New Age Generators Pvt. Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 1289/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3458 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Section: 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.G. BANSAL ITA NO. 1289(DEL)2010 ASSESSMENT YEAR: 2006-07 NEW AGE GENERATORS PVT. LTD. THE ADDL. COMMISSIONER OF I. TAX, B-1/109 PASCHIM VIHAR, N. DELHI. V. RANGE 13, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIPIN JAIN, FCA RESPONDENT BY : SHRI H.K. LAL, SR. DR ORDER PER A.D. JAIN, J.M. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 006-07. THE SOLE GROUND TAKEN BY THE ASSESSEE IS AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE AUTHORITIES BELOW HAVE ERRED AND ARE NOT CORREC T IN LEVYING/CONFIRMING LEVY OF PENALTY OF RS. 5,45,250/ - U/S 271 D OF THE ACT, ON WHOLLY ERRONEOUS, ILLEGAL AND UNTENABLE GRO UNDS. IT IS PRAYED THAT THE PENALTY LEVIED BE DIRECTED TO BE DELETED A LTOGETHER. 2. WHILE DICTATING THE ORDER, IT CAME TO NOTICE THA T BHALOTIA ENGINEERING WORKS PVT. LTD. V. CIT 275 ITR 399(JHAR), WHICH HA S BEEN RELIED ON BY THE AUTHORITIES BELOW, STANDS DISTINGUISHED BY THE HON BLE PUNJAB & HARYANA HIGH COURT VIDE ORDER DATED 22.10.2009 IN ITA NO. 3 61 OF 2009(O&M), ITA 1289(DEL)2010 2 CIT V. JALANDHAR I, JALANDHAR V. M/S. SPEEDWAYS RU BBER PVT. LIMITED, JALANDHAR. SINCE SPEEDWAYS (SUPRA), HAD NOT CO ME UP WHEN THE MATTER WAS ARGUED, THE CASE WAS REFIXED TO PUT SPEEDWAYS (SUPRA), TO THE PARTIES. AT THE TIME OF HEARING ON REFIXATION, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. HOWEVER, SINCE THE ARGUMENT HAD EA RLIER BEEN CONCLUDED, BOTH THE PARTIES HAVING BEEN HEARD AT LENGTH, THE M ATTER WAS AGAIN TAKEN AS HEARD. 3. AS PER THE ASSESSMENT ORDER, THE ASSESSEE COMPAN Y WHICH WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CANOPI ES AND PANEL BOXES USED IN DIESEL AND ELECTRIC GENERATING SETS DURING THE Y EAR, INCREASED ITS SHARE CAPITAL FROM RS. 1,00,000/- TO RS. 47,79,000/- BY RECEIVING SHARE APPLICATION MONEY IN CASH FROM ITS DIRECTORS AND THEIR RELATIVE S. ON QUERY, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE AMOUNT HAD BEEN RE CEIVED AS SHARE APPLICATION MONEY AND WAS NOT LOAN OR DEPOSIT. 4. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITT ED THAT THE SHARE APPLICATION MONEY HAD BEEN RECEIVED IN CASH FROM IT S DIRECTORS/SHAREHOLDERS, WHO WERE CLOSELY RELATED PE RSONS; THAT THIS WAS NOT IN VIOLATION OF THE PROVISIONS OF SECTION 269 SS OF THE I.T. ACT; THAT THE COMPANY HAD ALLOTTED SHARES AND HAD ISSUED SHARE CE RTIFICATES TO THE APPLICANTS IN THE ORDINARY COURSE; THAT THE SHARE A PPLICATION MONEY HAD NOT ITA 1289(DEL)2010 3 BEEN REFUNDED; THAT AS SUCH THE PROVISIONS OF SECTI ON 269 SS WERE NOT ATTRACTED; AND THAT AS PER SECTION 273 B OF THE ACT , IF THERE WAS A BONA FIDE AND GENUINE TRANSACTION AND IF FOR ANY BONA FIDE RE ASON, THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUE O R DEMAND DRAFT, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY, HAS A DISCRETIONARY POWER. 5. THE AO, HOWEVER, DID NOT AGREE WITH THE STAND TA KEN BY THE ASSESSEE. FOR IMPOSING THE PENALTY IN QUESTION, HE PLACED REL IANCE ON BHALOTIA ENGINEERING WORKS PVT. LTD.(SUPRA), WHEREIN, IT HA S BEEN HELD AS FOLLOWS:- SECTION 269SS OF THE INCOME TAX ACT, 1961, WAS INS ERTED WITH A VIEW TO PREVENT TRANSACTIONS IN BLACK MONEY AND TO ENSUR E THAT PAYMENTS OF RS. 20,000/- AND ABOVE ARE TRACEABLE TO TRANSACTION S THROUGH A BANK. IF THE MISCHIEF THAT IS SOUGHT TO BE AVERTED IS KEP T 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 A S PROVIDED IN SECTION 269SS. EVEN IF SHARE APPLICATION MONEY CA NNOT BE CONSIDERED TO BE A LOAN WITHIN THE MEANING OF SECTI ON 269SS, IT PARTAKES OF THE CHARACTER OF A DEPOSIT, SINCE IT IS REPAYABLE IN SPECIE ON REFUSAL TO ALLOT SHARES AND IS REPAYABLE IF RECA LLED BY THE APPLICANT, BEFORE ALLOTMENT OF SHARES AND THE CONCLUSION OF TH E CONTRACT. HENCE THE ACCEPTANCE OF SHARE APPLICATION MONEY IN CASH A MOUNTING TO RS. 20,000/- OR MORE VIOLATES THE PROVISIONS OF SECTION 269SS. ITA 1289(DEL)2010 4 6. THE AO HELD THAT IN VIEW OF BHALOTIA ENGINEERIN G WORKS PVT. LTD.(SUPRA), THE ARGUMENT OF THE ASSESSEE THAT ACC EPTING SHARE APPLICATION MONEY IN CASH DOES NOT ATTRACT THE PROVISIONS OF SE CTION 269SS OF THE ACT AND THAT THE SAME IS NOT A LOAN OR DEPOSIT, COULD N OT BE ACCEPTED. 7. IT WAS IN THIS MANNER THAT THE PENALTY WAS IMPOS ED. 8. THE LEARNED CIT(A), BY WAY OF THE ORDER UNDER AP PEAL, CONFIRMED THE LEVY OF PENALTY, AGAIN PLACING RELIANCE ON BHALOTI A ENGINEERING WORKS PVT. LTD.(SUPRA). 9. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MAINTAINED THE STAND TAKEN BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORD ER. 10. HAVING HEARD BOTH THE PARTIES AND HAVING PERUSE D THE MATERIAL ON RECORD, WE FIND THAT BHALOTIA ENGINEERING WORKS PV T. LTD.(SUPRA), HAS BEEN CONSIDERED AND DISTINGUISHED BY THE HONBLE PU NJAB & HARYANA HIGH COURT IN SPEEDWAYS(SUPRA). THEIR LORDSHIPS HAVE HELD THEREIN AS FOLLOWS:- 5. ONLY POINT WHICH HAS BEEN PRESSED IS THAT AMOU NT SHOULD HAVE BEEN HELD TO BE LOAN OR DEPOSIT, AS HELD IN BHALOT IA ENGINEERING WORKS(SUPRA). 6. WE DO NOT FIND ANY MERIT IN THE CONTENTION RAI SED. THE FINDING TO THE EFFECT THAT TRANSACTION WAS BONA FIDE AND DEFAU LT WAS OF TECHNICAL ITA 1289(DEL)2010 5 NATURE WHICH DID NOT JUSTIFY LEVY OF PENALTY IS NOT SHOWN TO BE, IN ANY MANNER, PERVERSE OR UNREASONABLE. 11. BHALOTIA ENGINEERING WORKS PVT. LTD.(SUPRA), IS A DECISION RENDERED BY THE HONBLE JHARKHAND HIGH COURT. SPEEDWAYS (SUPRA), ON THE OTHER HAND, HAS BEEN RENDERED BY THE HONBLE PUNJAB & HAR YANA HIGH COURT. NEITHER OF THESE DECISIONS ARE FROM THE JURISDICTIO NAL HIGH COURT, (HONBLE DELHI HIGH COURT), SOFAR AS THE PRESENT ASSESSEE IS CONCERNED. IN SUCH A SITUATION, AS PER CIT V. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC), THE COURSE TO BE FOLLOWED IS THAT THE VIEW IN FAVOUR OF THE ASSESSEE IS TO BE ADOPTED. 12. BESIDES, HERE ALSO, THE TRANSACTION HAS NOT BEE N SHOWN TO BE MALA FIDE. SO, THE DEFAULT IS OF A TECHNICAL NATURE, NOT JUSTI FYING LEVY OF PENALTY. AS SUCH, FOLLOWING SPEEDWAYS (SUPRA), THE PENALTY I N QUESTION IS DELETED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2010. SD/- SD/- (K.G. BANSAL) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.07.2010 *RM ITA 1289(DEL)2010 6 COPY FORWARDED TO: 1.NEW AGE GENERATORS PVT. LTD. B-1/109 PASCHIM VIHAR, N. DELHI. 2. ACIT, RANGE 13, NEW DELHI. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR