The assessee-company received cash from its promoters and shareholders towards share application money pending allotment. Although the issue of redeemable preference shares was kept in abeyance pursuant to an interim order of the Company Law Board, the Assessing Officer treated the receipts as loans or deposits and initiated penalty proceedings under section 271D. The Tribunal held that the receipts had consistently been disclosed as share application money in the audited financial statements and accepted as such during the assessment proceedings. There was no legal prohibition under the Companies Act against receipt of share application money before increase of the authorised share capital. Since the receipts did not constitute loans or deposits within the meaning of section 269SS, penalty under section 271D was not leviable. (AY. 2012-13).