PR. COMMISSIONER OF INCOME TAX-2 LUDHIANA vs. M/S KASHMIR APIARIES PVT LTD

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ITA/353/2016HC Punjab & HaryanaPHHC01110561201618 January 2017Bench: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue in the present case was covered by its own decision rendered in the case of CIT Vs. Iqbal Inn & Hotels Ltd. (2015) 12 TMI (1070). The Tribunal had adjudicated the matter against the revenue based on this precedent. Since the issue was covered by the binding precedent of the High Court, no substantial question of law arose for consideration. Consequently, the appeal filed by the Revenue was dismissed. The reasoning was that the High Court's prior judgment directly addressed the applicability of Section 269SS and Section 271D in similar circumstances, and the ITAT had correctly applied this precedent. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue, Pr. Commissioner of Income Tax-2, Ludhiana, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT). The appeal pertains to Assessment Year(s) not explicitly stated but related to a transaction on 29.09.2008. The core of the dispute involves the ITAT's deletion of an addition made by the Department under Section 271D of the Act. The addition was based on the assessee, M/s Kashmir Apiaries (P) Ltd., allegedly receiving ₹50,00,000/- in cash as share application money from Sh. Jagjit Singh Kapoor for the allotment of 1,00,000 shares at ₹50/- each. The Revenue contended this was a violation of Section 269SS of the Act, justifying the penalty under Section 271D.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was right in deleting the addition made under Section 271D of the Income Tax Act, 1961, by relying on the judgment of the Punjab & Haryana High Court in CIT Vs. Iqbal Inn & Hotels Ltd. (2015) 12 TMI (1070). 2. Whether the ITAT was right in deleting the addition, ignoring the fact that the assessee company received ₹50,00,000/- in cash as share application money from Sh. Jagjit Singh Kapoor on 29.09.2008 for allotment of 1,00,000 shares @ ₹50/- each, which constituted a violation of Section 269SS of the Act, making the penalty under Section 271D rightly levied. 3. Whether the High Court erred both on facts and in law in upholding the ITAT's order without appreciating that the Income Tax Act, 1961, does not provide any exemption for the receipt of share application money in cash from the provisions of Section 269SS. Contentions: Assessee: The ITAT's decision was based on the judgment of this Court in CIT Vs. Iqbal Inn & Hotels Ltd. (2015) 12 TMI (1070), which was in favour of the assessee. Revenue: The receipt of ₹50,00,000/- in cash as share application money was a violation of Section 269SS, and therefore, the penalty under Section 271D was rightly levied. The ITAT erred in deleting the addition.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271D,Section 269SS

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 353 of 2016 (O&M) Decided on : 18.01.2017 Pr. Commissioner of Income Tax-2, Ludhiana . . . Appellant Versus M/s Kashmir Apiaries (P) Ltd. . . . Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE RAMENDRA JAIN PRESENT: Mr. Z.S. Klar, Advocate for the appellant. **** AJAY KUMAR MITTAL, J. (Oral) The revenue has approached this Court under Section 260A of the Income Tax Act, 1961 (in short 'the Act'), seeking the following substantial questions of law:- “1. Whether the Hon'ble ITAT was right in deleting the addition made u/s 271D of the Income Tax Act, 1961 by the Department by relying on the judgement of Hon'ble Punjab & Haryana High Court, Chandigarh, in the case of CIT Vs. Iqbal Inn & Hotels Ltd. (2015) 12 TMI (1070). 2. Whether the Hon'ble ITAT was right in deleting the addition ignoring the facts that assessee company received `50,00,000/- in cash as share application money from Sh. Jagjit Singh Kapoor on 29.09.2008 for allotment of 1,00,000 shares @ Rs. 50/- each. Since the cash receipt of `50,00,000/- by the appellant Jawala Ram 2017.02.14 12:27 I attest to the accuracy and authenticity of this document Chandigarh

ITA No. 353 of 2016 (O&M) - 2 - company was violation of provisions of Section 269SS of the Act, hence the penalty u/s 271-D of the I.T. Act, 1961 was rightly levied. 3. Whether the Hon'ble High Court has erred both on facts and in law in upholding the order of the ITAT without appreciating that the Income Tax Act, 1961, it is no where provided that receipt of share application money in cash would be exempt from the provisions of section 269SS of the Income Tax Act, 1961.” 2. Learned counsel for the revenue very fairly did not dispute that the issue in the present case is covered by the decision of this Court rendered in case of CIT Vs. Iqbal Inn & Hotels Ltd. (2015) 12 TMI (1070) in favour of the respondent-assessee, on the basis of which the tribunal had adjudicated the matter against the revenue. Therefore, in view of the above, the issue being covered, no substantial question of law arises. 3. Dismissed. (AJAY KUMAR MITTAL) JUDGE (RAMENDRA JAIN) January 18, 2017 JUDGE J.Ram

Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No Jawala Ram 2017.02.14 12:27 I attest to the accuracy and authenticity of this document Chandigarh

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