2018 (5) TMI 623

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....vy of penalty u/s 271D r.w.s. 269SS of the Income Tax Act, 1961 (hereinafter called as 'the Act'). In this case, the Ld. Addl. CIT observed that the assessee has received a payment of Rs. 50 lakhs by way of cash as a loan. Therefore, the Ld. Addl. CIT, Range-2, Vijayawada has initiated penalty u/s 271D r.w.s. 269SS of the Act. As per the details furnished by the Ld. Addl.CIT, the assessee company has received the share application money from the following Directors of the company. Sri Peravalli Venkata Ramana - Rs. 25,00,000/- Smt. Peravalli Sabitha - Rs. 25,00,000/- 3. The Addl. CIT has called for the explanation of the assessee and the assessee's A.R. submitted that the company has not received any loan or dep....

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.... money and subsequently the shares were allotted, hence the assessee's case is distinguishable in respect of the case law relied upon by the Ld. Addl. CIT in the case of Bhalotia Engineering Works Pvt. Ltd. (supra) and following decisions of (i)CIT v. Sri Sidhdata Ispat (P) Ltd. [2012 - TIOL - 786 - HC (Del.)], (ii)CIT v. IP India (P) Ltd. (2012)70 DTR (Del.) 452, 2011-TIOL-811-HC (Del.) (iii) CIT v. ldhayam Publications Ltd. (2006) 285 ITR 221 (Mad.) allowed the appeal of the assessee. For ready reference and for the sake of clarity, we extract relevant paragraph of the CIT(A)'s order as under: "5. I have perused the submissions of appellant and the case laws relied on by Assessing Officer and appellant. 5.1. Admittedl....

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....tion 269SS will not apply where the contributions received have been converted into share capital by way of allotment of shares, was held by Courts in the following cases i. CIT v. Sri Sidhdata Ispat (P) Ltd. [2012 - TIOL - 786 - HC (Del.)] ii. CIT v. IP India (P) Ltd. (2012)70 DTR (Del.) 452, 2011-TIOL- 811-HC (Del.) iii. CIT v. ldhayam Publications Ltd. (2006) 285 ITR 221 (Mad.) 5.4 In view of the above, I hold that penalty u/s 271D is not leviable in this case. I, therefore, cancel the penalty levied." 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In this case, both the Directors have contributed the share applicati....