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TMI Blog2025 (1) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... at the repayment has been made by journal entry and a small part paid through banking channel. Thus, the facts available on record would show that no actual payment has been made in cash but has been merely effected by journal entry in the books of the assessee. As in the case of CIT vs Noida Toll Bridge Co. Ltd. [ 2003 (1) TMI 46 - DELHI HIGH COURT] had taken judicial view that such repayment of loan by way of journal entry falls outside the ambit of s. 269T. In any case, such transactions are entitled to immunity available u/s 273B of the Act which stipulates that penalty u/s 271E is not to be imposed on a person for any failure, if he proves that there was reasonable cause for such failure in accepting/repaying the loan/deposits in modes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit Report that the assessee has made repayments of loans/deposits of INR 2,31,51,640/- in modes other than account payee cheque or account payee draft or other specified modes which the AO presumed to be repayment in cash in violation of s.269T of the Act. In response to the show cause notice issued towards proposed levy of penalty under s. 271E for alleged violation of provision of s. 269T, the assessee submitted before the AO that repayments were made to the partners of the partnership firm by way of book entries i.e. journal entries and not by way of cash. The assessee also contended that the repayments to the partners is nothing but transaction its own self and not with a third person. Accordingly, the assessee contended that since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in nature. 6.1. The Co-ordinate Bench of Tribunal in Shrepak Enterprises vs DCIT (1998) 64 ITD 300 (AHD) order dated 20.05.1997 has observed that payment by partner to firm is a payment to self is not a loan or deposit contemplated under s. 269SS of the Act and consequently, penalty under s. 271D is not attracted. By the same token, repayment of the outstanding by the partnership firm to the partner would not attract s.269T of the Act and consequently penalty under s. 271E would not be attracted. 6.2. The Hon ble Delhi High Court in the case of CIT vs Noida Toll Bridge Co. Ltd. (2003) 262 ITR 260 (Del) order dated 28.01.2003; CIT-VI vs Worldwide Township Projects Ltd. (2014) 367 ITR 433 (Del), have held that when no payment is made in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits in modes other than the ones prescribed. The journal entries in the instant case appear to have been made with the partner of the firm under the bonafide belief that such transactions would not be hit by the provision of s. 269T in light of various judicial decisions on the issue including the judgement of the Jurisdictional High Court. 8. Besides, there is no finding in the orders of the lower authorities that such transactions by way journal entry were undertaken to evade any tax in any manner. 8.1. Thus, when the facts are seen holistically, there does not appear to be any justification to sustain the action of the Ld.CIT(A). The order of the Ld.CIT(A) is thus set aside and the AO is directed to cancel the penalty imposed under s.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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