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2022 (10) TMI 165
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.... of by this common order for the sake of convenience. 2. At the outset, we find that there is a delay of 51 days in filing of appeal by the revenue. We find that the order of ld. CIT(A) had been passed during Covid pandemic period and hence in view of the relaxation granted by the Hon'ble Supreme Court , the delay is hereby condoned and appeal of the revenue is admitted for adjudication. ITA No. 1290/Mum/2022 - Asst Year 2015-16 - Revenue Appeal against cancellation of penalty u/s 271D of the Act by the ld. CIT(A) 3. The only identical issue involved in this appeal is as to whether the ld. CIT(A) was justified in deleting the penalty levied u/s 271D of the Act in the facts and circumstances of the case. 4. The grounds raised by the revenue are as under:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the penalty levied w/s. 271D of the Act since the assessee has not shown the reasonable cause us. 273B of the Act for entering into such transactions through journal entries? 2."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the penalty without giv....
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.... Name of the Party Credits (Rs.) 1 18/08/2014 Bennett, Coleman & Co. Ltd. 74,60,086 2 12/03/2015 Lafarge Aggregates & Concrete 1,32,463 3 31/03/2015 Yash Enterprise 697 TOTAL 75,93,246 LEDGER OF SHREENIWAS COTTON MILLS LTD. Sr. No. Date Name of the Party Credits (Rs.) 1 09/10/2014 Alakh Advertising And Publicity 3,72,545 TOTAL 3,72,545 LEDGER OF PALAVA DWELLERS. Sr. No. Date Name of the Party Credits (Rs.) 1 12/01/2015 Shubham Earthmovers Pvt. Ltd., 67,753 TOTAL 67,753 6. The explanation given by the assessee before the ld. AO is as under:- Bennett Coleman & Co. Ltd - Rs 74,60,086/- Amount Payable to Bennett Coleman & Co. Ltd (BCCL) by the assessee company adjusted against the amount receivable on account of flat booking made by the BCCL in the sister concern In the current year the following journal entry was passed by the Assessee Company in the ledger account of LodhaPranik Landmark Developers Put Mad Crita (LPLDPL) (Now known as Lodha Developers Ltd as LodhaPranik Landmark Develo....
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....e by Lafarge Aggregates & Concrete to third party vendor. Simultaneously LDL, a sister concern, had payable to Lafarge Aggregates & Concrete on account of purchase of concrete material. Debit Balance of Lafarge Aggregates & Concrete in the books of assessee company on account of income booked towards recovery of Electricity charges and Royalty Income is adjusted against amount payable by LDL, a sister concern. In order to avoid the empty formality of making the payment to Lafarge Aggregates & Concrete through LDL and also simultaneously receiving the amount in Assessee Company from Lafarge Aggregates & Concrete, the Assessee company issued a credit note to Lafarge Aggregates & Concrete and passed the journal entry in order to adjust the amount receivable by Lafarge Aggregates & Concrete against amount payable by Lafarge Aggregates & Concrete to LDL. Accordingly, for squaring up the mutual transactions of payable and receivable, the above journal entry was passed. Copy of The Screenshot of entry as passed in the books of Assessee company are enclosed herein as Annexure-IV. The assessee submits that it has undertaken the above transaction with a view to extinguish t....
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....3, 218, 219/2015 dated 6.2.2018 , CIT vs Lodha Builders Private Limited in ITA No. 199/2015 dated 6.2.2018, wherein Special Leave Petitions (SLPs) filed by the department were dismissed by the Hon'ble Supreme Court. Apart from above, the SLPs of the department were dismissed by the Hon'ble Supreme Court in the following cases:- a) CIT vs Ashtavinayak Real Estate Private Limited in SLP No. 44674/2018 dated 4.1.2019 b) CIT vs Lodha Crown Buildmart Private Limited in SLP No. 44666/2018 dated 3.1.2019 c) CIT vs Lodha Builders Private Limited in SLP No. 42738/2018 dated 21.1.2019 d) CIT vs Lodha Properties Development Private Limited in SLP No. 42791/2018 dated 10.12.2018 e) CIT vs Adinath Builders Private Limited in SLP No. 40471/2018 dated 3.12.2018 7.1. Moreover, the assessee submitted that this Tribunal in Lodha Developers Pvt Ltd have listed seven reasons which can be considered as a reasonable cause . The details of the seven reasons / groups are :- (1) Alternate mode of raising funds (2) Assignment of receivables (3) Squaring of transactions (4) Operational efficiency / MIS purpose (5) Co....
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....payment of loan/deposit by outflow of funds nor refers any of other permissible modes of repayment of loan/deposit, but merely puts an embargo on repayment of loan/deposit except by the modes specified therein. 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. 20. Strong reliance was placed by the counsel for the assessee on the decision of the Apex Court in the case of J.B. Boda & Co. (P.) Ltd. (supra). In that case, J.B. Boda & Co. (P.) Ltd. (supra) carrying on business as reinsurance brokers were during the course of business required to remit the entire reinsurance premium payable to the foreign reinsurers in foreign currency and then receive commission in foreign currency from the said foreign insure Rs. Instead of remitting the entire amount to the foreign reinsurers and then receiving commission from the said foreign insurers, J B Boda & Company with the approval of the Reserve Bank of India retained the foreign currency to the extent of the commission and remitted the balance amount to the foreign reinsure Rs....
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....r such failure. Thus, reading Section 269T, 271E and 273B together it becomes clear that : (a) Under Section 269T it is mandatory for the persons specified therein to repay loan/deposit only by account payee cheque/draft if the amount of loan/deposit together with interest, if any, exceeds the limits prescribed therein; (b) Non-compliance of the provisions of Section 269T renders the person liable for penalty under Section 271E; and (c) Section 273B provides that no penalty under Section 271E shall be imposed if reasonable cause is shown by the concerned person for failure to comply with the provisions of Section 269T of the Act. 22. The argument advanced on behalf of the assessee that if Section 269T is construed literally, it would lead to absurdity cannot be accepted, because, repayment of loan/deposit by account payee cheque/bank draft is the most common mode of repaying the loan/deposit and making such common method as mandatory does not lead to any absurdity. No doubt, that in some cases genuine business constraints may necessitate repayment of loan/deposit by a mode other than the mode prescribed under Section 269T. To cater to the needs o....
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....ed the provisions of Section 269T, the assessee has shown reasonable cause and, therefore, the decision of the Tribunal to delete the penalty imposed under Section 271E of the Act deserves acceptance. (emphasis supplied by us) 25. In the result, we hold that the Tribunal was not justified in holding that repayment of loan/deposit through journal entries did not violate the provisions of Section 269T of the Act. However, in the absence of any finding recorded in the assessment order or in the penalty order to the effect that the repayment of loan/deposit was not a bonafide transaction and was made with a view to evade tax, we hold that the cause shown by the assessee 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. 26. The appeal is disposed of in the above terms with no order as to costs. 8.1. We find that the ld. CIT(A) further placed reliance on yet another decision of Hon'ble Jurisdictional High Court in the case of CIT vs Ajinath Hi-tech Builders P Ltd reported in 412 ITR 316 (Bom) and few tribunal decisions rendered in the....
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....r Asst Year 2015-16 is dismissed. ITA No. 1291/Mum/2022 - Asst Year 2015-16 - Revenue Appeal against cancellation of penalty u/s 271E of the Act by the ld. CIT(A) 11. The only identical issue involved in this appeal is as to whether the ld. CIT(A) was justified in deleting the penalty levied u/s 271E of the Act in the facts and circumstances of the case. 12. The grounds raised by the revenue are as under:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the penalty levied us. 271E of the Act since the assessee has not shown the reasonable cause w/s. 273B of the Act for entering into such transactions through journal entries? 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the penalty without giving a finding on transaction to transaction basis in the given case for existence of reasonable cause w/s. 273B which led to the exigency of contravention of provisions of 269T as the fact of each transaction need independent verification?" 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in merely rel....
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....4 Lafarge Aggregates & Concrete 1,11,150 12 12/01/2015 Manthan Enterprises 18,160 13 13/01/2015 Lafarge Aggregates &. Concrete 32,18,588 14 11/02/2015 Madison Communications Pvt. Ltd. 3,71,894 15 20/03/2015 Terraa Propex Pvt. Ltd. 6,89,165 14. The explanation given by the assessee before the ld. AO is as under:- On behalf payments; Some expenses are incurred at group level and later on allocated to various companies including the assessee company. In the present case before you, the payments made on behalf are explained as follows: a. Transfer of Vendor balances for knocking off: This represents the knocking off of amount payable by the assessee company to vendor and amount receivable from the same vendor in its sisters concerns or vice versa. The assessee submits that there was a debit balance/ credit balance in its sister concerns in respect of certain vendors and the amount payable / receivable by the assessee company to such vendors was adjusted against the amount receivables/payable from such vendors in the books of sister concern. This adjustment was given effect by way of the journal entry. The assessee sub....
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............Dr 74,60,086 To Lodha Developers Pvt Ltd............Cr 74,60,086 M/s Bennett Coleman & Co. Ltd (BCCL), is a vendor through which advertisement are provided in the newspaper. During the year under consideration invoices were raised on the assessee company in respect of advertisement services provided during the year by BCCL, As per the term of the barter agreement (Copy of Barter agreement is enclosed herein as Annexure-II) entered into between BCCL and LPLDPL, 66.67% of the value of advertisement services in case of each invoice (excluding commission and Service tax) is to be adjusted against the flat booked by BCCL in LPLDPL and the balance amount of the invoice is to be paid. Accordingly the Assessee Co. transferred 66.67% of value of advertisement services to LPLDPL for adjustment against the flat booked in LPLDPL by BCCL and the balance amount was paid through proper banking channels. This adjustment was given effect by way of the above mentioned journal entry. Copy of Entry passed in the books of Assessee Company is attached as....
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....tinguishing the mutual liability of paying/receiving through journal entries constitute reasonable cause; should not be considered as violation of provisions of Sec 269SS/269T. e. Madison Communications Pvt Ltd.: Amount receivable by assessee company from Madison Communications Pvt. Ltd. (MCPL), adjusted against amount payable by Lodha Developers Ltd(LDL) (earlier known as Lodha Developers Pvt Ltd) to MCPL: In the current year the following journal entry was passed by the Assessee Company in respect of the above pictorial representation of transaction: Lodha Developers Ltd................Dr Rs. 3,71,894 To Madison Communications Pvt. Ltd. Rs. 3,71,894 M/s Madison Communication Pvt. Ltd. (MCPL), is an agent through which advertisements are placed with different vendors namely Bennett Coleman Co. Ltd. etc. During the year under consideration certain amount was payable by LDL on account of advertising services ....
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....d employee. In view of the above facts the Assessee submits that it's action of extinguishing the mutual liability of paying/receiving through journal entries constitute reasonable cause and should not be considered as violation of provisions of Sec 269SS/269T. g. Brokerage payment to TerraaPropex Put. Ltd.: TerraaPropex Put. Ltd. is common broker of Assessee Company and Shreeniwas Cotton Mills Pvt. Ltd. (SNCML), sister concem of Assessee Company. During the year under consideration the Assessee Company had debit balance of TerraaPropex Pvt. Ltd. on account of Excess brokerage paid towards sale of flat. Simultaneously, SNCML a sister concern, had payable to TerraaPropex Put. Ltd. on account of brokerage towards sale of flat. Debit Balance of TerraaPropex Pvt. Ltd. in the books of Assessee Company on account of Excess brokerage paid is adjusted against amount payable by SNCML, a sister concern. In order to avoid the empty formality of making the payment to TerraaPropex Put. Ltd. through SNCML and also simultaneously receiving the amount in Assessee Company from TerraaPropex Pvt. Ltd., the Assessee company passed the journal entry in order to adjust the amount r....
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....n short). RFL had disbursed the loan directly to Lodha Developers Pvt Ltd (LDPL) at the behest of the assessee. It is not in dispute that LDPL is a flagship company of the assessee. Since the loan amount was directly disbursed to LDPL by RFL, the assessee passed the following journal entry in its books :- Lodha Developers Pvt Ltd A/c Dr Rs 2,88,72,500 To Religare Finvest Ltd A/c Cr Rs 2,88,72,500 16.1. It is not in dispute that the loan instalment and interest payable to RFL were duly serviced by the assessee company i.e Macrotech Developers Ltd (Successor to Shreeniwas Cotton Mills Ltd) against the outstanding loan account. Even the said repayment of loans were made only by account payee cheques. Hence there is no contravention of provisions of section 269T of the Act as alleged by the ld. AO in the instant case. Accordingly, we hold that this case is no different from other cases that are before us in the present list. 17. Both the parties before us agreed that the reasoning given by the ld. AO and the ld. CIT(A) are one and the same in all the appeals. In....