1994 (12) TMI 127 - AT - Income Tax

Summary

Issues involved:
The judgment involves the confirmation of part penalty imposed by the Deputy Commissioner of Income-tax (DCIT) u/s 271D of the Income-tax Act, 1961 for violation of the provisions of section 269SS of the Act.

Facts:
The appellant, a private limited company, received various amounts from family members. The Assessing Officer (AO) alleged violations of section 269SS, leading to a penalty. The company's explanations were partially accepted by the Commissioner of Income-tax (Appeals) (CIT(A)), resulting in the cancellation of penalties for some amounts but not for others.

Analysis:
The judgment delves into the provisions of section 269SS, which prohibits taking loans or deposits exceeding Rs. 20,000 in cash. It distinguishes between clauses (a), (b), and (c) of the section, outlining different scenarios for its application. The judgment emphasizes the importance of assessing compliance with section 269SS during the relevant assessment year to prevent tax evasion.

Legal Interpretation:
The judgment analyzes whether the amount received for share application constituted a "loan" or "deposit" under section 269SS. It references legal definitions and precedents to determine the nature of the transaction. It concludes that the amount in question did not have the characteristics of a loan or deposit, thus not violating section 269SS.

Decision:
Ultimately, the penalty imposed on the company under section 271D for the alleged default under section 269SS was canceled. The appeal was allowed, and the penalty of Rs. 41,000 was revoked.