2009 (6) TMI 981

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....absolutely illegal and unjustified in law as well as on merits. 2. That both the lower authorities erred in law in holding that share application money is in the nature of loan or deposit for the purposes of s. 269SS r/w s. 271D of the IT Act. 1961. 3. That without prejudice under the facts and circumstances, there existed a reasonable cause under s. 273B, therefore no penalty should have been levied. 4. That without prejudice after holding the share application money transaction to be genuine and bona fide, there could not have been any reason or occasion to hold that there is a violation of s. 269SS. 5. That without prejudice penalty levied without recording any legally valid satisfaction of violation o....

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....ardwaj. Now, the assessee is in further appeal before us. 4. In the course of argument before us, learned Authorised Representative of the assessee has raised various arguments and the same are also furnished by him in the brief synopsis filed before us. One of the contentions raised is that s. 269SS is not applicable on receipt of share application money in cash. In support of this contention, reliance was placed by him on the judgment of Hon'ble Madras High Court rendered in the case of CIT v. Rugmini Ram Ragav Spinners (P.) Ltd. [2008] 220 CTR (Mad.) 520 : [2008] 304 ITR 417 (Mad.). It is also submitted by him that this judgment of Hon'ble Madras High Court is dt. 12th July, 2007. It was also pointed out by him that there is a....

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....sons. It was also held that the provisions of ss. 269SS and 269T have application only in limited way in respect of deposits or loans and when it is neither deposit nor loan, the provisions of ss. 269SS and 269T have no application at all. As per this judgment of Hon'ble Madras High Court, no penalty can be imposed under s. 271D also because once it is held that the receipt of share application money is neither loan nor deposit, the provisions of ss. 269SS and 271 are, also not applicable because these provisions are applicable only when the assessee receives loan or deposit in cash. The judgment of Hon'ble Jharkhand High Court rendered in the case of Bhalotia Engineering Works (supra) is against the assessee. In this case, it. was ....