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Issues involved: Appeal against cancellation of penalty u/s 271D for loan transaction through journal entries violating section 269SS.
Issue 1: Cancellation of penalty u/s 271D - The revenue appealed against the cancellation of penalty of Rs. 71,45,430 u/s 271D by CIT(A) for a loan transaction made through journal entries, contending it violated section 269SS. - AO levied penalty after finding the loan amount was received otherwise than by Account Payee Cheque or Draft, deeming it a contravention of section 269SS. - Assessee argued that transactions were not in cash but through journal entries, thus not violating section 269SS. - CIT(A) referred to ITAT decisions where penalties were not levied for transactions through journal entries, citing the case of N.H.Securities Ltd. vs. Addl. CIT. - CIT(A) upheld the cancellation of penalty u/s 271D based on the ITAT order, leading to the revenue's appeal before the Tribunal. Issue 2: Interpretation of law - The AO alleged the transactions were made to evade tax, disregarding the Assessee's explanation that the loan was received through journal entries, not in cash. - Assessee cited precedents like the case of Noida Toll Bridge Co. Ltd. and Sunflower Builders (P) Ltd., where penalties were not imposed for transactions through journal entries. - The Tribunal upheld the CIT(A)'s decision to cancel the penalty, emphasizing that penalty provisions are not attracted for transactions made through journal entries as per previous Tribunal decisions. - The Tribunal dismissed the revenue's appeal, affirming the cancellation of the penalty u/s 271D based on the consistent interpretation of the law regarding transactions through journal entries.
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