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TMI Blog2018 (7) TMI 2242X X X X Extracts X X X X X X X X Extracts X X X X ..... f decision in case title as CIT Vs Triumph International (I) Ltd [ 2012 (6) TMI 358 - BOMBAY HIGH COURT ] is not applicable. In the said discussion, 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. Accordingly, these issues are decided in favour of the assessee against the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... e/draft, thereby flouting the provision of Section 269T of the I.T. Act. The entries are as under: - Sr. No. Name of the Sister Concerns Debits (Rs.) 1 Lodha Developers Pvt. Ltd. 2,07,34,391 2 Vardhvinayak Builders Pvt. Ltd. 7,35,000 Total 2,14,69,391 5. On the letter of the AO, the notice was issued to the assessee on 03.07.2015 in which the assessee was asked to explain as to why the penalty u/s 271E of the Act should not be levied. The assessee filed the reply to the notice and thereafter considering the reply of the notice, the Assessing Officer levied the penalty to the tune of ₹ 2,14,69,391/- u/s 271E of the Act. The assessee also received the loan to the tune of ₹ 1,96,38,939/- through journal entries, therefore, after giving the notice to the assessee, the penalty to the tune of ₹ 1,96,38,939/- was levied u/s 271D of the Act. Feeling aggrieved, the assessee filed an appeal against both the orders and the CIT(A) has deleted the penalty levied u/s 271D and 271E of the Act, therefore, aggrieved by this order, the revenue has filed the above mentioned appeals before us. ISSUE NOs.1& 2:- 6. Under these issues the revenue has challenged the deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing search in the Lodha group of cases on 10.1 2011, it could not be ruled out that the entities through whom such repayment/acceptances are done by way of journal entries are not part of a chain of entities involved in transaction for the purpose of tax evasion. 7.2. The appellant has submitted that the journal entries passed for transactions assigning debts and liabilities among sister concerns and reimbursement of expenses do not constitute acceptance of ban or deposit of money as per provisions of section 269SS of the Act It has been submitted that out of the total credits, an amount of ₹ 18168,679/- has been credited in the account of Lodha Hi-Rise Builders Pvt Ltd (LHRBPL) since the amount payable to LDPL has been transferred/assigned to LHRBPL. An amount of ₹ 735000/-- has been credited in the account Shri Vardhvinayak Builders Pvt Ltd, out of which the amount of ₹ 73,50000- represents on behalf payment to vendors and an amount of ₹ 5000/- has been credited in cash. These transactions has been categorized as transfer of inter-company balance for operational efficiency. Penalty has been levied u/s.2710 with respect to the above said amounts. Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio laid down in IT A No.5746 of 2010 decided on 12* June 2012 (the decision for A.Y 2003-04), that receiving loans/deposits through journal entries would be in violation o! section 26SSSoftheAct. 7.3.2 Further, I find that the issue regarding levy of penalty u/s.271D/271E of the I.T. Act in the case of various other companies of Lodha group (Ladha Builders Pvt Ltd vs ACIT and five other group concerns) for A.Y 2009-10 has been decided by the ITAT 'E1 Bench, Mumbai vide order dated 27.6.2014. In the said order, under similar facts and circumstances, the ITAT is of the opinion that The assesses has violated the provisions of section 269SS/269T of the Act in respect of journal entries. Accordingly, following the above said decision, it is held that the appellant has received the loan amount of ₹ 1,96,36,939/- by way of journal entries, as noted in the penalty order, in contravention of the provision of section 269SS and ground No.3 taken by the appellant in this regard 7.4. Ground No.4 to 9 are against the finding of the Addl.CIT that penalty was leviable u/s.271D of the Act since no reasonable cause could be found in this case. In this regard it is observed that the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des of repaying loan or deposit Therefore, on the facts, in the absence of any finding assessment order the penalty order to the effect that the repayment of loan or deposit was not a bonafide transaction and was made with a view to evade tax, the cause by the assesses was a reasonable cause and in view of section 2736 of the Act, penalty under section 271 E could for contravened the provisions of section 269T of the Act. 1 5. In the appellant's case the genuineness of the transaction made through journal entries is not in doubt and it has not been shown either in the assessment proceedings or in the penalty proceedings that unaccounted income of the lender or the borrower was involved. From the assessment order passed u/s.143(3) dated 30.3.2015, it is noted that the total income has been assessed alter making the following additions i) Land & brokerage income- ₹ 5,00,000/- arid penalty proceedings u/s.271(1)(c) have been initialed. This additional income represents the additional income disclosed before the Settlement Commission, which was not allowed to be proceeded with vide order u/s.245D(l) dated 12.2.2013. However, there is no finding that the transactions by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of squaring up with the same party can only claim the benefit of reasonable cause. This observation is found to be without merit particularly in light of the decision of High Court of Bombay in the case of CIT vs M/s. Triumph international Finance(l) Ltd 1TA No.5745 of 2010 dated 17.3.2012 for the A.Y.2000-01,as noted in para 6 3 above, wherein the appellant company and its sister concern M/s Triumph Securities Ltd had transactions of sale and purchase with common customers and the credit/debit liabilities were settled through journal entries and it was held 'that the transactions in question were undertaken not with a view to receive loans/deposits in contravention of Section 269SS, but in a view to extinguish the mutual liability of paying/receiving the amounts by the assesses and its sister concern to the customers In (he absence of any material on record to suggest that the transactions in question were not reasonable or bonafide and in view of section 273B of the Act, we see no reason to interfere with the order of the Tribunal in deleting the penalty of ₹ 22 99 crores.' 7.5.3. It has also been observed by the Addl.CIT that it shall not be out of pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Accordingly, these issues are decided in favour of the assessee against the revenue. ITA NO. 615/M/2017:- 8. In this appeal, the CIT(A) has deleted the penalty levied u/s271E of the Act on account of repaid of loans to various concerns on the basis of journal entries otherwise then the account payee cheque, draft which was held to be in violation of provision of Section 269SS of the Act by the AO. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "10 The grounds taken by the appellant and the facts of the case are similar to those taken in appeal against levy of penalty u/s 271D of the Act for the A.Y. 2008-09, discussed in paras above. The AO has levied the penalty of ₹ 2,14,69,391/- u/s 271E of the Act, holding that he appellant has contravened the provisions of section 269T of the Act without any reasonable cause in respect of the total debits of ₹ 2,14,69,391/- which represent repayment of loans by way of journal entries to its sister concerns as under: Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transactions by way of journal entries are in contravention of provision of section 259T of the Act. the appellant has shown reasonable cause vj's.273B of the Act and the levy of penalty was not justified. Accordingly, the levy o1 penalty of ₹ 2,14,65,391,1 - is hereby cancelled. Ground No.4 to 9 are allowed, 10.5. In Ground No. l0 it has been contended that the AddL ClT erred in not following the decision of the ITAT, Mumbai in ITA No.475 to 481 of 2014 in respect of identical penalties levied in assessee's own and associate company cases. Following the decision in para 9 above, this ground is allowed." 9. On appraisal of the above mentioned finding, we noticed that the levying of penalty u/s 271E of the Act is in connection with repayment of loan and deposit to various sister concerns on the basis of journal entries otherwise then account payee, cheque and draft. The factual position is not dispute and the legal position has already been discussed above. The CIT(A) has relied upon the decision of Bombay High Court in the case of CIT Vs. Triumph International Finance Ltd. ITA. No. 5745 of 2010 dated 17.08.2012 and at the time of argument the Ld. Representative of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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