ITO, New Delhi V. M/s Kistursons Plylam Pvt. Ltd., Delhi

ITA 5395/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82104 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO . 5395 /DEL/ 2013 ASSESSMENT YEAR : 2007 - 08 ITO, VS. KISTURSONS PLYLAMM PVT. LTD., WARD 5(3), 1, MELA RAMA MARKET, NEW DELHI. 913/17, CHOTTA CHIPPIWARA, CHAWRI BAZAR, DELHI. AAACK1086B (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VIVEK NANGIA, SR. DR RESPONDENT BY: SH. KAPIL GOEL, ADV. ORDER PER A.T. VARKEY, J.M. THIS DEPARTMENTAL APPEAL ARISES AGAINST THE ORDER OF LD. CIT(A) - VII, DATED 19 TH JULY, 2013 FOR A.Y. 2007 - 08. 2. THE SOLITARY ISSUE RELATES TO DELETION OF LEVY OF PENALTY OF RS. 6 LAKHS U/S 271D OF THE INCOME TAX ACT , 1961 (HEREIN AFTER THE ACT) . 3. ACCO RDING TO THE AO, THE ASSESSEE HAD ACCEPTED SHARE APPLICATION MONEY OF RS. 6 LAKHS IN CASH FROM M/S PETAL CARE INDIA PVT. LTD. WHICH CONSTITUTED INFRINGEMENT OF SEC. 269SS OF THE ACT. AND AS SUCH HE LEVIED PENALTY OF RS. 6 LAKH U/S 271D OF THE ACT. 4. THE LD. CIT(A), DELETED THE SAME, FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. I.P. INDIA PVT. LTD., 343 ITR 353(DEL.). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE CASE LAW CITED BEFORE US AND THE RECORDS. TH E LD. DR REFERRED TO THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMORA IN ITA NO. ITA NO. 5395 /D/ 2013 KISTURSONS P. LTD. 2 313/2006. WE HAVE GONE THROUGH THE SAID CASE LAW AND THE SAME IS NOT APPLICABLE AS IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE AMOUNT WAS RECEIVE D BY WAY OF SHARE APPLICATION MONEY WHICH WAS NOT THE CASE IN SAMORA CASE WHERE THE ASSESS INITIAL STAND WAS THAT THE SUM RECEIVED WAS UNSECURED LOAN, THEN IT CHANGED THE STAND AND CLAIMED IT AS SHARE APPLICATION, WHICH WAS NOT ACCEPTED BY THE HONBLE HIGH COURT. 6. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. I.P. INDIA (P) LTD. (SUPRA) HAS DECIDED THE ISSUE BY HOLDING AS UNDER: 8. ON A CAREFUL CONSIDERATION OF THE MATTER, WE FIND THAT THE AO HAS RELIED ON THE JUDGMENT OF THE JHARKHAND HI GH COURT (SUPRA) AND REFERRED THE ISSUE OF LEVYING PENALTY TO THE ADDITIONAL CIT. HE DID NOT EXAMINE WHETHER THE SHARE APPLICATION MONIES CAN BE TREATED AS LOAN OR DEPOSIT WITHIN THE MEANING OF SEC. 269SS. THE ADDITIONAL CIT HAS MERELY ENDORSED THE V IEW OF THE AO IN PASSING THE PENALTY ORDER. THE CIT(A) HAS FOUND AS A FACT THAT THE SHARES WERE SUBSEQUENTLY ALLOTTED TO THE APPLICANT - COMPANIES AS SHOWN BY THE FORM FILED BEFORE THE REGISTER OF COMPANIES. NEITHER THE AO NOR THE ADDITIONAL CIT HAS TAKEN THE TROUBLE TO EXAMINE THIS ASPECT WHILE IMPOSING THE PENALTY. THEY HAVE MERELY RELIED ON THE JUDGMENT OF THE JHARKHAND HIGH COURT (SUPRA). THE RELIANCE ON THIS JUDGMENT APPEARS TO US TO BE MISPLACED. IN BAIDYA NATH PLASTIC INDUSTRIES (P) LTD. AND ORS. VS. K.L. ANAND (1998) 230 ITR 522, A LD. SINGLE JUDGE OF THIS COURT POINTED OUT THAT THE DISTINCTION BETWEEN A LOAN AND A DEPOSIT IS THAT IN THE CASE OF THE FORMER IT IS ORDINARILY THE DUTY OF THE DEBTOR TO SEEK OUT THE CREDITOR AND TO REPAY THE MONEY ACCO RDING TO THE AGREEMENT WHILE IN THE CASE OF A DEPOSIT IT IS GENERALLY THE DUTY OF THE DEPOSITOR TO GO TO THE BANKER OR TO THE DEPOSITEE, AS THE CASE MAY BE, AND MADE A DEMAND FOR IT. THIS JUDGMENT WAS APPROVINGLY CITED BY A DIVISION BENCH OF THIS COURT IN DIRECTOR OF INCOME TAX (EXEMPTION) VS. ACME EDUCATIONAL SOCIETY (2010) 326 ITR 146 (DEL). IN THIS DECISION, IT WAS HELD THAT A LOAN GRANTS TEMPORARY USE OF MONEY, OR TEMPORARY ACCOMMODATION, AND THAT THE ESSENCE OF A DEPOSIT IS THAT THERE MUST BE A LIABI LITY TO RETURN IT TO THE PARTY BY WHOM OR ON WHOSE BEHALF IT HAS BEEN MADE, ON FULFILLMENT OF CERTAIN CONDITIONS. IF THESE TESTS ARE APPLIED TO THE FACTS OF THE CASE BEFORE US, IT MAY BE SEEN THAT THE RECEIPT OF SHARE APPLICATION MONIES ITA NO. 5395 /D/ 2013 KISTURSONS P. LTD. 3 FROM THE THREE P RIVATE LIMITED COMPANIES FOR ALLOTMENT OF SHARES IN THE ASSESSEE COMPANY CANNOT BE TREATED AS RECEIPT OF LOAN OR DEPOSIT. IN ANY CASE, THE TRIBUNAL HAS RIGHTLY NOTICED THE CLEAVAGE OF JUDICIAL OPINION ON THE POINT AND HELD THAT IN THAT SITUATION THERE WAS REASONABLE CAUSE U/S 273B, APPLYING THE JUDGMENT OF THE SUPREME COURT IN VEGETABLE PRODUCTS (SUPRA). SINCE THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THE CASE DECIDED BY HONBLE HIGH COURT, THEREFORE, IN OUR CONSIDERED VIEW, THIS ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT. WE HOLD THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED. WE FIND NO FAULT IN THE ORDER OF THE CIT(A). WE DISMISS THE REVENUES APPEAL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2014. - SD/ - - SD/ - ( T.S. KAPOOR ) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14.11.2014 *KAVITA, P.S. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI TRUE COPY BY ORDER ASSISTANT REGISTRAR