2008 (9) TMI 422 - AT - Income Tax

Summary

Issues involved: Penalty u/s 271D for receiving share application money through foreign inward remittance.

Summary:
The appeal was against the penalty imposed u/s 271D of the Income-tax Act, 1961, for receiving share application money through foreign inward remittance. The Assessing Officer found that the company received Rs. 25.28 lakhs from the CEO, including Rs. 16.61 lakhs from his USA account. The penalty was imposed as the transfer was not considered as an account payee cheque or draft. The Commissioner partly sustained the penalty, leading to the appeal.

The assessee argued that the amount was received through proper banking channels and not in cash, citing relevant provisions of the Negotiable Instruments Act and Income-tax Act. It was highlighted that the transfer was made to save time and expenses due to the company's financial situation. The Departmental representative supported upholding the penalty.

After considering the submissions, it was noted that the amount was received through foreign inward remittance and not in cash. The genuineness of the transaction was accepted by the Assessing Officer. As the transfer was made through approved foreign exchange transactions and due to the company's liquidity crunch, the penalty was deleted as there was no violation of section 269SS. The appeal was allowed, and the order was pronounced on September 12, 2008.