TaxTMI 
TaxTMI 
2021 (12) TMI 1174
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....Arising out of ITA No.7136/Mum/2016 & 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....
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....on of penalty u/s.271D & 271E of the Income Tax Act, 1961 (hereinafter 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 : 201....
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.... penalty u/s.271D and 271E of the Act was made to the ld. Additional CIT, Central Range-7 from ld. 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 ....
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....igation pursuant to directions of Hon'ble Income Tax Settlement Commission. Hence, the ld. Addl. CIT observed that it cannot be ruled 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....
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....rein the Tribunal upheld the order of the ld. CIT(A) which stated that the penalty was time barred by limitation u/s.275(1)(c) of the Act 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 /....
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....be a finding that the transaction is not bonafide. 3.6.1. The assessee submitted that the ld. Addl. CIT had tried to circumvent conditions by misinterpreting the judgment of the Hon'ble Bombay High Court 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 investigatio....
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.... 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 noncommercial 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 asses....
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....cheque or account payee bank draft, as the necessary evidence is not in the possession of the assessee. 2. Amount repaid /accepted in certain cases are by way of transfer of liabilities by accounting entries. • These observations of the auditors show that the correctness of the accounts on this issue has not been certified by the auditors and the same is contrary to the claim of the 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....
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....owed. Secondly, the number of transactions are high. It is humanly impossible for the Assessing Officer to investigate each transaction. In fact, to counter such tendencies of tax evasion, accepting/repaying loans/deposits through account payee cheques/ bank drafts became mandatory by introducing the relevant provisions so that a screening of the prima facie bona fide transactions could have been effected making the task of the Assessing Officer easy. But the assessee 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 appro....
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.... assessee has to prove reasonable cause and this is question of fact. Each case has to be decided on the fact of the case and there cannot be any covered matter. • Reliance was also placed on the decision of the Hon'ble Jurisdictional High Court in the case of Triumph International Finance (I) Ltd., reported in 345 ITR 270 wherein it was observed as under:- (a) When loan/ deposit has been repaid by debiting accounts through journal entries, it was held that the assessee has contravened the provisions of section 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 Tr....
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....erein. Therefore, in the present case, where loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of section 269T of the Act. - Para 24- It would have been an empty formality to repay the loan/deposit by account pay cheque/draft and receive back almost the same amount towards the sale price of shares. • The ld. Special Counsel for the Revenue argued that in the peculiar facts of the case, it was held by the Hon'ble High Court that there was reasonable cause for the default. • 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 se....
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....'ble High Court given in the context of the few appeals before them turned out to be the chief arguments of the ITAT in deleting penalty in all subsequent appeals before it. The analysis of the submissions of the assessees and exercise of probing into the existence of reasonable cause became no longer necessary and the ITAT gave relief in all the appeals of the group across the board where the transactions took place before 12th June 2012, the day of judgment in the case of Triumph International Finance (I) Ltd. (supra) Consequently, to my knowledge, not a single penalty under section 271D and 271E has been sustained on the issue 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 t....
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.... the ld. CIT(A) in para 7.2 page 15 in respect of penalty u/s.271D of the Act and para 10 in page 20 in respect of penalty u/s.271E of the Act. These factual findings recorded by the ld. CIT(A) stating that assessee had passed journal entries within the business exigencies, are not controverted by the ld. Special Counsel for the Revenue. Hence, he argued that it is grossly incorrect on the part of the ld. Special Counsel for the Revenue to say that assessee had not given any explanations in respect of transactions passed through journal entries. • No false explanation was 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. 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 ....
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....he ld. AR also placed reliance on a table wherein the issue in dispute has been decided in favour of the assessee by various decisions of Mumbai Tribunal as under:- Sr. No. Name of Assessee Appeal No Assessment Year Bench Date of Order 1 Aashthavinayak Estate Company Pvt Ltd 602/Mum/2017 2009-10 H Bench 07.08.2019 2 Galaxy Premises Pvt Ltd 7124/M/16and 7125/M/16 2007-08 G Bench 13.07.2018 3 Galaxy Premises Pvt Ltd 7126/M/16and 7127/M/16 2008-09 4 Galaxy Premises Pvt Ltd 7128/M/16and 7129/M/16 2009-10 5 Jineshwer Real Estate And Farms Pvt Ltd 598/Mum/2017 2012-13 J Bench 26.06.2018 6 Lodha Construction (Dombivli) 139/Mum/2017and 140/Mum/2017 2007-08 A Bench 30.07.2018 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 ....
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....he decision of this Tribunal in the case of DCIT vs. Macrotech Developers Ltd., in ITA No.1415 & 1416/Mum/2018 for A.Y.2013-14 dated 08/04/2021 wherein under similar circumstances, the penalty u/s.271D & 271E was deleted by this Tribunal. • The ld. Special Counsel for the Revenue argued that the ld AO is not required to examine each of the 300 transactions entered into by the assessee by way of journal entries and certify their genuineness. This would be an impossible job for the ld. AO and this failure to do an impossible job on the part of the ld. AO should not lead to the presumption that all the transactions are genuine. In this regard, the ld. AR argued that assessee had entered into similar transactions with its group concerns which are listed out independently in those 300 entries by way of journal entries. The assessee had given explanation about the nature of transactions carried out by it before the ld. AO. If the ld. AO finds it impossible to examine the 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 transac....
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....tails and explanations given by the assessee company have been duly accepted by the ld. AO for the said cheque transactions The ld. AO had not drawn any adverse inference on the entire transactions reflected in the said ledger accounts and had not doubted the genuineness of these transactions in the quantum scrutiny assessment proceedings. Then how can the ld. Addl. CIT draw adverse inference on these transactions and levy penalty u/s.271D and 271E of the Act. He argued that genuineness of these transactions is certainly one of the factors to judge "reasonable cause" within the meaning of Section 273B of the Act. • The ld. AR pleaded that assessee‟s case is squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Ajinath High-Tech Builders Pvt. Ltd., and others (various sister concerns of the assessee group) dated 06/02/2018 reported in 92 Taxmann.com 228, wherein under similar facts and circumstances in respect of transactions entered though journal entries penalty 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 ca....
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....the purpose of levy of penalty u/s 271D and 271E of the Act, we find from the perusal of the ledger accounts, majority of the entries represent regular income tax payments and TDS remittances made by one entity on behalf of another entity which are reflected both in debit as well as in credit side of the respective ledger accounts (i.e debit entries totaling to 2 and credit entries totaling to 65) ; legal and professional charges incurred by one entity on behalf of another entity which are reflected in credit side of the respective ledger accounts comprising of 4 entries and group company current account transactions reflected in both debit as well as in credit side of the respective ledger accounts (i.e debit entries totaling to 9 and credit entries totaling to 15). Hence effectively the ld Addl CIT should have verified only 24 entries falling in group company current account transactions for the purpose of ascertaining the veracity of the transactions passed through journal entries. We find that these transactions have been duly examined 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....
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.... through journal entries in the instant case represent unaccounted income of the lender or the receiver. The transactions through journal entries were reflected in the regular books of accounts maintained by the assessee. Hence the disclosure made by the Lodha group before the Hon'ble Income Tax Settlement Commission would be obviously on account of their undisclosed income and hence the reasoning given by the ld. Addl CIT in this regard in his penalty order which was heavily relied upon by the learned Special Counsel for the Revenue, has no substance and hence rejected. It is not in dispute that the entire transactions through journal entries have been carried out for the purpose of the business of the assessee company in the normal course of its business. We also find that settling the mutual claims between parties through journal entries is certainly one of the recognized modes of repaying the loan / deposit. There is absolutely no material to suggest that the transactions entered through journal entries were not bonafide transactions. 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 wou....
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....ssee was a reasonable cause and, therefore, in view of Section 273B of the Act, no penalty under Section 271E could be imposed for contravening the provisions of Section 269T of the Act. (emphasis supplied by us) 6.2. 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 and heavily relied upon him to suggest that the books of accounts of the assessee company are not reliable, we find that the ld. AO had taken due cognizance of the tax audit report and had accepted all these transactions to have been entered into in normal course of its business and accepted all those transactions as 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. Hence it would be unfair on the part of the ld. Special Counsel for the Revenue to mention those alleged discrepancies at this stage of appeal, which was never disputed by the ld. AO. If there is any grievance left to the department on this, the department should proceed on t....
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....hat the loan was received by that assessee in cash. The factual distinction has been well brought out by the ld AR in his arguments reproduced supra and the same are not reiterated herein for the sake of brevity. Moreover, the reliance of this special bench decision was also made by the ld DR in the cases before this tribunal earlier and this tribunal having taken due cognizance of the same , had decided the impugned issue before us in favour of the assessee. 6.6. The reliance placed by the ld. Special Counsel for the Revenue on the decision of Mumbai Tribunal in the case of V.N.Parikh Securities Pvt Ltd vs ACIT in ITA No. 6082, 6083/Mum/2009 for Asst Year 2005-06 dated 16/08/2013 is also factually distinguishable in as much as in that case, the assessee could not prove why it was not able to open a fresh bank account and the matter was remanded back to the AO for ascertaining as to whether there existed a reasonable cause. Hence the reliance placed by the ld Special Counsel for the Revenue on this case does not advance the case of the department. 6.7. The ld. Special Counsel for the Revenue strongly relied on the celebrated quote of Justice P N Bhagwati in the case of Distri....
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....ould never be presumed. Assessee was under a bonafide belief that passing of journal entries do not violate provisions of law. This is established by the fact that (i) the plea was taken before the ld. AO in the first instance itself ; (ii) this has not been disbelieved by the ld. AO ; and (iii) the assessee group has a common set of accountants, chartered accountants and advisors. In the group cases, the Tribunal and Hon'ble High Court has accepted the explanation of bonafide belief of the assessee. With common set of people, it has to be held that the assessee was also under the same belief. In assessee‟s own case for the immediately preceding assessment year, the Tribunal has accepted that the assessee was under the bonafide belief. In any case, the ld. AO having not disbelieved the explanation nor made any inquiry, the revenue cannot allege contrary at this stage. 6.10. We hold that the revenue is not justified in expecting the assessee to stop passing the journal entries with effect from 12/06/2012. This is for the reason that the Hon'ble Bombay High Court in the case of Triumph International has not declared all the journal entries to be illegal. In fact, jou....
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....A No. 5745/2010 c) CIT vs Ajitnath Hi-Tech Builders Private Limited and Others (belonging to the assessee group concerns) reported in 92 taxmann.com 228 (Bom) d) CIT vs Lodha Builders Pvt Ltd in ITA No. 199 of 2015 dated 6.2.2018 We find that the SLPs preferred by the revenue against the aforesaid orders have been dismissed by the Hon'ble Supreme Courts vide their orders dated 03/12/2018, 10/12/2018, 03/01/2019, 04/01/2019 and 21/01/2019. When this tribunal in series of decisions had relied upon the observations of the Hon'ble Jurisidctional High Court and rendered its decision in favour of the assessee, we are unable to persuade ourselves to accept to the arguments advanced by the ld. Special Counsel for the Revenue that tribunal ought not to have relied upon those observations made by the Hon'ble Jurisdictional High Court. 6.13. Hence in view of our detailed observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that the assessee had proper reasonable cause within the meaning of section 273B of the Act and hence the transactions passed through journal entries though would be hit by the provision....
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....d and submissions made it is noted that the penalty has been levied with respect to journal entries with group concern / associate, which have been undertaken to assign debts and for on behalf payments. As a result of these entries the receivables/debt have gone up resulting in taking 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.3148/Mum/2017 (A.Y.2007-08) - Revenue Appeal 9. 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 th....
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.... Private Limited 71,53,676/- - TOTAL 80,78,601/- 1,17,44,60,169/- 10.1. 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, an amount of Rs. 10,43,47,019/- represented the amount payable to Lodha Developers Pvt ltd (LDPL) which was transferred by Lodha Construction, Dombivli(LCD) to the assessee company since it became partner in LCD w.e.f 1.4.2007, in place of M/s. LDPL which exited the partnership on 31.3.2007. Further, an amount of Rs. 105,84,00,000/-, was credited since shares of Macrotech Constructions Pvt Ltd were purchased from M/s.LDPL by the assessee company. The balance credit entries are various small amounts reflecting 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 concern, 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 u....
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.... 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 Cowtown Land Development Pvt. Ltd. 2,50,00,000 2 Lodha Developers Pvt. Ltd. 28,96,55,853 Total 31,46,55,853 12.1. 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. 314,655,853/-, the amount of Rs. 250,00,000/- represented the amount paid by Cowtown Land Development Pvt. Ltd. to-Mansukhlal Hiralal and Co. for purchase of b land at Walkeshwar on behalf of the assessee company on various dates. Similarly, the credits amounting to Rs. 250,00,000/- in the account of Lodha Developers Pvt. Ltd. are on account of payment made by the said company to Mansukhlal Hiralal & Co, for purchase of land at Walkeshwar on behalf of the assessee company. Further, the credit of Rs. 214,591,443/-, represents the balance of Lodha Builders Pvt. Ltd. with the assessee company, which has been transferred to Lodha Developers Pvt. Ltd. on 31/12/2006, for ease in consolidation of accounts....
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....cial 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. 7145/Mum/2016 (A.Y.2008-09) Revenue Appeal 14. 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 24,29,80,400 Total 24,29,80,400 14.1. The ld. CIT(A) appreciated the basis of passing journal entries in respect of the aforesaid transactions by observing that the journal entries with group concerns have been undertaken to assign receivables, payments on behalf of group concerns for squaring up transactions and for ease in consolidation of accounts, rectification entries etc., All other legal arguments advanced by the assessee before the ld. CIT(A....
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....he following transactions passed through journal entries. Sl. No. Name of the Sister Concerns Amount (Rs.) 1 Cowtown Land Development Pvt. Ltd. 346786 2 Lodha Developers Pvt. Ltd. 208757 3 Lodha Novel Build Farms Pvt. Ltd. 150000000 Total 150555543 16.1. 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. 7148/Mum/2016 (A.Y.2011-12) Revenue Appeal 17. This appeal is filed by the Revenue challenging the action of the ld.....
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....the grounds raised by the Revenue are dismissed. ITA No. 7147/Mum/2016 (A.Y.2010-11) Revenue Appeal 19. 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. Sl. No. Name of the Sister Concerns Amount (Rs.) 1 Lodha Developers Pvt, Ltd. 139948104 2 Lodha Builders Pvt. Ltd. 35951966 Total 175900070 19.1. 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 S....
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....he grounds raised by the Revenue are dismissed. ITA No. 7136/Mum/2016 (A.Y.2010-11) Revenue Appeal 21. 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 ASHTAVINAYAK BUILDMART PVT LTD 36000 2 ASHTAVINAYAK BUILDWELL & FARMS PVT LTD 60799 3 LODHA HIRISE BUILDERS PVT LTD 35951966 4 LODHA NOVEL BUILD FARMS PVT LTD 8054634275 5 ARIHANT PRIMISES 590433 6 ARlHANTPRIMtSES 1390611 7 BALAII HITECH REALTY & ENGINEERS PVT LTD 23641443 8 CHANDRAPRABHA CONST. & AGRO P LTD 41360 9 CHANDRAPRABHA REALTY & FARMS P LTD 66000 10 CHINTAMANI PARSWANATH CORPORATION 61000 11 MACROTECH CONSTRUCTION PVT LTD 568151236 12 DURGESHWARI HI RISE & FARMS PVT LTD 8271120798 13 EKNATH LAND DEVELOPERS & FARMS P LTD 34975 14 GAJANAND BUILDTECH & AGRO P LTD 36822 15 GANESHJI REALTY & AGRO PVT LTD 37545 16 ....
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....RANSPERANT HI-TECH DEV. PVT. LTD. 58000 64 LODHA VILLAS PVT. LTD. 135000 65 MAHAVIR COUNTRY HOUSE PVT. LTD. 127000 66 MAHAVIR PREMISES PVT.LTD. 21615060 67 NAVNATH BUILDERS AND DCVLOPERS PVT. LTD. 66000 68 PADAM PRABHU BUILDMART PVT.LTD. 26757 69 PADMAVATI BUILDTECH AND FARMS PVT. LTD. 220 70 PLEASANT REALTY AND FARMS PVT. LTD. 72000 71 SAMBHAVNATH REALITY AND FARMS PVT.LTD. 19000 72 SHALIBHADRA BUILTECH PVT.LTD. 56989 73 SHAUBHADRA REALTORS AND FARMS PVT. LTD. 62000 74 SHANT1NATH RESIDENTIAL PARADISE PVT. LTD. 56567 75 SHEETALNATH BUILDTECH AND FARMS PVT. LTD. 80000 76 SHEETALNATH CONSTRUCTION AND AGRO PVT. LTD. 74000 77 SIDDHESHWAR REAL ESTATE DEVELOPERS AND AGRO FARMS PVT. LTD. 63984 78 SIDDHESHWAR BUILDCON PVT. LTD. 61000 79 SUVIDHINATH BUILDTECH AND FARMS PVT. LTD. 70465 SO VAMADEVIDEVELOPERS AND FARMS PVT. LTD. 78573042 81 V1VEK ENTERPRISES 1526572 82 LODHA BUILDING AND CONSTRUCTION PVT. LTD. 208 83 GANDHAR BUILDERS PVT. LTD. 689 84 SHANTINATH DESIGNER CONSTRUCTION PVT. LTD. 2358 85 ....
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.....Y.2010-11) Revenue Appeal 23. 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 Devejopers Pvt. Ltd. 4323926 2 Macroteck Constructions Pvt. Ltd. 1586588 3 Lodha Land Developers Pvt. Ltd. 2625000 4 Susima Builtech Pvt, Ltd. 224336056 5 Maa Padmavati Township Pvt. Ltd. 112171357 Total 345042927 23.1. 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 Enter....
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....itted 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. CO No.11/Mum/2019 & CO No.12/Mum/2019(A.Y.2010-11), CO No.5/Mum/2019 & CO No.6/Mum/2019(A.Y.2010-11), CO No.7/Mum/2019 & CO No.8/Mum/2019 (A.Y.2010-11), CO No.13/Mum/2019 & CO No.14/Mum/2019 (A.Y.2010-11) 26. As regards to the Jurisdictional issue, learned Counsel for the assessee Shri Vijay Mehta first of all stated that the assessee has raised jurisdictional issue in it‟s COs that the penalty levied under section 271D & 271E of the Act in these cases is barred by limitation, which is common in all the COs. On this, learned Special Counsel for the Department Shri P C Chhotaray stated that the issue in CO‟s is as regards to the limitation of levy of penalty under section 271D and 271E of the Act. In view of the above admitted issue, since the issue is common in all the COs, with the consent of both the parties, we take up assessee‟s CO No.5/Mum/2019 arising out of ITA No.7136/Mum/2016 and adjudica....
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....vide order dated 10.09.2014 for the assessment year 2010-11. 27.2. The CIT(A) also confirmed the action of the Addl. CIT by holding the same as not barred by limitation by observing in para 5.2.4 as under: "5.2.4 Subsequent, to above decision of the Mumbai ITAT, the Hon'ble Kerala High Court in the case of Grihalaxmi Vision vs Addll. CIT [ITA 83/2014] has held that the time period of section 275(1)(c) starts from the day when the Addl. GIT issues the notices. Identical view was taken by the Hon'ble Special Bench Chandigarh in the case of Dewan Chand Amritlal vs DCIT [98 ITD 200]. Subsequent to above order of the ITAT, the CBDT has also clarified the position vide circular dated 26.04.2016 bearing number 09/DV/2016 wherein the CBDT has stated that the period of limitation u/s 275(1)(c) shall start from the date when the JCIT issues the notice. Therefore, following the recent judgment of Kerala High Court read with the CBDT's circular on the identical subject, I am of the considered view that the limitation period mentioned in section 275(1)(c) of the Acts starts from the period when JCIT / Addl. CIT issued the notices for levy of penalty. In the present case, the notice ....
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.... of assessment order i.e. 21.03.2013 and accordingly the time barring shall be counted from the date of assessment order. As the six months from the end of the month in which action for imposition of penalty initiated expires on 30.09.2013, no penalty order can be passed beyond that date. 30. On the other hand, the Ld. Special Counsel for the Revenue Shri P.C. Chhotaray argued on behalf of the Revenue and stated that the AO has made only a reference for consideration of penalty under section 271E of the Act vide letter dated 26.06.2013 and the Addl. CIT after receiving and perusing the reference made by the Asst. Commissioner, Central Circle-42, Mumbai, a show cause notice was issued to the assessee vide notice dated 27.03.2014, calling for explanation as to why penalty under section 271E of the Act should not be imposed on the assessee. According to Ld. Special Counsel for the Revenue, this is the starting point of initiating the penalty proceedings. He relied on the CBDT Circular No.09/DV/2016 dt.26.04.2016 clarifying the CBDT‟s view that the commencement of limitation for imposition of penalty under section 271D and 271E of the Act is the date when the Addl. CIT issues ....
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....ed in clause(c) of section 275(1) of the Act. While holding so the Tribunal held as under: "16. We have heard both the parties on the legal issues raised in the Additional Ground i.e., applicability of the provisions of clause (c) to section 275(1) of the Act to the impugned penalties and the manner of computing the limitation of time provided in the said clause. To decide the above issues, in our opinion, the provisions of section 275 of the Act are required to analysed. The same read as under: "275(1)[(a) in a case where the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeals ) under section 246 [or section 246A] or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later : [Provided that in a case where the relevant assessment or othe....
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....al is received by the Chief CIT or CIT, whichever period expires later. 22. The period of limitation for the cases falling under category II is six months from the end of the month in which such order on revision is passed and the period of limitation for the cases falling under the above category III is the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the last category, filling of appeal in respect of order passed in proceedings during which penalty proceedings were initiated is not relevant. To this effect a Circular No. 551, dated 23-1-1990 [ (1990) 82 CTR (St.) 325] and another Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued by the CBDT 23. A close scrutiny of section 275 which is reproduced hereinabove shows that clause (1)(a) covers those cases where the penalty proceedings are in respect of a default related to principal assessment for a particular assessment year and the penalty proceedings are required to....
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....aults for which no statutory mandate is there about any particular proceedings during the course of which only such penalty proceedings can be initiated, a different period of limitation has been prescribed under clause ( c ) as a separate category. In cases falling under clause (c), penalty proceedings are to be completed within six months from the end of the month in which the proceedings during which the action for imposition of penalty is initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. There is no provision under clause (c) for the extended period of limitation commensuration with completion of the appellate proceedings, if any, arising from the proceedings during the course of which such penalty proceedings are initiated as in the case where the penalty proceedings are linked with the assessment proceedings or the other relevant proceedings. 26. The expression "other relevant thing' used in section 275(1)(a) and clause (b) of sub - section (1) of section 275 is significantly missing from clause(c) of section 275(1) to make out this distinction very clear. ....
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....as barred by limitation. The said decision of the ITAT in the case of Dewan Chand Amit Lal (supra) deferred at the relevant point of time that the order of the Tribunal in the case of Hissaria Bros (supra). However, it is a fact that the said decision of the Tribunal in the case of Hissaria Bros (supra) was subsequently upheld by the Hon'ble Rajasthan High Court. Therefore, considering the principle of precedence, it is necessary for the Tribunal to follow the order of the High Court where there is no contrary judgment from the jurisdictional High Court. As stated earlier, the said judgment from the Rajasthan High Court was also followed in the case of Jitendra Singh Rathore (supra). Therefore, in a case where the AO made a reference in the assessment order about the requirement of initiating the penalty proceedings and acted by making a reference to the JCIT, who is actually empowered by the statute to impose the penalty u/s 271D and 271E of the Act, the limitation should be counted right from the date of such reference in the assessment order / issue of show cause notice by the AO. 19. Further, the judgment of Honble Delhi High Court in the case of M/s Noida Toll Bri....
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....uccessfully impugned by the assesee before the IT AT. On appeal, this Court held as under: "While holding that the provisions of section 269SS of the Act were not attracted, the Tribunal has noticed that (i) in the instant case, the transaction was by an account payee cheque; (ii) no payment on account was made in cash either by the assessed or on its behalf; (iii) no loan was accepted by the assessee in cash, and (iv) the payment of Rs. 4.85 crores made by the assesee IL & FS, which holds more than 30 per cent of the paid - up capital of the assessee, by journal entry in the books of account of the assessed by crediting the account of IL & FS. Having regard to the aforenoted findings, which are essentially findings of fact, we are in complete agreement with the Tribunal that the provisions of section 269SS were not attracted on the facts of the case. Admittedly, neither the assessee nor IL & FS had made any payment in cash. The order of the Tribunal does not give rise to any question of law, much less a substantial question of law. 20. Thus, the judgment in the case of M/s Worldwide Township Projects Ltd vide ITA No.232/2014 is relevant for the propositi....
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.... the provisions of clause (c) to section 275(1) of the Act, 6 months from the end of the month in which the action was initiated expires on 30.6.2012. After considering the explanation of limitation u/s 275(2), Explanation 1 read with section 129 of the Act, extended limitation expires on 30.7.2012 against the above due dates, the penalty order passed by the Addl. CIT on 28.9.2012, which is barred by the limitation. Thus, the orders of the penalty of this kind have to be explained considering the provisions of clause (c) of section 275(1) of the Act. Further, it is the summary of the decision cited above that any case where AO made a reference in the assessment order, after discussing the same with the assessee during the regular assessment proceedings or made a referral to the Addl. CIT for imposition of the penalty. In our opinion, these preliminary acts constitute "action for the imposition of penalty". An action for imposition of penalty is always anterior in time to the "actual" imposition of penalty. In our opinion, the AO‟s discussion given in para 6 of the assessment order and AO‟s letter dated 6 to the Addl. CIT constitutes "action for imposition of penalty". T....
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....ction 269SS/269T of the Act and accordingly reference for initiation of penalty proceedings u/s. 271D/271E of the Act was made to Addl. CIT, Circle-6, Mumbai in the Assessment Order. After completion of assessments, the Assessing Officer by letters dated 11.12.2012 and 26.06.2013 made a reference to the Addl. CIT for initiation of penalty proceedings. Therefore, the facts of the assessee‟s case in all these cases are identical to the facts as mentioned by the Tribunal in its order in ITA.No. 475 to 481/Mum/2014 dated 27.06.2014 in assessee‟s own case and associated companies‟ cases. Thus, respectfully following the said decision of the Coordinate Bench in assessee‟s own case, we hold that, as the Assessing Officer in the course of the assessment proceedings called for explanation of the assessee in respect of loans accepted and repaid otherwise than by way of Account payee cheque/drafts, considered the reply of the Assessee and rejected the reply thereon, and the Assessing Officer holding that the assessee has violated the provisions of section 269SS/269T also made a reference to the Addl. CIT for initiation of penalty proceedings in the assessment order, th....
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....t to repayment of loan or deposits within the meaning of section 269SS or section 269T, and on the ground that limitation under section 275(1)(c) applies to such proceedings, we hold in favour of the respondent." Subsequently, this decision of Hon'ble Rajasthan High Court was affirmed by Hon'ble Supreme Court in Civil Appeal No.5254 of 2008 (2016) 386 ITR 719 (SC) wherein it is held as under: "1. On perusing the judgment of the High Court, it is found that penalty imposed on the respondent herein was also set aside on the ground that the provisions of Section 271-D and 271-E of the Income Tax Act were invoked after six months of limitation and, therefore, such penalty could not have been imposed. Since the outcome of the judgment of the High Court can be sustained on this aspect alone, it is not even necessary to go into other aspects. Leaving the other questions of law open, the appeal is dismissed. There shall be no order as to costs." 32.2. The assessee also relied on the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Jitendra Singh Rathore (2013) 352 ITR 327 (Raj). In this case also similar proposition was laid down in favour of asses....