2012 (1) TMI 80 - HC - Income Tax

Penalty u/s 271D Proceedings u/s 269 SS initiated on finding during search that assessee had received money exceeding Rs. 20, 000/- in cash from 46 persons assessee contending it to be share application money Held that - It is on record that the CIT (Appeals) had held the entire amount in dispute related to the share application money and was treated as having been fully explained. This Court has already held that share application money can not be called deposit within the meaning of section 269 SS or 269 T of the Act and therefore in our considered opinion the Tribunal had rightly upheld the order of the CIT (Appeals) deleting the penalty Decided in favor of assessee.

Summary

Issues:
1. Appeal under section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding penalty under section 271 D for Assessment Year 1997-98.
2. Dispute over whether the amount received in cash exceeding Rs. 20,000/- was share application money or a deposit, and the applicability of sections 269 SS and 271 D of the Act.
3. Interpretation of the Tribunal's decision and the legality of upholding the order of the CIT (Appeals) deleting the penalty.

Analysis:
1. The appeal was filed against the order of the Income Tax Appellate Tribunal regarding the imposition of a penalty under section 271 D of the Income Tax Act, 1961, for the Assessment Year 1997-98. The Assessing Officer found that the respondent had received cash exceeding Rs. 20,000/- from 46 persons, leading to the initiation of penalty proceedings under section 271 D. The respondent claimed the amount was share application money and not a deposit, thus not falling under the provisions of section 269 SS. The Assessing Officer imposed a penalty, which was later deleted by the CIT (Appeals) and upheld by the Tribunal.

2. The dispute revolved around whether the amount received in cash was share application money or a deposit, determining the applicability of sections 269 SS and 271 D of the Act. The senior counsel for the revenue argued that the transaction was a cover-up to evade section 269 SS, justifying the penalty under section 271 D. However, the Tribunal upheld the order of the CIT (Appeals) based on the explanation that the share application money cannot be considered a deposit as per previous court rulings.

3. Upon review, the Court found that the share application money could not be classified as a deposit under the Act, as per a previous judgment. The Tribunal's decision was considered legally sound, and no substantial question of law arose from the case. Therefore, the appeal was dismissed, affirming the Tribunal's decision to delete the penalty imposed under section 271 D. The Court emphasized that the order did not warrant further legal scrutiny or intervention.

This detailed analysis highlights the key legal issues, arguments presented, and the reasoning behind the judgment, providing a comprehensive overview of the case.