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The Tax Publishers2012 TaxPub(DT) 0239 (Del-HC) : (2012) 043 (I) ITCL 0194 : (2012) 343 ITR 0353 : (2012) 204 TAXMAN 0368 : (2012) 070 DTR 0452 INCOME TAX ACT, 1961 --Penalty under section 271D--Violation of section 269SSShare application money accepted in cash--The assessing officer observed that the assessee received share application monies in cash from three private limited companies. On the ground that the provisions of section 269SS are attracted to the receipt of the above monies in cash, the assessing officer was of the view that the assessee was liable to be proceeded against for levy of penalty under section 271D. Assessing officer referred the matter to the Addl. CIT, who was the appropriate authority to levy the penalty. Before the Addl. CIT the assessee submitted a written reply and contended that there was no violation of the provisions of section 269SS as it had not accepted any loan or deposit in cash. It was claimed that the receipt of share application monies in cash did not amount to acceptance of loan or deposit by the company. These submissions were, however, rejected by the Addl. CIT, and he imposed the penalty of Rs. 18,00,000 under Section 271D. The CIT (Appeals) considered the submissions of the assessee in detail and held that there was no violation of section 269SS since the share application monies received by the assessee company would not amount either to a loan or a deposit within a meaning of section 269SS. He further noted that the shares have in fact been subsequently allotted to the three companies, who advanced the monies to the assessee. The Tribunal held that since there was more than one view on the applicability of section 269SS to monies received as share application monies, the Commissioner (Appeals) had rightly cancelled the penalty. Held: The receipt of share application monies from the three private limited companies for allotment of shares in the assessee-company cannot be treated as receipt of loan or deposit resulting in violation of section 269SS provision. Hence, the penalty under section 271D was not leviable. Income Tax Act, 1961 Section 271D Income Tax Act, 1961 Section 269SS IN THE DELHI HIGH COURT SANJIV KHANNA & R.V. EASWAR, JJ. CIT v. I.P. India (P) Ltd. IT Appeal No. 1192 of 2011 A.Y. 2005-06 21 November, 2011 Appellant by : Sanjeev Sabharwal, Respondent by : S. Krishnan, JUDGMENT This is an appeal filed by the Revenue under section 260A of the Income Tax Act (Act, for short) against the order dated 31-3-2011 of the Income Tax Appellate Tribunal (Tribunal, for short) in ITA 226/Del./2011 relating to the assessment year 2005-06. The following questions of law, stated to be substantial questions of law have been raised in the appeal: 2.1 Whether learned ITAT/Commissioner (Appeals) erred in deleting the penalty of Rs. 18,00,000 imposed by the assessing officer under section 271D of the Income Tax Act, 1961? SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0239 (Del-HC) : (2012) 043 (I) ITCL 0194 : (2012) 343 ITR 0353 : (2012) 204 TAXMAN 0368 : (2012) 070 DTR 0452

INCOME TAX ACT, 1961

--Penalty under section 271D--Violation of section 269SSShare application money accepted in cash--The assessing officer observed that the assessee received share application monies in cash from three private limited companies. On the ground that the provisions of section 269SS are attracted to the receipt of the above monies in cash, the assessing officer was of the view that the assessee was liable to be proceeded against for levy of penalty under section 271D. Assessing officer referred the matter to the Addl. CIT, who was the appropriate authority to levy the penalty. Before the Addl. CIT the assessee submitted a written reply and contended that there was no violation of the provisions of section 269SS as it had not accepted any loan or deposit in cash. It was claimed that the receipt of share application monies in cash did not amount to acceptance of loan or deposit by the company. These submissions were, however, rejected by the Addl. CIT, and he imposed the penalty of Rs. 18,00,000 under Section 271D. The CIT (Appeals) considered the submissions of the assessee in detail and held that there was no violation of section 269SS since the share application monies received by the assessee company would not amount either to a loan or a deposit within a meaning of section 269SS. He further noted that the shares have in fact been subsequently allotted to the three companies, who advanced the monies to the assessee. The Tribunal held that since there was more than one view on the applicability of section 269SS to monies received as share application monies, the Commissioner (Appeals) had rightly cancelled the penalty. Held: The receipt of share application monies from the three private limited companies for allotment of shares in the assessee-company cannot be treated as receipt of loan or deposit resulting in violation of section 269SS provision. Hence, the penalty under section 271D was not leviable.

Income Tax Act, 1961 Section 271D

Income Tax Act, 1961 Section 269SS

IN THE DELHI HIGH COURT

SANJIV KHANNA & R.V. EASWAR, JJ.

CIT v. I.P. India (P) Ltd.

IT Appeal No. 1192 of 2011

A.Y. 2005-06

21 November, 2011

Appellant by : Sanjeev Sabharwal,

Respondent by : S. Krishnan,

JUDGMENT

This is an appeal filed by the Revenue under section 260A of the Income Tax Act (Act, for short) against the order dated 31-3-2011 of the Income Tax Appellate Tribunal (Tribunal, for short) in ITA 226/Del./2011 relating to the assessment year 2005-06. The following questions of law, stated to be substantial questions of law have been raised in the appeal:

2.1 Whether learned ITAT/Commissioner (Appeals) erred in deleting the penalty of Rs. 18,00,000 imposed by the assessing officer under section 271D of the Income Tax Act, 1961?