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TMI Blog2022 (3) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. These are genuine transactions carried out in the normal course of the business of the assessee. Hence, if the aforesaid transactions are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. Assessee has given complete explanation of the transactions by way of detailed explanation together with the purpose of passing a journal entry including relevant journal entry passed in the books of accounts of the assessee company. The same are not reiterated for the sake of brevity herein as they are already forming part of the records. Hence it could be safe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble CIT(A) is justified in holding that the journal entries should enjoy equal immunity on part with account payee cheques and bank drafts? 3. whether on the facts and circumstances of the case and in law, the Hon'ble CIT(A) is justified in merely relying upon the High Court order in assessee s group case company, Lodha Builders (P_ Ltd. In ITA Nos. 171/172/202/2013/218/219 of 2015 vide order dated 06.02.2018 without examining the cause behind each instance of default which, therefore, rendered the impugned order perverse, and thereby rendered the applicability of any judicial precedent as otiose? For Assessment Year 2013-14 1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) is justified in deleting the penalty of ₹ 1,05,36,585/- under section 271D holding that there was reasonable cause under section 273B for entering on transaction to transaction basis in the given case for existence of reasonable cause under section 273B which led to the exigency of contravention of provisions of Sections 269SS/ST? 2. Whether on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) is justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty order under section 271D was passed on 30th September, 2016 levying the penalty of ₹1,05,36,585/-. 010. The assessee preferred the appeal before the learned CIT (A) who passed an order dated 28 February 2019. The learned CIT (A) after considering the decision of the sisters concern of assessee on identical facts and circumstances, he held that the journal entries resulting into the credit liability into the books of the assessee were held as loan acceptance by ld Adjudicating authority, therefore whether on such transaction where no loans are accepted but merely journal entries are passed is reasonable cause even if there is a violation of provision of section 269 SS of The Act. He held that there is a reasonable cause as envisaged u/s 273 B of the Act and therefore no penalty can be levied. Accordingly, he deleted the penalty of ₹1,05,36,585/- levied under section 271D of the Act. Therefore, the Assessing Officer aggrieved with that order and is in appeal before us. 011. The learned Departmental Representative vehemently supported the orders of the learned Jt. Commissioner of income tax. 012. The learned Authorised Representative submitted that identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that this is not a case of loan or deposit taken or repaid and that it is only a case of assigning of receivables. The ld. CIT(A) observed that M/s. HT Media Ltd. (HTML) entered into an agreement with Lodha Developers Pvt. Ltd.(LDPL) according to which 75% of the value of invoices raised by HTML for advertising services have to be adjusted against the part payment by LDPL to HTML and the balance amount of 25% is to be paid by the assessee company. Accordingly, the assessee company transferred 75% of the value of advertisement services to LDPL for adjustment against the down payment paid by LDPL to HTML and the balance amount was paid through proper banking channels. M/s. Mangal Paper Mart (MPM) entered into an agreement with Lodha Novel Buildfarms Pvt Ltd. (LNBPL) according to which 50% of the value of advertisement services in case of each invoice is to be adjusted against the flat booked by MPM in LNBPL and the balance amount of the invoice is to be paid. Accordingly, the assessee company transferred 50% of the value of advertisement services to LNBPL for adjustment against the flat booked in LNBPL and the balance amount was paid through proper banking channels. Mr. Maninder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ‟ ble High Court held that the same would constitute reasonable cause within the meaning of Section 273B of the Act as assessee was made to believe by way of series of decisions rendered on the subject. The ld. CIT(A) also placed reliance on the Mumbai Tribunal decision in the case of Lodha Builders Pvt. Ltd.,(Group company of the assessee on the very same issue) wherein this Tribunal had given seven instances of journal entries which could be considered as a reasonable cause within the meaning of Section 273B of the Act. The same are as under:- a) Alternate mode of raising funds b) Assignment of receivables c) Squaring up of transactions d) Operational efficiencies / MIS purpose e) Consolidation of family member debts f) Correction of errors g) Loans taken in cash 3.4. The ld. CIT(A) gave a categorical finding that the transactions carried out with the aforesaid three parties i.e. Jawala Real Estate Pvt. Ltd., Shreeniwas Cotton Mills Limited Lodha Developers Private Limited, which are subject matter of levy of penalty u/s.271D of the Act were carried out as an act of assigning of receivables or extinguishment of mutual liability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee nor any adverse finding has been brought on record with regard to journal entries passed by the assessee in its books for adjustment / assigning of receivables. Accordingly, the ld. CIT(A) deleted the levy of penalty u/s.271D of the Act. Aggrieved, the Revenue is in appeal before us. 3.5. We find the entire gamut of the case had been dealt in detail by the ld. CIT(A) in his order which have already been narrated hereinabove. The same are not reiterated herein for the sake of brevity as they remain undisputed. We find from the aforesaid factual narration and the basis of passing journal entries by the assessee in its books that these entries are merely passed for squaring up of transactions or adjustment of entries. This categorical finding given by the ld. CIT(A) in his order has not been controverted by the Revenue before us. Yet another categorical finding recorded by the ld. CIT(A) which remain uncontroverted by the Revenue before us is that these transactions were not made by the assessee with a malafide intent to evade tax and that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is reasonable may not be a sufficient cause. Thus, the expression 'reasonable cause' would have wider connotation than the expression 'sufficient cause'. Therefore, the expression 'reasonable cause' in Section 273B for nonimposition of penalty under Section 271E would have to be construed liberally depending upon the facts of each case. 24. In the present case, the cause shown by the assessee for repayment of the loan/deposit otherwise than by accountpayee cheque/bank draft was on account of the fact that the assessee was liable to receive amount towards the sale price of the shares sold by the assessee to the person from whom loan/deposit was received by the assessee. It would have been an empty formality to repay the loan/deposit amount by account-payee cheque/draft and receive back almost the same amount towards the sale price of the shares. Neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. There is nothing on record to suggest that the amounts advanced by Investment Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey . The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money. In the present case, admittedly no money was transacted other than through banking channels. M/s PACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s PACL India Ltd. In view of this admitted position, no infringement of Section 269SS of the Act is made out. This Court, in the case of Noida Toll Bridge Co. Ltd. (supra), considered a similar case where a company had paid money to the Government of Delhi for acquisition of a land on behalf of the assessee therein. The Assessing Officer levied a penalty under Section 271D of the Act for alleged violation of the provisions of Section 269SS of the Act since the books of the assessee reflected the liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us are on same points and squarely covers the issue in favour of the assessee. The learned Departmental Representative could not show us any reason to deviate from it. As the issue is covered by the decision of the co-ordinate Benches, respectfully following the same, we hold that there is no infirmity in the order of the learned CIT(A) in deleting the penalty levied u/s 271 D of the Act for both the years. Therefore, the orders of ld CIT (A) are confirmed. 015. Accordingly, all the three grounds of appeal raised by the learned Assessing Officer are dismissed. 016. The facts for Assessment Year 2014-15 are also identical. Both the parties also confirmed that there is no change in the facts and circumstances of the case, except the amount of penalty. 017. On careful hearing of the above appeal, for the reason given in above appeal of the learned Assessing Officer for Assessment Year 2013-14, we confirm order of ld CIT (A) in deleting penalty u/s 271 D of the Act . Accordingly, appeal of the ld AO for AY 2014-15 is also allowed. 018. Accordingly, both the appeals filed by the learned Assessing Officer for both the Assessment Years are dismissed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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