AI Drafter 
TaxTMI 
TaxTMI 
2018 (7) TMI 2090
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appreciation of facts we are referring the facts in appeals for AY 2007-08 in ITA No.139 & 1409/Mum/2017. 2. Brief facts of the case are that the assessee is a Private Limited Company, engaged in the business of development and construction of real estate properties. It filed its return of income on 30/10/2007, declaring income at Rs. 5,25,128/-. The assessment was completed under section 143(3) on 30/03/2015 determining total income at Rs. 1,02,65,660/-. The AO while passing the assessment order made reference for considering penalty u/s.271D and 271E for accepting loan/deposit by assessee from various sister concern through journal entries i.e., otherwise than account payee cheque/draft holding that assessee has violated the provisions of section 269SS/269T of the Act. The Assessing Officer simultaneously made reference for consideration of penalty under section 271E/269T as well. On receipt of reference the ACIT issued separate show cause notice dated 03/07/2015 as to why penalty u/s. 271D and 271E should not be levied. The assessees filed reply vide letter dated 13/07/2015. In reply the assessee contended that journal entries were passed to avoid the delay in procedural has....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and that payment of journal entry was given prior to the decision of Hon'ble Bombay High Court, which constitutes a reasonable cause within the meaning of section 273B. Aggrieved by the order of the CIT(A), the revenue is in appeal before the Tribunal. 4. We have heard the submissions of the Ld. Departmental Representative (DR) for the Revenue and the Ld. Representative for the assessee (AR) and perused the material on record. At the outset ld. AR submits that Grounds of appeal raised by the revenue are covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in assessee's group case in CIT vs. Ajinath Hitech Builders Private and Others (in ITA.s No.171,172,202, 203, 218 and 219 of 2015 dated 06th February, 2018). Ld.AR further submits that by following the decision of the Hon'ble Jurisdictional High Court the Tribunal allowed similar relief to the assessee in the case of Aashthavinayak Estate Company Ltd. (ITA No.602/M/2017 dated 31 may, 2018) ; CIT vs. National Standard India Ltd. (ITA No.6607/Mum/2016 & 6609/Mum/2016 dated 6th June 2018). The Ld.AR further submits that the journal entries were made/received by the assessee prior to 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y or if he has given some false entries in his accounts, he should not escape by giving some false entries in his account, he shall not escape by giving false explanation for the same. The assessee further contended that there is no receipt of any loan/deposit or repayment in any other mode other than the account payee cheque. It is merely a case of assignment of debt by one group entity to another group entity and journal entries have been passed to record such assigned transactions. The provision of section 269SS and 269T are not applicable on such genuine transactions. The Assessing officer in the assessment order has not made any observation that transactions in question are not out of business exigency or was done with a motive to evade tax. Penalties cannot be levied in a mechanical manner. The provisions of section 269SS and section 269T are not applicable where transaction is between sister concerns. The ld. CIT(A) after considering the contention of the assessee concluded that the assessee has violated the provisions of section 269SS and 269T of the Act. However, the ld CIT(A) concluded that the assessee has given sufficient explanation within the meaning of section 273B ,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts. This is so as the Tribunal holds that the failure to comply with Section 269SS of the Act was on account of reasonable cause on the part of the respondents. This finding of reasonable cause was on the application of parameters laid down by this Court in Triumph International Finance (supra) to determine reasonable cause for not complying with the provisions of Section 269SS of the Act. (c) Mr. Mohanty, the learned Counsel for the Revenue seeks to challenge the impugned order of the Tribunal on the ground that Section 273B of the Act will have no application as the test of reasonable cause is not satisfied :in the present facts for the following reasons :- (i) the decision of this Court in Triumph International Finance (supra) will have no application as that was of the case of only one transaction while in this case, there are numerous transactions reflected through the passing of journal entries; (ii) the reasons set out for taking advances / deposits by way of journal entry would not satisfy the test of reasonable cause; and (iii) the non-satisfaction of showing reasonable cause as required under Section 273B of the Act gives rise to a ques....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fact. No inference of law and / or issue of interpretation is to be made. The decision relied upon by the Revenue in case of Premier Breweries Ltd.(supra) concerned itself with the issue of a claim for deduction under Section 37 of the Act on the basis of the Agreements entered into between the parties. The inference of law in that case was whether on the facts, it could be inferred that the claim for deduction is in respect of expenditure incurred wholly and exclusively for the purposes of the business. Thus, it would involve a question of interpretation of the agreements etc. from which an inference is to be drawn. Further, it also involves application of principles of law to the facts for the purposes of deductions and, therefore, it would lead to a question of law. Therefore, the Court held in the facts of that case that a question of law does arise. (f) In this case, the issue of reasonable cause is an inference of fact from facts and, therefore, a question of fact. The Supreme Court decision in Sree Meenakshi Mills Ltd. Vs. Commissioner of Income Tax, 31 ITR 28 had laid down the tests to determine a question of law and / or fact. In the above context, the Court obse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decision of the Delhi High Court in Noida Toll Bridge Co. Ltd. (supra) were holding the field. Thus, not in breach of Section 269SS of the Act. In the above view, while agreeing with the submission of Mr. Mohanty, learned Counsel for the appellant that the decision of this Court in Triumph International Finance (supra) has only clarified / stated the position as always existing in law, the receiving of deposits / loans through journal entries would certainly be hit by Section 269SS of the Act. Nevertheless, prior to the decision of this Court in Triumph International Finance (supra), there was reasonable cause for respondents to receive deposit / loan through journal entries. This non-compliance with Section 269SS of the Act would certainly be a reasonable cause under Section 273B of the Act for non-imposition of penalty under Section 271D of the Act. (j) In the above circumstances, the view taken by the Tribunal in the impugned order holding that no penalty can be imposed upon the respondents as there was a reasonable cause in terms of Section 271B of the Act for having received loans / deposits through journal entries is at the very least is a possible view in the facts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal was approved by the Hon'ble jurisdictions! High Court in their judgment and order dated 06.02.2018 in the case of CIT v. Ajinath Hi-Tech Builders Pvt Ltd. and others, copies of which have also been placed on record. In this case, it was also held that prior to the judgment in CIT v. Triumph International Finance (I) Ltd. (345 ITR 270), there were series of orders on this point holding that journal entry would not fall foul of S. 269SS of the Act. Since the judgment in CIT v. Triumph International Finance (I) Ltd. (345 ITR 270) was rendered on 12.06.2012, it was held, that the assessee could have had a bonafide belief prior to that date that there was no violation of S. 269SS of the Act in accepting loan by journal entry. 9. While deciding the issue, the CIT(A) has also followed the decision of Jurisdictional High Court in case of group concern of the case. The facts and circumstances during the year under consideration are same, accordingly, we do not find any infirmity in the order of CIT(A) for deleting the penalty imposed u/s.271D by relying on the decision of Jurisdictional High Court in group case of the assessee. 10. In the result, appeal of the Revenue ....