M/S. MAHAGUN TECH PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 6672/DEL/2013Status: DisposedITAT Delhi04 November 2015AY 2003-046 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee violated the provisions of Section 269SS by accepting loans and share application money in cash. The penalty imposed under Section 271D was justified and upheld.

What were the facts?

The assessee accepted loans and share application money in cash, exceeding Rs. 20,000, in contravention of Section 269SS. The Assessing Officer imposed a penalty under Section 271D, which was upheld by the CIT(A).

What were the issues?

Whether accepting loans and share application money in cash in violation of Section 269SS attracts penalty under Section 271D.

Which sections of the Income-tax Act were involved?

Section 269SS,Section 271D,Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-2 : NEW DELHI

Before: SHRI H.S. SIDHU

For Appellant: Shri Saubhagya Aggarwal, Adv
For Respondent: Ms. Garima Jain, Sr. DR
Hearing: 04.11.2015Pronounced: 04.11.2015

ORDER This appeal by the assessee is directed against the order passed by the CIT (A)-IV, New Delhi on 11.10.2013 upholding the penalty of Rs.2,47,104/- imposed by the AO u/s 271D of the Income-tax Act, 1961 in relation to the assessment year 2003-04.

2.

Briefly stated, the facts of the case are that the assessee is an individual, filed return declaring NIL income on 3.7.2009. Assessment in this case was completed u/s. 153A/143(3) of I.T. Act at Rs. 2,46,834/- The Addl. CIT was of the view that as per provisions of section 269SS of the I.T. Act, no person shall take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft. He was of the view that the assessee company has accepted loans in cash in contravention to the provisions of Section 269SS and the mere fact that no bank amount was being maintained by the assessee company does not absolve the assessee from the default. He was further of the view that there is no exemption specified in the provisions of Act for receipt of any sum by any other mode including book transfer etc. as in the case of the assessee company. The Addl. CIT(A) arrived at the conclusion that the assessee has violated the provisions of section 269SS and accordingly, imposed a penalty of Rs. 2,47,104/- upon the assessee is a sum equal to the amount of loan / deposits accepted in contravention to the provisions of section 269SS of the I.T. Act. The ld. CIT(A) upheld the penalty.

3.

Now the assessee is in appeal before the Tribunal.

4.

Ld. Counsel for the assessee has stated that addition on similar and identical count has been dismissed by the Hon’ble Delhi High Court in the case of CIT vs. RP Singh & Co. (P) Ltd. (2012) 340 ITR 217 (Del) wherein the Revenue’s appeal has been dismissed holding that once the share application money received by the assessee was treated as undisclosed income, penalty proceedings could not have been initiated under section 269SS read with section 271D of the I.T. Act. In this behalf, he filed the copy of the aforesaid decision. He further stated that the present case is squarely covered by the aforesaid decision of the Hon’ble High Court, hence, he requested that the same ratio may be followed in the case of the assessee and penalty in dispute may be deleted.

5.

On the other hand, Ld. DR relied upon the orders of the authorities below and stated that the Ld. CIT(A) has passed a well reasoned order which may be upheld.

6. I have heard both the parties and perused the relevant material available on record especially the orders of the authorities below and the case laws cited by the Ld. Counsel of the assessee, as aforesaid. It is an admitted fact that the assessee has raised a loan of Rs.1.47,304/- from Shri Bhim Bindal. The amount represented two installments paid directly by Shri Bhim Jindal to Noida Authority directly and credit for the same was given by the assessee company in the loan account of Shri Bhim Bindal. Admittedly, it was not a normal business transaction as the assessee is not into giving and taking of loans. Therefore, the case laws relied upon by the Ld. Counsel for the assessee is distinguishable on the facts and circumstances of the case. I further find that the assessee has received an amount of Rs.99,800/- in cash from Shri Shim Bindal for allotment of the shares. However, as per Section 269SS no person shall take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft, if amount exceeds Rs.20,000/-. I find that the Ld. CIT(A) has rightly referred the Hon'ble Jharkhand High Court decision in the case of Bhalotia Engineering Works Pvt. Ltd. vs. CIT (Jharkhand) 285 ITR 399 wherein it has been held that the provisions of Section 269SS are attracted in case of share application money also. Keeping in view of the facts and circumstances and the precedent relied upon by the Ld. CIT(A), as aforesaid, I am of the view that in the present case the assessee has violated the provisions of Section 269SS and the decision of upholding of penalty in dispute by the Ld. CIT(A) is a justified which does not need any interference on my part, hence, I uphold the impugned order on the issue in dispute decide the same against the Assessee.

6.

In the result, the appeal filed by the Assessee stands dismissed.

The Order pronounced in the Open Court on 04.11.2015.

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