Nehsel Exports Pvt. Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 1355/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3732 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 31-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Keywords: Reasonable cause
• Section: 273B; 271D; 192

Judgement Text

I.T.A. NO.1355 /DEL/2010 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 1355 /DEL/2010 (ASSESSMENT YEAR 2006-07) NEHSEL EXPORTS PVT. LTD. VS. ADDL CIT, C/O NAVEEN JAIN & CO., RANGE 13, CHARTERED ACCOUNTANTS NEW DELHI G-73, 2 ND FLOOR, LAJPAT NAGAR-I, NEW DELHI-24 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AABCN 9651J APPELLANT BY: SHRI KAPIL GOEL, CA RESPONDENT BY: MISS ANUSHA KHURANA, SR. DR ORDER PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) XVI, NEW DELHI DATED 18.01.2010 FOR ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. A.O. HAS ERRED IN LAW AND FACTS IN INITIATING THE PROCEEDINGS FOR IMPOSITION OF PENALT Y FOR ACCEPTING THE SHARE APPLICATION MONEY I.T.A. NO.1355 /DEL/2010 2/7 RS.50,000/- IN CASH AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE SAME. 2) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE C SE, LD. ADDL. CIT HAS ERRED IN LAW AND FACTS IN IMPOSING THE PENALTY OF RS.50,000/- FOR TREATING TH E SHARE APPLICATION MONEY OF RS.50,000/- AS LOAN AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE SAME. 3) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. ADDL. CIT HAS ERRED I LAW AND FACTS I N IMPOSING THE PENALTY OF RS.50,000/- FOR VIOLATION O F SECTION 269SS OF THE I. T. ACT, 1961 AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE SAME. 4) THAT THE LD. CIT(A) HAS ERRED IN HOLDINGS THAT RATI O OF CASE LAW CIT V SPEEDWAYS RUBBER PVT. LTD. (I.T.A. NO. 361/2009 (P & H) DATED 22.10.2009 AND CIT V. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192(S.C.) ARE NOT APPLICABLE TO THE AP0PELANTS CAS E. 5) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. ADDL. CIT IN IMPOSING THE PENALTY OF RS.50,000/- AND ACTION OF THE LD. CIT(A) IN CONFIRMING THE SAME ARE CONTRARY TO LAW AND FACTS AND VOID AB INITIO. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS OBSERVED BY THE A.O. IN THE PENALTY ORDER THAT IN THE COURSE OF ASSESSMENT PROCEEDING, IT WAS NOTED THAT THE ASSESS EE COMPANY WITHIN THIS YEAR HAS RECEIVED SHARE APPLICA TION MONEY AMOUNTING TO RS.50,000/- ADMITTEDLY IN CASH FROM M/S. ASAHI TRAVEL SERVICES PVT. LTD. IT IS FU RTHER NOTED BY THE A.O. THAT THE AMOUNT IS RECEIVED IN CA SH ON 30.07.2005 AGAINST WHICH, 834 SHARES WERE ALLOTTED (FOR RS.10 EACH AT A PREMIUM OF RS.50/- PER SHARE) ON I.T.A. NO.1355 /DEL/2010 3/7 12.02.2008. IT IS NOTICED BY THE A.O. THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISH ED CONFIRMATION OF PARTIES AND IT WAS ALSO SUBMITTED B Y THE ASSESSEE THAT SHARE APPLICATION MONEY IS NEITHER LO AN NOR DEPOSIT. IN THE PENALTY PROCEEDINGS ALSO, IT W AS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE PROVISIONS OF SECTION 269SS ARE NOT APPLICABLE TO S HARE APPLICATION MONEY RECEIVED IN CASH FOR AN AMOUNT EXCEEDING RS.20,000/-. THE A.O. WAS NOT SATISFIED. HE FOLLOWED THE JUDGEMENT OF HON'BLE JHARKHAND HIGH COURT RENDERED IN THE CASE OF BHALOTIA ENGINEERING WORKS VS CIT REPORTED IN 275 ITR 399 AND IMPOSED PENALTY OF RS.50,000/- FOR THIS ALLEGED VIOLATION O F SECTION 269SS AND THIS PENALTY WAS IMPOSED U/S 271D . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW TH E ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY THE LD. A.R. BEFORE US THAT ADMITTEDLY, THE JUDGEMENT OF HONBLE JHARKHAND HIGH COURT RENDERED IN THE CASE OF BHALOTIA ENGINEERING WORKS (SUPRA) IS AGAINST THE ASSESSEE BUT THIS IS NO T THE JURISDICTIONAL HIGH COURT IN THE PRESENT CASE. IT IS ALSO SUBMITTED THAT THREE OTHER HIGH COURTS ARE IN FAVOU R OF I.T.A. NO.1355 /DEL/2010 4/7 THE ASSESSEE AND RELIANCE WAS PLACED BY HIM ON THE FOLLOWING JUDGEMENTS OF VARIOUS HIGH COURTS: A) CIT VS RUGMINI RAM RAGAV SPINNERS PVT. LTD. 304 ITR 417 (MD.) B) CIT VS SPEEDWAYS RUBBER PVT. LTD. I.T.A. NO. 361OF 2009 DATED 22.10.2009 (PUNJAB & HARYANA) C) CIT VS KARDAH LEXOPLAST PVT. LTD. I.T.A. NO. 184/99 (ALLD.) DATED 16.01.2008. 4. AN ALTERNATIVE SUBMISSION WAS ALSO MADE THAT EVEN I F IT IS HELD THAT PROVISIONS OF SECTION 269SS ARE APPLIC ABLE WITH REGARD TO RECEIPT OF SHARE APPLICATION MONEY, THE ASSESSEES CASE FALLS WITHIN THE AMBIT OF REASONABL E CASE AS PROVIDED IN SECTION 273B AND FOR THIS REASON ALS O, THE PENALTY IMPOSED BY THE A.O. SHOULD BE DELETED. IN SUPPORT OF THIS CONTENTION THAT THERE WAS REASONABL E CAUSE FOR RECEIVING THIS AMOUNT OF SHARE APPLICATIO N MONEY IN CASH, HE SUBMITTED EXTRACT OF THE CASH BOO K OF THE ASSESSEE FOR THE RELEVANT DATE I.E. 30.07.2005 AND IT IS POINTED OUT THAT ON THIS DATE THE OPENING CASH B ALANCE IN THE HANDS OF THE ASSESSEE WAS ONLY RS.654/- AND AFTER RECEIPT OF THIS AMOUNT OF RS.50,000/- IN CASH TOWAR D SHARE APPLICATION MONEY, THE ASSESSEE HAD TO MAKE PAYMENT IN CASH OF RS.26650/- ON THIS VERY DATE AND HENCE SUCH RECEIPT IN CASH WAS FOR REASONABLE CAUSE . IT IS ALSO SUBMITTED THAT SHARES WERE ACTUALLY ALLOTTE D AND I.T.A. NO.1355 /DEL/2010 5/7 THE RECEIPT OF SHARE APPLICATION MONEY WAS BONA FID E AND HENCE NO PENALTY IS JUSTIFIED. 5. AS AGAINST THIS, THE LD. D.R. FOR THE REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW AND RELIANCE WAS PL ACED BY HER ON THE JUDGEMENT OF HONBLE JHARKHAND HIGH COURT RENDERED IN THE CASE OF BHALOTIA ENGINEERING WORKS (SUPRA). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. WE FINDS THAT THIS IS ADMITTED POSITION THA T THE JUDGEMENT OF HONBLE JHARKHAND HIGH COURT RENDERED IN THE CASE OF BHALOTIA ENGINEERING WORKS (SUPRA) IS AGAINST THE ASSESSEE ON THIS VERY ISSUE BUT LD. A.R . FOR THE ASSESSEE HAS CITED THREE MORE JUDGEMENTS OF VAR IOUS HIGH COURTS ON THIS VERY ISSUE WHICH ARE IN FAVOUR OF THE ASSESSEE:- - THE FIRST JUDGEMENT IS OF HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS RUGMINI RAM RAGAV SPINNERS PVT. LTD.(SUPRA) WHEREIN IT WAS HELD THAT THERE IS NO MATERIAL OR EVIDENCE RELATING TO COMPELLING CIRCUMSTANCES PRODUCED BY THE REVENUE TO PROVE THAT THE MONEY RECEIVED IS A DEPOSIT OF LO AN. IN THIS CASE ALSO, THE MONEY WAS RECEIVED AS SHARE APPLICATION MONEY. - 2 ND JUDGEMENT IS OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF SPEEDWAYS RUBBER PVT. LTD. (SUPRA). IN HIS CASE, HONBLE PUNJAB & HARYAN A I.T.A. NO.1355 /DEL/2010 6/7 HIGH COURT HAS ALSO CONSIDERED THE JUDGEMENT OF JHARKHAND HIGH COURT RENDERED IN THE CASE OF BHALOTIA ENGINEERING WORKS (SUPRA). IN THAT CASE ALSO SHARE APPLICATION MONEY WAS RECEIVED IN CASH AND PENALTY WAS IMPOSED BY THE A.O. U/S 271D AND THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF TRANSACTION BEING BONA FIDE AND ALSO O N THIS BASIS THAT DEFUALT WAS OF TECHNICAL NATURE, WH ICH DID NOT JUSTIFY LEVY OF PENALTY. - 3 RD JUDGEMENT RELIED UPON IS THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF KARDAH LAXO PVT. LTD. (SUPRA). IN THAT CASE ALS O THE ISSUE WAS THE SAME REGARDING RECEIPT OF SHARE APPLICATION MONEY IN CASH AND IN THAT CASE ALSO THE TRIBUNAL DID NOT ACCEPT THE CONTENTION OF THE DEPARTMENT THAT THE SHARE APPLICATION MONEY IS LOAN AND DEPOSIT. THIS TRIBUNAL DECISION WAS CONFIRMED BY THE HON'BLE HIGH COURT OF ALLAHABAD. 7. IN THE PRESENT CASE ALSO, THE FACTS ARE IDENTICAL. NONE OF THESE FOUR HIGH COURT IS A JURISDICTIONAL HIGH COUR T IN THE PRESENT CASE. IN OUR CONSIDERED OPINION, AS PE R THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS LTD. AS REPORTED IN 88 ITR 192 (S.C.), WHEN TWO VIEWS ARE POSSIBLE, THE VIEW FAVOR ABLE TO THE ASSESSEE SHOULD BE ADOPTED. AS PER THE ABOV E DISCUSSION, WE FIND THAT ON THIS ISSUE, THERE ARE T WO VIEWS. ONE VIEW IS AGAINST THE ASSESSEE I.E. OF HO NBLE JHARKHAND HIGH COURT WHEREAS OTHER VIEW IS IN FAVOU R OF THE ASSESSEE AND THIS VIEW IS TAKEN BY THREE DIF FERENT I.T.A. NO.1355 /DEL/2010 7/7 HIGH COURTS I.E. MADRAS, PUNJAB &HARYANA & ALLAHABAD HIGH COURT AND UNDER THESE CIRCUMSTANCES, AS PER THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF VEGETABLE PRODUCTS (SUPRA), WE ADOPT TH E VIEW WHICH IS IN FAVOUR OF THE ASSESSEE AND HENCE B Y RESPECTFULLY FOLLOWING THREE JUDGMENTS OF VARIOUS H IGH COURTS CITED BY THE LD. A.R. OF THE ASSESSEE, WE DE CIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. IN VIEW OF T HIS, OTHER CONTENTIONS RAISED BY THE LD. A.R. OF THE ASS ESSEE REGARDING REASONABLE CAUSE ETC. DO NOT CALL FOR ANY ADJUDICATION. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . 9. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 8 TH JUNE 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI