Ita/256/2014 Of Commissioner Of Income-Tax Patiala v. M/S Eqbal Inn & Hotels Ltd Patiala

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 256 of 2014Date of decision: 21.9.2015 The Commissioner of income Tax, Patiala .....- Appe M/s Eqbal Inn & Hotels Limited ....mesponden CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MR. JUSTICE RAMENDRA JAIN 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest? Present: Mr. Zora Singh Klar, Advocate for the appellant-revenue, Ms.Radhika Suri, Sr. Advocate with Ms. Rinku Dahiya,Advocate for the respondent-assessee. Ajay Kumar Mittal,J, 1]This order shall dispose of ITA Nos.256, 266, 279 and 321 of2014 as learned counsel for the parties are agreed that the issue involved inall these appeals is identical. However, the facts are being extracted fromITA No .256 of 2014 |ITA No.256 of 2014 has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short, “the Act”) against theorder dated 30.11.2014, Annexure A.3 passed by the Income Tax AppellatTribunal Chandigarh Bench 'B', Chandigarh (in short, “the Tribunal) in ITANo.878/Chd/2013 for the assessment year 2006-07, claiming following substantial questions of law:- 1) In the facts and circumstances of the case, whether the ITATwas right in law in not sustaining the action of the JCIT/CIT(A)in imposing/upholding the penalties under section 271D of theIncome Tax Act, 1961 on the ground that the amount was|received in the current account, even though the section itselfdoes not provide any exception that the loan or deposit receivedin the current account of the assessee would be exempt from theprovisions of Section 269SS of the Act? 11) In the facts and circumstances of the case, whether the ITATwas right in holding that receipt of share application money incash would be exempt from the provisions of section 269SS?111) In the facts and circumstances of the case, whether the ITATwas right in treating the amounts received 1n cash over a periodof 6 years, without allotment of shares, as share applicationmoney? iv) In the facts and circumstances of the case, whether the ITATwas right in holding that there was reasonable cause for receiptof cash by the assessee company from the directors, even thoughcash was received regularly and on consecutive dates and oflarge sums and both the payers and the receiver had bankaccounts in the same city? 3 3A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The assessee acceptedshare application money in cash from its directors namely Shri KamalpreetSingh, Prop. M/s Saran Enterprises, Patiala, Shri Balwinder Singh Prop. M/sM.P.Traders, Patiala and Smt. Pritam Kaur Prop. M/s Jaimai SonsEnterprises, Patiala amounting tovO4,15,440/-, |-1,07,49,200/-, —=29,33,000/- and=a66,50,000/- for the assessment years 2003-04, 2005-06 to 2007-08 respectively in cash aggregating to =a2,07,47,640/- in violation of ITA No.256 of 2014 3 3A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The assessee acceptedshare application money in cash from its directors namely Shri KamalpreetSingh, Prop. M/s Saran Enterprises, Patiala, Shri Balwinder Singh Prop. M/sM.P.Traders, Patiala and Smt. Pritam Kaur Prop. M/s Jaimai SonsEnterprises, Patiala amounting tovO4,15,440/-, |-1,07,49,200/-, —=29,33,000/- and=a66,50,000/- for the assessment years 2003-04, 2005-06 to 2007-08 respectively in cash aggregating to =a2,07,47,640/- in violation of ITA No.256 of 2014 the provisions of section 269SS of the Act. The Joint commissioner ofIncome Tax, Patiala Range, Patiala vide consolidated order dated 28.9.2011,Annexure A.] imposed penalty under section 271D of the Act amounting toan4,15,440/- for the assessment year 2003-04,=a1,07,49,200/- for theassessment year 2005-06,=a29,33,000/- for the assessment year 2006-07and=a66,50,000/- for the assessment year 2007-08 respectively. Aggrievedby the order, the assessee filed appeals before the Commissioner of IncomeTax (Appeals) CIT(A)]. Vide consolidated order dated 27.8.2013, AnnexureA.2, the CIT(A) dismissed the appeals. Still not satisfied, the assessee filedappeal before the Tribunal. Vide order dated 30.1.2014, Annexure A.3, theTribunal partly allowed the appeal, deleting the penalty under section 271Dof the Act in all the four years. It was held that when the money had beenreceived in a current account,it cannot be covered under the definition ofloan or deposit and consequently penal provisions under section 271D ofthe Act would not be attracted and that the money contributed by the variousdirectors and their relatives was to be treated as share capital. Hence theinstant appeal by the revenue, 4 We have heard learned counsel for the parties. 4 The issue herein 1s whether the amount paid towards shareapplication money by various applicants to the assessee would be embracedunder the term ‘loan or deposit’ within the meaning of section 269SS of theAct. 6.It would be expedient to refer to the relevant statutoryprovisions. Rule 2(b) (vil) and (ix) of the Companies (Acceptance ofdeposits) Rules, 1975 (in short, “the Rules”) reads thus:- 6Rule 2(b): deposit means any deposit of money with, andincludes any amount borrowed by, a company, but does notinclude- 4444444 44444444(1) to (v1) xx(vil) any amount received by way of subscriptions to anyshares, stock, bonds or debentures such bonds or debentures asare covered by sub clause (x) pending the allotment of the saidshares, stock,bonds or debentures and any amount received byway of calls in advance on shares, in accordance with thearticles of Association of the company so long as such amountis not repayable to the members under the articles ofAssociation of the company; 444444(vill) XXXXX XX(1x) any amount received by a private company from a personwho, at the time of the receipt of the amount,was a director,relative of director or member: Provided that the director or member, as the case may be, fromwhom money is received, furnishes to the company at the timeof giving the money, a declaration in writing to the effect thatthe amount 1s not being given out of funds acquired by him byborrowing or accepting from others; Explanation — For the removal of doubts, it 1s hereby declaredthat any deposit received or renewed by a company before thecommencement of the Companies (Acceptance of Deposits)Amendment Rules, 1978 shall continue to be governed by therules applicable at the time of such deposit or renewal as theCcase may be. Section 2698S of the Act *I769SSNo person shall, after the 30th day of June, 1984, takeor accept from any other person (hereafter in this sectionreferred to as the depositor), any loan or deposit otherwise thanby an account payee cheque or account payee bank draftOr useofelectronic clearing system through a bank account1f,— 56) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or Explanation — For the removal of doubts, it 1s hereby declaredthat any deposit received or renewed by a company before thecommencement of the Companies (Acceptance of Deposits)Amendment Rules, 1978 shall continue to be governed by therules applicable at the time of such deposit or renewal as theCcase may be. Section 2698S of the Act *I769SSNo person shall, after the 30th day of June, 1984, takeor accept from any other person (hereafter in this sectionreferred to as the depositor), any loan or deposit otherwise thanby an account payee cheque or account payee bank draftOr useofelectronic clearing system through a bank account1f,— 56) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or 5b) on the date of taking or accepting such loan or deposit,any loan or deposit taken or accepted earlier by such personfrom the depositor 1s remaining unpaid (whether repaymenthas fallen due or not), the amount or the aggregate amountremaining unpaid ; or 5C) the amount or the aggregate amount referred to 1n clause56) together with the amount or the aggregate amountreferred to in clause (b), 1s twenty thousand rupees or more : Providedthat the provisions of this section shall not applyto any loan or deposit taken or accepted from, or any loan ordeposit taken or accepted by,— 56) Government ; 5b) any banking company, post office savings bank or co-operative bank ; 5C) any corporation established by a Central, State orProvincial Act ; 5d) any Government companMas defined 1n section 617 ofthe Companies Act, 1956 (1 of 1956) ; 5() such other institution, association or body or class ofinstitutions, associations or bodies which the CentralGovernment may, for reasons to be recorded in writing,notify in this behalf in the Official Gazette : Provided furtherthat the provisions of this section shallnot apply to any loan or deposit where the person fromwhom the loan or deposit 1s taken or accepted and the personby whom the loan or deposit is taken or accepted are bothhaving agricultural income and neither of them has anyincome chargeable to tax under this Act.| Explanation.—For the purposes of this section,— 5]) "banking company" means a company to which theBanking Regulation Act, 1949 (10 of 1949), applies andincludes any bank or banking institution referred to in|section 51 of that Act ;] 5Il) "co-operative bank" shall have the meaning assigned toit in Part V of the Banking Regulation Act, 1949 (10 of1949) ; 5Il) "loan or deposit" means loan or deposit of money.” Section 271D of the Act O71).(1) If a person takes or accepts any loan or deposit 1ncontravention of the provisions ofsection 269SS, he shall beliable to pay, by way of penalty, a sum equal to the amountof the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall beimposed by the Joint Commissioner.”imposed by the Joint Commissioner.” TdIn order to impose penalty under section 271D of the Act, therevenue has to establish that what was received by the assessee, was a loanor deposit within the meaning of section 269SS of the Act. Under Rule 2(b)(1x) of the Rules, deposit does not include any amount received from adirector, relative of director or member of a private limited company. Theassessee company in the present case was constructing a hotel and loan hadnot been sanctioned by the financial institutions and banks. The assesseecompany received money from its directors for construction of hotel whichhad been transferred at the end of the every year to share applicationaccount 1.e. current account which cannot be called loan or deposit. TheAssessing officer held that the assessee had taken the loan in cash 1n thegarb of share application money in violation of Sections 269SS of the Actand was liable to penalty under Section 271D of the Act. The CIT(A) whileconcurring with the findings recorded by the Assessing Officer dismissedthe appeal filed by the assessee. The Tribunal deleted the penalty whileobserving thus; “25. We may also note that assessment orders have been passed “25. We may also note that assessment orders have been passed for various years under section 148/143(3) of the Act. It seemsthat notice under section 148 was issued because assessee hadnot filed any return of income for assessment year 2003-04 andlater years. The assessments were completed later on. Thisbecomes clear from the assessment orders filed at pages 61 to68 of the paper book. No additions have been made on accountof share application money which clearly means that sources ofthe share capital were found to be genuine. It was pleaded bylearned counsel for the assessee that even Chartered Accountantwho has conducted the audit never pointed out any objectionfor receipt of share application money in cash. The same wasdone to meet the requirement of funds for construction of thehotel and assessee was under the bonafide belief that noviolation have taken place, therefore, the case becomes totallycovered by the decision of the Hon'ble Punjab and HaryanaHigh Court in the case of Speedways Rubber Pvt. Limited(supra). In that case it 1s clearly held that if transaction wasbonafide and default was of technical nature,then the penaltyshould not be justified. In the case before us, there 1s no defaultbecause the share application money or deposit in the currentaccount cannot be included in the definition of deposit but inany case even if it is assumed otherwise then the defect is onlyof technical nature and there was a bonatfide belief on the parof the assessee that this 1s not in contravention of provisions ofthe Act,therefore, 1t is of technical nature and does not call forlevy of penalty. In any case, a reasonable cause was alsoexplained that assessee company was constructing a hotel forwhich bank loans were not sanctioned and therefore, directorshad to contribute the money towards construction of the hotel.The payment was generally required for labour payments andother cash items, therefore, it 1s a reasonable case for acceptingthe cash from directors and relatives and even on this basis alsopenalty is not leviable.” Learned counsel for the appellant-revenue was unable to point out anyillegality or perversity 1n the findings recorded by the Tribunal.|We proceed to examine the judgments relied upon by thelearned counsel for the respondent-assessee. In CIT vs. Rugmini RamKagay Spinners F. Limited,(2008) 304 ITR 417 (Mad.), the assessee hadreceived cash over a period of time as advance towards allotment of shares|from 16 persons without stipulating any time frame towards return/refund ofmoney without interest, 1n case of non allotment of shares either fully orpartly. It was held by the Madras High Court that the money retained by thecompany was neither deposit nor loan,it was only share capital advance. Theadvances of share application money or repayments of such advances hadnot flowed from any undisclosed income of the assessee or the concernedpersons. The assessee had not paid any interest at all on any of the advancesrepaid after some time. The advances were only against allotment of sharesand not by way of loans or advances. The relevant findings recorded by theMadras High Court read thus:- “Heard the counsel. The assessee had received cash over aperiod of time, as advance towards allotment of shares from 16persons without stipulating any time frame towards return /refund of money without interest, in case of non-allotment ofShares either fully or partly. In this case, the money retained bythe company was neither deposit nor loan, but it 1s only sharecapital advance. Penalty underSection 271 1S not automaticand to be levied only in the absence of a reasonable cause. Nodoubt a reasonable cause has to be established by the assessee.The rationale behind the provisions ofSection 269SSand2697is to prevent tax evasion, 1.e., the laundering of concealedincome by parties in the guise of cash loans or deposits 1n or “Heard the counsel. The assessee had received cash over aperiod of time, as advance towards allotment of shares from 16persons without stipulating any time frame towards return /refund of money without interest, in case of non-allotment ofShares either fully or partly. In this case, the money retained bythe company was neither deposit nor loan, but it 1s only sharecapital advance. Penalty underSection 271 1S not automaticand to be levied only in the absence of a reasonable cause. Nodoubt a reasonable cause has to be established by the assessee.The rationale behind the provisions ofSection 269SSand2697is to prevent tax evasion, 1.e., the laundering of concealedincome by parties in the guise of cash loans or deposits 1n or outside the accounts. The provision ofSection 269SSand269Ttherefore have application only in a limited way in respect ofdeposits or loans. When it 1s neither deposit nor loan, theprovisions ofSections 269SSand2697have no application atall. Even 1f there 1s repayment by cash it could not be said toattract the levy of penalty automatically, underSection 271ofthe Act. The advances of share application money orrepayments of such advances have not flowed from anyundisclosed income of the assessee or the concerned persons. Itis also seen from the records that assessee had not paid anyinterest at all on any of the advances repaid after quite sometime. If the intention was to receive them as loans or deposits,then certainly the lenders would not have made the advancesgratuitously. It is also a factual finding given by the authoritiesbelow that the assessee was not called upon to explain thedefault underSection 269SSon receipt of the advances inearlier years, which would show that the assessee's case was notgoverned by the said provisions. Penalty under|Section 271E1Snot automatic, and a bona fide belief to the effect that thereceipt of advances against allotment of shares would not betermed as loans or deposits, would be sufficient to drop thepenalty leviable, unless and until the material on recordpositively shows that money received is only a deposit or loan,There is no dispute that the impugned advances were onlyagainst allotment of shares and not by way of loans ordeposits.” Q_Tn|CIT vs. L.P.India P. Limited,(2012) 343 ITR 353 (Del.), the assessee a private company received share application monies in cash fromthree private limited companies. The Assessing Officer was of the view thatthe assessee was liable to be proceeded against for levy of penalty undersection 271D of the Act on the ground that the provisions of section 269SS ITA No.256 of 2014 contended that there was no violation of the provisions of section 269SS ofthe Act as it had not accepted any loan or deposit in cash. The receipt ofShare application monies in cash did not amount to acceptance of loan ordeposit by the company. The Assessing Officer referred the matter to theAdditional Commissioner who imposed penalty. The CIT(A) deleted thepenalty. The Tribunal upheld the said view. The Delhi High Court held thatreceipt of share application monies from the three private limited companiesfor allotment of shares in the assessee could not be treated as receipt of loanor deposit. The relevant findings recorded by the Delhi High Court readthus:- arSection 269SSprohibits any person from accepting a loanor deposit in cash exceeding Rs.20,000 in the aggregate in ayear from a third person. If there 1s any violation, the personreceiving the loan or deposit will be liable to penalty u/S.271DIn an amount equal to the amount of the loan or deposit. A loanor deposit is defined in the Explanation below Sec.269SS as a"loan or deposit of money". The assessee's contention, acceptedboth by the CIT(A) and the Tribunal, is that share applicationmonies received by a company, pending allotment of shares, donot amount to loan or deposit, arSection 269SSprohibits any person from accepting a loanor deposit in cash exceeding Rs.20,000 in the aggregate in ayear from a third person. If there 1s any violation, the personreceiving the loan or deposit will be liable to penalty u/S.271DIn an amount equal to the amount of the loan or deposit. A loanor deposit is defined in the Explanation below Sec.269SS as a"loan or deposit of money". The assessee's contention, acceptedboth by the CIT(A) and the Tribunal, is that share applicationmonies received by a company, pending allotment of shares, donot amount to loan or deposit, 8. On a careful consideration of the matter, we find that the AOhas relied on the judgment of the Jharkhand High Court (supra)and referred the issue of levying penalty to the Additional CIT.He did not examine whether the share application monies canbe treated as "loan" or "deposit" within the meaning ofSection269SS. The Additional CIT has merely endorsed the view ofthe AO in passing the penalty order. The CIT(A) has found as afact that the shares were subsequently allotted to the applicant-companies as shown by the form filed before the Registrar ofCompanies. 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 JharkhandHigh Court (supra). The reliance on this judgment appears to usto be misplaced.In Baidya Nath Plastic Industries (P) Ltd. andOrs vs K.L. Anand(1998) 230 ITR 522, a learned Single Judgeof this court pointed out that the distinction between a loan anda deposit is that in the case of the former it is ordinarily theduty of the debtor to seek out the creditor and to repay themoney according to the agreement while in the case of adeposit it 1s generally the duty of the depositor to go to thebanker or to the depositee, as the case may be, and make ademand for it. This judgment was approvingly cited by aDivision Bench of this court 1n Director of Income Tax(Exemption) vs ACME Educational Society(2010) 326 ITR146 (Del). In this decision, it was held that a loan grantstemporary use of money, or temporary accommodation, andthat the essence of a deposit is that there must be a liability toreturn it to the party by whom or on whose behalf it has beenmade, on fulfillment of certain conditions. If these tests areapplied to the facts of the case before us, 1t may be seen that thereceipt of share application monies from the three privatelimited companies for allotment of shares in the assessee-company cannot be treated as receipt of loan or deposit. In anycase, the Tribunal has rightly noticed the cleavage of judicialopinion on the point and held that in that situation there wasreasonable cause u/s 273B, applying the judgment of theSupreme Court in Vegetable Products (supra).” 10. _Similarly, 1nCIT vs. Sunil Kmar Goel,(2009) 315 ITR 163) assessee had satistactorily established reasonable cause under section 273Bof the Act, he must be deemed to have established sufficient cause for notinvoking the penalty provisions of Sections 271D and 271E of the Actagainst him. The deletion of penalty by the Tribunal was held to be valid,This Court recorded thus:- “Having given our thoughtful consideration to thesubmissions advanced by the learned counsel for the rivalparties, we are of the view that the finding that there wasreasonable cause shown by the respondent- assessee, 1s afinding of fact. This emerges from the decision rendered bythis Court 1n Saint Medical Store'scase (2005) 277 ITR420, wherein, this Court has inter-alia held as under:- 10. _Similarly, 1nCIT vs. Sunil Kmar Goel,(2009) 315 ITR 163) assessee had satistactorily established reasonable cause under section 273Bof the Act, he must be deemed to have established sufficient cause for notinvoking the penalty provisions of Sections 271D and 271E of the Actagainst him. The deletion of penalty by the Tribunal was held to be valid,This Court recorded thus:- “Having given our thoughtful consideration to thesubmissions advanced by the learned counsel for the rivalparties, we are of the view that the finding that there wasreasonable cause shown by the respondent- assessee, 1s afinding of fact. This emerges from the decision rendered bythis Court 1n Saint Medical Store'scase (2005) 277 ITR420, wherein, this Court has inter-alia held as under:- "As pointed out earlier, there 1s no doubt about thegenuineness of the transactions which have been fullyaccepted in the assessment made for the year underconsideration. Even if, there 1s any ignorance, whichresulted in the infraction of law, the default 1s technicaland venial which did not prejudice the interests of theRevenue as no tax avoidance or tax evasion was involved.To my mind, bona fide belief coupled with thegenuineness of the _ transactions would _ constireasonable cause under|section 2/73for not invoking theprovisions ofsection 271Eof the Act. The impugnedorder of penalty 1s cancelled. The findings of the Commissioner of Income tax(Appeals) have been confirmed in appeal by the Tribunal. Therefore, the findings recorded by the Commissioner ofIncome-tax (Appeals) and the Tribunal that the assesseehad shown reasonable cause for the failure to comply withthe provisions ofsection 269Tof the Act is a finding offact based on appreciation of material on record. It doesnot give rise to any question of law, much less substantial question of law. Accordingly, the appeal is dismissed." The Income Tax Appellate Tribunal was right in recording itsconclusion that a "reasonable cause" had been shown by therespondent- assessee. The Income Tax Appellate Tribunalrelied on the fact that the respondent-assessee had producedhis cash books, depicting loans taken by him unilaterallybefore the Revenue. Another fact taken into consideration was,that no prejudice was caused to the Revenue, in the instantaction of the respondent-assessee inasmuch as, the respondent-assessee did not attempt by the impugned act to avoid any taxliability. Furthermore, there 1s no dispute about the fact, thatthe instant cash transactions of the respondent-assessee werewith the sister concern, and that, these transactions werebetween the family, and due to business exigency. A familytransaction, between two independent assessees, based on anact of casualness, specially in a case where the disclosurethereof 1s contained in the compilation of accounts, and whichhas no tax effect, in our view establishes "reasonable cause"underSection 273Bof the Act. Since the respondent-assessee,had satisfactorily established "reasonable cause" underSection2738of the Act, he must be deemed to have establishedsufficient cause for not invoking the penal provisions (Sections2 7TandDT 1of the Act) against him.” 11.However, contrary view was taken by the Jharkhand High Court inBholotia Engineering Works Pvt. Limted vs. Commissioner of IncomeTax,(2005) 275 ITR 399, to the effect that even if share application moneycannot be considered to be a loan within the meaning of section 269SS ofthe Act, it partakes the character of a deposit since it 1s repayable in specieon refusal to allot shares and 1s repayable 1f recalled by the applicant before allotment of shares and the conclusion of the contract. Hence the acceptance ITA No.256 of 2014 held to be violating the provisions of section 269SS of the Act. It wasobserved as under:- 11.However, contrary view was taken by the Jharkhand High Court inBholotia Engineering Works Pvt. Limted vs. Commissioner of IncomeTax,(2005) 275 ITR 399, to the effect that even if share application moneycannot be considered to be a loan within the meaning of section 269SS ofthe Act, it partakes the character of a deposit since it 1s repayable in specieon refusal to allot shares and 1s repayable 1f recalled by the applicant before allotment of shares and the conclusion of the contract. Hence the acceptance ITA No.256 of 2014 held to be violating the provisions of section 269SS of the Act. It wasobserved as under:- “9. If we take recourse to the explanation inSection 269Tof theAct, deposit means a deposit of money which 1s repayable afternotice or repayable after a period. Money paid to a company insupport of an application for shares is a deposit of money in thecompany which 1s repayable by the company alter the period forallotment of shares comes to an end, or a decision is takenregarding the allotment of shares. Thereafter, the amount 1srepayable to the person who paid the money, even without ademand in that behalf. In case of refusal of shares the amounthas to be returned in specie. In that context, it appears to us thatthere cannot be much difficulty in holding that the amount paidIn support of an application for shares must be considered to be adeposit till the allotment of shares or refund of the money onrejection of the application. 10. What will happen if shares are ultimately allotted to theapplicant? What is the nature of the amount in the hands of thecompany until the shares are allotted? The amount cannot be aloan. But at the same time, there 1s an obligation on the companyto return the money to the applicant or for allotting the sharesapplied tor. Until either of these happens, the amount cannot beconsidered to be a loan in the hands of the company. But itappears to us that it will partake the character of a deposit in thehands of the company attracting the prohibition contained inSection 269SSoft the Act. 11. The question has to be considered in the context of purposesought to be achieved by the insertion ofSection 269SSin theAct. Obviously, it was done with a view to prevent transactionsin black money and to ensure that payments of Rs. 20.000/- andabove, are traceable to transactions through a Bank. If themischief that is sought to be averted is kept in mind. it will beappropriate to hold that any payment of Rs. 20,000/- or above, made to a company as share application money, should be asprovided inSection 269SSof the Act. 12. Therefore, even if share application money cannot beconsidered as a loan within the meaning ofSection 269SSof theAct, we are of the view that it partakes the character of a deposit,since it 18 repayable 1n specie on refusal to allot shares and isrepayable if recalled by the applicant, before allotment of sharesand the conclusion of the contract.’ 12)Respectfully, we are unable to subscribe to the view taken bythe Jharkhand High Court 1n|Bhalotia Engineering Works Pvt. Limited"9case (supra). Accordingly, it 1s held that the amount received by theassessee towards share application money would not fall under loan ordeposit under section 269SS of the Act. Consequently, the penalty underSection 271D of the Act was not leviable. The Tribunal was right indeleting the penalty. Consequently, finding no merit 1n the appeals, the sameare hereby dismissed.| (Ajay Kumar Mittal)Judge September 21, 2015@?"@ (Ramendra Jain)Judge