2012 (6) TMI 358 - BOMBAY HIGH COURT

Penalty u/s 271E - contravention of Section 269T - repayment of loan by making journal entries in the books of account - Held that:- Reading Section 269T, 271E and 273B together it becomes clear that Section 269T puts an embargo on repayment of loan/deposit except by the modes specified therein, non-compliance of which renders the person liable for penalty u/s 271E. However, Section 273B provides that no penalty u/s 271E shall be imposed if reasonable cause is shown by the concerned person for failure to comply with the provisions of Section 269T

In present case, repayment by journal entries 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. 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. In the absence of any finding that the repayment of loan/deposit was not a bonafide transaction and was made with a view to evade tax, it is held that though the assessee has violated the provisions of Section 269T, the assessee has shown reasonable cause u/s 273B and, therefore, penalty imposed u/s 271E deserves to be deleted - Decided in favor of assessee.