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TMI Blog2015 (2) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... by a journal entry. Considering the nature of the transactions, we are of the opinion that there was a reasonable cause on the part of assessee for obtaining amounts from Mr. K.V. Sreerama Murthy which are subsequently considered as share application money. In view of the provisions of section 273B of the I.T. Act, there no scope for levy of penalty under section 271D. - Decided in favour of assessee. - ITA. No. 1968/Hyd/2011 - - - Dated:- 29-12-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. P. Muralimohan Rao For the Respondent : Mr. Rajat Mitra ORDER Per B. Ramakotaiah, A.M. This appeal by assessee is directed against the order of the Ld. CIT(A)-IV, Hyderabad dated 30.09.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a lender and as the assessee has not accepted any loans from the said person, it was only book entry from credits to share application money. Therefore, provisions of section 269SS cannot be invoked. Assessee relied on the decision of Hon ble Supreme Court in the case of Bombay Steam Navigation Co. P. ltd., vs. CIT 56 ITR 52 for the proposition that every creditor who is entitled to receive debt cannot be regarded as a lender. Further, assessee relied on the Coordinate Bench decision of ITAT, Allahabad Bench in the case of Bombay Conductors and Electrical Ltd., to submit that book entries are out of the purview of section 269SS. A.O. however, did not consider the above explanation and considered the amount advanced as loan to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore was for a specific period, i.e., till the date of the relevant financial year. Under the circumstances, I am of the view that even if there were no explicit or written conditions for taking the said amounts, it cannot be denied that there was at least an oral contract or understanding between the appellant and the MD thereof regarding the nature of the amounts so received in cash by the appellant. Therefore, I am of the considered view that the amount of ₹ 14,93,000/- was indeed in the nature of loan or deposit. Since the same was received in cash and was not received in modes duly specified in sec. 269SS of the Act, in view of the decisions cited by the Assessing Officer, the provisions of sec.271D of the Act were indeed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, find that there was a fit case for imposition of the penalty u/s.271D for such conscious and continuous default. The penalty of ₹ 14,93,000/- is accordingly upheld. 5. Ld. Counsel reiterated the facts as stated before the authorities and relied on the Coordinate Bench decision in the case of Dillu Cini Enterprises P. Ltd., vs. Addl. CIT 80 ITD 484 for the proposition that funding of the assessee company by one of its Directors to enable it to meet its business exigencies and withdrawal of money as and when required by him did not attract provisions of section 269SS and 271D as the transactions were undisputedly genuine. Ld. Counsel also relied on the Coordinate Bench decision in the case of Magna Technologies Ltd., vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry was passed by way of journal entry as a credit to Mr. K.V. Sreerama Murthy account. Likewise, the total credits into the account by way of salary amounts are to the tune of ₹ 12,95,490 only. We are not able to verify how the A.O. arrived at ₹ 14,93,000 as amount advanced towards salaries. 8. In addition to the above, assessee has advanced direct share application money on 25.06.2006 to an extent of ₹ 2 lakhs and on 01.12.2006 to an extent of ₹ 2 lakhs. Thus, the finding of A.O. and Ld. CIT(A) that share application money was transferred at the end of the year by way of journal entries are not correct to full extent. Not only the above, Mr. K.V. Sreerama Murthy has advanced an amount of ₹ 40,000 by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all before considering the penalty, we are of the opinion that the penalty was levied without any application of mind. As seen from the transactions based on the ledger account, an amount of ₹ 12,95,490 was paid for the purpose of salaries and benefits every month and an amount of ₹ 3,41,000 was paid towards deposit and orchestra equipment. Hence, to that extent, it can be concluded that the amounts are advanced for business exigencies of assessee company. Amounts towards share application money during the year were some times returned to the said person and only net amount of outstanding amount at the end of the year was transferred by a journal entry. 10. Considering the nature of the transactions, we are of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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