AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 125
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....moto Writ Petition (C) No. 3 of 2022. 2. Assessee has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is not justified in deleting the penalty levied u/s. 271D 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 u/s. 273B which led to the exigency of contravention of provisions of 269SS 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 not justified in merely relying upon the various case laws without examining the cause behind each instance of default which, therefore, rendered the impugned order perverse, and thereby rendered the applicability of any judicial precedent as otiose? 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is not justified in giving....
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....nt of the transactions as settlement of these transactions through banking channels results in avoidable delay of 3-5 days and (iv) avoided the blocking of huge funds for temporary period without any corresponding commercial gain. During the course of regular assessment proceeding confirmations of accounts recording all the transactions were duly considered and no adverse inference, of any kind, was drawn by the Assessing Officer. All the journal entries passed by it were genuine with a corresponding journal entries in the books of sister concerns. All sister concerns with whom the Assessee had entered into transaction through journal entries are having Permanent Account Number (PAN) and were regularly filing their return of income. There was no avoidance of any tax liability by transferring assets/liabilities through journal entries; or loss of revenue to the Income Tax Department. On behalf of the Assessee reliance was placed on the following: - CIT vs. Triumph International Finance (India) Limited [ITA No. 5745/2010- unreported judgment dated 17.08.2012. - CIT vs. Triumph International Finance (India) Limited [ 345 ITR 272 Bombay HC] - Goldstar Electricals Pvt. Ltd. vs. AC....
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....various group entities which are also the subject matter of investigation pursuant to direction of Hon'ble ITSC. Hence it cannot be ruled out that the entities through whom such repayment / acceptances are done are not part of a chain of entities involved in transaction for the purpose of tax evasion." (Emphasis Supplied) 6. Being aggrieved the Assessee carried the issue in appeal before the CIT(A). The CIT(A) confirmed the penalty levied in respect of cash transactions and deleted penalty in respect of the journal entries levied under Section 271D of the Act and holding as under: "9.1 I have considered the facts of the cases, orders of the Addl. CIT and the submissions of the appellant. I find that in arriving at the conclusion that the arriving appellant has violated the provisions of Sections 269SS/269T of the Act, the Addl. CIT has heavily relied on the judgement dated 12/06/2012 of the Hon'ble Bombay High Court in the case of CIT(Central)-IV vs. Triumph International Finance (India) Ltd. (supra.), wherein it was held that where loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisi....
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....uck) 543 wherein it has been held journal entries in the book of accounts Indicating deposit / loans will not fall foul of Section 269SS of the Act. Besides, the Delhi High Court in Commissioner of Income Tax Vs. Noida Toll Bridge Co. Ltd. 262 ITR 260 inter alla held that payment of Rs.4.85 crores made by the assesses by a journal entry in its books of account by crediting the account of ILFS, would not fall foul of Section 269SS of the Act. This particularly in the absence of any payment being made in cash. (i) In the present facts, the period during which the journal entries were made by the respondents was in the previous year relevant to the Assessment Year 2009-10 i.e. Financial Year 2008-09. At that time, the decisions of the Tribunal in the cases of Triumph International (Supra) and decision of V.H. Parekh (P) Ltd., Ketan V. Parekh, Sunflower Builders (supra), Ruchika Chemicals (supra), Lala Murari Lal (supra) and the decision of the Delhi High Court in Noida Toll Bridge Co. Ltd.(supra) were holding the field. Thus, not in breach of Section 269SS of the Act. In the above view, while agreeing with the submission of Mr. Mohanty, learned Counsel for the appellant that the dec....
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....hough receiving of deposits / loans through journal entries would be hit by Section 269SS of the Act, nevertheless, where such transactions are made by an assessee prior to the decision of the Hon'ble Bombay High Court in the case of Triumph International Finance (supra.), the provisions of Section 271D of the Act would not be attracted, as the assessee shall be deemed to have had reasonable cause to receive the deposits/loans through journal entries, which would also be a reasonable cause u/s.273B of the Act for non-imposition of penalty u/s.271D of the Act. 9.6 Though the judgment of the Hon'ble Bombay High Court in the case of Triumph International Finance (supra.) relates to levy of penalty u/s.271D of the Act for violation of the provisions of Section 289SS of the Act, considering the fact that the provisions of Section 269T of the Act are analogous to the provisions of Section 269SS of the Act, the above principle laid down by the Hon'ble Bombay High Court, and upheld by the Hon'ble Supreme Court, in respect of levy of penalty u/s. 271D of the Act would apply to levy of penalty u/s.271E also, which is levied for violation of the provisions of Section 269T of....
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....ly, is directed to be deleted to the extant it has been levied in respect of the journal entries, whereas the same is upheld in respect of transactions where cash has been deposited on behalf of the transacting parties. The grounds taken by the appellant in both the appeals are, accordingly, Partly Allowed subject to verification of facts as above." 7. Being aggrieved by the order of CIT(A), the Revenue is in appeal before us. All the grounds raised by the Revenue are directed against the order of CIT(A) deleting the penalty levied by the Assessing Officer under Section 271D of the Act in case of violation of Section 269SS of the Act in respect of the transactions undertaken by way of journal entries. 8. The Learned Departmental Representative relied upon the order passed by the Assessing Officer levying penalty under Section 271D of the Act whereas the Learned Authorised Representative for Assessee referred to the order passed by the CIT(A) and placed reliance on the various judgments/decisions forming part of the legal paper-book (Pg 1 to 1178). 9. We have heard the rival submission and perused the material on record. We note that identical contentions raised by the Revenue s....