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2022 (8) TMI 625 - AT - Income TaxPenalty levied u/s 271D and 271E - assessee had accepted/paid loans in contravention of provision of section 269SS/269T - CIT(A) deleted the penalty on the ground that accepting deposits by way of journal entries was a transaction in the nature of the bonafide and not with a view to avoid tax - HELD THAT - In the Ground No. 2 raised before the Ld. CIT(A), there was no such issue of bonafide nature of the transaction, still he decided that too against the finding of the Hon ble Bombay High Court in the case of the Triumph International Finance (I) Ltd. 2012 (6) TMI 358 - BOMBAY HIGH COURT wherein the Hon ble Bombay High Court has specifically observed that irrespective whether the transaction was bonafide or non-bonafide, repayment of loan by debiting amount through journal entries was in the nature of contravention of section 269T . In view of the above, the finding arrived by the Ld. CIT(A) in para 5.3, being contrary to the decision of the Hon ble Bombay High Court, is set aside. The Hon ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has been raised before the lower authorities.Appeal of revenue allowed.
Issues:
- Appeal against penalty levied under sections 271D and 271E of the Income-tax Act, 1961. - Ex-parte hearing due to non-attendance of the assessee. - Transfer of loans through journal entries contravening provisions of section 269SS/269T. - Grounds raised against deletion of penalties by the CIT(A). - Dismissal of Ground No. 1 and allowance of Ground No. 2 by the CIT(A). - Appeal by the Revenue challenging the deletion of penalties. - Contravention of section 269SS and 269T through journal entries. - Discrepancy between the CIT(A) decision and the judgment of the Bombay High Court. - Findings and conclusions regarding the penalties under sections 271D and 271E. Analysis: The Appellate Tribunal ITAT Mumbai heard two appeals by the Revenue against penalties imposed under sections 271D and 271E of the Income-tax Act, 1961. Despite multiple notifications, the assessee did not attend the hearing, leading to an ex-parte hearing. The penalties arose from a common transaction involving the transfer of loans through journal entries, which the Assessing Officer found to contravene sections 269SS/269T. The Addl. CIT imposed penalties based on this contravention, which the CIT(A) partially upheld and partially deleted. The CIT(A) dismissed Ground No. 1 but allowed Ground No. 2 of the appeal, leading to the Revenue's appeal before the Tribunal. The Tribunal considered the grounds raised against the deletion of penalties under sections 271D and 271E. The CIT(A) had based the deletion on the nature of the transactions being bonafide, contrary to the decision of the Bombay High Court in a similar case. The Tribunal found discrepancies in the CIT(A)'s decision and the High Court's judgment, leading to the allowance of the Revenue's appeal against the deletion of penalties. The Tribunal concluded that the transactions involving the transfer of loans through journal entries indeed contravened sections 269SS and 269T. As a result, the appeals filed by the Revenue were allowed, overturning the CIT(A)'s decision to delete the penalties. The judgment highlighted the importance of adhering to the provisions of the Income-tax Act, even in cases where transactions may appear bonafide, emphasizing the need for strict compliance with the law to avoid penalties.
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