TMI Blog2012 (10) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Hindustan Steels Ltd.(1969 (8) TMI 31). Therefore assessee is under bonafide belief that the amounts could have been accepted by cash. Accordingly, the penalty levied u/s 271D is deleted. Decision in favor of assessee. - ITA No. 799/Del/12 - - - Dated:- 13-7-2012 - SHRI R.P. TOLANI AND SHRI K.G. BANSAL JJ. Appellant by : Shri Kapil Goel Adv. Respondent : Ms. Nandita Kanchan Sr. DR O R D E R PER R.P. TOLANI, J.M: This is assessee s appeal against CIT(A) s order dated 16-11-2011, challenging the sustenance of penalty of Rs. 13,12,526/-, levied by the Assessing Officer u/s 271D of the Income-tax Act, 1961, relating to A.Y. 2007-08. 2. Brief facts are: The assessee accepted share application money in cash amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares are allotted the nature of the amount of share application partakes the character of deposit, which attracts the prohibition contained in sec. 269SS. Assessing Officer , thus held that the amount advanced by Shri Manish Agarwal was cash deposit and imposed the penalty. 2.5. Aggrieved, assessee preferred first appeal, wherein the penalty was confirmed by CIT(A) with further observation that ITAT Delhi Bench in the case of ITO Vs. M/s Nandi Promoters Pvt. Ltd. [ ITA no. 3462/Del/2009(2011) 13 Taxmann 213 (Del.), has held that share application money received in excess of authorized capital cannot be treated as share application money. Aggrieved, assessee is before us. 3. Learned counsel for the assessee reiterated the facts and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. If there is any violation, the person receiving the loan or deposit will be liable to penalty u/s 271D in an amount equal to the amount of the loan or deposit. A loan or deposit is defined in the Explanation below Sec. 269SS as a loan or deposit of money . The assessee s contention, accepted both by the CIT(A) and the Tribunal, is that share application monies received by a company, pending allotment of shares, do not amount to loan or deposit. On a careful consideration of the matter, we find that the AO has relied on the judgment of the Jharkhand High Court (supra) and referred the issue of levying penalty to the Additional CIT. He did not examine whether the share application monies can be treated as loan or deposit within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case before us, it may be seen that the receipt of share application monies from the three private limited companies for allotment of shares in the assessee company cannot be treat ed as receipt of loan or deposit. In any case, the Tribunal has rightly noticed the clevage of judicial opinion on the point and held that in that situation there was reasonable cause u/s 273B, applying the judgment of the Supreme Court in Vegetable Products (supra). (ii) ITAT Delhi Bench G in cross appeals in the case of M/s Shri Sidhata Ispat (P) Ltd. vide order dated 31-3-2011 rendered in ITA nos. 3569 281/Del/2010 and 4577/Del/2009, deleting penalty levied u/s 271E by following observations: 25. As regards the rest of the share capital mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and contends that when the impugned cash deposits were taken from the director, the assessee had no unsubscribed capital. The share capital was increased much later and after the necessary permission from ROC. Thereafter, these amounts advanced by directors were treated as share application money. Thus, at the time of advancing they were cash deposits. 5. We have heard rival contentions and gone through the relevant material available on record. As the facts emerge, the impugned amounts were advanced by the director and assessee had no unsubscribed authorized capital, which was increased subsequent to deposits. 5.1. CIT(A) has relied on the ITAT decision in the case of M/s Nandi Promoters Pvt. Ltd. (supra), where it has been held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application money has not been doubted. Thus, the default assumes technical character. 5.5. The provisions of sec. 269SS were brought on statute to curb the practice of black money in cash transaction. In the facts and circumstances of the case, it cannot be held that there was any black money involved in this case. Under these circumstances, the default becomes a technical or venial default. 5.6. Hon ble Supreme Court in the case of Hindustan Steels Ltd. (supra) has categorically held that penalty should not be imposed only because ii is lawful to do so. In this case, though the provisions are attracted that it may be lawful to impose penalty, but in the event of its being a technical or venial breach and the bona fide belief, Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
