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TMI Blog2022 (6) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 of the Act was conducted on Lodha Group on 10.01.2011 and as a result of undisclosed transactions by the group, in one of the allegations against the group is of resorting to round tripping of funds to evade taxes. According to the AO, assessee had violated the provisions of section 269SS of the Income Tax Act, 1961 (in short 'the Act') and accordingly, he levied the penaly of Rs. 1,18,00,608/- u/s 271D of the Act. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A). Before CIT(A) assessee has explained that Jimmy Gandhy and Gopal Meghnani are employees of assessee Company. During the year under consideration the amounts were payable to employees on account of performance, bonus. These employees had booked flats in Projects bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... journal entries? 2. Whether on the fact and circumstances of the case and in law, the Ld. CIT(A) is justified in holding the journal entries should enjoy equal immunity on par with account payee cheques and bank drafts? 3. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in giving the benefit of reasonable cause to a series of transactions, without appreciating that such benefit is available as an exception rather than a rule, to unlawfully granting perpetual legitimacy to transactions otherwise held to be illegal.?" 6. At the time of hearing, it is brought to our notice that the issue under consideration is in favour of the assessee. 7. On the other hand, Ld. DR also clearly agreed with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. 3.6. We find from pages 5-7 of the impugned penalty order u/s.271D of the Act that assessee has given complete explanation of the transactions before the ld. Addl. CIT by way of detailed explanation together with the purpose of passing a journa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression 'reasonable cause' would have wider connotation than the expression 'sufficient cause'. Therefore, the expression 'reasonable cause' in Section 273B for non-imposition of penalty under Section 271E would have to be construed liberally depending upon the facts of each case. 24. In the present case, the cause shown by the assessee for repayment of the loan/deposit otherwise than by account-payee cheque/bank draft 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. It would have been an empty formality to repay the loan/deposit amount by account-payee cheque/draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order or in the penalty order to the effect that the repayment of loan/deposit was not a bonafide transaction and was made with a view to evade tax, we hold that the cause shown by the assessee was a reasonable cause and, therefore, in view of Section 273B of the Act, no penalty under Section 271E could be imposed for contravening the provisions of Section 269T of the Act. 3.7. We also find that the Hon‟ble Delhi High Court in the case of CIT vs Worldwide Township Projects Ltd reported in 229 Taxman 560 (Del) in the similar set of facts and circumstances had categorically observed as under:- 8. A plain reading of the aforesaid Section indicates that (the import of the above provision is limited) it applies to a transaction where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on behalf of the assessee therein. The Assessing Officer levied a penalty under Section 271D of the Act for alleged violation of the provisions of Section 269SS of the Act since the books of the assessee reflected the liability on account of the lands acquired on its behalf. On appeal, the CIT (Appeals) affirmed the penalty. The order of the CIT was successfully impugned by the assessee before the ITAT. On appeal, this Court held as under:- "While holding that the provisions of Section 269SS of the Act were not attracted, the Tribunal has noticed that: (i) in the instant case, the transaction was by an account payee cheque, (ii) no payment on account was made in cash either by the assessed or on its behalf, (iii) no loan was accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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