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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, Income-tax Officer, Ward 18 (4), New Delhi (hereinafter referred to as ‘the revenue’) by filing the present appeal sought to set aside the impugned order dated 04.10.2013 passed by the Commissioner of Income-tax (Appeals)-XXI, New Delhi qua the assessment year 2006-07 on the grounds inter alia that :-
“(i) The ld. CIT (A) erred in law and on the facts of the case in cancelling the penalty of Rs.95,35,750/- imposed by the Addl.CIT, Range 18, New Delhi u/s 271D of the I.T. Act. (ii) Whether in the facts and circumstances of the case, the ld. CIT (A) erred in ignoring the decision of Hon’ble High Court of Delhi in the case of CIT vs. Samora Hotels Pvt. Ltd. (2012).
(iii) The appellant craves, leave or reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
Briefly stated, the facts of this case are : during the scrutiny proceedings qua assessment year 2006-07 completed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’), it was noticed that assessee had received a sum of Rs.1,00,35,750/- in cash which was claimed to be against share capital of Rs.5,00,000/-, share premium of Rs.36,00,000/- and share application money of Rs.59,35,750/-, out of which except initial subscription to the share capital of Rs.1,00,000/-, there was no premium and as such, the balance of Rs.99,35,750/- was treated as unexplained cash credit and added to the returned income.
Assessing Officer treated the receipt of share capital, share premium and share application money amounting to Rs.1,00,35,750/- in cash as clear violation of section 269SS and sought to initiate the penalty proceedings u/s 271D of the Act.
Show-cause notice was issued and Smt. Premlata Mishra, CA/AR of the assessee put in appearance and filed written submissions. Finding the explanation furnished by the assessee not tenable, AO came to the conclusion that the assessee has failed to prove genuineness and creditworthiness of the parties from whom he has received the money by producing them, the amount of Rs.1,00,35,750/- being cash received by the assessee company, claimed to be share capital, share premium and share application money is only a cover up explanation for circumventing the provisions of section 269SS and held the assessee to be liable for penalty of Rs.95,35,750/- being the amount received/taken/accepted in cash.
Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has accepted the appeal and cancelled the penalty levied by the AO. Feeling aggrieved, the revenue has come up before the Tribunal by way of filing the present appeal.
Assessee has not preferred to put in appearance despite issuance of the notice of hearing for 11.04.2016 and 04.07.2016 and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file.
We have heard the ld. Departmental Representative for the revenue to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. DR, challenging the impugned order relied upon the assessment order as well as penalty order passed by the AO.
Undisputedly, assessee has received an amount of Rs.1,00,35,750/- against the share capital including share application money and share premium account; that the addition made by the AO on this account was deleted by the CIT (A), however, same was set aside and restored to the AO by the Tribunal; that in the fresh assessment made by the AO, he has accepted the share application money of Rs.54,70,000/- as explained one and balance amount of Rs.44,65,750/- as unexplained amount.
To adjudicate the controversy at hand, provisions contained u/s 269SS of the Act are reproduced for facility of reference as under :-
“269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,— (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more : Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,— (a) Government ; (b) any banking company, post office savings bank or co- operative bank ; (c) any corporation established by a Central, State or Provincial Act ; (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: [Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.] Explanation.—For the purposes of this section,—
[(i) "banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;] (ii) "co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means loan or deposit of money.]
Bare perusal of the provisions contained u/s 269SS, particularly Explanation to the section goes to prove that “loan or deposit” means loan or deposit of money meaning thereby receipt of cash as share application money is neither a loan nor deposit and as such, provisions contained u/s 269SS are not attracted.
Hon’ble jurisdictional High Court in case cited as Commissioner of Income Tax vs. I.P. India P. Ltd. [2012] 343 ITR 353 (Delhi) while examining the identical issue has held that share application money is not a “deposit” within the meaning of section 269SS nor it is a “loan” by any stretch of imagination and as such, penalty cannot be imposed u/s 271D of the Act. So, finding no infirmity or illegality in the findings returned by the ld. CIT (A), we hereby dismiss the present appeal filed by the revenue. Order pronounced in open court on this 11th day of July, 2016.