TaxTMI 
TaxTMI 
2025 (1) TMI 867
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.... response to which, the assessee's Authorised Representative appeared before the Assessing Officer from time to time and filed the requisite details. 3.1. The Assessing Officer completed the assessment u/sec.143(3) on 29.11.2018 determining the total income of the assessee at Rs. NIL. During the course of assessment proceedings, the Assessing Officer noted that assessee made repayment of loans/deposits through the mode other than account payee cheques/drafts, for which, the Assessing Officer referred the matter to the concerned JCIT for initiation of penalty proceedings for violating the provisions of sec.269T, for which, the JCIT issued notice to the assessee asking it to explain as to why an order imposing penalty should not be made u/sec.271E of the Act. 3.2. During such penalty proceedings, the assessee apart from making various other submissions, drew the attention of the Bench to the submissions made before the JCIT which reads as under : "4. Company supplies its products through Customer Sales Agents (CSA) after taking security deposit from them. Security Deposit is taken for ensuring genuineness of the party and timely recovery of dues of the company. The Security Depos....
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....d the action of the JCIT. 5. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 6. Learned Counsel for the Assessee, at the outset, strongly challenged the order of the Ld. CIT(A) in confirming the penalty levied by the Assessing Officer u/sec.271E of the Act. He submitted that the transactions in respect of which penalty has been levied can be bifurcated in two parts i.e., (i) transaction with related party viz., Shri Deepak Sanghavi of Rs. 13,06,040/-, Mrs. Ritu Sanghavi Rs. 8,21,370/- totalling to Rs. 21,27,410/- and (ii) transactions with Customer Sales Agents [in short "CSAs"] amounting to Rs. 36 lakhs, the details of which are as under : Sr.No. Particulars Amount (Rs.) 1. Agrawal Enterprises Gorakhpur 1,00,000/- 2. Tirupati Agencies Akola 1,50,000/- 3. Suhani Enterprises 5,00,000/- 4. Frontier Logistics 15,00,000/- 5. JMD Enterprises 3,00,000/- 6. Aman Traders 5,00,000/- 7. Bharat Bandhu 3,00,000/- 8. Dhara Enterprises 2,50,000/- 6.1. So far as the transactions with the related parties are concerned, he submitted that it had made certain payments on behalf of the above referred persons which are settled th....
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....he case of Lodha Builders Pvt. Ltd., vs., ACIT vide ITA.No.476/Mum./2014, he submitted that the Tribunal in the said decision has held that accepting/repaying loans/ advances via journal entries contravenes Section 269SS and 269T provisions but penalty cannot be levied u/sec.271D and u/sec.271E of the Income Tax Act, if transactions are "bonafide and genuine". It has further been held that so long as the transactions are for business purposes and do not involve unaccounted money, they are genuine. He accordingly submitted that penalty so levied by the Assessing Officer and sustained by the Ld. CIT(A) is not justified and should be deleted. 7. The Learned DR, on the other hand, while supporting the order of the JCIT/AO and CIT(A) referred to the decision of Hon'ble Supreme Court in the case of CIT (Central)- IV vs. Adinath Builders (P.) Ltd., [2019] 102 taxmann.com 57 (SC) and submitted that the receipt of deposits/loans through journal entries is in breach of sec.269SS. He accordingly submitted that the order of the Ld. CIT(A) sustaining the penalty levied by the JCIT/AO should be upheld. 8. We have heard the rival arguments made by both the sides and perused the material availab....
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....hstanding anything contained in the provisions of [clause (b) of sub-section (1) of] [section 271, section 271- A] [section 271AA] section 271-B, [section 271BA] [section 271-BB], section 271C, [section 271CA] section 271D, section 271E, [section 271F, [section 271FA,] [section 271FA] [section 271FAA.] [section 271FAB,] [section 271FB] [section 271G,] [section 271GA,] (section 271GB,] [section 271GC,] [section 271H,] [section 271-1,] [section 271J,] clause (c) or clause (d) of sub-section (1) or subsection (2) of section 272A, sub-section (1) of section 272AA] or [section 272B or] [sub-section (1) [or sub- section (1A)] of section 272BB or] [sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause" for the said failure.]" 8.4. We find the Hon'ble Bombay High Court in the case of CIT (Central)-IV vs. Ajitnath Hi-Tech Builders (P.) Ltd., (supra) while holding that receipt/deposit/loans received through journal entries is in breach of se....
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....c clearing system of a bank if the amount involved is in excess of Rs. 20,000/-. This imposition of penalty under Section 271D of the Act, was upheld by a common order dated 31st December, 2013 passed by the Commissioner of Income Tax (Appeals). On further appeal, the impugned order dated 27th June, 2014 of the Tribunal, inter alia held that penalty under Section 271D of the Act is not imposable in view of Section 273B of the Act. This for the reason that there was a reasonable cause for the failure to comply with Section 269SS of the Act. (b) On merits of the issue, the parties before us are agreed that the Tribunal was correct in holding that receipt of any advance/loan by way of journal entries is in breach of Section 269SS of the Act as the decision of this Court in CIT v. Triumph International Finance (I) Ltd. [2012] 22 taxmann.com 138/208 Taxman 299/345 ITR 270 (Bom.) is binding upon it. However, the Revenue's grievance is with the impugned order dated 27th June, 2014 of the Tribunal further holding no penalty under Section 271D of the Act is imposable in view of Section 273B of the Act in the present facts. This is so as the Tribunal holds that the failure to comply wi....
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.... entries constituted a recognized modes of recording of transactions and in the absence of any adverse finding by the authorities that the journal entries were made with a view to achieve purposes out side the normal business operations or there was any involvement of money, then, in these facts there was a reasonable cause for not complying with Section 269SS of the Act. (e) Mr. Mohanty's submission that the test laid down in Triumph International Finance ( supra) will have no application in the present facts in view of the large number of entries in this case as compared to only one entry in the case before this Court. The test of reasonable cause can not, in the present facts be determined on the basis of the number of entries. If there was a reasonable cause for making the journal entries, then, the number of entries made, will not make any difference. Besides, on facts, the Tribunal was satisfied with the reasons given by the Assessee for reasonable cause and this finding is not shown to be perverse. Finally, the issue of there being a reasonable cause or not is an issue of fact. No inference of law and/or issue of interpretation is to be made. The decision relied upon b....
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....Chemicals & Investment (P.) Ltd. [2004] 88 TTJ 85 (Delhi) and Asstt. CIT v. Lala Murari Lal & Sons [2004] 2 SOT 543 (Luck) 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 CIT v. Noida Toll Bridge Co. Ltd. [2004] 139 Taxman 115/ [2003] 262 ITR 260 inter alia 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 ....