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2021 (12) TMI 1174 - AT - Income TaxPenalty u/s.271D 271E - Accepting and repayment of loan / deposits through journal entries - Period of limitation for imposing penalty u/s 275(1)(c) - assessee has accepted loans / deposits from various sister concerns through journal entries and had repaid loans to various sister concerns through journal entries as according to ld. DCIT the same were in violation of provisions of Section 269SS and 269T - proof of reasonable cause in Section 273B for non-imposition of penalty under section 271E - HELD THAT - Journal entries which had been passed by the assessee company in its books for mutual extinguishment of liabilities between various entities and assignment of debts / receivables from one entity to another entity would not be hit by the provisions of Section 269SS and 269T of the Act as there is sufficient reasonable cause for the same within the meaning of section 273B of the Act. We find that the ledger accounts produced by the assessee before the ld. AO in the quantum assessment proceedings and before the ld. Addl. CIT during the penalty proceedings had not raised any doubt in respect of genuineness of the transactions and the transactions being entered into in the normal course of business of the assessee. Hence it could be safely concluded that those entries were passed out of business exigencies with bonafide belief that they are not in contravention of provisions of Section 269SS and 269T of the Act. It is a well known fact that concealment should always be established and could never be presumed. Assessee was under a bonafide belief that passing of journal entries do not violate provisions of law. This is established by the fact that (i) the plea was taken before the ld. AO in the first instance itself ; (ii) this has not been disbelieved by the ld. AO ; and (iii) the assessee group has a common set of accountants chartered accountants and advisors. In the group cases the Tribunal and Hon ble High Court has accepted the explanation of bonafide belief of the assessee. With common set of people it has to be held that the assessee was also under the same belief Thus we hold that the assessee had proper reasonable cause within the meaning of section 273B of the Act and hence the transactions passed through journal entries though would be hit by the provisions of sections 269SS and 269T of the Act since reasonable cause is established in the instant case the assessee company would get immunity from levy of penalty thereon. Accordingly the grounds raised by the revenue are dismissed. Period of limitation for imposing penalty u/s 275(1)(c) - HELD THAT - the discussion by the AO in the assessment order and making reference to the Addl. CIT for imposition of penalty under section 271D or 271E of the Act constitutes initiation for action for imposition of penalty and that is the date which should be reckoned for the purpose of limitation as specified in clause (c) of section 275(1) of the Act. - a reference made by the AO to the Addl. CIT for initiation of penalty proceedings in the assessment order by a preliminary act constitutes action for imposition of penalty as contemplated in the provisions of section 275(1)(c) of the Act. Hence the penalty orders passed by the Addl. CIT in all these cross objections are barred by limitation and accordingly quashed.
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