TaxTMI 
TaxTMI 
2018 (10) TMI 1927
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....aving held that the assessee had contravened the provisions of section 269SS of the Income Tax Act, 1961, ought to have upheld the levy of penalty u/s 271D as the assessee failed to establish the compelling reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal entry with its group concerns. 3. The grounds of appeal in respect of penalty u/s 271E read as under: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs. 27,32,00,000/- levied u/s 271E of the Income Tax Act, 1961 on the ground that genuineness of the transaction journal entries is not in doubt. 2. On the facts and in the circumstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of section 269T of the Income Tax Act, 1961, ought to have upheld the levy of penalty u/s 271E as the assessee failed to establish the compelling reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal entry with its group concerns. 4. Briefly stated, the facts of the case are that the Addl.....
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....that the assessee had violated the provisions of section 269SS/ 269T of the Act in respect of journal entries. Accordingly, following the said order, the Ld. CIT(A) held that the assessee had received the loan amount of Rs. 49,03,36,357/- by way of journal entries, as noted in the penalty order, in contravention of provisions of section 269SS of the Act. However, the Ld. CIT(A) relied on the above order of the Tribunal for AY 2009-10, wherein under similar facts and circumstances, it has been held that the assessee had shown reasonable cause and therefore the penalty imposed u/s 271D/271E are not sustainable. It was thus held by the Ld. CIT(A) that the reasons given by assessee do constitute reasonable cause within the meaning of section 273B of the Act, particularly in light of the fact that there is no finding that such transactions were undertaken to evade tax. Therefore, he deleted the penalty of Rs. 49,03,36,357/- levied by the AO u/s 271D of the Act. Also following the above order of the Tribunal, the Ld. CIT(A) held that although the said transactions by way of journal entries were in contravention of provisions of section 269T of the Act, the assessee had shown reas....
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....ommissioner of Income Tax (Appeals). On further appeal, the impugned order dated 27th June, 2014 of the Tribunal, inter alia held that penalty under Section 271D of the Act is not imposable in view of Section 273B of the Act. This for the reason that there was a reasonable cause for the failure to comply with Section 269SS of the Act. (b) On merits of the issue, the parties before us are agreed that the Tribunal was correct in holding that receipt of any advance / loan by way of journal entries is in breach of Section 269SS of the Act as the decision of this Court in Commissioner of Income Tax Vs. Triumph International Finance (I) Ltd. 345 ITR 270 is binding upon it. However, the Revenue's grievance is with the impugned order dated 27th June, 2014 of the Tribunal further holding no penalty under Section 271D of the Act is imposable in view of Section 273B of the Act in the present facts. 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 Finan....
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....e purposes outside the normal business operations or there was any involvement of money, then, in these facts there was a reasonable cause for not complying with Section 269SS of the Act. (e) Mr. Mohanty's submission that the test laid down in Triumph International Finance (supra) will have no application in the present facts in view of the large number of entries in this case as compared to only one entry in the case before this Court. The test of reasonable cause cannot, in the present facts be determined on the basis of the number of entries. If there was a reasonable cause for making the journal entries, then, the number of entries made, will not make any difference. Besides, on facts, the Tribunal was satisfied with the reasons given by the Assessee for reasonable cause and this finding is not shown to be perverse. Finally, the issue of there being a reasonable cause or not is an issue of 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 i....
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.... it has been held journal entries in the book of accounts indicating deposit / loans will not fall foul of Section 269SS of the Act. Besides, the Delhi High Court in Commissioner of Income Tax Vs. Noida Toll Bridge Co. Ltd. 262 ITR 260 inter alia held that payment of Rs. 4.85 crores made by the assesses by a journal entry in its books of account by crediting the account of ILFS, would not fall foul of Section 269SS of the Act. This particularly in the absence of any payment being made in cash. (i) In the present facts, the period during which the journal entries were made by the respondents was in the previous year relevant to the Assessment Year 2009-10 i.e. Financial Year 2008-09. At that time, the decisions of the Tribunal in the cases of Triumph International (Supra) and decision of VH. Parekh (P) Ltd., Ketan V Parekh, Sunflower Builders (supra), Ruchika Chemicals (supra), Lala Murari Lal (supra) and the 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 ....