9911796707
TMI Blog2022 (12) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment u/s. 143(3) was completed on 30.03.2015. The present penalty order u/s. 271D was passed by ACIT - Central Range-7 on reference from the Assessing Officer through letter dated 25.06.2015 intimating that assessee has repaid loans/ deposits from various sister concerns through journal entries, i.e., otherwise than account payee cheques/draft, thereby violating the provisions of section 269T of Income-tax Act, 1961 (in short "Act"). The show cause notice was issued to the assessee and the Ld. AR of the assessee attended and filed the relevant information as called for. The assessee has filed written submissions before ACIT - 7 and the same is reproduced from Page No. 2 to 13 of the penalty order u/s. 271E of the Act, for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the Ld. CIT(A) is not justified in giving the benefit of reasonable cause to a series of transactions, without appreciating that the such benefit is available as an exception rather than a rule, unlawfully granting perpetual legitimacy to transactions otherwise held to be illegal?'" 4. Ld. DR relied on the order of the Assessing Officer and prayed to set aside the order of the Ld.CIT(A). 5. At the time of hearing, Ld. AR of the assessee submitted that the present penalty has been levied by the Additional CIT u/s. 271D of the Act on the alleged ground that the assessee has violated provisions of section 269T of the Act and Ld.CIT(A) has examined the nature of transactions and has found that the transactions are journal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the issue under consideration is relating to penalty order u/s. 271E of the Act passed by ACIT-7, Mumbai. After considering the submissions of both the counsel, we observed that the Coordinate Bench in assessee's group company i.e. Lodha Builder Pvt. Ltd., held on the similar issue of levy of penalty as under: - "32. From above extracts from the judgment of jurisdictional High Court, it is clear that the journal entries are hit by the relevant provisions of s. 269SS of the Act. However, it is the finding of the Hon'ble High Court that completing the "empty formalities" of payments and repayments by issuing/receiving cheque to swap/square, tip the transactions, is not the intention of the provisions of s. 269SS of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie, commercial in nature and they cannot be described as non-business by any means. Further, we asked: ourselves as to why should the assessee under consideration take up issuing number of account payee cheques/bank drafts which can be accounted by the journal entries. This being the Spirit of Hon'ble High Court of Bombay, we adopt the same to the present issue. As such, the same is binding on us. What is the" point in issuing hundreds of account payee cheques/account payee bank drafts between the sister concerns of the group, when transactions can be accounted in books using journal entries, which is also an accepted mode of accounting in our opinion, on the factual matrix of these cases under consideration, journal entries sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed under s. 271D/271E of the Act are not sustainable. Regarding an amount of 'money' said to have been paid in violation of the said provisions, the same needs to be deleted in view of our decision on the legal issue discussed in paras 16 to 22 of the this order. Accordingly, the grounds raised in this regard are allowed." 8. Respectfully following the above decision and issue under consideration is already settled in favour of the assessee. The issue discussed in the above decision of the Coordinate Bench is on section 271D and the ground raised by the revenue is on section 271E, which is similar to the issue of section 271D. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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