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2018 (7) TMI 2241 - AT - Income TaxPenalty levied u/s 271D - repayment of loan /deposit by way of journal entries - Proof of bonafide belief - HELD 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 High Court in case of NOIDA Toll Bridge 2003 (1) TMI 46 - DELHI HIGH COURT and such loan by way of journal entries transaction were undertaken for various commercial reasons like assigning or receivable for operational efficiency, payment on the group concern for squaring up connection, for ease of consolidation of accounts, rectification entries etc. Commissioner (Appeals) after referring the decision of Bombay High Court in Trump International 2012 (6) TMI 358 - BOMBAY HIGH COURT held that repayment of loan /deposit by way of journal entries was in contravention of provision of section 269SS has been given after the close of financial year 2011-12 relevant to assessment year 2012-13. The learned Commissioner (Appeals) concluded that reasons disclosed by assessee constitute reasonable cause within the meaning of section 273B of the Act; particularly in light of the fact that there is no finding that such transaction was undertaken to evade the tax. The learned Commissioner (Appeals) while considering the contention of assessee also observed that there is no finding that transaction by way of journal entries were not made to evade tax. The finding of the CIT(A) is based upon the decision of Bombay High Court in the assessee s sister concern case title as CIT Vs AjinathHitech builders Private Limited others 2018 (2) TMI 603 - BOMBAY HIGH COURT Accordingly, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Resultantly, the appeal of the revenue is hereby ordered to be dismissed.
Issues:
Appeal by revenue against deletion of penalty under section 271D by CIT(A) for assessment year 2011-12. Cross-objection by assessee challenging the legality of the order under section 271D & 271E of the Act. Analysis: 1. Grounds of Appeal by Revenue: - Revenue contended that CIT(A) erred in deleting penalty under section 271D of ?5,03,15,487, citing genuine transaction doubts. - Revenue argued that as per section 269SS contravention, penalty under section 271D should have been upheld by CIT(A). 2. Cross-objection by Assessee: - Assessee raised objections on the legality of the order under section 271D & 271E, claiming it was beyond the limitation period. - Assessee sought leave to modify the cross-objection. 3. Case Background: - Search and seizure at Lodha Group revealed suppression of sale receipts and on-money receipts. - Key person declared undisclosed income, leading to notices for filing returns. - Assessee accepted loan in contravention of IT Act, resulting in penalty under section 271D of ?5,03,15,487. 4. Judicial Review: - Arguments presented by both parties; revenue sought to set aside CIT(A)'s decision, while assessee cited favorable precedents. - Assessee's defense included reliance on judicial decisions to justify journal entries and absence of tax evasion motive. - CIT(A) upheld assessee's contentions, finding reasonable cause under section 273B, based on prior court rulings. - CIT(A) concluded that the transactions were not for tax evasion purposes, aligning with Bombay High Court's decision in a related case. 5. Decision and Rationale: - Tribunal found CIT(A)'s decision judicious and correct, dismissing revenue's appeal. - Assessee's cross-objection not separately addressed due to resolution in the appeal. 6. Conclusion: - Appeal by revenue dismissed, upholding CIT(A)'s deletion of penalty under section 271D. - Cross-objection deemed academic in light of the appellate decision. This detailed analysis covers the grounds of appeal, cross-objection, case background, judicial review, decision rationale, and the final conclusion of the Appellate Tribunal's judgment.
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