- (1.) THIS Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 arises out of the order of the Income Tax Appellate Tribunal, Allahabad dated 30.6.2000 in Income Tax Appeal No. 1037 (Alld)/1998, for the assessment year 1994-95.
(2.) WE have heard Shri S.D. Singh, learned counsel appearing for the assessee-appellant. Shri R.K. Upadhyay appears for the Income Tax Department. The appellant is a HUF composed of Mr. Anirban Nath and his mother Mrs. Sushmita Nath. There is another HUF composed of one Mr. Anirdam Nath and his mother Sushmita Nath. The Anirban Nath Sushmita (HUF)-the assessee-appellant was in need of money to apply for allotment of shares of two companies M/s Trimurti Fertiliser Ltd and Crown Leasing & Finance Co. Ltd. It approached Arindam Nath Sushmita HUF, and Arinban Nath (individual) for giving loan of Rs. 6, 45, 000/- and Rs. 5, 60, 000/- respectively. The loans were advanced and the money was paid by the creditors to the companies directly. There was no term fixed for repayment of these loans, however, the interest was to be paid at the market rate. The shares were allotted in favour of assessee-appellant by the companies. The investment, however, did not fetch any profitable return for the appellant. The assessee-appellant could not make payment of interest and repayment of loans and also did not earn any profit on the investments. The appellant thus sought part repayment of the loans by transferring the shares allotted to it by the companies M/s Trimurti Fertiliser Ltd and M/s Crown Leasing & Finance Co. Ltd to the creditors, who agreed for repayment in that manner. In pursuance to the agreement some of the shares allotted to the assessee appellant by M/s Trimurti Fertiliser Ltd were transferred to M/s Arindam Nath Sushmita HUF, and some others were transferred to Mr. Anirban Nath (individual). Since these shares were transferred by way of repayment of loans taken from the transferees of the shares, there was no occasion or requirement to make any payment by cash or money. The transfer of shares was the mode of repayment of the loans in part. The Deputy Commissioner of Income Tax imposed penalty under Section 271-E of the Act for alleged violation of Section 269T, which provides for payment of an amount of Rs. 20, 000/- or more by account payee cheque or account payee bank draft drawn in the name of the person, who has made the loan or deposits. The appeal against the order dated 31.7.1997 passed by the Deputy Commissioner of Income Tax, was dismissed by CIT (A)-I, Kanpur on 12.8.1998.
(3.) THE Income Tax Appellate Tribunal dismissed the appeal of the assessee-appellant on 30.6.2000 on the ground that there were credit balance in the account of Anirban Nath (individual) of Rs. 5, 95, 560/- and in the account of Arinban Nath Sushmita (HUF) (assessee-appellant) of Rs. 7, 50, 979/-. THEse balances got adjusted to the extent of Rs. 9, 14, 000/- on account of sale of shares. Since the amount was not repaid by account payee cheque or account payee bank draft, the transaction falls within the mischief of Section 269-T of the Act and thus penalty is leviable under Section 271-E. Shri S.D. Singh has preferred this appeal on the grounds as follows:- "(i) Whether, in absence of a finding by the Tribunal that part repayment (of loans) of Rs. 9, 14, 000/- was against any "deposit"; penalty could be imposed, such a view being contrary to the provisions of section 269T read with Explanation (ii) to sub-section (2) thereof? (ii) Whether, the appellant could be penalised for repayment of Rs. 9, 14, 000/- being part repayment of loans advanced by M/s Arindam Nath Sushmita HUF and Anirban Nath (individual), as these repayments clearly stand outside the mischief of provisions of Section 269T of the Act? (iv) Whether, the money advance dby M/s Arindam Nath Sushmita HUF and Mr. Anirban nath (individual) could be held to be "deposit" within the meaning of Section 269T of the Act? There being clear evidence on record to show that the money was advanced as loans at the instance of the appellant. The Tribunal has erred in law in holding otherwise and its order is perverse on that count." Shri S.D. Singh has relied upon Commissioner of Income- Tax v. Vikramajit Singh (2007) 292 ITR 274 (Delhi); K. Rajendran Pillai and others v. Union of India and others (2007) 292 ITR 277 (Ker); A.M. Shamsudden v. Union of India and others (2000) 244 ITR 266; Baidya Nath Plastic Industries (P) Ltd and others v. K.L. Anand, Income-Tax Officer (1998) 230 ITR 522 (Delhi); and Commissioner of Income-Tax v. Motilal Subhodh Kumar Jain (2005) 277 ITR 524 (MP) in support of his submission, that in the transaction, as in the present case penalty, provision under Section 271-E, is not attracted. ;