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July 2025

Penalty — Share Application Money — Share application money otherwise than by account payee cheque or bank draft — Neither loan nor deposit but for participation in capital of company — Share application money is neither repayable after notice nor repayable after a period of time — Provisions of s. 269SS or s. 269T or consequential penalty provisions u/s. 271D or s. 271E not applicable:

By Keshav Bhujle | Ritu Punjabi, Advocates
Reading Time 3 mins

20 CIT vs.Vamshi Chemicals Ltd:

[2025] 474 ITR 422 (Cal.):

A. Ys. 2004-05 to 2007-08: Date of order 6 May 2024:

Ss. 269SS, 269T, 271D and 271E of ITA 1961

Penalty — Share Application Money — Share application money otherwise than by account payee cheque or bank draft — Neither loan nor deposit but for participation in capital of company — Share application money is neither repayable after notice nor repayable after a period of time — Provisions of s. 269SS or s. 269T or consequential penalty provisions u/s. 271D or s. 271E not applicable:

During the assessment years under appeal, the assessee received share application money for issue of preference shares amounting to ₹20,000 or more from persons otherwise than by an account payee cheque or account payee bank draft. The Assessing Officer issued a show cause notice for penalty u/s. 271D / 271E of the Income-tax Act, 1961 on the ground that the Assessee violated the provisions of section 269SS. The Additional Commissioner imposed penalty u/s. 217D for A.Y.s 2005-06, 2006-07 and 2007-08 and imposed penalty u/s/ 271E for A.Y.s 2004-05, 2005-06, 2006-07 and 2007-08.

The Tribunal held th

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