TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 1174
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....16 & 7137/Mum/2016) And ITA No.7138/Mum/2016 & 7139/Mum/2016, CO No.7/Mum/2019 & 8/Mum/2019 (Arising out of ITA No.7138/Mum/2016 & 7139/Mum/2016) And ITA No.7140/Mum/2016 & 7141/Mum/2016, CO No.13/Mum/2019 & 14/Mum/2019 (Arising out of ITA No.7140/Mum/2016 & 7141/Mum/2016) Shri Mahavir Singh, Vice President And Shri M.Balaganesh, Accountant Member For the Revenue : Shri Prakash Chhotaray For the Assessee : Shri Anuj Kisnadwala ORDER PER BENCH: ITA No.3143/Mum/2017 & 3144/Mum2017 (A.Y.2012-13) These appeals in ITA Nos.3143/Mum/2017 & 3144/Mum/2017 for A.Y.2012-13 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-49, Mumbai in appeal No.CIT(A)-49/IT-199 & 198/2015-16 dated 08/02/2017 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D & 271E of the Income Tax Act, 1961 (hereinafter referred to as Act). ITA No.3147/Mum/2017 & 3148/Mum/2017 (A.Y.2007-08) These appeals in ITA Nos.3147/Mum/2017 & 3148/Mum/2017 for A.Y.2007-08 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-49, Mumbai in appeal No.CIT(A)-49/IT-191, 192 & 267, 266/2015-16 dated 16/02/2017 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.....
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....referred to as Act). CO No.5/Mum/2019 & 6/Mum/2019 (Arising out of ITA No.7136/Mum/2016 & 7137/Mum/2016) (Assessment Year : 2010-11) These Cross Objections Nos.5/Mum/2019 & 6/Mum/2019 arising out of ITA Nos.7136/Mum/2016 & 7137/Mum/2016 for A.Yrs. 2010-11 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No. CIT(A)-48/IT-353 & 352/Addl.CIT, C.R-06/2014-15 dated 08/09/2016 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D & 271E of the Income Tax Act, 1961 (hereinafter referred to as Act). ITA No.7138/Mum/2016 & 7139/Mum/2016 (Assessment Year : 2010-11) These appeals in ITA Nos.7138/Mum/2016 to 7139/Mum/2016 for A.Yrs. 2010-11 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No.CIT(A)-48/IT-366 & 367/Addl.CIT, C.R-06/2014-15 dated 14/09/2016 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D & 271E of the Income Tax Act, 1961 (hereinafter referred to as Act). CO No.7/Mum/2019 & 8/Mum/2019 (Arising out of ITA No.7138/Mum/2016 & 7139/Mum/2016) (Assessment Year : 2010-11) These Cross Objections Nos.7/Mum/2019 & 8/Mum/2019 arising out of ITA Nos.....
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..... DCIT, Central Circle 7(3) through letter dated 25/06/2015 intimating that assessee has accepted loans / deposits from various sister concerns through journal entries and had repaid loans to various sister concerns through journal entries as according to ld. DCIT, the same were in violation of provisions of Section 269SS and 269T of the Act. The total of acceptance of loan entries / deposits otherwise than by way of account payee cheque / account payee draft and transacted through journal entries are as under:- Sl. No. Name of the sister concerns Credits (Rs.) 1 Lodha Developers Ltd., 17,69,41,354 2 Siddhnath Residential Paradise Pvt. Ltd., 5,13,58,339 Total 22,82,99,693 3.1. Similarly, the details of transactions which are repayment of loans / deposits to various sister concerns otherwise than by way of account payee cheque / account payee draft and transacted through journal entries are as under:- Sl. No. Name of the sister concerns Debits (Rs.) 1 Lodha Developers Ltd., 4,06,24,252 2 Siddhnath Residential Paradise Pvt. Ltd., 18,92,42,868 Total 22,98,67,120 3.2. Accordingly, a show-cause notice issued to the assessee by the ld....
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....ed out that the entities through whom such repayment / acceptance are done are not a part of chain of entities involved in the transaction for the purpose of tax evasion. With these observations, the ld. Addl. CIT held that assessee had violated the provisions of Section 269SS and Section 269T of the Act and proceeded to levy penalty u/s.271D and 271E of the Act respectively. 3.3. The assessee pleaded before the ld. CIT(A) that during the course of original scrutiny assessment proceedings, the entire transactions with the group entities were subject matter of verification by the ld. AO and no infirmity was found thereon, either on its business purposes or on its genuineness. All those transactions were accepted in toto by the ld. AO in the original quantum scrutiny assessment proceedings and no additions were made thereon. The assessee pointed out that the journal entries were passed in the normal course of its business for mutual extinguishment of liabilities. The assessee drew the attention of the ld. CIT(A) on the CBDT Circular No.387 dated 06/07/1984 more particularly to para 32.1 and 32.2 thereon, wherein the purpose behind introduction of Section 269SS and 269T were explaine....
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.... and that the provisions of Section 269SS of the Act are not attracted, in case of assigning of liabilities on the journal entries. In that case, the loan was assigned by that assessee to his wife by way of journal entry. It was pointed out that the department did not even challenge this decision on merits and only contested the limitation aspect before the Hon'ble Delhi High Court and the Hon'ble Delhi High Court upheld the Tribunal decision vide its order in ITA N.751/D/2014. The department further carried this matter by way of Special Leave Petition (SLP) before the Hon'ble Supreme Court. The Hon'ble Supreme Court held that while rejecting the SLP that "since on merit, it has been found that there is no penalty, this SLP is dismissed, however, leaving the question of law on limitation open." 3.4. The assessee without prejudice to the aforesaid arguments also submitted that at the time of passing of journal entries, the assessee company was of bonafide belief that creation or assignment of debt or squaring off of receivables / payables among the group entities / affiliate companies do not violate the provisions of Section 269SS and 269T of the Act. The assessee a....
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....ourt in the case of Triumph International referred to supra by stating that "the spirit of Bombay High Court judgment is that only such transactions which are in the nature of squaring up with the same party can only claim the benefit of reasonable cause." It was argued that there is absolutely no such conclusion in the judgement of the Hon'ble Bombay High Court. It was also argued that the ld. Addl. CIT had also tried to circumvent the examination of the aforesaid points by making the observation regarding the disclosure made by the assessee group before the Hon'ble Income Tax Settlement Commission. The assessee submitted that the order of Hon'ble Income Tax Settlement Commission u/s.245D(4) of the Act was passed on 28/11/2014 whereas the penalty order was passed on 28/09/2015 and no investigation pursuant to the order of the Hon'ble Settlement Commission was pending on 28/09/2015. It was pointed that the ld. Addl. CIT had not spelt out the nature of investigation sought to be carried out as per the directions of the Hon'ble Income Tax Settlement Commission and had merely made a vague statement. It was also pointed out that the ld. Addl. CIT while concluding ha....
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....al reasons and outside the normal business' operations." 3.8. The assessee also stated that the facts prevailing in the instant case are identical with the facts of the assessee company as each of the transactions passed through journal entries would fall in one of the seven categories cited below. For the sake of convenience, the details of 7 categories are mentioned as under:- i. Alternate mode of raising funds ii. Assignment of receivables iii. Squaring up transactions iv. Operational efficiencies / MIS purpose v. Consolidation of family member debts vi. Correction of errors; and vii. Loans taken in cash 3.9. Therefore, it was pleaded that the assessee‟s case is clearly covered by reasonable cause within the meaning of Section 273B of the Act and hence, there cannot be any levy of penalty u/s.271D and 271E of the Act. 3.10. The ld. CIT(A) went through the journal entries passed by the assessee and found that those journal entries were passed in the normal course of business of the assessee and in a bonafide manner by giving a categorical finding that all the transactions passed thereon are genuine and there was absolutely no malafide intention to evade ....
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....e assessee. * The ld. Addl. CIT followed the judgment of the Hon'ble Bombay High Court in the case of CIT v. Triumph International Finance (India) Ltd dated 12.06.2012 [2012] 345 ITR 270 (Bom) and held that there has been contraventions of the provisions of 269SS and 269T of the Act. He quoted from the judgment to highlight that the section does not make any distinction between bona fide and non- bona fide transactions. He also relied on the judgment of the Hon'ble ITAT "F" Bench, Mumbai in the case of V.N. Parekh Securities v. ACIT, Central Circle 40, ITA Nos.6082 & 6083/ Mumbai dated 16.08.2013 where it has been held that there can be no deletion of penalty if simply there is a receipt of loan or repayment of loan through journal entries. Each and every case is required to be considered as to whether there was some reasonable cause in accepting such loans or repaying loans through journal entries. * The ld. Addl. CIT held that there was no reasonable cause for the default. He distinguished the facts of the case in the case of CIT v. Triumph International Finance (India) Limited (supra) observing that in that case the transactions involved the same party and the Hon....
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.... violated the mandatory provision of law by not doing the transaction through the banking channel and by that act denied the Assessing Officer the instrument provided by law to investigate and find out the non-genuine transactions. Thus, the assessee is taking advantage of its own wrong. So, it is incorrect to say that the genuineness of the transactions is not in doubt, when this aspect has not been examined by the Assessing Officer. As regards application to the Settlement Commission, it is elementary that one can approach the Settlement Commission, only if it makes additional disclosure of income not disclosed before the Assessing Officer to avoid penalty and prosecution. Hence the very fact that the group has approached the Settlement Commission presupposes existence of concealment. The CIT(A) failed to appreciate this basic fact. * What is most important, as has been pointed out above, the auditors have not been able to certify the correctness of the accounts on this issue because the materials were not furnished to them. Because of this observation of the auditors, the accounts are not reliable. * There was some discrepancies in the tax audit report which was tabulated in....
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....n 271T of the Act. However, the Hon'ble High Court gave relief holding that there was reasonable cause for the default. (b) The assessee had accepted Rs. 4,29,04,722/- as and by way of inter-corporate deposit from Investment Trust of India which was repayable during the impugned assessment year 2003-04. During the relevant previous year the assessee had transferred shares worth Rs. 4,28,99,325/- to Investment Trust of India. Thus, in the assessment year in question, the assessee was liable to repay the loan/ inter-corporate deposit amounting to Rs. 429,04,722/- to the Investment Trust of India and receive Rs. 4,28, 99,325/- from Investment Trust of India towards the sale price of the shares. Both the parties agreed that the amounts payable/receivable be set-off in the respective books of account by making journal entries and pay the balance by account payee cheques. After setting off mutual claims through journal entries, the balance amount of Rs. 5397/- due and payable by the assessee to Investment Trust of India was paid by crossed cheque. (c) The Hon'ble Court observed: -Para 17- ....The obligation to repay the deposit by account payee cheque/bank draft for entities specif....
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.... * The only explanation, which is now being given in a number of appeals of this group, is that up to 12th June 2012 when the judgment was delivered by the Hon'ble Bombay High Court in the case of Triumph International Finance (India) Ltd. [2012] 345 ITR 270 (Bom.), the assessee was under the bona fide belief that transactions through journal entries are not hit by the provisions of 269SS and 269T of the Act. This belief was based on some prevailing judicial pronouncements on the issue. The assessee pleaded that this was a reasonable cause for not complying with the provisions of section 269SS and 269T. The assessee relied on the supplementary reasoning given in the judgment of the Hon'ble Bombay High Court in the case of Commissioner of Income-tax(central)-4 v. Ajinath Hi-Tech Builders (P) Ltd., ITXA 171 of 2015 and five other appeals dated 6th February 2018 [2018] 92 taxmann.com 228 (Bom,) * In the judgment of the Hon'ble Bombay High Court in the case of Commissioner of Income-tax, Central-4 v. Ajinath Hi-Tech Builders (P) Ltd.(ITXA 171 of 2015 and five other appeals, dated 6th February 2018, [2018], 92, taxmann.com. 228 (Bom.) (supra), the Hon'ble High Court ....
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....sue of transaction through journal entries in spite of the significant judgment of the Hon'ble Bombay High Court in the case of M/s Triumph International Finance (I) Ltd. (supra). 5. Per contra, the ld. AR defended each and every argument of the ld. Special Counsel for the Revenue. The gist of various arguments advanced by the ld. AR are as under:- * With regard to loan discrepancies in the tax audit report and the financial statements of the assessee company as pointed out by the ld. Special Counsel for the Revenue, the ld. AR argued that the Tax Auditor has made only general comments in form 3CD and in either way, the ld. AO had taken due cognizance of the same and had accepted all these transactions to have been entered into in normal course of its business and all those transactions are genuine and bonafide. This is evident from the fact that the ld. AO had not resorted to make any addition in respect of these journal entries in the original scrutiny assessment in the quantum proceedings. * With regard to disclosure made by the Lodha group of cases before the Hon'ble Tax Settlement Commission, the same were not made for the transactions already entered into books o....
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....assessee for adjustment of transactions between the group entities were not disputed by the Revenue in the original quantum proceedings. The ld. AR further argued that according to the ld. Special Counsel for the Revenue, the transactions which had been passed through only regular banking channels are genuine and bonafide. This argument cannot be accepted at all in as much as bonafide transactions passed through journal entries would also be genuine. He vehemently argued that no entity in this world could survive without passing of journal entries in its books of accounts. * With regard to the observation made by the Special Bench of Mumbai Tribunal in the case of Deepak Sales and Properties Pvt. Ltd., reported in 95 Taxmann.com 166, the ld. AR drew the attention to para 18 of that judgment wherein both the parties in that case had agreed that bonafide nature of transactions alone would not be sufficient to attract the clutches of Section 271D of the Act. Accordingly, he stated that it is more of a concession given by the parties in that case and hence, the same would lose its precedence value. He also drew our attention to para 22 of the said Special Bench decision wherein there....
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....7 Lodha Construction (Dombivli} 141/Mum/2017and 142/Mum/2017 2008-09 8 Lodha Construction (Dombivli) 110/Mum/2017and 111/Mum/2017 2009-10 9 Lodha Building & Construction Pvt. Ltd 135/Mum/2017 2008-09 10 Lodha Construction Pvt. Ltd 6602/Mum/2016 and 6604/Mum/2016 2011-12 11 Lodha Construction Pvt. Ltd 6603/Mum/2016 2010-11 12 Lodha Facilities Management Ltd 6605/ Mum/ 2016 and 6606/Mum/2016 2011-12 13 Aashtavinayak Real Estate P.Ltd 6612/Mum/2016 2009-10 14 National Standard India Ltd 6607/Mum/2016 and 6609/Mum/2016 2011-12 B Bench 06.06.2018 15 Palava Dwellers Pvt. Ltd. 6422/Mum/2016 2012-13 C Bench 15.06.2018 16 Shantinath Designer Construction Pvt Ltd 599/M/17and 600/M/17 2009-10 J Bench 09.07,2018 17 Shantinath Designer Construction Pvt Ltd 606/M/17and 615/M/17 2008-09 18 Simtools Private Limited 6608/Mum/2016 2011-12 J Bench 09.07.2018 19 Sumangla Developers & Farms Pvt Ltd 438/M/18 2011-12 E Bench 14.06.2019 20 Mahavir Premises Pvt Ltd 125/M/17and 126/M/17 2009-2010 D Bench 23.10.2018 21 Mahavir Premises Pvt Ltd 143/M/17and 144/M/17 2007-2008 &nbs....
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....same, then logically no adverse presumption could be drawn on the assessee that the said transactions are not genuine. The assessee had given an explanation in detail covering the broad nature of the transactions carried out by way of journal entries. Those explanations have never been found to be either false or not supported by any evidence. The assessee at best can only provide details before the ld.AO. If those details were chosen not to be examined by the ld. AO terming it to be an impossible task, in the language of the ld. Special Counsel for the Revenue, then why should the assessee be invited with penal proceedings for the very same transactions by presuming that those transactions are not genuine. * The ld. AR argued that bonafide belief while passing the journal entries was always available with the assessee company and the ld. Special Counsel for the Revenue cannot infer that said bonafide belief of the assessee is wrong. For journal entries passed before 12/06/2012, those entries were passed with a bonafide belief that there was no violation in terms of series of Tribunal decisions that were available in favour of the assessee. In respect of journal entries passed af....
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....enalty u/s.271D and 271E of the Act were sought to be deleted by the Hon'ble Jurisdictional High Court on the ground that assessee had sufficient reasonable cause within the meaning of Section 273B of the Act. The ld. AR also placed reliance on yet another decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Lodha Builders Pvt. Ltd., in Income Tax Appeal No.199 of 2015 dated 06/02/2018 in support of the same proposition. The ld. AR also placed on record the evidences wherein the Special Leave petitions (SLP) filed by the Revenue against the aforesaid orders of the Hon'ble Jurisdictional High Court were dismissed by the Hon'ble Supreme Court vide various orders dated 03/12/2018, 10/12/2018, 03/01/2019, 04/01/2019 and 21/01/2019. The ld. AR argued that not even an attempt has been made by the ld. Special Counsel for the Revenue to point out as to how the aforesaid decisions are not applicable to the facts of the assessee herein. * The ld. AR argued that the explanations for the nature of transactions which were subject matter of journal entries were indeed examined by the ld. CIT(A) also as they were while forming part of the records before the l....
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....mined by the ld CIT(A) and had given categorical finding in para 7.2 and para 10 of his order in detail. We find that no false explanations were given by the assessee with regard to journal entries passed in its books. The explanation given by the assessee for adjustment of transactions between the group entities were not disputed by the Revenue in the original quantum proceedings. We find that the ld. Special Counsel for the Revenue argued that transactions through journal entries cannot be held as bonafide and those passed through regular banking channels alone are bonafide. This argument cannot be accepted at all in as much as bonafide transactions passed through journal entries would also be genuine. We cannot remain oblivious of the fact that no entity in this world could survive without passing of journal entries in its books of accounts. Passing of journal entries in the books is one of the recognised modes of recording the accounting entries of the company. We find that the ld CIT(A) had examined the entire details furnished by the assessee company and had concluded that the journal entries had been passed in respect of transactions with group concerns which have been under....
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....tions. There is nothing on record to suggest that those entries were passed with a malafide intent to evade payment of taxes. In this regard, it would be relevant to reproduce the relevant portion of the judgement of Hon'ble Jurisdictional High Court in the case of CIT vs Triumph International Finance (I) P Ltd reported in 345 ITR 270 (Bom) wherein in para 24 and 25 it was observed as under:- "24. In the present case, the cause shown by the assessee for repayment of the loan/deposit otherwise than by account-payee cheque/bank draft was on account of the fact that the assessee was liable to receive amount towards the sale price of the shares sold by the assessee to the person from whom loan/deposit was received by the assessee. It would have been an empty formality to repay the loan/deposit amount by account-payee cheque/draft and receive back almost the same amount towards the sale price of the shares. Neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. There is nothing on record to suggest that the am....
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....as never disputed by the ld. AO. If there is any grievance left to the department on this, the department should proceed on the assessee company in the manner known to law. A settled issue cannot be reopened or reviewed at an appellate stage , especially when this tribunal does not have any power of enhancement of income. Hence the objections raised in this regard by the ld. Special Counsel for the Revenue are rejected. 6.3. It is pertinent to note that the assessee had given explanations for the total entries found in the ledger accounts of the two parties i.e Lodha Developers Ltd and Siddhnath Residential Paradise Pvt ltd which contains lot of cheque entries and also minimum journal entries. The explanations offered by the assessee had been duly accepted by the ld. AO (both cheque transactions as well as journal entries) in the original quantum scrutiny assessment proceedings in as much as he had not resorted to make any additions towards unexplained cash credit or unexplained investments etc in the assessment. This itself goes to prove that assessee had indeed furnished the requisite explanations for the entries in the ledger accounts of two parties. We find that the ld. Addl. ....
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....ecial Counsel for the Revenue strongly relied on the celebrated quote of Justice P N Bhagwati in the case of Distributors Baroda Case which reads as under :- "To perpetuate an error is no heroism. To rectify the same is the compulsion of judicial conscience." In this regard, we find that there was absolutely no error in the orders passed by this tribunal earlier which were heavily relied upon by the ld. AR before us. Moreover, some of these tribunal orders were even upheld by the Hon'ble Jurisdictional High Court and SLP preferred by the revenue before the Hon'ble Apex Court had been dismissed. Hence where is the error to perpetuate ? Hence the argument advanced by the ld. Special Counsel for the Revenue deserves to be dismissed. 6.8. We are also inclined to accept the argument advanced by the ld. AR that in respect of compliance to provisions of Section 269SS and 269T of the Act, considering the intention behind introduction of those provisions as explained in detailed by CBDT Circular No.387 dated 06/07/1984, rational interpretation should be given to those provisions and not literal interpretation. We find that the Hon'ble Supreme Court in the case of CIT vs. Nag....
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....e case of Triumph International has not declared all the journal entries to be illegal. In fact, journal entries are part and parcel of accrual system of accounting. The Hon'ble Bombay High Court judgement only requires that the assessee needs to establish the reasonable cause for passing the journal entries. We also find that in none of the case of Lodha group, a single penalty has been sustained itself proves the bonafide of the assessee and hence, the reasonable cause. In fact not only, at the Tribunal level, but no penalty has been sustained by the Hon'ble Bombay High Court as well as the Hon'ble Supreme Court by way of dismissal of SLP in the Lodha Group of cases. The liberal interpretation of the provisions of Section 273B is in accordance with the judgement of the Bombay High Court in the case of Triumph International wherein at para 23 of the decision, the High Court observed that "Unlike the expression "sufficient cause‟ used in Section 249(3), 253(5) and 260A(2A) of the Act, the legislature has used the expression "reasonable cause‟ in Section 273B of the Act. A cause which is reasonable may not be a sufficient cause. Thus, the expression "reasonab....
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....ough journal entries though would be hit by the provisions of sections 269SS and 269T of the Act, since reasonable cause is established in the instant case, the assessee company would get immunity from levy of penalty thereon. Accordingly, the grounds raised by the revenue are dismissed. 7. In the result, both the appeals of the revenue are dismissed. ITA No.3147/Mum/2017 (Revenue Appeal) 8. The issue involved in this appeal is with regard to levy of penalty u/s.271D of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271D of the Act in respect of the following transactions passed through journal entries. Sl. No. Name of the sister concerns Amount (Rs.) 1 Lodha Builders Pvt. Ltd. 43,56,85,744 2 Lodha Developers Pvt. Ltd. 16,54,064 3 Lodha Properties Development Pvt. Ltd. 8,40,30,000 Total 52,13,69,808 8.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by observing that out of the total credits of Rs. 43,56,85,744/- in the account of Lodha Builders Pvt. Ltd. (LBPL), the amounts of Rs. 13,314/-, Rs. 8,40,31,680/- and Rs. 16,40,750/- represent assignment of debt, being transfer of ....
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....the Act in respect of the following transactions passed through journal entries. Sl.No. Name of the sister concerns Amount(Rs.) 1 Lodha Developers Pvt, Ltd. - 2 Lodha Dwellers Pvt. Ltd. 24,230/- 3. Lodha Construction (Dombivali) 42,65,800/- 4. Macrotech Construction Pvt. Ltd. 3,00,000/- Total 45,90,030/- 9.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by observing that from the details filed, it is observed that the debit amounts in the books of the assessee company, on which penalty has been levied u/s.271E include :- (i) debit entries of various amounts in the account of LCD, made on reversal of the amounts paid as land purchase advance on various dates and on account of assignment of debt, being credit balance in the account of LCD of Rs. 5,65,800/-transferred to LDPL on 31.03.2007, resulting in repayment of the loan. The total of such amounts is Rs. 42,65,800/-. (ii) the debit of Rs. 3,00,000/- in the account of Macrotech Construction Pvt. Ltd. represents transfer of the amount payable to it by the assessee company to LDPL on 31.03.2007 as a result of which the credit balance ....
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....oan. The assessee company has also paid interest on such loans taken. All other legal arguments advanced by the assessee before the ld. CIT(A); conclusions drawn by the ld. CIT(A) and Addl. CIT remain same with those recorded in Sanathnagar Enterprises Ltd., supra. The arguments of the ld. Special Counsel for the Revenue and the arguments of the ld. AR remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No. 7135/Mum/2016 (A.Y.2008-09) Revenue Appeal 11. This appeal is filed by the Revenue challenging the action of the ld. CIT(A) deleting the levy of penalty u/s.271E of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271E of the Act in respect of the following transactions passed through journal entries. SI. No. Name of the sister concerns Debits ( Rs.) 1 Lodha Developers Pvt ltd 9,24, 925/- 2 Lodha Builders Pvt Ltd 71,53,676/- Total 80,78,601/- 11.1. The ld. CIT(A) appreciated the basis of passing journal entr....
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.... reimbursement of expenses, on account payment etc. From the details furnished and submissions made it is noted that the penalty has been levied with respect to journal entries with group concerns, which have been undertaken to assign receivables, payment on behalf of group concern for squaring up transactions and for ease in consolidation of accounts, rectification entries etc. As a result of these entries the receivables have gone up or down resulting in taking of loan/ repayment of loan. The assessee company has also paid interest on such loans taken. All other legal arguments advanced by the assessee before the ld. CIT(A); conclusions drawn by the ld. CIT(A) and Addl. CIT remain same with those recorded in Sanathnagar Enterprises Ltd., supra. The arguments of the ld. Special Counsel for the Revenue and the arguments of the ld. AR remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No. 7144/Mum/2016 (A.Y.2007-08) Revenue Appeal 13. This appeal i....
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....s of the ld. Special Counsel for the Revenue and the arguments of the ld. AR remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No. 7143/Mum/2016 (A.Y.2008-09) Revenue Appeal 15. This appeal is filed by the Revenue challenging the action of the ld. CIT(A) deleting the levy of penalty u/s.271E of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271E of the Act in respect of the following transactions passed through journal entries. SI. No. Name of the sister concerns Amount(Rs.) 1 Lodha Developers Pvt.Ltd 2,43,86,906/- Total 2,43,86,906 15.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by observing that from the details filed, it is observed that the amount credited to the account of Lodha Developers Pvt. Ltd. represents assignment of debts on various dates. Further, out of the total debits of Q Rs. 2,43,86,906/-, an amount of Rs. 2....
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....ies. SI. No. Name of the Sister Concerns Amount (Rs.) 1 Cowtown Land Development Pvt. Ltd. 2550 2 Lodha Developers Pvt. Ltd. 208757 3 Lodha Novel Build Farms Pvt. Ltd. 150000000 Total 150211307 17.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by making the same observations as was made in the earlier appeals referred to supra. All other legal arguments advanced by the assessee before the ld. CIT(A); conclusions drawn by the ld. CIT(A) and Addl. CIT remain same with those recorded in Sanathnagar Enterprises Ltd., supra. The arguments of the ld. Special Counsel for the Revenue and the arguments of the ld. AR remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No.7146/Mum/2016 (Revenue Appeal)-A.Y.2010-11 18. The issue involved in this appeal is with regard to levy of penalty u/s.271D of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271D of the ....
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....of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271D of the Act in respect of the following transactions passed through journal entries. SI. No. Name of the Sister Concerns Amounts (Rs.) l LODHA HIRISE BUILDERS PVT LTD 35951966 2 LODHA NOVEL BUILD FARMS PVT LTD 8315053753 3 ARIHANTPRIMISES 1377 4 MACROTECH CONSTRUCTION PVT LTD 490370738 5 DURGESHWARI HI RISE &. FARMS PVT LTD 4432272839 6 LODHA BUILDCON PVT.LTD 169762961 7 LODHA DEVELOPERS LTD 267907388 8 LODHA ESTATE PVT LTD 64244227 9 LODHA LAND DEVELOPERS PVT LTD 82646374 10 LODHA LEADING BUILDERS PVT LTD 8154 11 LOOHA M1LD-A-BUILT PVT LTD 2306 12 LODHA PROFICIENT BUILD PVT. LTD. 9818 13 MAHAVIR PREMISES PVT.LTD. 11313766 14 PADMAVATl BUILDTECH AND FARMS PVT. LTD. 627220 15 SAMBHAVNATH INFRABUILD AND FARMS PVT. LTD. 391395 16 SUVIDHINATH BUILDTECH AND FARMS PVT. LTD. 465 17 VAMADEV1DEVELOPERS AND FARMS PVT. LTD. 5480308 18 VIMALNATH NOVELTY BUILDTECH AND FARMS PVT. LTD. 391139 19 HI-CLASS DEVELOPERS PVT. LTD. 22782 20 SURYAKRIPA FARMS ANDCONSTRUCTION PVT. LTD. 4000000 21 COWTOWN LAND DEVLOPMENT PVT. LTD. 82....
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....NAFIDE BUILDERS PVT LTD 59000 26 LODHA BUILD CREATION PVT LTD 61000 27 LODHA BUILDTECH INFRASTRUCTURE P LTD 54000 28 LODHA BUILDWELL PVT LTD 61000 29 J.ODHA CIVIL CONSTRUCTION PVT LTD 45000 30 LODHA CONSTRUCTION PVT LTD 35198 31 LODHA CORE CONST. & ENGG. PVT LTD 61000 32 LODHA DESIGNER CONST. PVT LTD 271 33 LODHA DEVELOPERS LTD 715480922 34 LOOHA ENERGETIC DEVELOPERS P LTD 79000 35 LODHA ESTATE PVT LTD 53822176 36 LODHA FLATS & HOUSES PVT LTD 140000 37 LODHA FOREMOST CONSTRUCTION P LTD 59000 38 LODHA FOUNDATION DEV. & BUILDERS P LTD 58000 39 LODHA HOUSE DEVELOPERS PVT LTD 60000 40 LODHA IDEAL BUILDERS PVT LTD 59000 41 LODHA INFRABUILD & FARMS PVT LTD 72000 42 LODHA INFRACON PVT LTD 50000 43 LODHA INFRACREATIONS & FARMS P LTD 72000 44 LODHA INFRADEVELOPERS P LTD 60000 45 LODHA INFRAV1SION BUILDTECH P LTD 65000 46 LODHA INTENSITY CONST. PVT LTD 60000 47 LODHA LAND DEVELOPERS PVT LTD 82868466 48 LODHA LUXURY BUILDCON PVT LTD 55000 49 LODHA NOVELTY BUILDTECH & AGRO P LTD 80000 50 LOOHA OBSTINATE EST, DEVELOPERS 61000 SI LODHA ORIGIN REALTORS & ESTATE PVT. LT....
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....R remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No.7138/Mum/2016 (Revenue Appeal)-A.Y.2010-11 22. The issue involved in this appeal is with regard to levy of penalty u/s.271D of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271D of the Act in respect of the following transactions passed through journal entries. SI. No. Name of the Sister Concerns Amount (Rs.) 1 Lodha Developers Pvt. Ltd. 3498236 2 Macroteck Constructions Pvt. Ltd. 12668771 3 Susima Buirtech Pvt. Ltd. 115535042 4 Maa Padmavati Township Pvt. Ltd. 112171357 Total 227706399 22.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by making the same observations as was made in the earlier appeals referred to supra. All other legal arguments advanced by the assessee before the ld. CIT(A); conclusions drawn by the ld. CIT(A) and Addl. CIT remain same with those recorded in Sanath....
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....s of passing journal entries in respect of the aforesaid transactions by making the same observations as was made in the earlier appeals referred to supra. All other legal arguments advanced by the assessee before the ld. CIT(A); conclusions drawn by the ld. CIT(A) and Addl. CIT remain same with those recorded in Sanathnagar Enterprises Ltd., supra. The arguments of the ld. Special Counsel for the Revenue and the arguments of the ld. AR remain the same as was submitted by them in the case of Sanathnagar Enterprises Ltd., supra. Hence, the conclusions drawn by this Tribunal in the case of Sanathnagar Enterprises Ltd., would hold good for this appeal also. Accordingly, the grounds raised by the Revenue are dismissed. ITA No. 7140/Mum/2016 (A.Y.2010-11) Revenue Appeal 25. This appeal is filed by the Revenue challenging the action of the ld. CIT(A) deleting the levy of penalty u/s.271E of the Act. In this case, the ld. Addl. CIT levied penalty u/s.271E of the Act in respect of the following transactions passed through journal entries. 25.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by making the same observations as was ....
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....hich reads as under: "8.b By not accepting the loans through account payee cheque or bank draft and also the repayment the same other than through banking mode, the assessee in fact has violated the provision of section 269SS/269T which prohibits such transactions. The proviso to section 269SS exempt certain categories mentioned as (a) to (e) where loan or deposit taken can be accepted other than by account payee cheque or draft but the assessee does not fall under any of the exempt category. Hence, by not accepting the loan / deposit or the repayment of the same by account payee cheque or bank draft the assessee has violated the provisions of Section 269SS/269T of the I T Act. Therefore regarding initiation of penalty proceedings u/s 271D/271E of the I T Act, the matter is being referred to Addl. CIT, CR-6, Mumbai for necessary action." 27.1. The Addl. CIT noted that a reference for consideration of levy of penalty under section 271E of the Act was received from the AO through letter dated 26.06.2013 intimating that the assessee has repaid loans to various sister concerns through journal entry other than account payee cheques or draft and therefore has violated the provisions o....
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.... 21.03.2013 (b) End of the financial year in which penalty proceedings initiated 31.03.2013 (c) Six months from the end of the month in which action for imposition of penalty is initiated 30.09.2013 (d) Last date stated in column (b) or (c) 30.09.2013 29.1. Accordingly, Ld. Counsel argued that coming to the period of time barring stated in clause (c), no order imposing penalty shall be passed (i) After the expiry of financial year in which action for imposition of penalty is initiated or (ii) six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. According to Ld. Counsel, the action for imposition for penalty has been initiated on 21.03.2013 and accordingly the first time barring is 31.03.2013 and the second time barring is 30.09.2013. He submitted that as the second period i.e. 30.09.2013 expires later, the maximum period for passing penalty order cannot be extended beyond 30.09.2013. Ld. Counsel stated that the subject of initiating of penalty proceedings begins with the first observation made by the AO in the assessment order and he referred to para 8b as reproduced above. The AO after considering ....
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....and making reference to the Addl. CIT for imposition of penalty under section 271D or 271E of the Act, constitutes initiation for action for imposition of penalty and that is the date which should be reckoned for the purpose of limitation as specified in clause (c) of section 275(1) of the Act. The Tribunal in assessee‟s group cases in the case of DCIT vs. Lodha Builders Pvt. Ltd. ITA No.6614/M/2016 for A.Y. 2007-08 & ors. vide order dated 31.01.2020 has considered this issue and relied on another Co-ordinate Bench decision in ITA No.475 to 481/M/2014 order dated 27.06.2014 held that the penalties levied under section 271D & 271E of the Act are barred by limitation as the reference made by the AO to the Addl. CIT for initiation of penalty proceedings in the assessment order constitutes action for imposition of penalty as contemplated in the provisions of section 275(1)(c) of the Act. The relevant findings and observations of the Bench reads as under: "18. We have heard the rival submissions, perused the orders of the authorities below and case laws relied on. We observed that the tribunal in assessee's own case and group cases after considering various decisions on the issu....
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.... 17. The said provisions are explained by various Honble High courts and Tribunal. To start with, Honble High Court of Rajasthan in the case of CIT vs. Hissaria Bros (supra) explained the said provisions vide the para 21 to 27 of the said judgment and the same are produced as under: "21. By substituting section 275(1) which became operative from 01.04.1989, the provision of divided cases for the purpose of prescribing limitation for completing penalty proceedings into three categories: (i) Category I covers cases where the assessment to which the proceedings for imposition of penalty relate is the subject - matter of an appeal to the Dy. CIT(A) or the CIT(A) under section 246 or with effect from 1 - 6 - 2000, section 246A or an appeal to the Tribunal under section 253; (ii) Category II covers cases where the relevant assessment is the subject matter of revision under section 263; and (iii) Category III covers all other cases not falling within category I and category II which is governed by clause (c). By dividing into three categories the period of limitation for cases falling under category (i), i.e., clause (1)(a) is the financial year in which the proceedings, in th....
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....oceedings in the course of which the penalty proceedings are required to be initiated. 25. We have also noticed that section 271 and 273 were the two original penalty provisions, which require the penalty proceedings to be initiated during the course of relevant assessment proceedings or the other relevant proceedings, as the case may be. The penalty proceedings could also be initiated during the appellate proceedings arising out of the relevant assessment proceedings. It is only where the assessment proceedings are independent and not directly linked to the assessment proceedings that the result of such proceedings in the course of which the penalty proceedings were initiated does not affect the levy of penalty. On such penalty proceedings, independent of the assessment proceedings, clause (c) has been made applicable. In this category, the period of limitation for completing the penalty proceedings is linked with the initiation of the penalty proceedings itself. In such cases, the penalty proceedings can be initiated independent of any proceedings but obviously, the penalty proceedings can be initiated only when the default is brought to the notice of the concerned authority ....
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....r for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of clause (c) would arise." 18. Similar interpretations were taken by the ITAT, Rajkot Bench (Third Member) in the case of ACIT vs. Dipak Kantilal Takvani [2013] 39 taxmann.com 53 (Rajkot - Trib.) (TM) and the penalty orders u/s 271D and 271E of the Act, being unconnected to the income of the assessee, are to be considered as per the provisions of clause (c) of section 275(1) of the Act. The said Rajkot Bench of ITAT has followed the judgment of the Rajasthan High Court in the case of Jitendra Singh Rathore (supra). In this case, the Hon'ble High Court also observed that the first show cause notice for levy of penalty was issued by the AO though the authority obtained to initiate penalty proceedings has also subsequently issued a show cause notice as well. Hon'ble High Court held that the penalty proceedings were initiated by issue of first notice from the AO and not from the date of issue of notice by the JCIT....
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.... of money" The liability recorded in the books of accounts by way of journal entries, i.e., crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of section 269SS of the Act, because pasing such entries does not involve acceptance of any loan or deposit of money. In the present case, admittedly no money was transacted other than through banking channels M/s. PACL India Ltd made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s. PACL India Ltd. In view of this admitted position, no infringement of section 269SS of the Act is made out. This court, in the case of Noida Toll Bridge Co. Ltd (supra), considered a similar case where a company had paid money to the Government of Delhi for acquisition of a land on behalf of the assessee therein. The Assesing officer levied a penalty under section 271D of the Act for alleged violation of the provision s of section 269SS of the Act since the books of the assessee reflected the....
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.... 275(1)(c) only be attracted in the matters of penalties levied u/s 271D/271E of the Act. Further, it is also held that the limitation period would be counted from the date of assessment order with the AO's decision to make referral to his Addl CIT, who is authorized to impose penalty. 22. In the instant case, it is an undisputed fact that the Assessing Officer discussed the details as to the violation of the provisions of section 269SS and 269T of the Act in the assessment order. It also contains a reference to the requirement of making a reference to the Addl. CIT, CR-6, Mumbai for necessary action. Para 6 of the assessment order, which is already extracted above paras, bears witness to the above findings. Further, to give effect to his findings in the assessment order, the AO wrote a letter to the Addl. CIT on 11.1.2012, intimating to him about the violation to the said provisions of the Act. On receipt of the said reference from the AO, Addl. CIT issued a show cause notice on 15.2.2012 calling for explanation of the assessee as to why the penalty u/s 271D should not be imposed in the case of the assessee. Eventually, Addl. CIT passed a penalty order u/s 271D of the Income Tax....
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....06.14 24.06.14 4 M/s. Ajinath Hitech Builders Pvt Ltd., 05.12.11 11.12.2012 271E 04.12.13 31.03.12 30.06.12 30.06.14 30.06.12 30.06.14 24.06.14 5 M/s. Adinath Builders Pvt Ltd. 15.12.11 11.12.2012 271E 04.12.13 31.03.12 30.06.12 30.06.14 30.06.12 30.06.14 24.06.14 32. In all the above cases, facts are identical as the Assessing Officer in the course of the assessment proceedings made reference in the Assessment Order to the loans accepted and repaid other than by way of Account Payee Cheque/Drafts. We also observed that the assessee was asked to explain why the loans were accepted other than by Account Payee Cheque and in response to the query raised by the Assessing Officer in the course of assessment assessee submitted its reply. The Assessing Officer records a finding that the contentions of the assessee are not accepted as it is not falling under any exemption categories where loan/deposit can be accepted other than by Account Payee Cheque/draft. Therefore, the Assessing Officer concluded that the assessee by not accepting the loan/deposit by Account Payee Cheque or bank drafts violated the provisions of section 269SS/269T of the Act and accordingly re....
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.... has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, clause (a) of sub-section (1) of section 275 cannot be attracted to such proceedings. If that were not so, clause (c) of section 275(1) would be redundant because otherwise, as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default, e.g., penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of clause (c) would arise. 28. Thus, both on the ground that the transaction in question of retention of sale price by the Kachcha Arhatiya did not amount to deposit and its utilisation and dealing with it at the instance of farmer constituents did not amount to repayment of loan or deposits within the meaning of secti....