TMI Blog2016 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... nity from levy of penalty under section 271D of the Act on the ground of existence of reasonable cause for failure to comply with the provisions of section 269SS of the Act. - Decided in favour of revenue - ITA No. 1713/Del/2010 - - - Dated:- 27-7-2016 - Smt. Diva Singh, Judicial Member And Sh. O. P. Kant, Accountant Member Appellant by Sh. Sanjay Gupta, CA Respondent by Sh. V.R. Sonbhadra, Sr. DR ORDER Per O. P. Kant, A. M. This appeal has arisen by the judgment dated 15/03/2012 of the Hon ble High Court of Delhi in ITA No. 857 of 2011, wherein the Hon ble High Court remitted the matter to the Tribunal to decide the appeal afresh after recording factual findings, thereafter apply the decision of the Hon ble High Court in ITA No. 1192/2011. 2. The facts in brief of the case are that the assessee company filed its return declaring income of ₹ 7,190/- on 31/12/2006. In the course of assessment proceedings, the Assessing Officer observed that the assessee company was engaged in the business of providing financial services. He further observed from the records that the assessee company received share application money of ₹ 21,97,500/- from Sh. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cause for the assessee to accept share application money in cash. The Ld. Additional Commissioner of Income Tax following the judgment of the Hon ble Jharkhand High Court in the case of Bhalotia Engineering works Ltd Vs. Commissioner of Income Tax, 275 ITR 399, levied penalty of ₹ 10,70,000/- on 23/03/2009 under section 271D of the Act. On appeal, the learned Commissioner of Income-tax (Appeals), held that the assessee received the said amount under the guise of share application money but in fact that was loan received to attend the urgent business needs and the entries of the said amount in books of accounts as share application money was not determinative of the true character of the transaction and what was necessary to be considered is the true nature of the transaction as held in the case of Kadarnath Jute Manufacturing Company Limited Vs. CIT (1971) 82 ITR 363 (SC). The learned Commissioner of Income-tax (Appeals) also held that the reliance placed by the assessee on the decisions of the Tribunal in the case of Sharad Holding Leasing Private Limited, (2005) 95 ITD 336 (Pune) and in the case of Jagvijay Auto Finance Private Limited Vs. ACIT (1995) 52 ITD 504 (Jaipur) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect has not been considered and examined by the tribunal in spite of the specific findings recorded by the Assessing Officer and the Commissioner of Income Tax(Appeals). In these circumstances, we answer the aforesaid question of law in favour of the appellant and against the respondent-assessee. However, an order of remit is passed to the tribunal to decide the appeal afresh after recording factual findings and thereafter apply the decision of this Court in ITA No. 1192/2011. This order will not be construed as an order which decides the factual issue/question whichever arises for consideration on merits. 7. In compliance to the above direction of the Hon ble High Court, we have heard the parties on ground nos. 1 2 and perused the material on record including the judgment of the Hon ble High Court in ITA No. 1192/2011. The learned counsel of the assessee referred to the balance sheet of the assessee company as on 31/03/2006, which is available on page 4 of the assessee s paper book and submitted that the share application money of ₹ 21,97,500/- was appearing in balance-sheet, which included the sum of ₹ 10,70,000/- received in cash. He further submitted that sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case are different from the facts of the judgment of the Hon ble High Court in ITA No. 1192/2011 in the case of I.P. India Private Limited, because in the instant case shares were not allotted to the subscribers of the share application money, whereas in the case of I.P. India Private Limited (supra), the shares were allotted subsequently to the subscribers against the share application money. The learned Departmental Representative accordingly, submitted that the penalty levied might be sustained. 10. We have heard the rival submissions and perused the material on record. In the case of I.P. India Private Limited (supra) also the assessee received share application money in cash from three private limited companies and shares in fact were subsequently allotted to those companies, who advanced the money to the assessee. The Hon ble High Court observed that this aspect of allotment of shares was not examined either by the Assessing Officer or by the Additional Commissioner of Income Tax. The Hon ble High Court relied on the judgment in the case of Baidya Nath Plastic Industries (P.) Ltd and Ors. Vs. K. L. Anand (1998) 230 ITR 522, and distinguished the loan from the deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is given for temporary use then it is in the nature of loan and it is in the nature of deposit, if there s liability to return it to the party by whom or on whose behalf the amount was made. When we apply this test to the facts of the instant case, we find that the authorized share capital of the assessee was only ₹ 1 lakh as on 31/03/2006, which is evident from the Schedule-I of balance sheet of the assessee available on page - 6 of the assessee s paper book. This authorized capital was fully paid up as on 31/03/2006 and, therefore, there was no scope with the assessee for receiving further share application money. The authorized share capital of the assessee company remained ₹ 1 lakh even upto 31/3/2009, which is evident from balance sheet of the assessee company dated 31/03/2009 available on page 31 of the assessee s paper book. In such circumstances, no subscriber will give money as share application money to a company. Further, from the balance sheet dated 31/03/2009, it is manifest that entire amount of ₹ 21,97,500/-, which was appearing as a share application money in the balance sheet dated 31/03/2006, has been returned back to the subscribers. In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey in the present year. In the light of these facts, it cannot be held that the amount in question received by the assessee company was in fact share application money. It is settled position by now that the nomenclature given by the assessee company in its books of account is not final and decisive as held by the Hon'ble Apex Court in the case of Kedar Nath Jute Manufacturing Co. vs. CIT as reported in 82 ITR 363. In view of these facts, we are of the considered opinion that this claim of the assessee cannot be accepted that the amount received by the assessee company in the present year of ₹ 134.75 lakhs from Shri Gian Gupta, Director of the assessee company was on account of share application money. Once, we hold that, the order of the CIT(A) cannot be sustained because there is no finding given by the CIT(A) as to how the receipt in the present case, it is receipt of share application money and not of loan as held by the AO. We, therefore, hold that in the facts of the present case, the cash of ₹ 1 crore received by the assessee company was not on account of share application money because there is no authorized share capital at the time of such receipt and even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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