TMI Blog2022 (8) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... t has specifically observed that irrespective whether the transaction was bonafide or non-bonafide, repayment of loan by debiting amount through journal entries was in the nature of contravention of section 269T . In view of the above, the finding arrived by the Ld. CIT(A) in para 5.3, being contrary to the decision of the Hon ble Bombay High Court, is set aside. The Hon ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has been raised before the lower authorities.Appeal of revenue allowed. - ITA No. 7642/MUM/2016 And ITA No. 7651/MUM/2016 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ua the assessee and decide after hearing arguments of the Ld. Departmental Representative (DR) of the Revenue. Accordingly, we proceeded to hear the appeal. 3. The facts in brief of the case are that assessee filed its return of income for the year under consideration on 06.10.2010 declaring Nil income. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Act were issued and complied with. The Assessing Officer noted that the assessee had accepted/paid loans in contravention of provision of section 269SS/269T and therefore, he referred the matter to the Addl. CIT Range 10, Mumbai (in short the Add. CIT ) for levy of penalty u/s 271D/271E of the Act. The Ld. Addl. CIT noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice. It was submitted by the assessee that : a) the original creditors as well as the new creditors belonged to one known as Sarin family and b) loans were transferred as per the request of the persons involved consequent to a family arrangement in the Sarin Family. c) neither any cash loan was received nor any loans were repaid in Cash by the Appellant. d) genuineness of these loans and repayment of the same were never doubted at any point of time including at the time of assessment. 4. The Addl. CIT however, was not convinced with the reply of the assessee. According to him, in view of the decision of the Hon ble Bombay High Court in the case of Triumph International Finance (I) Ltd., 22 Taxman 138 repayment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E are reproduced as under: On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the penalty of Rs.2,43,00,000/- levied u/s 271E of the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt. (ii) On the facts and circumstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of section 269T of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271E as the assessee failed to establish the compelling reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal entry. 7. We have heard the submissions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to some other persons ('new creditors) by passing necessary journal entries in the books of the appellant. In my view, returning the loan amounts to the 'original creditors' by account payee cheques by the appellant and then receiving the same amount from the 'new creditors' by account payee cheques by the appellant would have been a empty formality in this case. As regards the reliance of the Addl. CIT on the decisions in the case of Dhanji R. Zalte (136 taxman 644) and in the case of K.V. George (42 taxmann.com 261), I find that those cases are distinguishable on facts as in those cases the loans were taken in cash (and not by passing journal entries as in the present case). Therefore, in my view, the Addl. CIT was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies carried out in the ordinary course of business would not come within the mischief of section 269T cannot be accepted, because, the section does not make any distinction between the bona fide and non-bona fide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit with interest if any exceeds the limits prescribed therein. Similarly, the argument that only in cases where any loan or deposit is repaid by an outflow of funds, section 269T provides for repayment by an account payee cheque/draft cannot be accepted because section 269T neither refers to the repayment of loan/deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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