TaxTMI 
TaxTMI 
2015 (5) TMI 470
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....ssessing Officer (hereinafter referred to as the AO) noted that the assessee company had accepted loans other than by way of account payee cheques or drafts. The AO held that it was the violation of the provisions of section 269SS, as per which, any loan or deposit amounting to Rs. 20,000/- or more accepted by a person other than by way of account payee cheque or draft has been prohibited, the violation of which attracts penalty under section 271D of the Act. The AO therefore initiated the penalty proceedings. The assessee submitted that there were valid reasons for accepting the loans by way of adjustments through journal entries. However, the AO did not accept the explanation of the assessee and levied penalty of Rs. 15,23,37,169/- under section 271D of the Act. 4. In appeal before the Ld. CIT(A), it was submitted that as per the detail, the assessee had received loan of Rs. 14,40,57,000/- from Mr. R.R. Chaturvedi by account payee cheque which was out of the purview of provisions of section 269SS of the Act. With respect to loan from Ms. Veena Chaturvedi of Rs. 70,35,000/-, Shreepati Logistics India Ltd. of Rs. 20,000/- and Yashwant V. Malbari of Rs. 3,10,000/- transferred thr....
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....ade before the Ld. CIT(A). He has submitted that the assessee had not done any transaction to circumvent the provisions of law, even, originally all the amount was received by way of account payee cheque and that the AO had not considered the submissions of the assessee regarding the necessity of the transactions and wrongly relied upon the erroneous report of the auditor and ignored the certificate of the auditor through which the mistake was rectified. He has further relied upon series of decisions of the Tribunal wherein it has been held that if the transactions are otherwise bonafide or genuine and the reasons offered by the assessee constitute reasonable cause within the meaning of section 273B, the penalty under section 271D is not attracted. The Ld. A.R. has relied upon the following decisions in this respect: 1. Decision of Mumbai Income Tax Tribunal in case of Lodha Builders Pvt. Ltd. pronounced on 27 June 2014 (163 TTJ 778) 2. Decision of Bombay High C ourt in case of Triumph International Finance India Ltd pronounced on 12 June 2012 (345 ITR 270) 3. Decision of Bombay High C ourt in case of Triumph International Finance India Ltd (ITA 5745 of 2010) dated 17 Augu....
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....t "Assesee has taken from sister concerns". c) It has been proved before the Addl. CIT and CIT (A) that there is absolutely no cash involved and the source can be traced to A/c payee cheques only. Addl. CIT has failed to refute this but only in order to strengthen his case on flimsy ground he makes a presumptive assertion that these entries has been passed to camouflage the sources and to evade tax. d) There is no attempt either in assessment order or in order to doubt the source of the entries and to take any consequential action under relevant provisions of the Income Tax Act. So, appellant‟s on source of entries being A/c payee cheque is correct." 30. It is the submission of the assessee that the Hon‟ble High Court has laid down the broad principles for determining the „reasonable cause‟ within the meaning of section 273B of the Act. The judgment in the case of Triumph International (I) Ltd dated 12.6.2012 (this judgment is different from that of judgment of Triumph International (I) Ltd dated 17.8.2012) and it explains the guidelines for the expression "reasonable cause". 31. The contents of paras 23 and 24 of the said of judgment of the Hon&....
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....therefore, the decision of the Tribunal to delete the penalty imposed under Section 271E of the Act deserves acceptance." 32. From the above extracts from the judgment of jurisdictional High court, it is clear that the journal entries are hit by the relevant provisions of section 269SS of the Act. However, it is the finding of the Hon‟ble High court that completing the "empty formalities" of payments and repayments by issuing/receiving cheque to swap/squire up the transactions, is not the intention of the provisions of section 269SS of the Act, when the transactions are otherwise bonafide or genuine. Such reasons of the assessee constitute „reasonable cause‟ within the meaning of section 273B of the Act. In the light of the above ratio of judgment, we analyse the facts of the present case here as under. 33. We find that there is no finding of AO in the order of the AO during the assessment proceedings that the impugned transactions constitutes unaccounted money and are not bona fide or not genuine. As such, there is no information or material before the AO to suggest or demonstrate the same. In the language of the Honble High court, „neither the genuin....
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....loan/deposit. The commercial nature and occurrence of these transactions by way of journal entries is in the normal course of business operation of the group concerns. In this regard, there is no adverse finding by the AO in the regular assessment. AO has not made out in the assessment that any of the impugned transactions is aimed at non commercial reasons and outside the normal business operations. As such, the provisions of section 269SS and 269T of the Act shall not be attracted where there is no involvement of the "money" as held by the Hon‟ble High Court of Delhi in the above cited cases, supra. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269SS / 269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed under Section 271D/E of the Act are not sustainable. Regarding an amount of "money" said to have been paid in violation of the said provisions, the same needs to be deleted in view of our decision on the legal issue discussed in para 16 to 22 of the this order. Accordingly, the grounds raised in this regard are allowed." 7. We fi....
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....96,141 3 Amount repaid by Cash 3,20,000 Total 2,05,87,050 Mrs. Veena Chaturvedi S. No. Particulars Amount (Rs.) 1 Amount transferred to Mr. RR Chaturvedi through Journal entry 70,35,000 Total 70,35,000 As per the above chart, in case of Mr. R R Chaturvedi the appellant had repaid Rs. 74,70,909/- through account payee cheque which is out of the purview of provisions of section 269T of the Act. With respect to amount repaid to Mr. R R Chaturvedi through journal entries, the appellant had originally given advance for purchase of property to Mr. Dilip Jindal, Mr Parsuram Kadam and Mr. Ram Baba Dudhavade by account payee cheque. On the request of those parties, the amount receivable from them was adjusted against the amount payable to Mr. R R Chaturvedi. In case of Mrs. Veena Chaturvedi the appellant had acquired loans from Mrs. Veena Chaturvedi in the preceding years through account payee cheques. During the year under consideration, she requested the company to transfer the loan into her husband's loan account with the company. Therefore, the account of Veena Ch....