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TMI Blog2025 (4) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... n violation of the provisions of the Income Tax Act, 1961 2. On the facts and circumstances of the case as well as in law, the Learned Assessing Officer has erred in passing the penalty order u/s 271D of the Income Tax Act, 1961, which is time barred as per the provision of the Income Tax Act, 1961. 3. On the facts and circumstances of the case as well as in law, the Learned Assessing Officer has erred in imposing the penalty u/s 271D of the Income Tax Act, 1961, without appreciating the fact 3 that Assessing Officer did not recorded any satisfaction in the assessment order to the effect that the provisions of section 269SS were violated by the assessee and penalty proceedings is to be initiated w/s 271D of the Income Tax Act, 1961. 4. On the facts and circumstances of the case as well as in law, the Leaned CIT(A) has erred in confirming the action of Learned Assessing Officer in levying the penalty of Rs.15,00,000/- u/s 271D of the Income Tax Act, 1961 on the alleged plea that the assessee has contravened the provisions of section 269SS of the Income Tax Act, 1961 without considering the facts and circumstances of the case. 5. The appellant craves leave to add, amend, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Services Pvt. Ltd highlighting the amount paid to M/s Rajat Enterprises. 12 12 6 Ledger account of M/s Rajat Enterprises in the appellant's books 13 13 7 Producer's account received from M/s Rajat Enterprises. 14 14 5. The Ld.AR further argued that the assessee regularly deals with the vendor 'M/s Rajat Enterprises' for distribution of film and other ancillary work related to promotion and distribution of film. During the year under consideration, the assessee had paid an amount of Rs. 10,00,000/-and Rs. 15,00,000/-on 17.4.2014 and 28.04.2014 respectively towards the work done by M/s Rajat Enterprises. The same can be seen from the ledger account of M/s Rajat Enterprises enclosed herewith in APB page 14. 6. However, out of total payment of Rs. 25,00,000/-, the payment made on 17.04.2014 of Rs. 10,00,000/- was through appellant's bank account and balance amount of Rs. 15,00,000/-was paid by borrowing funds from the NBFC i.e. 'M/s Goldencrest Financial Services Pvt. Ltd.' The said amount was directly paid by the NBFC via banking channels in the account c M/s Rajat Enterprises. As per the normal business practices, the assessee had passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette..." 8. However, Ld.AO, on contrary, in his assessment order stated that the assessee has accepted a loan by way of journal entry, which squarely falls under the mode specified in section 269SS, viz., 'otherwise than by an account payee cheque or account payee bank draft', without appreciating the fact that it was not the actual intent of the section. In this regard, respectfully reliance was placed on the judgement of Hon'ble Delhi High Court in case of Commissioner of Income-tax Vs. Noida Toll Bridge Co. Ltd. [2004] 139 Taxman 115 (Delhi) wherein on the basis of identical facts the Hon'ble Delhi High Court had held that journal entry passed by appellant was clearly out of purview of the section 269SS and hence no penalty needs to be levied. The relevant extract is reproduced as under: "2. While completing the assessment of the assessee for the assessment year 1998-99, the Assessing Officer initiated penalty proceedings under section 271D of the Act as he was of the view that the assessee had violated the provisions of section 26955 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax-VI Vs. Worldwide Township Projects Ltd (ITA 232/2014) had also dismissed the appeal of revenue wherein the levy of penalty under section 2710 was under consideration. Thus considering the facts of the case, provisions of the law and to the touchstone of the above judicial pronouncement it can be safely concluded that the transaction entered by the assessee company is outside the purview of the section 269SS and hence penalty levied by the Ld.AO u/s 271D needs to be deleted. 10. Considering the genuineness of receipt of loans/deposits by way of a journal entry carried out in ordinary course of business had never been doubted in the regular assessment proceedings and transaction by way of journal entry was undisputedly done since the NBFC had directly paid the amount to the vendor. To prove the factual position of the case, the assessee during the course of the penalty proceedings& normal assessment proceedings had submitted the following documents: a. Ledger account of M/s Goldencrest Financial Services Pvt. Ltd in the appellant's books. b. Ledger confirmation received from M/s Goldencrest Financial Services Pvt. Ltd. c. Extracts from the Bank statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a party from whom money is receivable-falls outside the purview of Section 269SS, as such entries do not involve the actual acceptance of a loan or deposit in monetary form. The imposition of penalty under Section 271D in relation to Section 269SS is, therefore, not justified, particularly in light of the judgments of the Hon'ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) and the Hon'ble Delhi High Court in the case of Worldwide Township Projects Ltd. (supra). The Ld. AR has further placed reliance on the decision in Noida Toll Bridge Co. Ltd. (supra), wherein the Hon'ble Delhi High Court has categorically held that the provisions of Section 269SS do not apply to transactions recorded through journal adjustments. Considering the facts of the case, the relevant provisions of law, and the binding judicial pronouncements, it can be conclusively held that the transaction entered into by the assessee is outside the ambit of Section 269SS. Consequently, the penalty levied by the Ld. AO under Section 271D amounting to Rs. 15 lakhs is liable to be deleted. The issue was also agitated before the Ld. CIT(A), where it was argued that, in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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