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TMI Blog2018 (8) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... /Mum/2017, ITA No.110/Mum/2017, ITA No.111/Mum/2017ITA No.135/Mum/2017, ITA No.6602/Mum/2016, ITA No.6603/Mum/2016, ITA No.6604/Mum/2016 And ITA No.6605/Mum/2016 - - - Dated:- 30-7-2018 - SHRI PAWAN SINGH, JM AND SHRI N.K. PRADHAN, AM ITA No.6606/Mum/2016, ITA No.6612/Mum/2016, C.O. No.157/Mum/2018 And C.O. No.154/Mum/2018 For The Appellant : Shri Vijay Mehta (AR) For The Respondent : Ms. Pooja Swaroop-(DR) And Shri Rajesh Kumar Yadav ORDER PER BENCH: 1. This group of 13 appeals by the Revenue and cross objection by the assessee in appeal for the assessment year 2010-11 are directed against the order of CIT(A).s for different assessment years. In all the appeals revenue has raised identical Grounds of appeal. Therefore, with the consent of parties all appeals were clubbed, heard together and are being disposed/decided by a single consolidated order. In all the appeals Revenue has challenged the deletion of penalty either under section. 271D or 271E of the Act. For appreciation of facts we are referring the facts in appeals for AY 2007-08 in ITA No.139 1409/Mum/2017. 2. Brief facts of the case are that the assessee is a Private Limited Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,73,49,453/- under section 271E and penalty of ₹ 2,84,12,090/- under section 271D. While levying penalty u/s. 271D/271E the ACIT relied upon the decision of Hon'ble Bombay High Court in the case of Trump International Finance (I) Ltd.(345 ITR 270) wherein it was held that transaction of loan/deposit by way of adjustment through book entry would result in contravention of provisions of section 269SS. 3. On appeal before CIT(A) both the penalties were deleted. The ld. CIT(A)while deleting the penalty u/s. 271D/271E held that genuineness of the transactions made through journal entries is not in doubt and it has not been shown either in assessment proceedings or in penalty proceedings that unaccounted income of lender or borrower was involved. There was no finding that the transactions by way of journal entries were not bonafide or made to evade tax. The ld. CIT(A) further held that the decision of the Hon'ble Bombay High Court in the case of Trump International Finance (I) Ltd. was dated 12/06/2012 and that payment of journal entry was given prior to the decision of Hon'ble Bombay High Court, which constitutes a reasonable cause within the meaning of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9T. The Assessing Officer further held that the assessee has not made out any reasonable cause as prescribed 273B of the Act. 7. Before ld. CIT(A) the assessee urged that journal entries is not loan or deposit of money neither there is any unaccounted cash flow money of the group entities. The assessee further contented that Section 269SS was introduced by the Finance Act, 1984. The Circular, gave the purpose of introduction of Section 269SS. The broad purpose of insertion of section 269SS was with the view to counter the device, which enables the tax payer to explain away un accounted cash or unaccounted deposits, the new section 269SS debars person from taking or accepting after 30/6/1984 from any person loan or deposit otherwise by an account payee cheque or account payee bank draft if the amount of loan or deposit or aggregating amount of such loan is ₹ 10,000/- or more. The object of insertion of section 269SS was to ensure that tax payer is not allowed to give false explanation for his unaccounted money or if he has given some false entries in his accounts, he should not escape by giving some false entries in his account, he shall not escape by giving false explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Commissioner of Income Tax Vs. Triumph International Finance (I) Ltd. 345 ITR 270 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 with Section 269SS of the Act was on account of reasonable cause on the part of the respondents. This fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 by the Revenue in case of Premier Breweries Ltd.(supra) concerned itself with the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 and Asst.CIT Vs. Lala Murari Lal Sons, 2004(2) SOT (Luck) 543 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 Commissioner of Income Tax Vs. Noida Toll Bridge Co. Ltd. 262 ITR 260 inter alia held that payment of ₹ 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 beingmade 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 VH. 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 Act. In the above view, while agreeing with the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of S. 269T of the Act in a case where the loan was repaid by way of a journal entry entailing levy of penalty u/s. 271E of the Act. However, at the same time it was also held that levy of penalty could be avoided on showing reasonable cause. In the premises, levy of penalty u/ss. 271D of the Act is not automatic, but the genuineness or otherwise of the reasons due to which repayment was made by journal entry has to be considered judiciously. 7. In the order reported as Lodha Builders (P) Ltd. v. ACIT [2014] 163 TTJ 778 (Mum), a bunch of appeals belonging to Lodha group (to which the present assessee belongs) involving identical issue, was disposed of by the co-ordinate Bench in which levy of similar penalties was held to be not sustainable as there was a reasonable cause, copies of which have been placed on record. In deciding the dispute in favour of the assessee, the Hon'ble Tribunal had considered and applied the ratio laid down by the Hon'ble jurisdictional High Court in the case of CIT v. Triumph International Finance (I) Ltd. (345 ITR 270). 8. The aforesaid order of the Hon'ble Tribunal was approved by the Hon ble jurisdictions! High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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