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Income Tax Appellate Tribunal, “RANCHI BENCH, RANCHI
Before: Shri Sanjay Garg & Shri Manish Borad
order : September 20, 2022 ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 24.09.2015 of the Commissioner of Income Tax (Appeals)-3, Patna [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The sole issue raised by the assessee, in this appeal, is relating to levy of penalty of Rs.51,00,000/- u/s 271D of the Act being the amount of loan/deposit taken by the assessee in cash in contravention of the provision of section 269SS of the Act.
The brief facts of the case are that during the assessment proceedings, the Assessing Officer noticed that the assessee company had received share application money from different persons @10 per share along with premium of Rs.40 per share from different parties totalling to Rs.51,00,000/-. All these payments were received in Assessment Year: 2006-07 Santpuria Alloys Pvt. Ltd cash. Since, the amounts in cash were more than the prescribed limit u/s 269SS of the Act, therefore, the Assessing Officer held that the amounts have been received in cash in violation of provisions of section 269SS of the Act. He, therefore, relying upon the decision of jurisdictional Hon’ble Jharkhand High Court in the case of Bhalotia Engineering Works P Ltd. (2005) 275 ITR 399 (Jharkhand) levied penalty of Rs.51,00,000/- u/s 271D of the Act.
In the appellate proceedings before the CIT(A), the assessee filed a disclosure petition of Director of the assessee company, Shri Gunwant Singh Saluja, wherein, the aforesaid amount of Rs.51,00,000/- had been taken as additional undisclosed income of the said director. The ld. CIT(A) taking note of the aforesaid fact and relying upon the decision of the jurisdictional Hon’ble Jharkhand High Court in the case of Bhalotia Engineering Works P Ltd. (supra) confirmed the penalty so levied by the Assessing Officer.
5. The main thrust of the argument of the ld. counsel for the assessee has been that the share application money/premium received by the assessee was not a loan or deposit, hence the provisions of section 269SS were not attracted. The other argument taken was that there was no finding of any of the Income Tax authorities below that the transaction made by the assessee, in respect of acceptance of share application money in cash, was not a genuine transaction. That there was no finding by any of the lower authorities that the transaction was made by the assessee with mala fide intention to introduce his unaccounted money. The ld. counsel, in this respect, has relied upon another decision of the Jurisdictional Jharkhand High Court in the case of Omec Engineers vs. CIT (2008) 217 CTR Jharkhand 144 to submit that the Hon’ble High Court in the said case has held that since there was no finding by the appellate authority that the transaction was not genuine or was made with mala fide intention with the object to conceal the undisclosed income, therefore, merely because of a technical mistake, the penalty should not be levied u/s 271D of the Act.
Assessment Year: 2006-07 Santpuria Alloys Pvt. Ltd 6. We have considered the rival contentions and gone through the records. A perusal of the assessment order as well as that of impugned order of the CIT(A) reveals that in this case, during the assessment proceedings, the assessee found to have received share application money along with share premium from different companies @10 per share along with Rs.40 per share as premium in cash. The Assessing Officer in respect of amount received from other four companies totalling Rs.28,75,000/- had made addition u/s 68 of the Act holding that the assessee could not prove the identity, creditworthiness of the share subscribers and genuineness of the transaction. However, in respect of another amount of Rs.51,00,000/- received from other 13 entities, the Assessing Officer held that the amount received from these entities was in violation of provisions of section 269SS and hence imposed penalty u/s 271D of the Act. During the appellate proceedings, relating to the quantum addition of Rs.28,75,000/-, it was brought before the CIT(A) that one of the directors of the assessee company namely Shri Gunwant Singh Saluja had disclosed the aforesaid amount of Rs.28,75,000/- as his additional income. Therefore, the ld. CIT(A) directed that since the said amount has been taken as additional income of Shri Gunwant Singh Saluja, the same is not required to be added in the hands of the assessee. Further, in the appeal relating to the penalty levied u/s 271D of the Act, it was again brought to the knowledge of the CIT(A) that the amount of Rs.51,00,000/- received as share application money was also disclosed as his additional income by the said Shri Gunwant Singh Saluja. In view of the above facts, the contention of the ld. counsel for the assessee that the Income Tax authorities have not disputed the genuineness of the transaction, is not correct. The disclosure by the director of the assessee company, Shri Gunwant Singh Saluja, of the aforesaid amount of Rs.51,00,000/- as his additional income from undisclosed sources, proves the fact that the aforesaid transaction of receipt of share application money of Rs.51,00,000/- by the assessee was not a genuine transaction. So far as the contention that the aforesaid share application money/share premium was not a loan or deposit, to attract the provisions of section 269SS of the Act is concerned, the issue is squarely covered against the assessee by the decision of the Assessment Year: 2006-07 Santpuria Alloys Pvt. Ltd jurisdictional Hon’ble Jharkhand High Court in the case of Bhalotia Engineering Works P Ltd. (supra) wherein it has been held as under:
The question has to be considered in the context of purpose sought to be achieved by the insertion of Section 269SS in the Act. Obviously, it was done with a view to prevent transactions in black money and to ensure that payments of Rs. 20,000/- and above, are traceable to transactions through a Bank. If the mischief that is sought to be averted is kept in mind, it will be appropriate to hold that any payment of Rs. 20,000/- or above, made to a company as share application money, should be as provided in Section 269SS of the Act.
Therefore, even if share application money cannot be considered as a loan within the meaning of Section 269SS of the Act, we are of the view that it partakes the character of a deposit, since it is repayable in specie on refusal to allot shares and is repayable if recalled by the applicant, before allotment of shares and the con-elusion of the contract. 7. In this situation, we answer the question referred to us in the affirmative, in favour of the Revenue and against the assessee. Answered accordingly. 7. In view of the above stated position, there is no merit in the present appeal of the assessee and the same is accordingly dismissed.
In the result, the appeal of the assessee stands dismissed.