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TMI Blog2013 (2) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Further even the penalty under section 271D and 271E is not automatic there is bonafide belief to the effect that the receipt of advances against allotment of shares and repayment of share money would not be termed as loans or deposits, which would be sufficient to drop the penalty levied in the present case – In favour of assessee. - ITA No. 1951/(Kol) of 2009 & ITA No.1929/Kol/2009 - - - Dated:- 12-1-2012 - Shri N.Vijayakumaran Sri C.D.Rao, JJ. For the Appellants: Shri A.K.Tibrewala For the Respondent: /Shri Niraj Kumar, CIT(DR) ORDER Per Bench These two appeals filed by assessee mentioned above, are against separate orders of the C.I.T.(A), Central-III, Kolkata, all dated 01.09.2009 relating to assessment year 2006-07. Since the issues involved in these two appeals are identical and relating to levying of penalty u/s 271D or u/s 271E of the IT Act both the appeals are disposed of by a consolidated order for the sake of convenience. 2. In both the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269SS and 269T which attracts levy of penalty u/s 271D and 271E of the Act. The arguments put forth before us by both the parties are well considered by this Tribunal. 6.1. The relevant observations of the Tribunal in the case of Appeline Cosmetics Toiletries Ltd are as under :- 8. We have heard rival parties and gone through the facts and circumstances of the case. Admitted facts are that the assessee has accepted monies on account of preference shares/ debentures of Rs.20,000/- or more and also repaid monies received on account of preference shares/ debentures from various persons otherwise than by account payee cheques or account payee Bank Drafts during the year under appeals. Now the question arises whether the amount received on account of share application money and the repayment of the same violates the provisions of section 269SS and 269T of the Act attracting penalty under section 271D and 271E of the Act. As the case law of the Hon ble Jharkhand High Court in the case of Bhalotia Engineering Works Pvt. Ltd.(Supra) relied by ld. CIT (D.R.), wherein Hon ble High Court held that the acceptance of share application money amounting to Rs.20,000/- or more violates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re application money. Hence, we are of the view, in view of the factual findings by the lower authorities that the amount received by way of deposit or loan is only share application money. We further find that the Hon ble Jharkhand High Court in the case of Bhalotia Engineering Works Pvt. Ltd. (supra) has decided the issue as under :- If we take recourse to the Explanation in section 269T of the Act, deposit means a deposit of money which is repayable after notice or repayable after a period. Money paid to a company in support of an application for shares is a deposit of money in the company which is repayable by the company after the period for allotment of shares comes to an end, or a decision is taken regarding the allotment of shares. Thereafter, the amount is repayable to the person who paid the money, even without a demand in that behalf. In the case of refusal of shares the amount has to be returned in specie. In that context, it appears to us that there cannot be much difficulty in holding that the amount paid in support of an application for shares must be considered to be a deposit till the allotment of shares or refund of the money on rejection of the application. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts. The provision of sections 269SS and 269T therefore have application only in a limited way in respect of deposits or loans. When it is neither deposit nor loan, the provisions of sections 269SS and 269T have no application at all. 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. It is also seen from the records that the assessee had not paid any interest at all on any of the advances repaid after quite some time. If the intention was to receive them as loans or deposits, then certainly the lenders would not have made the advances gratuitously. It is also a factual finding given by the authorities below that the assessee was not called upon to explain the default under section 269SS on receipt of the advances in earlier years, which would show that the assessee s case was not governed by the said provisions. Penalty under section 271E is not automatic, and a bona fide belief to the effect that the receipt of advances against allotment of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the amount of the deposit is to be repaid together with any interest, the aggregate of the amount of the deposit and such interest, is ten thousand rupees or more : Provided that where the repayment is by a banking company or co-operative bank, such repayment may also be made by crediting the amount of such deposit to the account (if any) with such company or bank 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 on or after the date on which the Income-tax (Second Amendment) Act, 1981, receives the assent of the President. (2) No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the deposit if (a) the amount of the deposit together with interest, if any, payable thereon, or (b) the aggregate amount of deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otment of shares. Also, there is no material or evidence or any compelling reason produced by the Revenue to prove that the money received is a deposit or loan. The first appellate authority as well as the Tribunal have come to a correct conclusion after accepting the explanation offered by the assessee. It is a question of fact and the order of the Tribunal is not a perverse one. The concurrent finding given by both the authorities below is based on valid materials and evidence. In the case of CIT v. P. Mohanakala [2007] 291 ITR 278, the Supreme Court held that whenever there is a concurrent finding by the authorities below, no interference should be called for by the High Court. Under these circumstances, we do not find any error or legal infirmity in the order of the Tribunal so as to warrant interference. 9. In view of the above two judgments of two Hon ble High Courts, where conflicting views are taken, the view in favour of the assessee, interpreting the provisions should be adopted in view of the decision of the Hon ble Supreme Court in the case of CIT Vs Vegetable Products (1973) 88 ITR 195 (SC), wherein Hon ble Apex Court has held as under:- There is no doubt that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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