9911796707
TMI Blog2013 (2) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee has submitted that this issue is fairly covered in favour of assessee. In support of his contention reliance was placed by him on the judgement of Hon'ble Madras High Court in the case of CIT vs. Rugmini Ram Ragav Spinners (P) Ltd (2008) 220 CTR (Mad) 520,(2008) 304 ITR 417 (Mad). It is also submitted by him that this judgement of Hon'ble Madras High Court is dt. 12th July, 2007. It was also pointed out by him the decision of Hon'ble Jharkhand High Court in the case of Bhalotia Engineering Works (P) Ltd. vs CIT (2005) 196 CTR (Jharkhand) 619 : (2005) 275 ITR 399 (Jharkhand) and this judgtement is against the assessee but the contention of the ld. AR is that it is a settled law where there are conflict views on the same issue by different High Courts then the interpretation which is favourable to assessee should be adopted. In this regard reliance was placed by him on the judgement of Hon'ble Apex Court in the case of CIT vs Vegetable Products Ltd. (1973) 1973 CTR (SC) 177. 4. On the other hand, the ld. DR appearing on behalf of the revenue has relied on the decision of the Hon'ble Jharkhand High Court in the case of Bhalotia Engineering Works (P) Ltd vs CIT (supra) wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, wherein it is held that the provisions of section 269SS and 269T of the Act have application only in a limited way in respect of deposits or loans. When it is neither deposit nor loan, Hon'ble Court held that the provisions of sections 269SS and 269T of the Act have no application at all. The Court further held that even if there is repayment by cash, it could not be said to attract the levy of penalty automatically under section 271E of the Act. The advances of share application money or repayments of such advances have not flowed from any undisclosed income of the assessee or the concerned persons. In the present case also, the assessee was searched and these share application monies were never the subject matter of addition in the case of the assessee and accordingly the share application money and repayment of the same have not flowed from any undisclosed income of the assessee. We find from the records that the assessee has not paid any interest on any of the share application monies till repayment, which is quite after sometime. If the intention was to receive these share application monies as loans or deposits, then certainly the lenders would not have made the advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But at the same time, there is an obligation on the company to return the money to the applicant or for allotting the shares applied for. Until either of these happens, the amount cannot be considered to be a loan in the hands of the company. But it appears to us that it will partake of the character of a deposit in the hands of the company attracting the prohibition contained in section 269SS of the Act. The question has to be considered in the context of the 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 of the character of a deposit, since it is repayable in specie on refusal to allot shares and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or loan. There is no dispute that the impugned advances were only against allotment of shares and not by way of loans or deposits. The authorities below have given a factual finding to the effect that it is not a deposit or loan. The Tribunal, in paragraph 3 of its order, held as under: "The Departmental representative could not bring on record any material that would go to show that the assessee in fact wanted only loan or deposit but tried to show them as share application money. Merely for the reason that some of the applications were rejected and in some of the applications the share allotments were not in full, it cannot be taken to mean that it was not share application money. Upholding the order of the Commissioner of Income-tax (Appeals) the appeal by the Revenue is dismissed." Hence, the factual finding by the authorities below is that the amount received is not a deposit or loan, but it is only share application money, and the same is based on valid materials and evidence. The relevant provisions of law are sections 269T, 271D, 271E and 273B of the Act. In the present case, the Assessing Officer levied penalty under section 271E deals with "penalty for failure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees or more : Provided that where the repayment is by a branch of a banking company or cooperative bank, such repayment may also be made by crediting the amount of such deposit to the savings bank account or the current account (if any) with such branch of the person to whom such deposit has to be repaid : Provided further that nothing in this sub-section shall apply to or in relation to the repayment of any deposit before the date on which the Income-tax (Second Amendment) Act, 1981, receives the assent of the President." The above section provides that no branch of a banking company, cooperative bank and no other company or co-operative society or partnership firm or other person, can repay any deposit made with such entity otherwise than by an account payee cheque or an account payee draft drawn in the name of the person who has made the deposit. The specific word used in the provision is "deposit". In this case, the finding is that there is no deposit. Section 273B of the Act deals with "penalty not to be imposed in certain cases". Section 273B, as on the relevant period, reads as under: "273B. Notwithstanding anything contained in the provisions of clause (b) of subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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