M/s Vatika Hotels Pvt. Ltd.,, Gurgaon v. Addll. CIT, New Delhi

ITA 4627/DEL/2009 | 2006-2007
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 462720114 RSA 2009
Bench Delhi
Appeal Number ITA 4627/DEL/2009
Duration Of Justice 1 month(s) 14 day(s)
Appellant M/s Vatika Hotels Pvt. Ltd.,, Gurgaon
Respondent Addll. CIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 22-01-2010
Date Of Final Hearing 12-01-2010
Next Hearing Date 12-01-2010
Assessment Year 2006-2007
Appeal Filed On 08-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 4627(DEL)/2009 ASSESSMENT YEAR: 2006-07 M/S VATIKA HOTELS PVT. LTD. ADDL. COMMISSIONER OF INCOME VATIKA TRIANGLE SUSHANT LOK-I VS. TAX RANGE-17 NEW DELHI. BLOCK-A MEHRAULI GURGAON ROAD GURGAON. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.S. AGGARWAL SR. ADVOCATE SHRI RAVI PRATAP MALL ADVOCATE & SHRI D.B. JAIN C.A. RESPONDENT BY : SHRI STEPHEN GEORGE CIT DR ORDER PER K.G. BANSAL ; AM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAIN ST THE LEVY OF PENALTY OF RS. 50.00 CRORE U/S 271D OF THE INCOME-TAX A CT 1961. THE ASSESSEE HAS TAKEN UP A NUMBER OF GROUNDS THE GIST OF WHICH IS THAT THE LD. CIT(APPEALS) ERRED ON FACTS AND IN LAW IN CO NFIRMING THE LEVY OF PENALTY OF RS. 50.00 CRORE U/S 271D OF THE ACT . OTHER GROUNDS ARE IN THE NATURE OF STATEMENT OF FACTS AND THE ARGUM ENTS. HOWEVER ALL THE 7 GROUNDS TAKEN BY THE ASSESSEE ARE REPRODUCED BELOW:- I) THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS)-XIV NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW IN C ONFIRMING THE LEVY OF PENALTY OF RS. 50.00 CRORES UNDER SECTION 2 71D OF THE ACT. ITA NO. 4627(DEL)/2009 2 II) THAT WHILE UPHOLDING THE LEVY OF THE AFORES AID PENALTY THE LD. CIT(APPEALS) HAS COMPLETELY FAILED TO APPRECIATE THAT ASSESSEE HAD NOT ACCEPTED ANY LOAN OR DEPOSIT MUCH LESS ANY LOAN OR DEPOSIT OF MONEY WITHIN THE MEANING OF LOAN OR D EPOSIT AS DEFINED IN EXPLANATION TO SECTION 269SS OF THE AC T AND HAS THUS ERRED IN HOLDING THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT WARRANTING THE LEVY OF PENALTY U/S 271D OF THE ACT. III) THAT THE FINDING OF THE LD. CIT(APPEALS) T HAT THERE IS NO PROOF THAT THE ASSESSEE RECEIVED THE AMOUNTS TOWARDS THE SHARE APPLICATION MONEY IS FACTUALLY INCORRECT AND CONTRARY TO THE EVIDENCE ON RECORD. THERE MERE FACT THAT T HE SHARES HAD BEEN ALLOTTED IN THE SUCCEEDING YEAR AND HAD B EEN ALLOTTED IN CONSIDERATION OF THE VALUE OF LAND CAN BE HELD TO BE NO BASIS TO ASSUME THAT THE VALUE OF LAND DID NOT REP RESENT SHARE APPLICATION MONEY AND REPRESENTED AN AMOUNT OF LOAN OR DEPOSIT ACCEPTED BY THE ASSESSEE COMPANY AND W AS THUS IN VIOLATION OF PROVISIONS CONTAINED IN SECTION 269 SS OF THE ACT. IV) THAT THE LD. CIT(APPEALS) HAS FURTHER FAI LED TO COMPREHEND THAT IN THE INSTANT CASE THE ASSESSEE HAD ONLY RECEIVED LAND AGAINST THE ISSUE OF SHARE CAPITAL WHICH HAD BE EN EVALUATED AT RS. 50.00 CRORES AND HAS BEEN SHOWN AS THE S HARE APPLICATION MONEY AND THUS WAS NEITHER RECEIPT OF LOAN O R DEPOSIT BUT WAS THE CAPITAL RECEIPT IN THE HANDS OF THE AS SESSEE COMPANY. V) THAT THE JUDGMENT RELIED UPON OF JHARKHAND HIGH COURT IN THE CASE OF M/S BHALOTIA ENGINEERING WORKS (P) LTD. HAS NO SEMBLANCE OR RESEMBLANCE WITH THE FACT OF TH E INSTANT CASE AND AS SUCH THERE COULD HAVE BEEN NO JUSTIFICA TION TO HAVE INVOKED U/S 269SS OF THE INCOME-TAX ACT AND CO NFIRM THE PENALTY LEVIED U/S 271D OF THE ACT. VI) THAT THE LD. CIT(APPEALS) HAS GROSSLY ERR ED BOTH IN LAW AND ON FACTS IN FRAMING THE IMPUGNED ORDER WITHOUT APPRECIATING THE DETAILED WRITTEN SUBMISSIONS FILED BY THE APPELLANT COMPANY JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT COMPANY AND MATERIAL PLACED ON RECORD. ITA NO. 4627(DEL)/2009 3 VII) THAT THE VARIOUS JUDICIAL PRONOUNCEMENTS R ELIED UPON BY THE LEARNED CIT(APPEALS) ARE NOT WELL FOUNDED AND IN FACT HAVE BEEN MECHANICALLY APPLIED IN DISREGARD OF THE MA TERIAL ON RECORD TO CONFIRM THE ORDER ON ARBITRARY WHIMS ICAL AND SUBJECTIVE CONSIDERATIONS AND AS SUCH THE IMPUG NED ORDER IS OTHERWISE VITIATED IN LAW. 2. ON PERUSAL OF THE PENALTY ORDER IT IS SEEN THAT THE ASSESSEE HAD PURCHASED LAND ADMEASURING 4.20 ACRES FROM VAT IKA LTD. FOR A CONSIDERATION OF RS. 50.50 CRORE. A SUM OF RS. 5. 00 CRORE WAS PAYABLE BY 31.12.2004 FURTHER RS. 10.00 CRORE BY 31.3.20 05 AND BALANCE RS. 35.50 CRORE BY 30.6.2005. THE AMOUNT WAS NOT PAID IN CASH BUT ADJUSTED BY ALLOTMENT OF SHARES TO THE VATIK A LTD. AS PER RESOLUTION OF THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY RECORDED IN THEIR MEETING HELD ON 16.6.2006. THE AO WAS OF THE VIEW TH AT THE SUM OF RS. 50.00 CRORE SHOWN AS SHARE APPLICATION MONEY IN F INANCIAL YEAR 2005-06 WAS RECEIVED OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THIS WAS IN CONTRAVENTION OF THE PROVISI ON CONTAINED IN SECTION 269SS OF THE ACT. THEREFORE A NOTICE U/S 2 71D WAS ISSUED AND AFTER TAKING INTO ACCOUNT THE EXPLANATION OF THE ASS ESSEE PENALTY OF RS. 50.00 CRORE WAS LEVIED. AGGRIEVED BY THIS ORDER THE ASSESSEE MOVED AN APPEAL BEFORE THE CIT(APPEALS)-XIX NEW DELHI. VARIOUS SUBMISSIONS WERE MADE BEFORE THE LD. CIT(APPEALS) AND IN P ARTICULAR IT WAS ITA NO. 4627(DEL)/2009 4 SUBMITTED THAT IT HAD NOT RECEIVED THE AMOUNT IN CASH. THE LD. CIT(APPEALS) REFERRED TO THE STATEMENT OF ACCO UNT FOR THE FINANCIAL YEAR 2005-06 AND MENTIONED THAT THE ASSESSEE RECEI VED TOTAL CREDITS OF ABOUT RS. 65.25 CRORE IN THIS YEAR. AFTER EXCLUDING THE OPENING BALANCE OF ABOUT RS. 46.18 CRORE THE RECEIPTS WERE T O THE TUNE OF RS. 19.07 CRORE IN THIS YEAR. THE ACCOUNT WAS DEBITED BY A S UM OF RS. 50.00 CRORE ON 31.3.2006 IN RESPECT OF SHARE APPLICATION MONE Y. ON THE BASIS OF THESE FACTS IT WAS HELD THAT THE ASSESSEE COMPANY RECEIVED VARIOUS AMOUNTS. HOWEVER THE ASSESSEE DID NOT PROVE THAT SUCH A MOUNTS WERE RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES OR DRAFTS. A FTER CONSIDERING VARIOUS SUBMISSIONS MADE BY THE ASSESSEE IT WAS HELD T HAT THE SAME WAS DONE TO OVERCOME THE RESTRICTIONS PLACED UNDER VARIOUS PR OVISIONS OF THE COMPANIES ACT AND ALSO THE INCOME-TAX ACT U/S 2(22)(E). NO REASONABLE CAUSE WAS SHOWN FOR ACCEPTING A MOUNTS OTHER THAN BY ACCOUNT PAYEE CHEQUES OR DRAFTS. THEREFORE THE LEVY OF THE PENALTY WAS UPHELD. 3. BEFORE US THE LD. COUNSEL DREW OUR ATTE NTION TO THE PROVISION CONTAINED IN SECTION 269SS. IT IS PROVIDED THA T NO PERSON SHALL AFTER THE 30 TH DAY OF JUNE 1984 TAKE OR ACCEPT FROM ANY OTHER PERSON ITA NO. 4627(DEL)/2009 5 (HEREAFTER IN THIS SECTION REFERRED TO SUCH DE POSITOR) ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACC OUNT PAYEE BANK DRAFT OF AN AMOUNT OF RS. 20 000/- OR MORE. CERTAIN EXC EPTIONS HAVE BEEN PROVIDED IN RESPECT OF BANKING COMPANIES ETC. EXPLANATION (III) OF THE SECTION DEFINES LOAN OR DEPOSIT IN AN EXHAU STIVE MANNER TO MEAN LOAN OR DEPOSIT OF MONEY. THE CASE OF THE LD. COUNSE L WAS THAT THE ASSESSEE HAD NOT TAKEN ANY LOAN OR DEPOSIT OF MONEY AND THEREFORE THERE WAS NO VIOLATION OF THE PROVISION CONTAINED IN THE AFOR ESAID SECTION. CONSEQUENTLY HIS ARGUMENT WAS THAT PENALTY CO ULD NOT HAVE BEEN LEVIED U/S 271D. 3.1 COMING TO THE ASSESSMENT ORDER A REFERENC E WAS MADE TO THE SECOND PARAGRAPH WHEREIN IT IS MENTIONED THAT T HE ASSESSEE COMPANY WAS INCORPORATED WITH THE NAME OF IRIS HOTELS P VT. LTD. ON 27.4.2004 UNDER THE COMPANIES ACT 1956 WITH THE OBJECT TO CARRY ON THE BUSINESS OF RUNNING AND MANAGING HOTELS RESORTS MOTELS ETC. AND SUBSEQUENTLY THE NAME WAS CHANGED TO VATIKA HOTELS (P) LT D. ON 23.01.2006. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE RECE IVED SHARE APPLICATION MONEY OF RS. 50.00 CRORE. IT IS FURTHER MENT IONED THAT THE ASSESSEE HAD PURCHASED LAND FROM VATIKA LTD. FOR A CONSID ERATION OF RS. 50.50 ITA NO. 4627(DEL)/2009 6 CRORE WHICH WAS PAAYABLE IN INSTALLMENTS OF DIFFERENT AMOUNTS ON THREE DIFFERENT DATES THE LAST INSTALLMENTS OF RS . 35.50 CRORE TO BE PAID BY 30.6.2005. SINCE THE ASSESSEE DID NOT MAKE THE PAYMENT AS PER THE PAYMENT SCHEDULE THE AMOUNT OF RS. 50.00 CROR E WAS ADJUSTED TOWARDS SHARE APPLICATION MONEY IN FINANCIAL YEAR 20 05-06 AND RS. 50.00 LAKH IN FINANCIAL YEAR 2006-07. THE SHARES OF THE VALUE OF RS. 50.50 CRORE WERE ALLOTTED TO VATIKA LTD. SUBSEQUENTLY. IT WAS SUBMITTED THAT THE STATEMENT MADE BY THE AO THAT DURING THE YE AR UNDER CONSIDERATION THE ASSESSEE RECEIVED SHARE APPLICATION MONEY OF RS. 50.00 CRORE IS FACTUALLY INCORRECT. THE CORRECT POSITION IS THAT THE ASSESSEE HAD PURCHASED LAND FROM VATIKA LTD. AND THE SALE CONSIDERATION PAYABLE WAS ADJUSTED AS SHARE APPLICATION MONEY. FU RTHER A REFERENCE WAS MADE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO AND THE REPLY FURNISHED TO THE SHOW CAUSE NOTICE DATED 23.6.2009. I N THIS REPLY IT WAS INTER- ALIA SUBMITTED THAT IN THE CASE OF BHALOTIA ENGINEERING WORKS (P) LTD. VS. CIT (2005) 275 ITR 399 THE HONBLE JH ARKHAND HIGH COURT HELD THAT THE RECEIPT OF SHARE APPLICATION MONEY OTHER THAN BY CROSSED CHEQUE OR DRAFT WAS IN CONTRAVENTION OF THE PROVI SION CONTAINED IN SECTION 269SS. HOWEVER THE ASSESSEE DID NOT RECEIVE ANY AMOUNT BY WAY OF SHARE APPLICATION MONEY IN CASH. THUS IT WAS ARGUED THAT IN ABSENCE ITA NO. 4627(DEL)/2009 7 OF RECEIPT OF ANY MONEY IN CASH THE ASSESSE E DID NOT CONTRAVENE THE PROVISION CONTAINED IN SECTION 269SS. THE LD. C OUNSEL ALSO REFERRED TO 9 GROUNDS TAKEN BEFORE THE LD. CIT(APPEALS) AND THE ORDER PASSED BY HIM. IN THIS CONNECTION OUR ATTENTION WAS DRAWN TOWARDS THE ACCOUNT OF VATIKA LTD. IN THE BOOKS OF THE ASSESSEE FOR T HE PERIOD 1.4.2004 TO 31.3.2007 PLACED IN THE PAPER BOOK ON PAG ES 70 TO 72. THIS ACCOUNT WAS CREDITED BY AN AMOUNT OF RS. 50.50 CRORE ON 28.4.2004. THEREAFTER THERE ARE OTHER CREDITS AND DE BITS IN THIS ACCOUNT LEAVING CLOSING BALANCE OF ABOUT RS. 46.18 CRORE ON 3 1.3.2005. IN THE SUBSEQUENT YEAR ALSO THERE ARE CERTAIN CREDI TS AND DEBITS AND IN PARTICULAR AN AMOUNT OF RS. 50.00 CRORE IS DEBI TED ON 31.3.2006 BY WAY OF SHARE APPLICATION MONEY. THE CLOSING BAL ANCE AS ON 31.3.2006 WAS ABOUT RS. 8.72 CRORE WHICH WAS CARRIED FORWA RD TO THE NEXT YEAR. IN THIS YEAR ALSO THERE ARE MANY CREDITS AND DE BITS IN THE ACCOUNT. IN PARTICULAR THE ACCOUNT WAS DEBITED BY RS. 5 0.00 LAKH ON 30.6.2006 TOWARDS SHARE APPLICATION MONEY. THE CASE OF THE LD. COUNSEL WAS THAT THE ASSESSEE WAS INDEBTED TO VATIKA LTD. BY AN AMOUNT OF RS. 50.50 CRORE PAYABLE IN RESPECT OF PURCHASE OF LAND. THIS AMOUNT WAS ADJUSTED TOWARDS SHARE APPLICATION MONEY ON TWO OCCASIONS I.E. 31.3.2006 AND 30.6.2002. ITA NO. 4627(DEL)/2009 8 3.2 THE LD. COUNSEL ALSO REFERRED TO PARAGRAPH S 16.2 TO 16.4 OF THE ORDER OF THE LD. CIT(APPEALS) WHEREIN IT IS I NTER-ALIA MENTIONED THAT IN FINANCIAL YEAR 2005-06 THERE WERE TOTAL CREDI TS OF ABOUT RS. 65.25 CRORE INCLUDING THE OPENING BALANCE. THIS ACCOUNT WA S DEBITED BY A SUM OF RS. 50.00 CRORE ON 31.3.2006 IN RESPECT OF SHAR E APPLICATION MONEY. THUS IT CAN BE SEEN THAT THE ASSESSEE R ECEIVED VARIOUS AMOUNTS AND IT HAS NOT BEEN PROVED THAT SUCH AMOUNTS WERE RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES OR DRAFTS. THE CASE OF T HE LD. COUNSEL WAS THAT ALL THE MONIES WERE RECEIVED AND PAID THROUGH BANK ING CHANNELS. THE PENALTY WAS LEVIED IN RESPECT OF THE AMOUNT OF R S. 50.00 CRORE WHICH WAS A PART OF THE LAND COST AND ADJUSTED TOWARDS SHARE APPLICATION MONEY. SINCE THE MONEY WAS NOT RECEIVED BY WAY OF CASH THERE WAS NO VIOLATION OF THE STATUTORY PROVISION IN T ERMS OF CLAUSE (III) OF THE EXPLANATION TO SECTION 269SS. 4. IN REPLY THE LD. DR REFERRED TO PARAGRAP HS 16.2 TO 16.4 OF THE ORDER OF THE LD. CIT(APPEALS) WHICH HAS ALREA DY BEEN SUMMARIZED BY US. IT IS MENTIONED THAT VATIKA LTD. HAD SO LD THE LAND TO THE ASSESSEE IN FINANCIAL YEAR 2004-05 AND ITS ACCOUNT WAS CREDITED BY AN AMOUNT OF ITA NO. 4627(DEL)/2009 9 RS. 50.50 CRORE ON 28.4.2004. IN THAT YEAR THE ASSESSEE RECEIVED AND PAID AMOUNTS ON VARIOUS DATES AND THE CLOSING B ALANCE WAS ABOUT RS. 46.18 CRORE. IN FINANCIAL YEAR 2005-06 THE ASSESSEE RECEIVED AMOUNTS ON VARIOUS DATES AGGREGATING TO ABOUT RS. 19.0 7 CRORE AND A SUM OF RS. 50.00 CRORE WAS ADJUSTED ON 31.3.2006 TOWARD S SHARE APPLICATION MONEY. THE ASSESSEE DID NOT PROVE THAT THESE A MOUNTS WERE RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES OR DRAFTS. FOR THE SAKE OF READY REFERENCE THESE PARAGRAPHS ARE REPRODUCED BELO W:- 16.2 IT IS SEEN THAT THE TRANSACTION OF PUR CHASE HAS TAKEN PLACE IN F.Y. 2004-05. THE ACCOUNT OF M/S VATIKA LAND BASE PVT. LTD. (SELLER OF THE LAND) WAS CREDITED FOR RS. 50 5 0 00 000/- ON 28.4.2004. DURING THE F.Y. 2004-05 THE ASSES SEE RECEIVED AMOUNTS ON VARIOUS DATES AND THE CLOSING BAL ANCE AS ON 31.3.2005 IN FAVOUR OF M/S VATIKA LANDBASE PVT . LTD. WAS RS. 46 18 31 225/-. DURING THE F.Y. 2005-06 RELEVANT FOR A.Y. 2006- 07 THE ASSESSEE RECEIVED AMOUNTS ON VARIOU S DATES AND THE TOTAL CREDITS IN THE ACCOUNT WERE RS. 65 25 26 245 .80. AFTER EXCLUDING THE OPENING BALANCE OF RS. 46 18 31 225/- TH E VALUE OF THE TRANSACTIONS RELATING TO F.Y. 2005-06 WAS RS. 19 06 95 020.80. THE ACCOUNT COPY MAINTAINED IN THE NAME OF M /S VATIKA LANDBASE PVT. LTD. IN THE BOOKS OF THE ASSESSE E FOR THE PERIOD FROM 01.04.2005 TO 31.03.2006 IS ENCLOSED AS ANNEXU RE TO THIS ORDER. ITA NO. 4627(DEL)/2009 10 16.3 IT IS FURTHER SEEN THAT THE ACCOUNT OF M/ S VATIKA LANDBASE PVT. LTD. WAS DEBITED FOR RS. 50 00 00 000/- O N 31.03.2006 AND CORRESPONDINGLY SHARE APPLICATION MONEY ACCO UNT WAS CREDITED ON 31.03.2006 FOR THE SAME AMOUNT. 16.4 AS SEEN FROM THE ACCOUNT THE ASSESSEE C OMPANY RECEIVED VARIOUS AMOUNTS. THE ASSESSEE HAS NOT PROVED THAT THE AMOUNTS RECEIVED WERE BY WAY OF ACCOUNT PAYEE CHEQUE(S ) OR ACCOUNT PAYEE BANK DRAFT(S). 4.1 IT WAS HIS CASE THAT VARIOUS AMOUNTS WE RE RECEIVED FROM VATIKA LTD. APART FROM THE CREDIT GIVEN OF RS. 50.50 CRORE IN RESPECT OF PURCHASE OF LAND. THE FINDING OF THE LD. CIT(AP PEALS) IS THAT THE ASSESSEE DID NOT PROVE THAT SUCH OTHER AMOUNTS WERE RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES OR DRAFTS. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. FROM THE RIVAL SUBMISSIONS IT BEC OMES CLEAR TO US THAT THE ASSESSEE HAD A RUNNING ACCOUNT WITH VATIKA L TD. THIS ACCOUNT WAS CREDITED BY A SUM OF RS. 50.50 CRORE FOR PUR CHASE OF LAND ON 28.04.2004. THERE WERE OTHER CREDITS AND DEBI TS THE IMPORT OF WHICH IS NOT CLEAR FROM THE COPY OF ACCOUNT FILED WITH US. HOWEVER IT IS CLEAR TO US THAT THE ACCOUNT WAS DEBITED BY A SUM OF RS. 50.00 CRORE ON ITA NO. 4627(DEL)/2009 11 31.3.2006 FOR SHARE APPLICATION MONEY AND ALS O ON 30.6.2006 BY A SUM OF RS. 50.00 LAKH IN RESPECT OF SHARE APP LICATION MONEY. THUS THERE IS A DIRECT RELATION BETWEEN THE LAND COST AND SHARE APPLICATION MONEY AS THE AGGREGATE OF TWO DEBITS IS THE SAME AS THE LAND COST. IN FINANCIAL YEAR 2005-06 THE ACCOUNT WAS DE BITED BY A SUM OF RS. 50.00 CRORE BY WAY OF SHARE APPLICATION MONEY. THUS THIS DEBIT HAD A DIRECT CO-RELATION WITH THE CREDIT MADE ON 28.0 4.2004. THE PENALTY WAS LEVIED IN RESPECT OF THIS AMOUNT. AS MENTIONED EARLIER THE AMOUNT WAS NOT RECEIVED BY WAY OF CASH ALTHOUGH IT CA N BE SAID THAT IT WAS ALSO NOT RECEIVED BY WAY OF ACCOUNT PAYEE CHEQU ES OR DRAFTS. HOWEVER THE CREDIT WAS GIVEN TO PARTLY DISCHARGE THE OUTSTANDING LIABILITY AND IT WAS NOT LOAN OR DEPOSIT MADE BY VATIKA LTD. 5.1 COMING TO THE STATUTORY PROVISIONS CLAUS E (III) OF THE EXPLANATION TO SECTION 269-SS DEFINES LOAN OR DEPOSIT TO MEAN LOAN OR DEPOSIT OF MONEY. THE CREDIT IN THE ACCOUNT ON 28.04.2 004 WAS NOT FOR RECEIPT OF MONEY BUT FOR PURCHASE OF LAND AND THE L IABILITY WAS PARTLY DISCHARGED BY TAKING RS. 50.00 CRORE AS SHARE APPLICATION MONEY. THEREFORE WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE SHARE APPLICATION WAS RECEIVED IN CASH. THE CASE OF THE LD. DR WAS THAT THE ITA NO. 4627(DEL)/2009 12 ASSESSEE ALSO RECEIVED OTHER AMOUNTS FROM V ATIKA LTD. ON DIFFERENT OCCASIONS AS MENTIONED BY THE LD. CIT(APPEALS). HOWEVER TO OUR MIND THE PENALTY WAS NOT LEVIED BY THE AO IN RESPEC T OF SUCH RECEIPTS OF ABOUT RS. 19.07 CRORE. THE CASE OF THE LD. COUN SEL WAS THAT SUCH RECEIPTS WERE ALSO THROUGH BANKING CHANNELS. HOWEVER O N THE BASIS OF THIS STATEMENT WE CANNOT COME TO A CONCLUSION THAT THE MONEY WAS RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUE OR DRAF T. BUT THAT IS NOT THE QUESTION BEFORE US. THE QUESTION BEFORE US IS IN REGARD TO RECEIPT OF SHARE APPLICATION MONEY WHICH CAN BE SAID TO BE A PART OF PURCHASE CONSIDERATION OF THE LAND PAYABLE BY THE ASSESSEE . WHILE THE REVENUE WILL BE ENTITLED TO EXAMINE THE RECEIPT OF OTHER AMOUNTS IN THE CONTEXT OF THE STATUTORY PROVISION IT IS CLEAR THAT ALLOTMENT OF SHARES WAS IN LIEU OF LAND PURCHASED FROM VATIKA LTD. IN THE C ASE OF BHALOTIA ENGINEERING WORKS (P) LTD. (SUPRA) THE FACTS WERE THAT THE ASSESSEE COMPANY ACCEPTED AMOUNTS OF RS. 20 000/- AND MORE IN CASH FROM 10 PERSONS AND ENTERED THEM IN THE BOOKS OF ACCOUN T. IT WAS EXPLAINED THAT THE AMOUNTS WERE RECEIVED AS SHARE APPLICATIO N MONEY AND SUBSEQUENTLY SHARES WERE ALLOTTED TO THESE PERS ONS. THEREFORE THE AMOUNTS WERE NOT LOANS OR DEPOSITS. THE HONB LE COURT CAME TO THE CONCLUSION THAT THERE WAS AN OBLIGATION ON THE C OMPANY TO RETURN THE ITA NO. 4627(DEL)/2009 13 MONEY IN CASE SHARES WERE NOT ALLOTTED TO THE M. THEREFORE THE AMOUNTS PARTOOK THE CHARACTER OF DEPOSIT TILL FINAL DECISION AND THE DEPOSIT IN CASH ATTRACTED THE PROVISION CONTAIN ED IN SECTION 269SS. IF WE APPLY THE ANALOGY OF THIS CASE IF THE SHARES HAD NOT BEEN ALLOTTED TO VATIKA LTD. THE PURCHASE PRICE OF THE LAND WOULD HAVE BEEN PAID BY THE ASSESSEE. THERE WOULD HAVE BEEN NO OCCASION TO RECEIVE THE MONEY WHICH COULD NOT BE TERMED AS LOAN OR DEPOSIT. 5.2 IN A NUTSHELL IT IS HELD THAT THE ASSES SEE DID NOT RECEIVE ANY LOAN OR DEPOSIT OF MONEY AND THE DEBT BY WAY OF UNPAID PURCHASE PRICE WAS PARTLY SATISFIED BY ALLOTMENT OF SHARES TO VATIKA LTD. ACCORDINGLY IT IS ALSO HELD THAT THE LD. CIT(APPEALS) ERRED IN S USTAINING THE LEVY OF THE PENALTY. 6. IN THE RESULT THE APPEAL IS ALLOWED AS DISC USSED ABOVE. 7. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 JANUARY 2010. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 22ND JANUARY 2010. SP SATIA ITA NO. 4627(DEL)/2009 14 COPY OF THE ORDER FORWARDED TO:- 1. VATIKA HOTELS PVT. LTD. NEW DELHI. 2. ADDL. CIT RANGE-17 NEW DELHI. 3. CIT 4. CIT(A) NEW DELHI. 5. THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR .