Eminent Infra Projects (P) Ltd. v. Addl. CIT

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The Tax Publishers2013 TaxPub(DT) 0255 (Del-Trib) : (2013) 049 (II) ITCL 0156 INCOME TAX ACT, 1961 --Penalty under section 271D--Contravention of section 269SS Cash deposit from director towards share application money--Assessee-company accepted share application money in cash from one its director. Assessing officer held that assessee had accepted cash deposit and accordingly initiated penalty proceedings under section 271D. Assessing officer contended that until the shares are allotted the nature of amount of share application partkes the character of deposit, which attracts prohibition contained in section 269SS. Assessee was under bona fide belief that share application money could be accepted by way of cash. Commissioner (Appeals) confirmed the order of assessing officer. *Held:* Penalty should not be imposed only because it was lawful to do so and if assessee was under bona fide belief, penalty should not be visited for technical and venial breach of law. Respectfully following Delhi High Court's judgment in the case of IP. India (P) Ltd. ITA No. 1192/2011 about the nature of share capital, there exist divergence of judicial opinion on the issue about the exact meaning of the word 'deposit', and subsequent increase of authorized capital. Therefore, it was considered that assessee's bona fide could not be held to be without any reason. Accordingly penalty levied under section 271D was deleted. Income Tax Act, 1961, Section 271D In the ITAT, Delhi B Bench R.P. Tolani & K. G. Bansal ITA No. 799/Del/12 A.Y.2007-08 13 July, 2012 Income Tax Act, 1961, S. 271D *Decision:In assessees favour. Appellant by :* Kapil Goel Respondent by : Nandita Kanchan ORDER This is assessees appeal against Commissioner (Appeals)s order dated 16-11-2011, challenging the sustenance of penalty of Rs. 13,12,526, levied by the assessing officer under section 271D of the Income Tax Act, 1961, relating to assessment year 2007-08. 2. Brief facts are: The assessee accepted share application money in cash amounting to Rs. 13,12,526 from one of its director Manish Agarwal as under: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0255 (Del-Trib) : (2013) 049 (II) ITCL 0156

INCOME TAX ACT, 1961

--Penalty under section 271D--Contravention of section 269SS Cash deposit from director towards share application money--Assessee-company accepted share application money in cash from one its director. Assessing officer held that assessee had accepted cash deposit and accordingly initiated penalty proceedings under section 271D. Assessing officer contended that until the shares are allotted the nature of amount of share application partkes the character of deposit, which attracts prohibition contained in section 269SS. Assessee was under bona fide belief that share application money could be accepted by way of cash. Commissioner (Appeals) confirmed the order of assessing officer. Held: Penalty should not be imposed only because it was lawful to do so and if assessee was under bona fide belief, penalty should not be visited for technical and venial breach of law. Respectfully following Delhi High Court's judgment in the case of IP. India (P) Ltd. ITA No. 1192/2011 about the nature of share capital, there exist divergence of judicial opinion on the issue about the exact meaning of the word 'deposit', and subsequent increase of authorized capital. Therefore, it was considered that assessee's bona fide could not be held to be without any reason. Accordingly penalty levied under section 271D was deleted.

Income Tax Act, 1961, Section 271D

In the ITAT, Delhi B Bench

R.P. Tolani & K. G. Bansal

ITA No. 799/Del/12

A.Y.2007-08

13 July, 2012

Income Tax Act, 1961, S. 271D

Decision:In assessees favour.

Appellant by : Kapil Goel

Respondent by : Nandita Kanchan

ORDER

This is assessees appeal against Commissioner (Appeals)s order dated 16-11-2011, challenging the sustenance of penalty of Rs. 13,12,526, levied by the assessing officer under section 271D of the Income Tax Act, 1961, relating to assessment year 2007-08.

2. Brief facts are: The assessee accepted share application money in cash amounting to Rs. 13,12,526 from one of its director Manish Agarwal as under: