - Also there is nothing on record, suggesting any tax planning or infraction of relevant provisions with malafide intention. Moreover, transactions are between the directors and the company and that too towards share application money/capital - in favour of assessee. - ITA No.4622/Del./2011 - - - Dated:- 6-9-2012 - Rajpal Yadav, A N Pahuja, JJ. For Respondent: Shri Sanjay Kumar Jain, DR ORDER Per: A N Pahuja: This appeal filed on 19.10.2011 by the Revenue against an order dated 10-08-2011 of the ld. CIT(Appeals) -XIX,New Delhi, for the Assessment Year 2007-08, raises the following grounds:- [1] On the facts and circumstances of the case and in law the learned CIT(A) has erred in cancelling the penalty of Rs.14,81,208/- levied by the AO u/s 271D of the Income Tax Act,1961,in view of the decision of Hon ble Jharkhand High Court in the case of M/s Bhalotia Engineering Works (P) Ltd vs. CIT, 275 ITR 399 [2] The appellant craves leave for reserving the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of appeal. 2. At the outset, the Bench rejected the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shri Arun Kishore having resigned, amount was refunded to him. Since the genuineness of the transact ions was not in doubt, the assessee pleaded that no penalty could be levied. However, the Additional CIT did not accept the submissions of the assessee while relying upon decision in Bhalotia Engg. Works Pvt. Ltd.(supra) and levied a penalty of Rs.14,81,208/-u/s 271D of the Act. 4 On appeal, the assessee contended that the share application money cannot be treated as loan or deposit and relied upon decisions in Jagvijay Auto Finance Pvt. Ltd. Vs. ACIT 52 ITD 504 (JP); CIT Another Vs. Kailash Chandra Deepak Kumar 317 TR 351 (All); Sharad Holding Leasing (P) Ltd. Vs. ACIT 95 ITD 336; CIT Vs. Speedways Rubber Pvt. Ltd. 326 ITR 31 (P H) and CIT Vs. Rugmini Ram Ragav Spinning (P) Ltd. 304 ITR 417 (Mad) . While contending that the share application money was received for business purposes and transactions were genuine, the ld. AR relied upon decisions in ADIT vs. Kum AB Shanti 255 ITR 258 (SC); CIT vs. Parmanand 266 ITR 255 (DEL); CIT vs. Sunil Kumar Goel 315 ITR 163 (P H); Woodward Governor India Pvt. Ltd vs. CIT 253 ITR 745 (DEL) ; and Ind Enterprises vs. DCIT 68 TTJ 373 (HY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct in law in deleting penalty u/s 271D of Rs.3 lacs in the circumstances of the case and after due deliberation, we are inclined to uphold the same" 6.5 There is a finding by both the AO and the Addl. CIT that the amounts in question represent share application money/share capital received in cash from the promoters/directors of the appellant company. As discussed above, the provisions of S. 269SS are not applicable to share application money/share capital. In view of the facts brought on record and the legal position available as on date, there is no scope for levy of penalty in respect of share application money/share capital of Rs.14,81,208 received in cash from the promoters/directors of the appellant company. 7. The other contention of the AR is that the transactions are between the appellant company and the Directors and the amounts were received in cash to meet the expenditure in the initial stages of the company and stated that there was reasonable cause in terms of S.273B. After careful consideration of facts and the submissions of the AR, the contentions of the AR that there is reasonable cause are tenable. In view of the above discussion, there is no cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing on record to suggest that the transaction is in the nature of loan or deposit, apparently, the provisions of section 269SS are not attracted. The meaning of "deposit" and "loan" has been explained on page 8454 of the Chaturvedi and Pithisaria's Income-tax Law. Fifth Edition, Volume 5, as under: " 'Deposit' and 'loan'- these two are not identical in meaning. - It is true that both in the case of a loan and in the case of a deposit there is a relationship of a debtor and a creditor between the party giving money and the party receiving money. But in the case of a deposit, the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money - the benefit normally being earning of interest from a party who customarily accepts deposits. Deposits could also be for safe-keeping or as a security for the performance of an obligation undertaken by the depositor. In the case of a loan, however, it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of the borrower although the person who lends the money may also stand to gain thereby by earning interest on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were attached with certain conditions or stipulation as to period of repayment, rate of interest, manner of repayment, etc. so as to treat the said transactions as loans or advances. Moreover, the Revenue have not placed before us any material, suggesting that the transactions were actually in the nature of loans or deposits. In these circumstances, the reliance on the decision in M/s Bhalotia Engineering Works Pvt. Ltd. (supra), in our opinion, is totally misplaced. Hon ble Madras High Court in CIT Vs. Rugmini Ram Ragav Spinners Private Ltd. (2008), 304 ITR 417 held that the money received in cash by a company towards allotment of shares, was neither a loan nor a deposit. In Baidya Nath Plastic Industries (P) Ltd. and Ors vs K.L. Anand (1998) 230 ITR 522 , Hon ble Delhi High Court pointed out the distinction between a loan and a deposit while observing that in the case of the former it is ordinarily the duty of the debtor to seek out the creditor and to repay the money according to the agreement while in the case of a deposit it is generally the duty of the depositor to go to the banker or to the depositee, as the case may be, and make a demand for it. This judgment was cite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any ignorance, which resulted in the infraction of law, the default is technical and venial which did not prejudice the interests of the Revenue as no tax avoidance or tax evasion was involved. To my mind, bonafide belief coupled with the genuineness of the transact ions would constitute reasonable cause under section 273B for not invoking the provisions of section 271E of the Act. The impugned order of penalty is cancelled. 6.4 There is another aspect of the matter. In the case of Bombay Conductors Electricals Ltd. Vs. DCIT, 56 TTJ 580 (Ahd.) , the Tribunal found that there was no evidence on record to show that infraction of the provisions was with the knowledge or in defiance of the provisions. It was further found that there was nothing on record to indicate that the assessee had indulged in any tax planning or tax evasion and if at all there was a violation, it was mere venial or technical. This decision of the ITAT has been upheld by Hon ble jurisdictional High Court in the case of CIT Vs. Bombay Conductors Electricals Ltd, 301 ITR 328(Guj) . In the case under consideration also, there is nothing on record, suggesting any tax planning or infraction of relevant prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
