TaxTMI 
TaxTMI 
2019 (9) TMI 1623
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.... deleting the penalty of Rs. 1,73,56,40,689/- levied u/$.271E of the Income Tax Act, 1961 on the ground that genuineness of the transaction made through journal entries is not in doubt. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) having held that the assessee had contravened the provisions of section 269T of the Income Tax Act, 1961, ought to have upheld the levy of penalty u/s.271E as the assessee failed to establish the compelling reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal entry with its group concerns." 4. The only issue raised by the Revenue is against the deletion of penalty of Rs. 173,56,50,689/- as levied by the AO under section 271E of the Act on the ground that assessee has contravened the provisions of section 269T of the Act. 5. The facts in brief are that during the course of assessment proceedings, the AO noticed that assessee has violated the provisions of section 269T of the Act. The AO after completing the assessment under section 143(3) of the Act vide order dated 28.03.2013 made a reference to the Additional CIT through communication date....
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....7.2018. The Ld. A.R., therefore, submitted that in view of the said order of the co-ordinate bench of the Tribunal the appeal of the Revenue may kindly be dismissed. Further, the Ld. A.R. also submitted that the issue is also squarely covered by the decision of the Hon'ble Bombay High Court in the cases of sister concerns/related concerns in ITA No.171 of 2015 - CIT vs. Ajitnath Hi-Tech Builders Pvt. Ltd., in ITA No.172 of 2015 - CIT vs. Lodha Properties Development Pvt. Ltd., in ITA No.202 of 2015 - CIT vs. Lodha Crown Buildmart Pvt. Ltd., in ITA No.213 of 2015 - CIT vs. Lodha Builders Pvt. Ltd., in ITA No.218 of 2015 - CIT vs. Adinath Builders Pvt. Ltd. and in ITA No.219 of 2015 - CIT vs. Ashthavinayak Real Estate Pvt. Ltd. in which identical issue involved i.e. the imposition of penalty under section 271D for violation of provision of section 269SS of the Act was decided in favour of the assessee. The Ld. A.R. also brought to the notice of the Bench that the SLP filed by the Revenue which also stood dismissed by the Hon'ble Supreme Court in SLP(civil) 01 diary No.42791 of 2018 arising out of order of the Hon'ble Bombay High Court in 172 of 2015 dated 6.2.2018. 7. The Ld. D.R.....
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....of the assessee further submits that the journal entries were made prior to 12 June 2012 as the present appeal pertains to assessment year 2012-13, therefore, the ratio of decision in case title as CIT Vs Trump International (I) Ltd dated 12 June 2012 (345 ITR 270)/ [22 Taxmann.com 138(Bom)] is not applicable. The ACIT levied the penalty under section 271D on the observation that the assessee accepted loan/ deposits from sister concern through journal entries i.e. otherwise then account payee cheque/draft and thereby violated the provisions of section 269SS. The assessee has taken journal entries of Rs. 10,99,595/-from Dharamnath Buildtech & Farm Pvt Ltd. The assessing officer further held that the assessee has not made out any case of reasonable cause under section 273B by making the reference the decision of honorable Bombay High Court in Trump International Finance (i) Ltd (supra). Before Commissioner (Appeals) the assessee urged that the journal entries have been made with the group concern under the bonafide belief that such transaction would not be hit by the provisions of section 269 SS in view of the various judicial decision on this issue, including the decision of Delhi H....
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....tances, adjudicating the crossobjection would only be academic in nature." 9. Further, Hon'ble Bombay High Court in ITA No.172 of 2015 & ors. in case of CIT vs. Lodha Properties Development Pvt. Ltd. & others has decided the issue in favour of the assessee by holding that no penalty can be imposed under section 271D of the Act for having accepted loans/deposits through journal entries as there was a reasonable cause. The operative part of the decision is reproduced as under: " 3. Regarding Question No.(i) :- (a) The common impugned order of the Tribunal arises from the orders passed by the Addl. Commissioner of Income Tax imposing penalty upon the respondents under Section 271D of the Act for breach of Section 269SS of the Act. This penalty was imposed inasmuch as during the previous year relevant to the subject assessment year, the respondents had accepted loans / deposits by way of passing journal entries in its books of accounts, in breach of Section 269SS of the Act. In terms Section 269SS of the Act prohibits a person from taking / accepting any loan / deposit or specified sum, otherwise by an account payee cheque or by an account payee bank draft or by us....
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....s as held by the Apex Court in Premier Breweries ltd. Vs. Commissioner of Income Tax, 372 ITR 180. Thus, it is submitted this question requires admission as it gives rise to a substantial question of law; (d) We find that the impugned order of the Tribunal has on application of the test laid down for establishment of reasonable cause, for breach of Section 269SS of the Act by this Court in Triumph International Finance (supra) found that there is a reasonable cause in the present facts to have made journal entries reflecting deposits. The Tribunal while relying upon the order of this Court in Triumph International Finance (supra) has held that in the present facts, neither the genuineness of receipt of loans / deposits by way of an adjustment through journal entries carried out in the ordinary course of business has been doubted in the regular assessment proceedings. It held in the present facts the transaction by way of journal entries was undisputedly done to raise funds from sister concerns, to adjust or transfer balances to consolidate debts to correct clerical errors etc. Further, the Tribunal records that as observed by this Court in Triumph International Fi....
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.... is an inference from other basic facts, will not alter its character as one of fact. Therefore, the issue of there being reasonable cause or not, is a question of fact and unless it is shown to be perverse, we would normally not interfere. (g) In the above circumstances, the view taken by the Tribunal on the facts before it, is a possible view and does not give rise to any substantial question of law. (h) In any event, as rightly pointed out by Mr. Sridharan, learned Senior Counsel for the respondents assesses, the order of this Court in Triumph International Finance (supra) was rendered on 12th June, 2012. This, was in an appeal filed by the Revenue from the order of the Tribunal dated 29th January, 2008, which had held that deposits / loans received through journal entries do not fall with the mischief of Section 269SS of the Act, so as to invite penalty under Section 271D of the Act. This, the Tribunal did by following its earlier orders in the case of VN. Parekh Ltd. and Ketan Parekh as indicated in the order of this Court in Triumph International Finance (supra). Our attention was also invited to numerous reported decisions of the Tribunal in the cases of Su....