DCIT, CHENNAI V. M/s. Object Frontier Software Pvt. Ltd., CHENNAI

ITA 1446/CHNY/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51865 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 11-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGARAJAN JUNIOR
• Assessee Lawyers: S SRIDHAR
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A. NOS. 1446, 1447 & 1448/MDS/2009 (ASSESSMENT YEARS : 2002-03, 2003-04 & 2004-05) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(1), CHENNAI 600 034. (APPELLANT) V. M/S OBJECT FRONTIER SOFTWARE PVT. LTD., NO.7, 1 ST FLOOR, WELLINGTON ESTATE, 53, ETHIRAJ SALAI, EGMORE, CHENNAI 600 105. PAN : AAACO3373P (RESPONDENT) APPELLANT BY : SHRI K.E.B. RANGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 20.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE THREE APPEALS OF THE REVENUE ASSAIL THE ORDE RS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI, DE LETING PENALTY LEVIED ON THE ASSESSEE UNDER SECTION 271D OF INCOME -TAX ACT, 1961 I.T.A. NOS. 1446 TO 1448/MDS/09 2 (IN SHORT THE ACT) OF THE AMOUNTS ` 32,55,000/-, ` 32,09,000/- AND ` 76,56,980/- FOR THE RESPECTIVE ASSESSMENT YEARS. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD ACCEPT ED SHARE APPLICATION MONEY IN CASH FROM VARIOUS PERSONS DURI NG THE RELEVANT PREVIOUS YEARS. ASSESSING OFFICER WAS OF THE OPINI ON THAT SUCH MONEY RECEIVED TOOK THE CHARACTER OF DEPOSITS, RELY ING ON THE DECISION OF HON'BLE JHARKHAND HIGH COURT IN THE CAS E OF BHALOTIA ENGINEERING WORKS P. LTD. V. CIT (275 ITR 399). THE REFORE, ACCORDING TO HIM, THERE WAS A VIOLATION OF SECTION 269SS OF T HE ACT. ASSESSEE WAS PUT ON NOTICE IN THIS REGARD. ASSESSEE RELYING ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. IDHAYAM PUBLICATIONS LTD. (285 ITR 221),SUBMITTED THAT IT W AS A PRIVATE LIMITED COMPANY REGISTERED UNDER COMPANIES ACT,1956 AND MON EY ACCEPTED TOWARDS SHARE APPLICATION PENDING ALLOTMENT WAS NOT A DEPOSIT UNDER RULE 2(B)(VII) OF THE COMPANIES(ACCEPTANCE OF DEPOS IT) RULES, 1975. AS PER THE ASSESSEE, FOR TAKING THE VIEW THAT MONEY RECEIVED FROM DIRECTORS / SHAREHOLDERS COULD NOT BE CONSIDERED AS DEPOSITS, HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF IDHAYAM P UBLICATIONS LTD. (SUPRA) HAD RELIED ON THE ABOVE MENTIONED RULES. RELIANCE I.T.A. NOS. 1446 TO 1448/MDS/09 3 WAS ALSO PLACED ON A HOST OF OTHER DECISIONS IN SUP PORT OF ITS CONTENTION. ASSESSEE FURTHER ARGUED BEFORE THE A.O . THAT SHARES WERE INDEED ALLOTTED TO ALL THE PERSONS EVENTUALLY, AND FORM NO.2 UNDER THE COMPANIES ACT, 1956 BEING THE RETURN ON S HARE ALLOTMENT, WAS FILED WITH REGISTRAR OF COMPANIES. ASSESSEE AL SO ENDEAVOURED TO DIFFERENTIATE ITS CASE WITH THAT OF THE FACTS IN THE CASE OF BHALOTIA ENGINEERING WORKS P. LTD. (SUPRA) OF HON'BLE JHARKH AND HIGH COURT. 3. HOWEVER, THE A.O. WAS NOT APPRECIATIVE OF THE AB OVE CONTENTIONS. ACCORDING TO HIM, CASH RECEIVED BY TH E ASSESSEE AGAINST SHARE APPLICATIONS WERE NOT FROM ANY EXISTI NG SHAREHOLDERS SINCE FIRST ALLOTMENT OF 8,37,064 SHARES WAS DONE B Y THE ASSESSEE ON 31 ST MARCH, 2002. HENCE, ACCORDING TO A.O., MONEY RECE IVED BY THE ASSESSEE FROM VARIOUS PERSONS PRIOR TO 31 ST MARCH, 2002 COULD NEVER BE CONSIDERED AS EQUIVALENT TO MONEY RECEIVED FROM EXISTING SHAREHOLDERS. THEREFORE, ACCORDING TO HIM, ASSESSE ES CASE WAS WELL DISTINGUISHABLE FROM THE FACTS IN THE CASE OF IDHAY AM PUBLICATIONS LTD. (SUPRA) OF THE HON'BLE JURISDICTIONAL HIGH COU RT, SINCE THERE THE MONEY RECEIVED BY THE SAID COMPANY WAS FROM DIRECTO R-CUM- SHAREHOLDER, THROUGH A RUNNING CURRENT ACCOUNT. AS PER THE A.O., THE I.T.A. NOS. 1446 TO 1448/MDS/09 4 FACTS OF ASSESSEES CASE WERE MORE IN TANDEM WITH T HAT OF THE DECISION OF BHALOTIA ENGINEERING WORKS P. LTD. (SUP RA) BY HON'BLE JHARKHAND HIGH COURT. HE THUS CAME TO A CONCLUSION THAT WHAT WAS RECEIVED BY THE ASSESSEE WAS NOTHING BUT DEPOSITS A ND THERE WAS VIOLATION OF SECTION 269SS OF THE ACT THE MONEY HAV ING BEEN RECEIVED IN CASH. INSOFAR AS ASSESSMENT YEARS 2003 -04 AND 2004-05 WERE CONCERNED, THE A.O. ALSO CITED A REASON THAT A SSESSEE COULD NOT PROVE THE AMOUNTS RECEIVED TO BE DEPOSITS FALLING UNDER RULE 2(B)(IX) OF COMPANIES (ACCEPTANCE OF DEPOSIT) RULES , 1975 SINCE THERE WERE NO DECLARATIONS FURNISHED FROM THE CONCE RNED PERSONS, THAT THE AMOUNTS GIVEN BY THEM WERE NOT OUT OF ANY BORROWINGS OR SUMS ACCEPTED FROM ANY OTHER PERSONS. AS PER THE A .O., IN NONE OF THESE DECISION RELIED ON BY THE ASSESSEE, A ISSUE R EGARDING CHARACTER OF SHARE APPLICATION MONEY WAS ADJUDICATED. THUS H E HELD THAT THERE WAS VIOLATION OF SECTION 269SS OF THE ACT IN ALL TH E YEARS AND PENALTY WAS LEVIED UNDER SECTION 271D OF THE ACT. 4. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT DECISION OF HON'BLE JHARKHAND HIGH COURT I N THE CASE OF BHALOTIA ENGINEERING WORKS P. LTD. (SUPRA) WOULD NO T APPLY SINCE I.T.A. NOS. 1446 TO 1448/MDS/09 5 THERE THE CONCERNED COMPANY HAD RECEIVED SHARE APPL ICATION MONEY IN EXCESS OF SPECIFIED LIMITS. ACCORDING TO ASSESS EE, IT WAS FOR THIS REASON THEIR LORDSHIP OF JHARKHAND HIGH COURT HELD THAT SUCH MONEY RECEIVED IN EXCESS WAS NOTHING BUT DEPOSITS. AS PE R THE ASSESSEE, HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ID HAYAM PUBLICATIONS LTD. (SUPRA) HAD ACCEPTED AS PROPER, RELIANCE PLACE D ON COMPANIES (ACCEPTANCE OF DEPOSIT) RULES, 1975 FOR INTERPRETIN G THE TERM DEPOSIT IN THE CONTEXT OF APPLICATION OF SECTION 269SS OF THE ACT. RELIANCE WAS FURTHER PLACED ON THE DECISION OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. RUGMINI RAM RAGHAV SPINNERS PRIVATE LIMITED (304 ITR 417). LD. CIT(APPEALS) WA S APPRECIATIVE OF THESE CONTENTIONS. ACCORDING TO HIM, IN VIEW OF TH E DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RU GMINI RAM RAGHAV SPINNERS PRIVATE LIMITED (SUPRA), THE RATIO OF HON' BLE JHARAKHAND HIGH COURT IN THE CASE OF BHALOTIA ENGINEERING WORK S P. LTD. (SUPRA) COULD NOT BE APPLIED. LD. CIT(APPEALS) NOTED THAT ASSESSEE HAD INDEED ALLOTTED SHARES AGAINST SUCH APPLICATIONS EV ENTUALLY, AND ALSO NOT PAID ANY INTEREST TO SUCH APPLICANTS. FURTHER AS PER LD. CIT(APPEALS), ASSESSEE HAD A REASONABLE CAUSE TO BE LIEVE THAT SHARE APPLICATION MONEY RECEIVED WOULD NOT BE CONSI DERED AS DEPOSIT I.T.A. NOS. 1446 TO 1448/MDS/09 6 AND HENCE ITS EXPLANATION ON THESE LINES WAS ALSO A CCEPTABLE. HE, THEREFORE, DELETED THE LEVY OF PENALTY FOR ALL THE YEARS. 5. NOW BEFORE US, THE LEARNED D.R. ASSAILING THE OR DER OF LD. CIT(APPEALS), SUBMITTED THAT ASSESSEES AUTHORIZED CAPITAL FOR FINANCIAL YEAR 31.3.2002 AND 31.3.2003 WAS ` 85 LAKHS AS CLEAR FROM ITS BALANCE SHEET FOR THE RESPECTIVE YEARS PLACED A T DEPARTMENTAL PAPER-BOOK PAGES 3 AND 8. ACCORDING TO HIM, AGAINS T SUCH AUTHORIZED CAPITAL, ASSESSEE HAD ALREADY ISSUED EQU ITY SHARES TO ` 83,74,640/-. LEARNED D.R., THEREFORE, SUBMITTED TH AT SHARE APPLICATION MONEY RECEIVED AFTER 31 ST MARCH, 2002 WAS IN EXCESS OF AUTHORIZED CAPITAL WHICH STOOD ALREADY ALMOST FULLY SUBSCRIBED AND HENCE, SUCH MONEY COULD NOT BE CONSIDERED AS SHARE APPLICATION MONEY, BUT, ONLY AS DEPOSITS. INSOFAR AS YEAR ENDE D 31.3.2004 WAS CONCERNED, LEARNED D.R. SUBMITTED THAT AUTHORIZED C APITAL STOOD INCREASED TO ` 2,30,00,000/- AND THIS WAS NOTHING BUT A PLOY ADOP TED TO WRIGGLE OUT OF SITUATION, WHEREBY PENALTY WOULD BE LEVIED FOR ACCEPTING DEPOSITS OTHERWISE THAN THROUGH ACCOUNT P AYEE CHEQUE/DEMAND DRAFT. THEREFORE, ACCORDING TO HIM, LD. CIT(APPEALS) FELL IN ERROR WHEN HE DELETED THE PENALTY LEVIED WH EN THE FACTS OF THE I.T.A. NOS. 1446 TO 1448/MDS/09 7 CASE CLEARLY POINTED OUT THAT THE MONEY RECEIVED WA S NOTHING BUT DEPOSITS AND THAT TOO NOT FROM ANY EXISTING SHAREHO LDERS OR DIRECTORS. 6. PER CONTRA, LEARNED A.R., STRONGLY SUPPORTING TH E ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE WHOLE OF THE SHARE APPLICATION MONEY WAS CONVERTED TO SHARE CAPITAL. BY THE YEAR ENDED 31.3.2004, THERE WAS NO SHARE APPLICATION MONEY PENDING ALLOTM ENT. FOR THIS HE RELIED ON BALANCE SHEET OF THE COMPANY AS ON 31 ST MARCH, 2004 PLACED AT PAPER-BOOK PAGE 13 OF THE DEPARTMENT. FU RTHER, ACCORDING TO HIM, HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF RUGMINI RAM RAGHAV SPINNERS PRIVATE LIMITED (SUPRA) HAD CLEARLY HELD THAT SHARE APPLICATION MONEY RETAINED BY A COMPANY WAS NEITHER DEPOSIT NOR LOAN AND HENCE, PROVISIONS OF SECTION 269SS AND SEC TION 269T OF THE ACT WOULD HAVE NO APPLICATION. FURTHER RELIANCE WA S ALSO PLACED ON THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF CIT V. SPEEDWAYS RUBBER (P) LTD. (326 ITR 31). 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. COPIES OF FINAL ACCOUNTS PLACED BEFORE US BY LEARNE D D.R. SHOW THAT THE AUTHORIZED CAPITAL OF THE ASSESSEE-COMPANY AS O N 31.3.2002 AND 31.3.2003 (PAPER-BOOK PAGES 3 AND 8) STOOD AT ` 85 LAKHS. THE I.T.A. NOS. 1446 TO 1448/MDS/09 8 ISSUED, SUBSCRIBED AND PAID UP CAPITAL AS ON THESE DAYS STOOD AT ` 83,76,640/-. NEVERTHELESS, BY THE YEAR ENDED 31.3. 2004 (PAPER-BOOK PAGE 13), THE AUTHORIZED CAPITAL HAD INCREASED TO ` 2,30,00,000/- AND THE ISSUED, SUBSCRIBED AND PAID UP CAPITAL GONE UP TO ` 2,29,97,620/-. THE SHARE APPLICATION MONEY PENDING ALLOTMENT AS PE R THESE BALANCE SHEETS AS ON 31.03.2002 STOOD AT ` 35,55,000, AS ON 31.3.2003 STOOD AT ` 64,60,000/- AND AS ON 31.3.2004 STOOD AT NIL. W HAT IS CLEAR FROM THE DATA IS THAT ASSESSEE HAD INDEED ALLOTTED SHARE S ON ALL THE SHARE APPLICATION MONEY RECEIVED. IT WAS NOT A SHAM TRAN SACTION. HENCE, THE GENUINENESS OF THE TRANSACTION CANNOT BE QUESTI ONED. THE ONLY QUESTION TO BE ANSWERED IS WHETHER BY ACCEPTING SUC H SHARE APPLICATION MONEY IN CASH, ANY VIOLATION OF SECTION 269SS OF THE ACT CALLING FOR A LEVY OF PENALTY UNDER SECTION 271D OF THE ACT HAS HAPPENED. THIS QUESTION CAN BE ANSWERED IF WE FIRS T FIND WHETHER THE MONEY RECEIVED AGAINST SHARE APPLICATION IS A DEPOS IT OR LOAN AMOUNT. NO DOUBT, THE HON'BLE JHARKHAND HIGH COURT IN THE CASE OF BHALOTIA ENGINEERING WORKS P. LTD. (SUPRA) CLEARLY HELD THAT SHARE APPLICATION MONEY RECEIVED HAD TO BE TREATED ON PAR WITH DEPOSITS. THEIR LORDSHIPS HELD THAT AMOUNTS RECEIVED AS SHARE APPLICATION MONEY TILL THE POINT OF ALLOTMENT OR REFUND WAS NOT HING BUT DEPOSIT. I.T.A. NOS. 1446 TO 1448/MDS/09 9 PARA 6 OF THAT JUDGEMENT CLEARLY BRINGS OUT THAT IN THE SAID CASE ALSO ASSESSEE CONCERNED HAD EVENTUALLY ALLOTTED SHARES T O SUCH SHARE APPLICANTS. HERE ALSO THERE WAS NO RETURN OF MONEY TO ANY SHARE APPLICANTS, BUT, THERE WAS FULL ALLOTMENT OF SHARES AND ASSESSEE HAD ALSO FILED RETURN OF ALLOTMENT OF SHARES TO REGISTR AR OF COMPANIES. NEVERTHELESS, THE SHARE APPLICATION MONEY HELD FOR A PERIOD ONE TO THREE YEARS, COULD ONLY BE CONSIDERED AS DEPOSITS IF WE APPLY THE DECISION OF HON'BLE JHARKHAND HIGH COURT IN THE CAS E OF BHALOTIA ENGINEERING WORKS P. LTD. (SUPRA). HOWEVER, HON'BL E JURISDICTIONAL HIGH COURT IN THE CASE OF RUGMINI RAM RAGHAV SPINNE RS PRIVATE LIMITED (SUPRA), HAS TAKEN A VIEW THAT ADVANCE RECE IVED TOWARDS ALLOTMENT OF SHARES, EVEN IF THERE IS NO STIPULATIO N REGARDING ANY TIME FRAME FOR REFUND OF MONEY, AS LONG AS SUCH MONEY WA S RECEIVED WITHOUT ANY CONDITION REGARDING INTEREST, COULD NOT BE CONSIDERED AS DEPOSIT. RELEVANT PARAS 6 AND 10 OF THIS DECISION ARE REPRODUCED HEREUNDER :- 6. HEARD COUNSEL. THE ASSESSEE HAD RECEIVED CASH O VER A PERIOD OF TIME, AS ADVANCE TOWARDS ALLOTMENT OF SHA RES FROM 16 PERSONS WITHOUT STIPULATING ANY TIME FRAME TOWARDS RETURN/REFUND OF MONEY WITHOUT INTEREST, IN CASE OF NON- ALLOTMENT OF SHARES EITHER FULLY OR PARTLY. IN THIS CASE, THE MONEY RETAINED BY THE COMPANY WAS NEITHER DEPOSIT NOR LOAN, BUT I.T.A. NOS. 1446 TO 1448/MDS/09 10 IT IS ONLY SHARE CAPITAL ADVANCE. PENALTY UNDER S. 271E IS NOT AUTOMATIC AND TO BE LEVIED ONLY IN THE ABSENCE OF A REASONABLE CAUSE. NO DOUBT, REASONABLE CAUSE HAS TO BE ESTABL ISHED BY THE ASSESSEE. THE RATIONALE BEHIND THE PROVISIONS OF S S. 269SS AND 269T IS TO PREVENT TAX EVASION, I.E., THE LAUNDERIN G OF CONCEALED INCOME BY PARTIES IN THE GUISE OF CASH LOANS OR DEPO SITS IN OR OUTSIDE THE ACCOUNTS. THE PROVISION OF SS. 269SS A ND 269T THEREFORE, HAVE APPLICATION ONLY IN A LIMITED WAY IN RESPECT OF DEPOSITS OR LOANS. WHEN IT IS NEITHER DEPOSIT NOR LOAN, THE PROVISIONS OF SS. 269SS AND 269T HAVE NO APPLICATIO N AT ALL. EVEN IF THERE IS REPAYMENT BY CASH IT COULD NOT BE SAID TO ATTRACT THE LEVY OF PENALTY AUTOMATICALLY, UNDER S. 271E OF THE A CT. THE ADVANCES OF SHARE APPLICATION MONEY OR REPAYMENTS OF SUCH ADVANCES HAVE NOT FLOWN FROM ANY UNDISCLOSED INCOME OF THE ASSESSEE OR THE CONCERNED PERSONS. IT IS ALSO SEEN FROM THE RECORDS THAT THE ASSESSEE HAD NOT PAID ANY INTEREST AT ALL ON ANY OF THE ADVANCES REPAID AFTER QUITE SOME TIME. IF T HE INTENTION WAS TO RECEIVE THEM AS LOANS OR DEPOSITS, THEN CERT AINLY THE LENDERS WOULD NOT HAVE MADE THE ADVANCE GRATUITOUSL Y. IT IS ALSO A FACTUAL FINDING GIVEN BY THE AUTHORITIES BELOW THA T THE ASSESSEE WAS NOT CALLED UPON TO EXPLAIN THE DEFAULT UNDER S. 269SS ON RECEIPT OF THE ADVANCES IN EARLIER YEARS, WHICH WOUL D SHOW THAT THE ASSESSEES CASE WAS NOT GOVERNED BY THE SAID PRO VISIONS. PENALTY UNDER S. 271E IS NOT AUTOMATIC, AND A BONA F IDE BELIEF TO THE EFFECT THAT THE RECEIPT OF ADVANCES AGAINST ALL OTMENT OF SHARES WOULD NOT BE TERMED AS LOANS OR DEPOSITS, WO ULD BE SUFFICIENT TO DROP THE PENALTY LEVIABLE, UNLESS AND UNTIL THE MATERIAL ON RECORD POSITIVELY SHOWS THAT MONEY RECEIV ED IS ONLY A DEPOSIT OR LOAN. THERE IS NO DISPUTE THAT THE IMPU GNED ADVANCES WERE ONLY AGAINST ALLOTMENT OF SHARES AND NOT BY WAY O F LOANS OR DEPOSITS. THE AUTHORITIES BELOW HAVE GIVEN A FACTU AL FINDING TO THE EFFECT THAT IT IS NOT A DEPOSIT OR LOAN. THE T RIBUNAL, IN PARA 3 OF ITS ORDER, HELD AS UNDER : THE DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ON RECORD ANY MATERIAL THAT WOULD GO TO SHOW THAT THE ASSESSEE IN FACT WANTED ONLY LOAN OR DEPOSIT BUT TRIED TO SHOW THEM AS SHARE APPLICATION I.T.A. NOS. 1446 TO 1448/MDS/09 11 MONEY. MERELY FOR THE REASON THAT SOME OF THE APPLIC ATIONS WERE REJECTED AND IN SOME OF THE APPLICATIONS THE SHARE ALLOTMENTS WERE NOT IN FULL, IT CANNOT BE TAKEN TO MEAN THAT I T WAS NOT SHARE APPLICATION MONEY. UPHOLDING THE ORDER OF THE CIT(A ) THE APPEAL BY THE REVENUE IS DISMISSED. 10. THE ABOVE SECTION PROVIDES THAT IF THE ASSESSEE PROVES THAT THERE IS A REASONABLE CAUSE, HE IS NOT SUBJECT TO LEVY OF PENALTY. THE CASE OF THE ASSESSEE IS THAT THE AMOUN T RECEIVED BY THE ASSESSEE IS ONLY FOR THE PURPOSE OF ALLOTMENT OF SHARES AND IT IS NOT A DEPOSIT OR LOAN. IN THIS CASE, THE REASON ABLE CAUSE IS THAT THE ASSESSEE WAS UNDER THE BOA FIND BELIEF THAT THE MONEY RECEIVED IS ONLY FOR THE PURPOSE OF ALLOTMENT OF SHA RES. ALSO, THERE IS NO MATERIAL OR EVIDENCE OR ANY COMPELLING R EASON PRODUCED BY THE REVENUE TO PROVE THAT THE MONEY RECEI VED IS A DEPOSIT OR LOAN. THE FIRST APPELLATE AUTHORITY AS W ELL AS THE TRIBUNAL HAVE COME TO A CORRECT CONCLUSION AFTER AC CEPTING THE EXPLANATION OFFERED BY THE ASSESSEE. IT IS A QUESTI ON OF FACT AND THE ORDER OF THE TRIBUNAL IS NOT A PERVERSE ONE. T HE CONCURRENT FINDING GIVEN BY BOTH THE AUTHORITIES BELOW IS BASED ON VALID MATERIALS AND EVIDENCE. IN THE CASE OF CIT V. P. M OHANAKALA (2007) 210 CTR (SC) 20 : (2007) 291 ITR 278 (SC), T HE SUPREME COURT HELD THAT WHATEVER THERE IS A CONCURRENT FIND ING BY THE AUTHORITIES BELOW, NO INTERFERENCE SHOULD BE CALLED FOR BY THE HIGH COURT. UNDER THESE CIRCUMSTANCES, WE DO NOT F IND ANY ERROR OR LEGAL INFIRMITY IN THE ORDER OF THE TRIBUNAL SO A S TO WARRANT INTERFERENCE. HERE ALSO NOTHING HAS BEEN BROUGHT ON RECORD BY REV ENUE TO SHOW THAT SHARE APPLICANTS HAD GIVEN THE MONEY AS DEPOSI T, GRATUITOUSLY. THERE IS ALSO NO FINDING THAT ANY INTEREST WAS PAID BY THE ASSESSEE TO THE SHARE APPLICANTS. NO EXAMINATION OF ANY OF THE SHARE APPLICANT HAS BEEN DONE BY THE REVENUE TO SHOW THAT MONEY REC EIVED BY THE I.T.A. NOS. 1446 TO 1448/MDS/09 12 ASSESSEE WAS AS A LOAN OR DEPOSIT AND NOT FOR ALLOT MENT OF SHARES. WE ARE, THEREFORE, OF THE OPINION THAT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RUGMINI RAM RAGHAV SPINNE RS PRIVATE LIMITED (SUPRA) WOULD BE MORE APPROPRIATE FOR APPLI CATION ON THE FACTS HERE. THOUGH THE LATTER DECISION WAS GIVEN ON A QU ESTION REGARDING LEVY OF PENALTY UNDER SECTION 271E FOR VIOLATION OF SECTION 269T, SECTIONS 269SS AND 269T ARE TWO SIDES OF THE SAME C OIN, THE FORMER GOVERNING ACCEPTANCE OF LOAN/DEPOSITS AND LATTER GO VERNING REPAYMENT OF LOAN/DEPOSITS. WHEN THERE ARE TWO HIG H COURT DECISIONS WHICH ARE SEEMINGLY ON OPPOSITE POLES, ON E OF THE JURISDICTIONAL HIGH COURT HAS NECESSARILY TO BE FOL LOWED. THE REVENUE HAS NOT DOUBTED THE GENUINENESS OF THE TRAN SACTION. ASSESSEE HAD A BONAFIDE BELIEF THAT SHARE APPLICATI ON MONEY RECEIVED WAS NEITHER LOANS OR DEPOSITS. IT COULD A LWAYS INCREASE ITS AUTHORIZED CAPITAL, AND IN ANY CASE, THERE IS NO PR OHIBITION UNDER THE COMPANIES ACT, 1956, AGAINST ACCEPTING SHARE APPLIC ATION FOR ALLOTMENT OF SHARES IN EXCESS OF AUTHORIZED CAPITAL . IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE RIGOU R OF SECTION 269SS OF THE ACT CANNOT BE APPLIED. THE MONEY RECEIVED F ROM SHARE APPLICANTS BEING NEITHER A DEPOSIT NOR A LOAN. WHE N RIGOURS OF I.T.A. NOS. 1446 TO 1448/MDS/09 13 SECTION 269SS OF THE ACT CANNOT BE APPLIED, THERE C AN BE NO QUESTION OF LEVY OF PENALTY UNDER SECTION 271D OF THE ACT. EVEN OTHERWISE, THERE WAS REASONABLE CAUSE FOR THE ASSESSEE IN HOLD ING A BONAFIDE BELIEF THAT MONEY ACCEPTED WAS NOR LOAN OR DEPOSITS . LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY FOR ALL THESE YEARS. WE HAVE NO REASON TO INTERFERE WITH THE ORDER OF LD . CIT(APPEALS). 8. IN THE RESULT, ALL THE THREE APPEALS FILED BY RE VENUE STAND DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 23 RD SEPTEMBER, 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD SEPTEMBER, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE