TaxTMI 
TaxTMI 
2010 (1) TMI 907
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.... the ld. CIT(Appeals) has completely failed to appreciate that, assessee had not accepted any loan or deposit much less any loan or deposit of money within the meaning of "loan or deposit" as defined in Explanation to section 269SS of the Act and, has thus erred in holding that assessee has violated the provisions of section 269SS of the Act warranting the levy of penalty u/s 271D of the Act. iii) That the finding of the ld. CIT(Appeals) that "there is no proof that the assessee received the amounts towards the share application money" is factually incorrect and, contrary to the evidence on record. There mere fact that the shares had been allotted in the succeeding year and had been allotted in consideration of the value of land can be held to be no basis to assume that the value of land did not represent share application money and represented an amount of loan or deposit accepted by the assessee company and was thus in violation of provisions contained in section 269SS of the Act. iv) That the ld. CIT(Appeals) has further failed to comprehend that in the instant case, the assessee had only received land against the issue of share capital which had been evaluat....
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....entioned that the assessee received total credits of about Rs. 65.25 crore in this year. After excluding the opening balance of about Rs. 46.18 crore, the receipts were to the tune of Rs. 19.07 crore in this year. The account was debited by a sum of Rs. 50.00 crore on 31.3.2006 in respect of share application money. On the basis of these facts, it was held that the assessee company received various amounts. However, the assessee did not prove that such amounts were received by way of account payee cheques or drafts. After considering various submissions made by the assessee, it was held that the same was done to overcome the restrictions placed under various provisions of the Companies Act, and also the Income-tax Act u/s 2(22)(e). No reasonable cause was shown for accepting amounts other than by account payee cheques or drafts. Therefore, the levy of the penalty was upheld. 3. Before us, the ld. counsel drew our attention to the provision contained in section 269SS. It is provided that no person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to such depositor), any loan or deposit otherwise than by an acc....
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....ection 269SS. However, the assessee did not receive any amount by way of share application money in cash. Thus, it was argued that in absence of receipt of any money in cash, the assessee did not contravene the provision contained in section 269SS. The ld. counsel also referred to 9 grounds taken before the ld. CIT(Appeals) and the order passed by him. In this connection, our attention was drawn towards the account of Vatika Ltd. in the books of the assessee for the period 1.4.2004 to 31.3.2007, placed in the paper book on pages 70 to 72. This account was credited by an amount of Rs. 50.50 crore on 28.4.2004. Thereafter, there are other credits and debits in this account, leaving closing balance of about Rs. 46.18 crore on 31.3.2005. In the subsequent year also there are certain credits and debits and in particular an amount of Rs. 50.00 crore is debited on 31.3.2006 by way of share application money. The closing balance as on 31.3.2006 was about Rs. 8.72 crore which was carried forward to the next year. In this year also, there are many credits and debits in the account. In particular, the account was debited by Rs. 50.00 lakh on 30.6.2006 towards share application money. The case....
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.... 2005-06, relevant for A.Y. 2006-07, the assessee received amounts on various dates and the total credits in the account were Rs. 65,25,26,245.80. After excluding the opening balance of Rs. 46,18,31,225/-, the value of the transactions relating to F.Y. 2005-06 was Rs. 19,06,95,020.80. The account copy maintained in the name of M/s Vatika Landbase Pvt. Ltd. in the books of the assessee for the period from 01.04.2005 to 31.03.2006 is enclosed as annexure to this order. 16.3 It is further seen that the account of M/s Vatika Landbase Pvt. Ltd. was debited for Rs. 50,00,00,000/- on 31.03.2006 and correspondingly share application money account was credited on 31.03.2006 for the same amount. 16.4 As seen from the account, the assessee company received various amounts. The assessee has not proved that the amounts received were by way of account payee cheque(s) or account payee bank draft(s)." 4.1 It was his case that various amounts were received from Vatika Ltd. apart from the credit given of Rs. 50.50 crore in respect of purchase of land. The finding of the ld. CIT(Appeals) is that the assessee did not prove that such other amounts were received by way of a....