Multi Ex Marketing & Communications Ltd., Kolkata v. DCIT, Central Circle - XXII, Kolkata

ITA 1918/KOL/2009 | 2006-2007
Pronouncement Date: 18-07-2011 | Result: Allowed

Appeal Details

RSA Number 191823514 RSA 2009
Assessee PAN AADCM4340F
Bench Kolkata
Appeal Number ITA 1918/KOL/2009
Duration Of Justice 1 year(s) 8 month(s) 2 day(s)
Appellant Multi Ex Marketing & Communications Ltd., Kolkata
Respondent DCIT, Central Circle - XXII, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 18-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-07-2011
Date Of Final Hearing 11-03-2010
Next Hearing Date 11-03-2010
Assessment Year 2006-2007
Appeal Filed On 16-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE /AND . ! . '# ) [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE SHR I C. D. RAO AM] $ $ $ $ / I.T.A NOS. 1918 & 1919/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEARS: 2006-07 & 2007-08 MULTI EX MARKETING & COMMUNICATIONS VS. DEPUTY CO MMISSIONER OF INCOME-TAX LTD. (PAN AADCM 4340 F) CENTRAL CIRCLE-XXII KOL KATA. (*+ /APPELLANT ) ( -*+/ RESPONDENT ) FOR THE APPELLANT: SHRI A. K. TIBREWAL FOR THE RESPONDENT: SHRI A. K. PRAMANICK '. / ORDER PER MAHAVIR SINGH JM ( ) THESE APPEALS BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A) CENTRAL-III KOLKATA IN APPEAL NO.198 & 199/CC-XXII/CIT(A)-C-III /08-09 VIDE DATED 01.09.2009. ASSESSMENTS WERE FRAMED BY DCIT CC-XXII KOLKATA U/ S. 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASSESSMENT YEARS 2006-07 AND 2007-08 VIDE HIS SEPARATE ORDER BOTH DATED 14.0 7.2008. THE PENALTY IN DISPUTE WAS LEVIED BY ADDL.CIT RANGE-VI CENTRAL KOLKATA U/S 271D OF THE ACT VIDE HIS SEPARATE ORDER BOTH DATED 31.12.2008. 2. THE ONLY COMMON ISSUE IN THESE TWO APPEALS OF TH E ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING LEVY OF PENALTY U/S. 271D OF ACT. FOR THIS ASSESSEE HAS RAISED COMMON GROUNDS IN BOTH THE YEARS AND THE GROUNDS ARE IDENT ICALLY WORDED EXCEPT AMOUNT. WE WILL TAKE UP THE GROUNDS FROM ITA NO. 1918/K/2009 WHICH READ S AS UNDER: 1) THAT THE LD. CIT(A) ERRED IN APPRECIATING AND/ OR CONSTRUING THE PRIMARY FACTS OF THE CASE AND THE CORRECT PRINCIPLES OF LAW APPLICABLE T O IT AND ON THE BASIS OF SUCH MISCONCEIVED NOTION OF FACTS AS WELL AS OF LAW HE FURTHER ERRED IN CONFIRMING THE PENALTY OF RS.6 81 000/- LEVIED BY THE ADDL. COMMISSIONER O F INCOME-TAX U/S. 271D READ WITH SEC. 269SS OF THE INCOME TAX ACT. 2) THAT THE LD. CIT(A) ERRED IN INFERRING THAT . THE ACT OF PLACING MONEY BY THE SHARE APPLICANTS AT THE TIME OF APPLICATION WITH THE ASSE SSEE FOR ALLOTMENT OF SHARES TANTAMOUNT TO DEPOSITING OF MONEY (PAGE 23 & 24 OF THE APPEL LATE ORDER) AND ON THE BASIS OF SUCH ERRONEOUS OBSERVATION HE FURTHER ERRED IN AGREEING WITH THE AUTHORITY BELOW THAT THE ASSESSEE HD RECEIVED SHARE APPLICATION MONEY IN TH E AMOUNT OF RS.20 000/- OR MORE IN CASH FOR AN AGGREGATE AMOUNT OF RS.6 81 000/- FOR ALLOTMENT OF PREFERENCE SHARES IN VIOLATION OF THE PROVISIONS OF SEC. 269SS OF THE AC T. 2 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 3. THAT WITHOUT PREJUDICE THE LD. CIT(A) ERRED IN OBSERVING INTER ALIA THAT . THE APPLICANT HAD NOT PUT FORWARD ANY REASONABLE CAUSE FOR RECEIVING THE MONEY IN CASH FROM THE SHARE APPLICANTS AND REPAYING THE MONEY IN CASH TO THE SHARE APPLICANTS. (PAGE 10 OF THE APPELLATE ORDER) AND ON THE BASIS OF SUCH ERRONEOUS OBSERVATION HE FURTHER ERRED IN CONFIRMING THE ORDER U/S. 271-D O F THE ACT. 4. THAT THE CONCLUSION DRAWN BY THE LD. CIT(A) IN CONFIRMING THE PENALTY U/S. 271-D IS BASED ON IRRELEVANT CONSIDERATIONS AND THEREFORE THE IMPUGNED ORDER UNDER APPEAL IS BAD IN LAW AND PERVERSE. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THERE IS A SEARCH & SEIZURE OPERATIONS U/S.132 OF THE INCOME TAX ACT 1961 AGAINST THE BASIL /APPELLI NE GROUP OF CASES OF WHICH THE ASSESSEE WAS PART OF ON 27.12.2006. FOLLOWING THE SEARCH NO TICES U/S.153A OF THE INCOME TAX ACT 1961 HAD BEEN ISSUED AND ON THE BASIS OF THE RETURN S FILE BY THE ASSESSEE ASSESSING OFFICER MADE ASSESSMENTS U/S. 153A OF THE ACT ON 14-07-2008 . HE INTIMATED ADDL.CIT RANGE VI KOLKATA OF THE FACT OF THE ASSESSEE ACCEPTING MONIE S ON ACCOUNT OF PREFERENCE SHARES / DEBENTURES AMOUNTING TO RS.20 000/- OR MORE FROM AN Y PARTICULAR PERSON OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IN THE ASSESSMENT YEARS UNDER APPEAL. ADDL CIT RANGE VI KOLKATA HAD AFTER HEARING THE ASSESS EE LEVIED PENALTY U/S.271 D OF THE INCOME TAX ACT 1961 IN THE SAID ASSESSMENT YEARS ON 31-12- 2008. THE COMPLETE DETAILS ARE GIVEN BELOW: ASSTT. YEAR RETURNED INCOME OR LOS (RS.) ASSESSED INCOME S.1531 (RS.) PREF SHARE/DEBENTURE APPLN RECD IN EXCESS OF RS.20 000/- (RS.) YEAR PENALTY LEVIED S.271D (RS.) 2006-07 2007-08 (6940350) (510592) (6940350) (510592) 681000 357500 681000 357500 4. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE STATED THAT ISSUE IS COVERED BY DECISION OF COORDINATE BENCH IN THE CASE OF APPELINE COSMETICS & TOILETRIES LTD. VS. DCIT ITA NOS.1969 TO 1975/K/2009 AYS 2002-03 TO 2004-05 20 07-08 & 2002-03 TO 2004-05 DATED 19 TH APRIL 2011. ON THE OTHER HAND THE LD. DR RELIED O N THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ON THE IDENTICAL ISSUE IN THE CASE OF APPELINE COSMETICS & TOILETRIES LTD. (SUPRA) WE HAVE HELD AS UNDER: 8. WE HAVE HEARD RIVAL PARTIES AND GONE THROUGH TH E FACTS AND CIRCUMSTANCES OF THE CASE. ADMITTED FACTS ARE THAT THE ASSESSEE HAS ACCE PTED MONIES ON ACCOUNT OF PREFERENCE SHARES/ DEBENTURES OF RS.20 000/- OR MORE AND ALSO REPAID MONIES RECEIVED ON ACCOUNT OF PREFERENCE SHARES/ DEBENTURES FROM VARIOUS PERSONS OTHERWISE THAN BY ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE BANK DRAFTS DURING THE YEA R UNDER APPEALS. NOW THE QUESTION ARISES WHETHER THE AMOUNT RECEIVED ON ACCOUNT OF SH ARE APPLICATION MONEY AND THE 3 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 REPAYMENT OF THE SAME VIOLATES THE PROVISIONS OF SE CTION 269SS AND 269T OF THE ACT ATTRACTING PENALTY UNDER SECTION 271D AND 271E OF T HE ACT. AS THE CASE LAW OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF BHALOTIA ENGINE ERING WORKS PVT. LTD.(SUPRA) RELIED BY LD. CIT (D.R.) WHEREIN HONBLE HIGH COURT HELD THAT THE ACCEPTANCE OF SHARE APPLICATION MONEY AMOUNTING TO RS.20 000/- OR MORE VIOLATES THE PROVISIONS OF SECTION 269SS OF THE ACT. ON THE OTHER HAND THE DECISION R ELIED BY THE LD. COUNSEL IN THE CASE OF RUGMINI RAM RAGAV SPINNERS PVT. LTD. (SUPRA) OF HON BLE MADRAS HIGH COURT WHEREIN IT IS HELD THAT THE PROVISIONS OF SECTION 269SS AND 26 9T OF THE ACT HAVE APPLICATION ONLY IN A LIMITED WAY IN RESPECT OF DEPOSITS OR LOANS. WHEN I T IS NEITHER DEPOSIT NOR LOAN HONBLE COURT HELD THAT THE PROVISIONS OF SECTIONS 269SS AN D 269T OF THE ACT HAVE NO APPLICATION AT ALL. THE COURT FURTHER HELD THAT EVEN IF THERE I S REPAYMENT BY CASH IT COULD NOT BE SAID TO ATTRACT THE LEVY OF PENALTY AUTOMATICALLY UNDER SECTION 271E OF THE ACT. THE ADVANCES OF SHARE APPLICATION MONEY OR REPAYMENTS OF SUCH ADVAN CES HAVE NOT FLOWED FROM ANY UNDISCLOSED INCOME OF THE ASSESSEE OR THE CONCERNED PERSONS. IN THE PRESENT CASE ALSO THE ASSESSEE WAS SEARCHED AND THESE SHARE APPLICATION M ONIES WERE NEVER THE SUBJECT MATTER OF ADDITION IN THE CASE OF THE ASSESSEE AND ACCORDI NGLY THE SHARE APPLICATION MONEY AND REPAYMENT OF THE SAME HAVE NOT FLOWED FROM ANY UNDI SCLOSED INCOME OF THE ASSESSEE. WE FIND FROM THE RECORDS THAT THE ASSESSEE HAS NOT PAI D ANY INTEREST ON ANY OF THE SHARE APPLICATION MONIES TILL REPAYMENT WHICH IS QUITE A FTER SOMETIME. IF THE INTENTION WAS TO RECEIVE THESE SHARE APPLICATION MONIES AS LOANS OR DEPOSITS THEN CERTAINLY THE LENDERS WOULD NOT HAVE MADE THE ADVANCES GRATUITOUSLY. WE F URTHER FIND THAT EVEN THE PENALTY UNDER SECTION 271D AND 271E IS NOT AUTOMATIC ON THE ISSUE AS ARGUED BY THE LD. COUNSEL THERE IS BONAFIDE BELIEF TO THE EFFECT THAT THE REC EIPT OF ADVANCES AGAINST ALLOTMENT OF SHARES AND REPAYMENT OF SHARE MONEY WOULD NOT BE TE RMED AS LOANS OR DEPOSITS WHICH WOULD BE SUFFICIENT TO DROP THE PENALTY LEVIED IN T HE PRESENT CASE. HERE THE REVENUE IS UNABLE TO SUBSTANTIATE THAT THE MONEY RECEIVED IS O NLY A LOAN OR DEPOSIT RATHER THERE IS NO DISPUTE THAT THE ADVANCES OR REPAYMENTS WERE ONLY A GAINST ALLOTMENT OF SHARES AND NOT BY WAY OF LOANS OR DEPOSITS. WE FURTHER NOTE THAT THE REVENUE COULD NOT BRING ON RECORD ANY MATERIAL THAT WOULD GO TO SHOW THAT THE ASSESSEE IN FACT WANTED ONLY LOAN OR DEPOSIT BUT TRIED TO SHOW THEM AS SHARE APPLICATION MONEY AND M ERELY FOR THE REASON THAT FOR SOME OF THE APPLICATIONS MONIES WERE RETURNED AND IN SOME O F THE APPLICATIONS THE SHARE ALLOTMENTS WERE NOT IN FULL IT CANNOT BE TAKEN INT O ACCOUNT THAT THIS IS NO SHARE APPLICATION MONEY. HENCE WE ARE OF THE VIEW IN VIEW OF THE FA CTUAL FINDINGS BY THE LOWER AUTHORITIES THAT THE AMOUNT RECEIVED BY WAY OF DEPOSIT OR LOAN IS ONLY SHARE APPLICATION MONEY. WE FURTHER FIND THAT THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF BHALOTIA ENGINEERING WORKS PVT. LTD. (SUPRA) HAS DECIDED THE ISSUE AS UN DER :- IF WE TAKE RECOURSE TO THE EXPLANATION IN SECTION 2 69T OF THE ACT DEPOSIT MEANS A DEPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD. MONEY PAID TO A COMPANY IN SUPPORT OF AN APPLICATION FOR SHARES IS A DEPOSIT O F MONEY IN THE COMPANY WHICH IS REPAYABLE BY THE COMPANY AFTER THE PERIOD FOR ALLOTMENT OF SHARE S COMES TO AN END OR A DECISION IS TAKEN REGARDING THE ALLOTMENT OF SHARES. THEREAFTER THE AMOUNT IS REPAYABLE TO THE PERSON WHO PAID THE MONEY EVEN WITHOUT A DEMAND IN THAT BEHALF. IN THE CASE OF REFUSAL OF SHARES THE AMOUNT HAS TO BE RETURNED IN SPECIE. IN THAT CONTEXT IT APPEA RS TO US THAT THERE CANNOT BE MUCH DIFFICULTY IN HOLDING THAT THE AMOUNT PAID IN SUPPORT OF AN APPLI CATION FOR SHARES MUST BE CONSIDERED TO BE A DEPOSIT TILL THE ALLOTMENT OF SHARES OR REFUND OF T HE MONEY ON REJECTION OF THE APPLICATION. WHAT WILL HAPPEN IF SHARES ARE ULTIMATELY ALLOTTED TO THE APPLICANT? WHAT IS THE NATURE OF THE AMOUNT IN THE HANDS OF THE COMPANY UNTIL THE SHARES ARE ALLOTTED? THE AMOUNT CANNOT BE A LOAN. BUT AT THE SAME TIME THERE IS AN OBLIGATION ON THE COMPANY TO RETURN THE MONEY TO THE APPLICANT OR FOR ALLOTTING THE SHARES APPLIED FOR. UNTIL EITH ER OF THESE HAPPENS THE AMOUNT CANNOT BE CONSIDERED TO BE A LOAN IN THE HANDS OF THE COMPANY . BUT IT APPEARS TO US THAT IT WILL PARTAKE OF THE CHARACTER OF A DEPOSIT IN THE HANDS OF THE COMP ANY ATTRACTING THE PROHIBITION CONTAINED IN SECTION 269SS OF THE ACT. 4 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 THE QUESTION HAS TO BE CONSIDERED IN THE CONTEXT OF THE PURPOSE SOUGHT TO BE ACHIEVED BY THE INSERTION OF SECTION 269SS IN THE ACT. OBVIOUSLY I T WAS DONE WITH A VIEW TO PREVENT TRANSACTIONS IN BLACK MONEY AND TO ENSURE THAT PAYMENTS OF RS. 2 0 000 AND ABOVE ARE TRACEABLE TO TRANSACTIONS THROUGH A BANK. IF THE MISCHIEF THAT I S SOUGHT TO BE AVERTED IS KEPT IN MIND IT WILL BE APPROPRIATE TO HOLD THAT ANY PAYMENT OF RS. 20 0 00 OR ABOVE MADE TO A COMPANY AS SHARE APPLICATION MONEY SHOULD BE AS PROVIDED IN SECTIO N 269SS OF THE ACT. THEREFORE EVEN IF SHARE APPLICATION MONEY CANNOT B E CONSIDERED AS A LOAN WITHIN THE MEANING OF SECTION 269SS OF THE ACT WE ARE OF THE VIEW TH AT IT PARTAKES OF THE CHARACTER OF A DEPOSIT SINCE IT IS REPAYABLE IN SPECIE ON REFUSAL TO ALLOT SHARES AND IS REPAYABLE IF RECALLED BY THE APPLICANT BEFORE ALLOTMENT OF SHARES AND THE CONC LUSION OF THE CONTRACT. BUT ON THIS VERY SIMILAR ISSUE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS RUGMINI RAM RAGAV SPINNERS P. LTD. (SUPRA) HAS HELD AS UNDER: HEARD COUNSEL. THE ASSESSEE HAD RECEIVED CASH OVER A PERIOD OF TIME AS ADVANCE TOWARDS ALLOTMENT OF SHARES FROM 16 PERSONS WITHOUT STIPULA TING ANY TIME FRAME TOWARDS RETURN/REFUND OF MONEY WITHOUT INTEREST IN CASE OF NON-ALLOTMENT OF SHARES EITHER FULLY OR PARTLY. IN THIS CASE THE MONEY RETAINED BY THE COMPANY WAS NEITHER DEPOSIT N OR LOAN BUT IT IS ONLY SHARE CAPITAL ADVANCE. PENALTY UNDER SECTION 271E IS NOT AUTOMATI C AND TO BE LEVIED ONLY IN THE ABSENCE OF A REASONABLE CAUSE. NO DOUBT A REASONABLE CAUSE HAS T O BE ESTABLISHED BY THE ASSESSEE. THE RATIONALE BEHIND THE PROVISIONS OF SECTIONS 269SS A ND 269T IS TO PREVENT TAX EVASION I.E. THE LAUNDERING OF CONCEALED INCOME BY PARTIES IN THE GU ISE OF CASH LOANS OR DEPOSITS IN OR OUTSIDE THE ACCOUNTS. THE PROVISION OF SECTIONS 269SS AND 2 69T THEREFORE HAVE APPLICATION ONLY IN A LIMITED WAY IN RESPECT OF DEPOSITS OR LOANS. WHEN I T IS NEITHER DEPOSIT NOR LOAN THE PROVISIONS OF SECTIONS 269SS AND 269T HAVE NO APPLICATION AT ALL. EVEN IF THERE IS REPAYMENT BY CASH IT COULD NOT BE SAID TO ATTRACT THE LEVY OF PENALTY AUTOMATI CALLY UNDER SECTION 271E OF THE ACT. THE ADVANCES OF SHARE APPLICATION MONEY OR REPAYMENTS O F SUCH ADVANCES HAVE NOT FLOWED FROM ANY UNDISCLOSED INCOME OF THE ASSESSEE OR THE CONCERNED PERSONS. IT IS ALSO SEEN FROM THE RECORDS THAT THE ASSESSEE HAD NOT PAID ANY INTEREST AT ALL ON ANY OF THE ADVANCES REPAID AFTER QUITE SOME TIME. IF THE INTENTION WAS TO RECEIVE THEM AS LOANS OR DEPOSITS THEN CERTAINLY THE LENDERS WOULD NOT HAVE MADE THE ADVANCES GRATUITOUSLY. IT IS ALS O A FACTUAL FINDING GIVEN BY THE AUTHORITIES BELOW THAT THE ASSESSEE WAS NOT CALLED UPON TO EXP LAIN THE DEFAULT UNDER SECTION 269SS ON RECEIPT OF THE ADVANCES IN EARLIER YEARS WHICH WO ULD SHOW THAT THE ASSESSEES CASE WAS NOT GOVERNED BY THE SAID PROVISIONS. PENALTY UNDER SECT ION 271E IS NOT AUTOMATIC AND A BONA FIDE BELIEF TO THE EFFECT THAT THE RECEIPT OF ADVANCES AGAINST ALLOTMENT OF SHARES WOULD NOT BE TERMED AS LOANS OR DEPOSITS WOULD BE SUFFICIENT TO DROP THE PENALTY LEVIABLE UNLESS AND UNTIL THE MATERIAL ON RECORD POSITIVELY SHOWS THAT MONEY RECE IVED IS ONLY A DEPOSIT OR LOAN. THERE IS NO DISPUTE THAT THE IMPUGNED ADVANCES WERE ONLY AGAINS T ALLOTMENT OF SHARES AND NOT BY WAY OF LOANS OR DEPOSITS. THE AUTHORITIES BELOW HAVE GIVEN A FACTUAL FINDING TO THE EFFECT THAT IT IS NOT A DEPOSIT OR LOAN. THE TRIBUNAL IN PARAGRAPH 3 OF IT S ORDER HELD AS UNDER: THE DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ON RECORD ANY MATERIAL THAT WOULD GO TO SHOW THAT THE ASSESSEE IN FACT WANTED ONLY LOAN OR DEPOSIT BUT TRIED TO SHOW THEM AS SHARE APPLICATION MONEY. MERELY FOR THE REASON THA T SOME OF THE APPLICATIONS WERE REJECTED AND IN SOME OF THE APPLICATIONS THE SHARE ALLOTMENTS WERE NOT IN FULL IT CANNOT BE TAKEN TO MEAN THAT IT WAS NOT SHARE APPLICATION MON EY. UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THE APPEAL BY THE REVENUE IS DISMISSED. HENCE THE FACTUAL FINDING BY THE AUTHORITIES BELOW IS THAT THE AMOUNT RECEIVED IS NOT A DEPOSIT OR LOAN BUT IT IS ONLY SHARE APPLICATION MONEY AN D THE SAME IS BASED ON VALID MATERIALS AND EVIDENCE. THE RELEVANT PROVISIONS OF LAW ARE SECTIO NS 269T 271D 271E AND 273B OF THE ACT. IN THE PRESENT CASE THE ASSESSING OFFICER LEVIED PENA LTY UNDER SECTION 271E DEALS WITH PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTIO N 269T. SECTION 271E AS ON THE RELEVANT PERIOD READS AS FOLLOWS: 5 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 271E. (1) IF A PERSON REPAYS ANY DEPOSIT REFERRED TO IN SECTION 269T OTHERWISE THAN IN ACCORDANCE WITH THE PROVISIONS OF THAT SECTION HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF THE DEPOSIT SO REPAID. (2) ANYPENALTY IMPOSABLE UNDER SUB-SECTION (1) SHAL L BE IMPOSED BY THE DEPUTY COMMISSIONER. FROM A READING OF THE ABOVE IT IS CLEAR THAT IF A PERSON REPAYS ANY DEPOSIT REFERRED TO IN SECTION 269T OTHERWISE THAN IN ACCORDANCE WITH THE PROVISIO NS OF THAT SECTION HE SHALL BE SUBJECTED TO LEVY OF PENALTY. SECTION 269T DEALS WITHMODE OF RE PAYMENT OF CERTAIN DEPOSITS. SECTION 269T AS ON THE RELEVANT PERIOD READS AS FOLLOWS: 269T.(1) NO COMPANY (INCLUDING A BANKING COMPANY) CO-OPERATIVE SOCIETY OR FIRM SHALL REPAY TO ANY PERSON ANY DEPOSIT OTHERWISE TH AN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT WHERE THE AMOUNT OF THE D EPOSIT OR WHERE THE AMOUNT OF THE DEPOSIT IS TO BE REPAID TOGETHER WITH ANY INTEREST THE AGGREGATE OF THE AMOUNT OF THE DEPOSIT AND SUCH INTEREST IS TEN THOUSAND RUPEES O R MORE : PROVIDED THAT WHERE THE REPAYMENT IS BY A BANKING C OMPANY OR CO-OPERATIVE BANK SUCH REPAYMENT MAY ALSO BE MADE BY CREDITING THE A MOUNT OF SUCH DEPOSIT TO THE ACCOUNT (IF ANY) WITH SUCH COMPANY OR BANK OF THE PERSON TO WHOM SUCH DEPOSIT HAS TO BE REPAID : PROVIDED FURTHER THAT NOTHING IN THIS SUB-SECTION S HALL APPLY TO OR IN RELATION TO THE REPAYMENT OF ANY DEPOSIT ON OR AFTER THE DATE ON W HICH THE INCOME-TAX (SECOND AMENDMENT) ACT 1981 RECEIVES THE ASSENT OF THE P RESIDENT. (2) NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIV E BANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON S HALL REPAY ANY DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOU NT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAS MADE THE DEPOSIT IF (A) THE AMOUNT OF THE DEPOSIT TOGETHER WITH INTERES T IF ANY PAYABLE THEREON OR (B) THE AGGREGATE AMOUNT OF DEPOSITS HELD BY SUCH P ERSON WITH THE BRANCH OF THE BANKING COMPANY OR CO-OPERATIVE BANK OR AS THE CASE MAY BE THE OTHER COMPANY OR CO-OPERATIVE SOCIETY OR THE FIRM EITHER IN HIS OWN NAME OR JOINTLY WITH ANY OTHER PERSON ON THE DATE OF SUCH REPAYMEN T TOGETHER WITH THE INTEREST IF ANY PAYABLE ON SUCH DEPOSITS IS TWENTY THOUSAN D RUPEES OR MORE : PROVIDED THAT WHERE THE REPAYMENT IS BY A BRANCH OF A BANKING COMPANY OR CO- OPERATIVE BANK SUCH REPAYMENT MAY ALSO BE MADE BY CREDITING THE AMOUNT OF SUCH DEPOSIT TO THE SAVINGS BANK ACCOUNT OR THE CURRENT ACCOUNT (IF ANY) WITH SUCH BRANCH OF THE PERSON TO WHOM SUCH DEPOSIT HAS TO BE REPAID : PROVIDED FURTHER THAT NOTHING IN THIS SUB-SECTION S HALL APPLY TO OR IN RELATION TO THE REPAYMENT OF ANY DEPOSIT BEFORE THE DATE ON WHICH T HE INCOME-TAX (SECOND AMENDMENT) ACT 1981 RECEIVES THE ASSENT OF THE PRESIDENT. THE ABOVE SECTION PROVIDES THAT NO BRANCH OF A BANK ING COMPANY COOPERATIVE BANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY OR PARTNERSHI P FIRM OR OTHER PERSON CAN REPAY ANY DEPOSIT MADE WITH SUCH ENTITY OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAS MADE THE DEPOSIT. THE SPECIFIC WORD USED IN THE PROVISION IS DEPOSIT. IN THIS CASE THE FINDING I S THAT THERE IS NO DEPOSIT. SECTION 273B OF THE 6 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 ACT DEALS WITH PENALTY NOT TO BE IMPOSED IN CERTAI N CASES. SECTION 273B AS ON THE RELEVANT PERIOD READS AS UNDER: 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PR OVISIONS OF CLAUSE (B) OF SUB- SECTION (1) OF SECTION 271 SECTION 271A SECTION 2 71B SECTION 271BB SECTION 271C SECTION 271D SECTION 271E CLAUSE (C) OR CLAUSE ( D) OF SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 272A SUB-SECTION (1) OF SECTION 272 AA OR SUB-SECTION (1) OF SECTION 272BB OR CLAUSE (B) OF SUB-SECTION (1) OR CLAUSE ( B) OR CLAUSE (C) OF SUB-SECTION (2) OF SECTION 273 NO PENALTY SHALL BE IMPOSABLE ON THE P ERSON OR THE ASSESSEE AS THE CASE MAY BE FOR ANY FAILURE REFERRED TO IN THE SAID PRO VISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THE ABOVE SECTION PROVIDES THAT IF THE ASSESSEE PRO VES THAT THERE IS A REASONABLE CAUSE HE IS NOT SUBJECT TO LEVY OF PENALTY. THE CASE OF THE ASSESSE E IS THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS ONLY FOR THE PURPOSE OF ALLOTMENT OF SHARES AND IT IS NOT A DEPOSIT OR LOAN. IN THIS CASE THE REASONABLE CAUSE IS THAT THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE MONEY RECEIVED IS ONLY FOR THE PURPOSE OF ALLOTMENT OF SHARES. ALSO THERE IS NO MATERIAL OR EVIDENCE OR ANY COMPELLING REASON PRODUCED BY THE REVENUE TO PROVE THAT THE MONEY RECEIVED IS A DEPOSIT OR LOAN. THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAVE COME TO A CORRECT CONCLUSION AFTER ACCEPTING THE EXPLANATION OFFERED BY THE ASSE SSEE. IT IS A QUESTION OF FACT AND THE ORDER OF THE TRIBUNAL IS NOT A PERVERSE ONE. THE CONCURRENT FINDING GIVEN BY BOTH THE AUTHORITIES BELOW IS BASED ON VALID MATERIALS AND EVIDENCE. IN THE CASE OF CIT V. P. MOHANAKALA [2007] 291 ITR 278 THE SUPREME COURT HELD THAT WHENEVER THERE IS A CONCURRENT FINDING BY THE AUTHORITIES BELOW NO INTERFERENCE SHOULD BE CALLED FOR BY THE HIGH COURT. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY ERROR OR LEGAL INFIRMITY IN THE ORD ER OF THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. 9. IN VIEW OF THE ABOVE TWO JUDGMENTS OF TWO HONBL E HIGH COURTS WHERE CONFLICTING VIEWS ARE TAKEN THE VIEW IN FAVOUR OF THE ASSESSEE INTERPRETING THE PROVISIONS SHOULD BE ADOPTED IN VIEW OF THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS VEGETABLE PRODUCTS (1973) 88 ITR 195 (SC) WHEREIN HONBLE AP EX COURT HAS HELD AS UNDER:- THERE IS NO DOUBT THAT THE ACCEPTANCE OF ONE OR TH E OTHER INTERPRETATION SOUGHT TO BE PLACED ON SECTION 271(1)(A)(I) BY THE PARTIES WOULD LEAD TO S OME INCONVENIENT RESULT BUT THE DUTY OF THE COURT IS TO READ THE SECTION UNDERSTAND ITS LANGUA GE AND GIVE EFFECT TO THE SAME. IF THE LANGUAGE IS PLAIN THE FACT THAT THE CONSEQUENCE OF GIVING E FFECT TO IT MAY LEAD TO SOME ABSURD RESULT IS NOT A FACTOR TO BE TAKEN INTO ACCOUNT IN INTERPRETING A PROVISION. IT IS FOR THE LEGISLATURE TO STEP IN AND REMOVE THE ABSURDITY. ON THE OTHER HAND IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE THAT CONSTRUCTION WHICH FAV OURS THE ASSESSEE MUST BE ADOPTED. THIS IS A WELL-ACCEPTED RULE OF CONSTRUCTION RECOGNISED BY TH IS COURT IN SEVERAL OF ITS DECISIONS. HENCE ALL THAT WE HAVE TO SEE IS WHAT IS THE TRUE EFFECT OF THE LANGUAGE EMPLOYED IN SECTION 271(1)(A)(I). IF WE FIND THAT LANGUAGE TO BE AMBIGUOUS OR CAPABLE OF MORE MEANINGS THAN ONE THEN WE HAVE TO ADOPT THAT INTERPRETATION WHICH FAVOURS THE ASSESSE E MORE PARTICULARLY SO BECAUSE THE PROVISION RELATES TO IMPOSITION OF PENALTY. 10. IN VIEW OF THE ABOVE DISCUSSION CASE LAWS RELI ED BY BOTH THE SIDES WE ARE OF THE CONSIDERED VIEW THAT ON RECEIPT OF SHARE APPLICATIO N MONEY AND REPAYMENT THEREOF WILL NOT VIOLATE THE PROVISIONS OF SECTION 269SS AND 269T W HICH ATTRACTS LEVY OF PENALTY UNDER SECTION 271D AND 271E OF THE ACT. ACCORDINGLY THESE APPEAL S OF THE ASSESSEE ARE ALLOWED. 7 ITA 1918-1919/K/2009 MULTI EX MARKETING COMMUNICATION LTD. A.Y.06-07&07-08 SINCE THIS ISSUE IS COVERED BY THE AFORESAID DECISI ON CITED SUPRA IN FAVOUR OF ASSESSEE WE DELETE THE PENALTY LEVIED BY ASSESSING OFFICER AND SUSTAIN ED BY CIT(A). APPEALS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED. 7. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . ! . '# (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED 18TH JULY 2011 /0 %12 3 JD.(SR.P.S.) '. 4 5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT MULTI EX MARKETING & COMMUNICATIONS LTD . 12A AMRITA BANERJEE LANE KOLKATA-26. 2 -*+ / RESPONDENT- DCIT CC-XXII KOLKATA. 3 . .% ( )/ THE CIT(A) KOLKATA 4. .% / CIT KOLKATA 5 . >? % / DR KOLKATA BENCHES KOLKATA -5 / TRUE COPY '.%@/ BY ORDER 2 /ASSTT. REGISTRAR .