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TMI Blog2023 (1) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 - BOMBAY HIGH COURT] as the assessee shall be deemed to have had reasonable cause to receive the deposits/loans through journal entries on account of various judgments/orders holding that journal entries in the book of accounts indicating deposit/loans did not fall foul of Section 269SS of the Act, which would also be a reasonable cause under Section 273B of the Act for non-imposition of penalty under Section 271D of the Act. Accordingly, all the grounds raised by revenue are rejected. - ITA No. 1405/MUM/2022 - - - Dated:- 20-12-2022 - SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER And SHRI RAHUL CHAUDHARY , JUDICIAL MEMBER For the Respondent / Department : Shri Nishant Somaiya For the Appellant / Assessee : Shri Gunajjan Kakkad ORDER Per Rahul Chaudhary , Judicial Member : 1. By way of the present appeal the Appellant/Revenue has challenged the order, dated 29.11.2021, passed by the Commissioner of Income Tax (Appeals) -49, Mumbai [hereinafter referred to as the CIT(A) ], under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as the Act ] in appeal No. 49/IT-10459/2015-16 for the Assessment Year 2009-10, whereby the CIT(A) had partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the returned loss of INR 17,69,197/-. During the assessment proceedings, the Assessing Officer had noticed that the Assessee had accepted loans/deposits from various sister concerns through journal entries (i.e., otherwise than by way of account payee cheques/draft). Accordingly, the Assessing Officer made reference for levy of penalty under Section 271D of the Act for violation of the provisions of Section 269SS of the Act in respect of the following transaction, vide letter dated 25.06.2015: S No. Name of the Sister Concern Credits (INR) 1. Lodha Developers Pvt. Ltd. 11,06,254/- 2. Lodha Hi Rise Builders Pvt. Ltd 46,28,42,029/- 3. Lodha Dwellers Pvt. Ltd 8,35,986/- 4. Lodha Pinnacle Buildtech Farms Pvt. Ltd. 2,87,414/- Total 46,50,71,683/- 4. In the penalty proceedings, the Assessee submitted the assets and lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptance is involved. The case before the Hon'ble Bombay High Court in Triumph International Finance (12.06.2012) involved transaction with one party and hence it was held that it would be an empty formality to pay and accept by account payee cheque the same amount. The assessee in this case has not shown that such transaction is with same party. It is not a case of simple squaring up or mutual extinguishment of liabilities which can be done by passing journal entries. In our case, the party from whom amount is shown to be accepted/ in the nature of loan or deposit is not the same party to whom the same amount is repaid. The assessee has not able to demonstrate in support of its case the necessity of receiving / repayment of loan / deposit otherwise than by account payee cheque in case of alternate mode of raising funds, assignment of receivables, squaring up of transactions, operation efficiency purpose, consolidation of family debts etc. The plea of the assessee for the benefit of reasonable cause cannot be accepted. The spirit of the Bombay High Court judgment is that only such transactions which are in the nature of squaring up with the same party can only claim the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV vs. Asthavinayak Real Estate Pvt. Ltd. (ITA No.219/2015), has held that no penalty can be levied in respect of transactions made through journal entries prior to the decision dated 12/06/2012 of the Court in the case of Triumph International Finance (India) Ltd. (supra.). The appellant has further submitted that the Hon'ble Supreme Court has also dismissed the Special Leave Petition (SLP) filed by the Department against the above decision of the Hon'ble Bombay High Court. The appellant has filed copies of the aforesaid orders of the Hon'ble Bombay High Court and the Hon'ble Supreme Court, before me. 9.2 I have gone through the orders of the Hon'ble Bombay High Court and the Hon'ble Supreme Court in the above-mentioned cases and relied upon by the appellant. It is seen that in the order 06/02/2018, the Hon'ble Bombay High Court has held as under: (h) In any event, as rightly pointed out by Mr. Sridharan, learned Senior Counsel for the respondents assesses, the order of this Court in Triumph International Finance (supra) was rendered on 12th June, 2012. This, was in an appeal filed by the Revenue from the order of the Tribunal dated 29th Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act for non-imposition of penalty under Section 271D of the Act. 9.3 From the above, it can be seen that in the cases under consideration before the Hon'ble High Court also, the assessment year involved was A.Y. 2009-10, as in the present case. The Hon'ble Court had observed that at the relevant time, the decisions of Tribunal in the cases of Triumph International (supra.), V.H. Parekh (P) Ltd., Ketan V. Parekh, Sunflower Builders, Ruchika Chemicals, Lala Murari Lal and the decision of Delhi High Court in the case of Noida Toll Bridge Co. Ltd., wherein it had been held that journal entries in the books of accounts indicating deposits/loans will not fall foul of Section 269SS of the Act, were holding the field. Accordingly, the Hon'ble High Court held that though receiving of deposits / loans through journal entries would certainly be hit by Section 269SS of the Act, nevertheless, prior to the decision of the Court in the case of Triumph International Finance (supra.), there was reasonable cause for assessees to receive deposit/loan through journal entries, which would also be a reasonable cause u/s.273B of the Act for non-imposition of penalty u/s.271D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns/deposits from its sister concerns, through journal entries, prior to the decision of the Hon'ble Bombay High Court in the case of Triumph International Finance (supra.). Accordingly, in view of the judgement dated 06/02/2018 of the Hon'ble jurisdictional High Court in the case of appellant's Group concerns and the orders dated 10/12/2018, 03/01/2019, 04/01/2019 and 21/01/2019 of the Hon'ble Supreme Court dismissing the SLPS filed by the Department against the aforesaid decision of the Hon'ble Bombay High Court discussed above, no penalty is leviable u/ss. 271D and 271E of the Act on the appellant, in respect of the transactions which has been made through journal entries. 9.8. This being so, it is however, found from the submissions of the assessee that there are certain transactions which could not be held as in the nature of journal entries, since those transactions have been made by depositing cash on behalf of the transacting parties. Such transactions, without any doubt or dispute, cannot be held as made through journal entries. Those transactions, in my considered view, would be liable to be considered for levy of penalty u/s 271D/271E even during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (345 ITR 270), the provisions of Section 271D of the Act would not be attracted, as the assessee shall be deemed to have had reasonable cause to receive the deposits/loans through journal entries, which would also be a reasonable cause under Section 273B of the Act for non-imposition of penalty u/s.271D of the Act. The Special Leave Petitions against the aforesaid Judgment and order passed by the Hon ble Bombay High Court have been dismissed by the Hon ble Supreme Court. The details of some of the matters is as under: Name of Sister Concern Before the Hon ble High Court [ITA No.] Before the Hon ble Supreme Court [(SLP)(C) Diary No.] Status Lodha Properties Development Pvt. Ltd. 172/2015 42791/2018 Dismissed, vide order dated 10.12.2018 Lodha Crown Buildmart Pvt. Ltd. 202/2015 44666/2018 Dismissed, vide order dated 03.01.2019 Ashtavinayak Real Estate Pvt. Ltd. 219/2015 44674/2018 Dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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