TMI Blog2019 (3) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... cted against the consolidated order of the CIT(A)-49, Mumbai, dated 01.12.2016, which in turn arises from the respective orders passed by the Additional CIT, Central Range- 7, Mumbai u/ss. 271D and 271E of the Income Tax Act, 1961(I.T. Act), both dated 01.12.2016. As the issues involved in the present appeals are inextricably interwoven and interlinked, therefore, the same are being taken up and disposed off together by way of a consolidated order. We shall herein advert to the appeals of the revenue against the consolidated order of the CIT(A) wherein the latter has deleted the penalty of ₹ 38,09,55,274/- and ₹ 35,52,90,732/- imposed by the Addl. CIT u/ss. 271D and 271E of the I.T Act, respectively. The revenue assailing the order of the CIT(A) against the deletion of penalty of ₹ 38,09,55,274/- under Sec. 271D has raised before us the following grounds of appeal : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty of ₹ 38,09,55,274/- levied u/s.271D of the Income Tax Act, 1961 on the ground that genuineness of the transaction made through journal entries is not in doubt. 2. On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the aforesaid reference made by the A.O, wherein the latter had intimated through letter dated 25.06.2015 that the assessee had accepted loans/deposits from its various sister concerns‟ through journal entries i.e. otherwise than by way of account payee cheques/drafts, the Addl. CIT issued a Show cause notice (for short SCN‟) calling upon the assessee to explain as to why penalty u/ss. 271D and 271E may not be imposed on it. In reply, the assessee tried to impress upon the Addl. CIT that no penalty under the aforesaid statutory provisions was liable to be imposed. In its submission the assessee assailed the proposed imposition of penalty u/ss. 271D and 271E on multiple grounds viz. (i). that the transferring of the rights and liabilities to the sister concern‟ by the assessee by way of journal entries did not constitute loan of money within the meaning of Sec. 269SS/269T of the IT Act; (ii). that there was neither any avoidance of any tax liability by transfer of assets/liabilities through journal entries, nor was there any revenue loss to the department; (iii). that the journal entries passed by the assessee were genuine with corresponding journal e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in SLP No. 15379/2013. It was further submitted by the assessee that the aforesaid judgment of the Hon‟ble High Court of Bombay was followed by the ITAT, Mumbai in the case of its sister concern‟ viz. Lodha Builders Pvt. Ltd. Vs. ACIT (ITA 476/Mum/2014) and the penalties imposed u/ss. 271D and 271E involving identical facts were deleted. Further, the assessee also took support of the CBDT Circular No. 387; dated 06.07.1984 in order to impress upon the A.O that as the transactions under consideration were duly recorded in the books of accounts of the assessee and its sister concerns‟, therefore, there was no justification for imposing penalty u/ss. 271D and 271E in the hands of the assessee. 4. The Addl. CIT after deliberating on the exhaustive submission filed by the assessee was however not persuaded to accept the same. It was observed by the Addl. CIT that the assessee company which was a part of the Lodha Group, which was a major construction group engaged in the construction business and development of real estate had received/accepted and repaid the loans from/to various concerns through Journal entries i.e by way of a mode other than that envisaged u/ss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 271E as the same had no relation to the alleged escaped assessment of income; (ii). that as the journal entries pointed out by the A.O did not involve any loan or deposit of money, therefore, in the absence of any violation of the provisions of Sec. 269SS and 269T of the IT Act, no penalty could have been imposed u/ss. 271D and 271E; and (ii). there was a reasonable cause u/s 273B for the assessee to have carried out the transactions by way of journal entries. The CIT(A) after deliberating on the contentions advanced by the assessee rejected the contention advanced by it that the A.O in the course of the reassessment proceedings had no jurisdiction to initiate/or make a reference to the Joint Commissioner of Income-tax in respect of technical penalties u/ss. 271D and 271E. Insofar the contravention of the provisions of Sec. 269SS and 269T was concerned, it was observed by the CIT(A) that as the assessee had accepted and repaid the loans amounting to ₹ 38,09,55,274/- and ₹ 35,52,90,732/- by way of journal entries i.e other than by way of account payee cheques and drafts, therefore, there was a violation of the mode of accepting and repaying of the loans as envisaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so noticed by the CIT(A) that the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Triumph International Finance (India) Ltd. (2012) 345 ITR 270 (Bom) holding that repayment of loan/deposit by way of journal entries was in contravention of provisions of Sec. 269T had been given after the close of the financial year 2011-12 relevant to A.Y 2012-13. In the backdrop of the aforesaid facts, it was observed by the CIT(A) that the aforesaid reasons constituted a reasonable cause within the meaning of Sec. 273B of the I.T Act , specifically in light of the fact that there was no finding of fact that such transactions were undertaken by the assessee to evade tax. The CIT(A) while concluding as hereinabove relied on the decision of the ITAT, Mumbai in the case of Lodha Builders Pvt. Ltd. Vs. ACIT [ITA No. 476 to 481/Mum/2014; dt. 27.06.2014) for A.Y 2009-10 and five other group cases, wherein under identical facts and circumstances the penalty imposed u/ss. 271D and 271E was quashed for the reason that there was a reasonable cause for the assessee to have undertaken such transactions by way of journal entries. Insofar the observation of the Addl. CIT that the spirit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passing of such entries does not involve acceptance of any loan or deposit of money. The ld. A.R taking us through the relevant pages of the assesses Paper book‟ (for short APB‟) submitted that as the assessee had a reasonable cause‟ for accepting and repaying the loans by way of journal entries, therefore, the CIT(A) had rightly vacated the penalties imposed by the Addl. CIT u/ss. 271D and 271E of the I.T Act. 8. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. The revenue has sought our indulgence for adjudicating as to whether the CIT(A) is right in law and the facts of the case in vacating the penalty imposed by the Addl. CIT u/ss. 271D and 271E of the I.T Act. As observed by us hereinabove, the CIT(A) had concluded that as the journal entry transactions of the assessee with its sister concerns‟ were for more than the amount of ₹ 20,000/- and the same were not through account payee cheque or bank drafts, therefore, there was a violation of the provisions of Sec. 269SS/269T of the I.T Act. Apart therefrom, the CIT(A) has supported his aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of a sister concern‟ of the assessee for A.Y 2011-12 viz. DCIT Vs. M/s National Standard India Ltd. [ITA No. 6607/Mum/2016 6609; dt. 06.06.2018] wherein identical facts and issue were involved, had upheld the order of the CIT(A) who had deleted the penalty imposed by the A.O under Sec. 271D and 271E for the reason that since the judgment in CIT vs. Triumph International Finance (I) Ltd. (2012) 345 ITR 270 (Bom) was rendered on 12.06.2012, therefore, the assessee could have had a bonafide belief prior to that date that there was no violation of Sec. 269SS of the I.T Act in accepting loan by journal entry. It was observed by the Tribunal in the aforementioned case, as under : 5. We have considered rival contentions and carefully gone through the orders of the authorities below. We have deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. We had also carefully gone through the orders of the Tribunal in the group case of the assessee exactly on the very same issue, which was upheld by the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing on pages 8 to 10 of the judgment are 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 January, 2008, which had held that deposits/loans received through journal entries do not fall with the mischief of Section 269SS of the Act, so as to invite penalty under Section 271D of the Act. This, the Tribunal did by following its earlier orders in the case of V.N. Parekh Ltd. and Ketan Parekh as indicated in the order of this Court in Triumph International Finance (supra). Our attention was also invited to numerous reported decisions of the Tribunal in the cases of Sunflower Builders Vs. Dy. CIT, 1997 (61) ITD (Pune 227, Asst. CIT Vs. Ruchika Chemicals Investment P) Ltd. 2004 (88) TTJ (Delhi) 85 and Asst CIT Vs. LalaMurari La I Sons, 2004(2) SOT (Luck) 543 wherein it has been held journal entries in the book of accounts indicating deposit/ loans will not fall foul of Section 269SS of the Besides, the Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. George Bankers v. ACIT (46 ITD 10), dated 16.04.1993; (ii) Order of Ahmedabad Bench of the Hon'ble Tribunal in Bombay Conductors Electricals Ltd. v. DCIT (90 Taxman 138), dated 30,11.1995; (iii) Judgment of Hon'ble Delhi High Court in CIT v. Noida Toll Bridge (262 ITR 260), rendered on 28.01,2003; (iv) Order of Agra Bench of the Hon'ble Tribunal in ITO v. Amarnath Shivraj (HUF) (1 SOT 346), dated 28.02.2003; (v) Order of Ahmedabad Bench of the Hon'ble Tribunal in ACIT v. Gujarat Ambuja Proteins Ltd. (3 SOT 811), dated 28.10.2003; (vi) Order of Kolkata Bench of the Hon'ble Tribunal in Krishna KR Pathak (HUF) (90 TTJ 940), dated 12.03.2004; (vii) Judgment of Hon'ble Rajasthan High Court in CIT v. Hissaria Bros (291 ITR 244), rendered on 21.07.2006; off Mumbai Bench of Hon'ble Tribunal in Triumph International Finance (I) Ltd. in FTA No. 542/Mum/2007, dated 29.01.2008; ix) Judgment of Hon'ble Gujarat High Court in CIT v. Bombay Conductors Electricals Ltd (301 ITR 328), rendered on 11.02.2008; (x) Order of Ahmedabad Bench of Hon'ble Tribunal in Jitu Builders (P) Ltd. v. Addl. CIT [124 ITD 134 (Ahd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the exception carved out in the judgment of the Hon'ble Bombay High Court in CIT v. Triumph International Finance (I) Ltd. [345 ITR 270 (Bom)]. Accordingly, both the penalties were not exigible in the present case as the assessee was under a bona fide belief and there was no contravention as per the law prevailing as on the date of passing the journal entries. The orders of the CIT (A), therefore, do not call for any interference. 14 During the course of hearing, learned AR submitted that a ground regarding limitation aspect of the penalty order under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. It was submitted that the issue regarding limitation period was raised first before the Addl. CIT, and thereafter before the CIT (A); and both the authorities have discussed this plea but rejected the claim of the assessee. In light of the above fact, although the assessee had not filed any appeal or cross objection, it is entitled to raise the said issue before the Hon'ble Tribunal. In support of this plea, attention of bench was invited to Rule 27 of the IT(AT) Rules which reads as under: The respondent, though he may not have appealed, may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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