TaxTMI 
TaxTMI 
2023 (2) TMI 414
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.... on the facts and in circumstances of the case the Ld. CIT(A) has erred in allowing the appeal of the assessee ignoring the finding of the AO while completing the assessment proceedings that, if the parties were shareholders then, they were required to be informed about the AGM meeting and other statutory meetings of the company. The Ld. CIT(A) has also not considered the fact that none of the statutory functions required by law to be performed by a company in respect of shareholders as per the Provision of Companies Act, were done by the Assessee Company. (2) That on the facts and in circumstances of the case the Ld. CIT(A) has erred incompletely ignoring the facts summarized by the Ld. AO in the penalty order vide which it is clearly e....
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....e submitted before him. The AO issued notices u/s 133(6) 8.131 to several shares holders. In response to the notice several shareholders complied 133(6) notices & admitted to have given money against share application money and obtained preference share certificates from company against their subscription. Nevertheless, Ld.AO treated the receipt of share application money as deemed deposits and considered it as violation of section 2695S and accordingly imposed penalty u/s 271D. 3. The company had received cash Rs. 4,86,960/- from its group company M/s SunPlant Agro Ltd., the company explained about execution of construction work for Sunplant Construction Ltd. Rs. 22,61,534/- against which payment in cash was received and recorded in a s....
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....books & accounts. (vi) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing. 4. Ground No. 1 to 6: Penalty proceeding u/s 271D is bad In law 4.1. During the assessment year 2010-11 the appellant company raised the capital by issuing 1,01,85,760preference shares of Rs. 10/- each and collected Rs. 10,18,57,600/- as preference shares application money from various share applicants for which the assessee company has submitted Form-2 to ROC, West Bengal. But without examining whether the share application amount can be treated as loan" or "deposit" within the meaning of Section 269SS of the Act and inspite of the response given by the shareholders of the notice which was issued u/s 133(6), A.O....
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....apital; In ROC the appellant has filed Return in Form 2 which is filed in case of issue of shares by issuer company; In the deposition statement made by the applicant they have admitted that they have been allotted share and given share certificate. They denied the fact that they have given any deposit to company; Further, no interest has been paid on said sum received from various applicant which is usually paid in case of deposits. In response to the notice u/s 133(6), all the notice shareholders confirmed the AO owing the amount subscribed by them against issue of preference shares. Few of them are being reproduced as hereunder: (a) Sudhir Sarkar - "I have taken 12000 Preference shares of Rs. 10/- each having Total Amount Rs.....
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....llant company as loan and deposits. Accordingly, I delete the penalty levied by the AO u/s 271D of the Act. 4.2.5. It may also be noted that SEBI has directed companies of the group to refund the money to the investors. Therefore the company would probably be not left with any money to pay tax dues if any. In the result, the appeal filed by the assessee is allowed. Sd/- (ANAND KUMAR KEDIA) C.I.T. (APPEALS)- 4, Kolkata" 5. After perusal of the above order, we confronted the ld. D.R. as to how a penalty under section 271D of the Income Tax Act can be imposed upon the assessee in these given facts. He was unable to controvert the finding of the ld. CIT(Appeals). It is pertinent to observe that a penalty under section 271D can ....