2018 (10) TMI 1928 - AT - Income Tax

Penalty u/s 271D 271 E - loan was repaid by way of a journal entry - HELD THAT - Penalty imposed u/s.271D and 271E was held to be not leviable in terms of decision of Bombay High Court in case of Triumph International Finance (I) Ltd 2012 (6) TMI 358 - BOMBAY HIGH COURT - as observed that there was a reasonable cause for squaring all the accounts through general entries. As the facts and circumstances in the appeals before us are parimateria with the facts and circumstances discussed by the Tribunal respectfully following the order of the Tribunal in the case of group concern, we do not find any infirmity in the order of CIT(A) for deleting the penalty imposed u/s.271D and 271E - Decided against revenue.

Summary

Issues:
Appeal against imposition of penalty u/s.271D & 271E of the Income Tax Act, 1961 for A.Y.2007-08 & 2009-10.

Analysis:
The Appellate Tribunal ITAT Mumbai heard appeals filed by the Revenue challenging the order of CIT(A)-49, Mumbai regarding the imposition of penalties under sections 271D and 271E of the Income Tax Act, 1961 for the assessment years 2007-08 & 2009-10. The Tribunal considered a previous decision of the Bombay High Court where a similar penalty was deleted. The Tribunal noted that the Assessing Officer had levied penalties for accepting loans through journal entries, citing a judgment which held that such transactions could violate provisions of the Act but penalties could be avoided with reasonable cause. The Tribunal also referenced a case involving Lodha group where similar penalties were deemed unsustainable due to reasonable cause. The Tribunal approved the decision of the CIT(A) to delete the penalties based on the High Court's judgment in the group case, as the facts were similar. Consequently, the appeal of the Revenue was dismissed.

The Tribunal reviewed the orders of the lower authorities and a previous case involving group concerns where penalties under sections 271D and 271E were found not leviable based on the decision of the Bombay High Court in the Triumph International Finance case. It was observed that there was a reasonable cause for using general entries to square all accounts. As the facts and circumstances were similar to the previous case, the Tribunal upheld the CIT(A)'s decision to delete the penalties under sections 271D and 271E. Subsequently, all appeals of the Revenue were dismissed.