DCIT CEN CIR 7(3), MUMBAI V. SAHAJANAND HI TECH CONSTRUCTION P.LTD, MUMBAI

ITA 127/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9200 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Rule of consistency; Bonafide belief; Question of law; Reasonable cause; Avoidance of tax
• Section: 273B; 143(3); 271D; 271E; 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI G. S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.127/MUM/2017 ASSESSMENT YEAR 2008-09 ITA NO.128/MUM/2017 ASSESSMENT YEAR 2008-09 DCIT, CENTRAL CIRCLE-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. SAHAJANAND HI TECH CONSTRUCTION PVT. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI-400 018. PAN :AAECP1936F (APPELLANT) .. (RESPONDENT) ITA NO.129/MUM/2017 ASSESSMENT YEAR 2009-10 ITA NO.130/MUM/2017 ASSESSMENT YEAR 2009-10 DCIT, CENTRAL CIRCLE-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. SAHAJANAND HI TECH CONSTRUCTION PVT. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI-400 018. PAN :AAECP1936F (APPELLANT) .. (RESPONDENT) APPELLANT BY DR. NARENDER KUMAR CIT-DR MISS ARJU GARODIA SR DR SHRI MANISH SINGH (DR) RESPONDENT BY SHRI VIJAY MEHTA (AR) DATE OF HEARING 21/06/2019 DATE OF PRONOUNCEMENT 26/06/2019 O R D E R ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 2 PER PAWAN SINGH, JUDICIAL MEMBER 1. THIS GROUP OF FOUR APPEAL BY THE REVENUE ARE DIREC TED AGAINST THE ORDER OF CIT(A)-49, MUMBAI DATED 17.10.2016 FOR ASSESSMENT Y EARS 2008-09 & 2009-10, WHICH IN TURN ARISES FROM THE PENALTY LEVI ED BY ASSESSING OFFICER UNDER SECTION 271D AND 271E DATED 28.09.2015. IN AL L APPEALS, THE REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL. THEREFO RE, WITH THE CONSENT OF PARTIES ALL APPEALS WERE CLUBBED, HEARD TOUGHER AND ARE DECIDED BY CONSOLIDATED ORDER. IN ALL THE APPEALS REVENUE HAS CHALLENGED THE DELET ION OF PENALTY EITHER UNDER SECTION. 271D OR 271E OF TH E ACT. FOR APPRECIATION OF FACTS WE ARE REFERRING THE FACTS IN APPEALS FOR AY 2008-09 IN ITA NO.127 & 128/MUM/2017. 2. BRIEF FACTS AS EXTRACTED FROM THE ORDERS OF AUTHORI TIES BELOW ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN T HE BUSINESS OF LAND DEVELOPMENT, CONSTRUCTION OF REAL ESTATE PROPERTIES AND BUILDER. THE ASSESSMENTS FOR THE YEAR UNDER CONSIDERATION WAS RE -OPENED VIDE NOTICE UNDER SECTION 148 DATED 11.09.2013. THE ASSESSMENT WAS COMPLETED UNDER SECTION 147 R.W. SECTION 143(3) ON 30/03/2015 DETER MINING TOTAL INCOME AT RS.9,67,940/-. THE AO WHILE PASSING THE ASSESSMENT ORDER MADE REFERENCE FOR CONSIDERING PENALTY U/S.271D AND 271E TO ADDITI ONAL COMMISSIONER OF INCOME-TAX -RANGE-7, MUMBAI (FOR SHORT ACIT), INT IMATING THAT ASSESSEE ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 3 HAS ACCEPTED/ AVAILED LOANS/DEPOSIT FROM VARIOUS SI STER CONCERN THROUGH JOURNAL ENTRIES I.E., OTHERWISE THAN ACCOUNT PAYEE CHEQUE/DRAFT AND THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269 SS OF THE ACT. ON RECEIPT OF REFERENCE THE ACIT ISSUED SEPARATE SHOW-CAUSE NO TICE DATED 03/07/2015 AS TO WHY PENALTY U/S. 271D AND 271E SHOULD NOT BE LEVIED. THE ASSESSEE FILED REPLY VIDE LETTER DATED 13/07/2015. IN REPLY THE ASSESSEE CONTENDED THAT JOURNAL ENTRIES WERE PASSED TO AVOID THE DELAY IN P ROCEDURAL HASSLES OF PREPARING CHEQUE AND OBTAINING SIGNATURE OF AUTHORI ZED PERSONS. IT WAS ALSO MADE TO AVOID TEMPORARY ARRANGEMENTS OF FUNDS FOR C LEARANCE OF CHEQUE AND EARLIER SETTLEMENT OF TRANSACTION AS SETTLEMENT OF THESE TRANSACTIONS THROUGH BANKING CHANNELS RESULTS IN AVOIDABLE DELAY OF 3-4 DAYS, BESIDES BLOCKING HUGE FUNDS FOR TEMPORARY PERIOD AND WITHOUT ANY COR RESPONDING COMMERCIAL GAIN. IT WAS ALSO PASSED FOR SQUARING OFF AND CONSO LIDATION OF RECEIVABLE AND PAYABLE, OPERATIONAL EFFICIENCY AND EASE OF MIS AND CORRECTION OF ERRORS WHILE PASSING ASSESSMENT ORDER WHILE PASSING THE EN TRY. IT WAS CONTENDED THAT WHILE PASSING THE ASSESSMENT ORDER NO ADVERSE INFERENCE WERE DRAWN BY ASSESSING OFFICER. IT WAS CONTENDED THAT THESE JOUR NAL ENTRIES WERE PASSED FOR BUSINESS EXIGENCIES TO CLEAR THE TRANSACTIONS E XPEDITIOUSLY AND WITHOUT ANY COMMERCIAL LOAN. IT WAS FURTHER CONTENDED THAT AT NO POINT OF TIME WAS THERE ANY CASH TRANSACTION WITH SISTER CONCERNS. TH E TRANSACTION WAS ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 4 ULTIMATELY SETTLED THROUGH BANKING CHANNELS. HENCE, THERE IS NO AVOIDANCE OF TAX LIABILITY BY TRANSFERRING THE ASSETS. THERE IS NO REVENUE LOSS EITHER. THUS THE JOURNAL ENTRIES PASSED WERE DUE TO REASONABLE C AUSE AND BUSINESS EXPEDIENCY. THE ASSESSEE PRAYED FOR DROPPING PENAL TY U/S. 271D AND 271E OF THE ACT. THE REPLY OF THE ASSESSEE WAS NOT ACCEP TED BY THE ACIT. THE ACIT LEVIED PENALTY OF RS.49,05,000/- UNDER SECTION 271E AND PENALTY OF RS. 27,02,533/- UNDER SECTION 271D. WHILE LEVYING PENALTY U/S. 271D/271E THE ACIT RELIED UPON THE DECISION OF HON'BLE BOMBA Y HIGH COURT IN THE CASE OF TRUMP INTERNATIONAL FINANCE (I) LTD.(345 I TR 270) WHEREIN IT WAS HELD THAT TRANSACTION OF LOAN/DEPOSIT BY WAY OF ADJ USTMENT THROUGH BOOK ENTRY WOULD RESULT IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS. 3. ON APPEAL BEFORE CIT(A) BOTH THE PENALTIES WERE DEL ETED VIDE ORDER DATED 17.10.2016. THE LD CIT(A) PASSED CONSOLIDATED ORDER IN ALL APPEALS FILED BY THE ASSESSEE. THE LD. CIT(A)WHILE DELETING THE PEN ALTY U/S. 271D/271E HELD THAT GENUINENESS OF THE TRANSACTIONS MADE THROUGH J OURNAL ENTRIES IS NOT IN DOUBT AND IT HAS NOT BEEN SHOWN EITHER IN ASSESSMEN T PROCEEDINGS OR IN PENALTY PROCEEDINGS THAT UNACCOUNTED INCOME OF LEND ER OR BORROWER WAS INVOLVED. THERE WAS NO FINDING THAT THE TRANSACTION S BY WAY OF JOURNAL ENTRIES WERE NOT BONAFIDE OR MADE TO EVADE TAX. THE LD. CIT(A) FURTHER HELD THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TRUMP ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 5 INTERNATIONAL FINANCE (I) LTD. WAS DATED 12/06/2012 AND THAT PAYMENT OF JOURNAL ENTRY WAS GIVEN PRIOR TO THE DECISION OF HON'BLE BOMBAY HIGH COURT, WHICH CONSTITUTES A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL. AS WE HAVE ALREADY RECORDED THAT THE FACTS IN BOTH THE ASSESSMENT YEARS ARE IDENTICAL EXCEPT VARIATION OF FIGURE OF PENALTY UNDER SECTION 271D/ 271E. 4. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DEPARTMEN TAL REPRESENTATIVE (DR) FOR THE REVENUE AND THE LD. REPRESENTATIVE FOR THE ASSESSEE (AR) AND PERUSED THE MATERIAL ON RECORD. AT THE OUTSET LD. A R SUBMITS THAT GROUNDS OF APPEAL RAISED BY THE REVENUE ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN AS SESSEES GROUP CASE IN CIT VS. AJINATH HITECH BUILDERS PRIVATE AND OTHERS ( IN ITA.S NO.171,172,202, 203, 218 AND 219 OF 2015 DATED 06 TH FEBRUARY, 2018). LD.AR FURTHER SUBMITS THAT BY FOLLOWING THE DECISIO N OF THE HON'BLE JURISDICTIONAL HIGH COURT THE TRIBUNAL ALLOWED SIM ILAR RELIEF TO THE ASSESSEE IN THE CASE OF AASHTHAVINAYAK ESTATE COMPANY LTD. ( ITA NO.602/M/2017 DATED 31 MAY, 2018) ; CIT VS. NATIONAL STANDARD IND IA LTD. (ITA NO.6607/MUM/2016 & 6609/MUM/2016 DATED 6 TH JUNE 2018). THE LD.AR FURTHER SUBMITS THAT THE JOURNAL ENTRIES WERE MADE/ RECEIVED BY THE ASSESSEE ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 6 PRIOR TO 12 TH JUNE, 2012. THE PRESENT APPEAL PERTAINS TO AY-2008 -09; THEREFORE, THE RATIO OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TRUMP INTERNATIONAL (I) LTD. IS NOT APPLICABLE. THE LD.AR FURTHER SUBMITS THAT ALL CONNECTED CASES LIST ED ALONG WITH THESE APPEALS PERTAIN TO AY 2008-09 TO 2009-10. THEREFORE , THE RATIO OF THE DECISION IN THE CASE OF TRUMP INTERNATIONAL (I) LTD . (SUPRA), IS NOT APPLICABLE. 5. ON THE OTHER HAND THE LD. DR SUBMITS THAT THE ASSES SEE HAS RECEIVED EXORBITANT AMOUNT FROM GROUP ENTITIES IN VIOLATION OF SECTION 269SS AND 269T. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE PENAL TY LEVIED UNDER SECTION 271D AS WELL AS 271E. THE ASSESSEE FAILED TO ESTABL ISH THAT THERE WAS SUFFICIENT OR REASONABLE CAUSE OR GENUINE BUSINESS CONSTRAIN OF HAVING TRANSACTIONS OF EACH AND EVERY JOURNAL ENTRY WITH D IFFERENT GROUP ENTRIES. THE LD.AR SUBMITS THAT PENALTY LEVIED BY ASSESSING OFFI CER MAY BE UPHELD BY REVERSING THE ORDER OF LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ACIT L EVIED PENALTY U/S.271D AS WELL AS U/S.271E ON HIS OBSERVATION THAT THE ASS ESSEE HAS ACCEPTED LOAN/DEPOSIT FROM SISTER CONCERN THROUGH JOURNAL EN TRIES I.E., OTHERWISE THEN ACCOUNT PAYEE CHEQUE /DRAFT THEREBY VIOLATED PROVIS IONS OF SECTION 269SS ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 7 AND/ OR 269T. THE ASSESSING OFFICER FURTHER HELD TH AT THE ASSESSEE HAS NOT MADE OUT ANY REASONABLE CAUSE AS PRESCRIBED 273B OF THE ACT. 7. BEFORE LD. CIT(A) THE ASSESSEE URGED THAT JOURNAL E NTRIES IS NOT LOAN OR DEPOSIT OF MONEY NEITHER THERE IS ANY UNACCOUNTED C ASH FLOW MONEY OF THE GROUP ENTITIES. THE ASSESSEE FURTHER CONTENTED THAT SECTION 269SS WAS INTRODUCED BY THE FINANCE ACT, 1984. THE CIRCULAR, GAVE THE PURPOSE OF INTRODUCTION OF SECTION 269SS. THE BROAD PURPOSE OF INSERTION OF SECTION 269SS WAS WITH THE VIEW TO COUNTER THE DEVICE, WHIC H ENABLES THE TAX PAYER TO EXPLAIN AWAY UN ACCOUNTED CASH OR UNACCOUNTED DE POSITS, THE NEW SECTION 269SS DEBARS PERSON FROM TAKING OR ACCEPTING AFTER 30/6/1984 FROM ANY PERSON LOAN OR DEPOSIT OTHERWISE BY AN ACCOUNT PAYE E CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF THE AMOUNT OF LOAN OR DEPOSIT O R AGGREGATING AMOUNT OF SUCH LOAN IS RS.10,000/- OR MORE. THE OBJECT OF I NSERTION OF SECTION 269SS WAS TO ENSURE THAT TAX PAYER IS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY OR IF HE HAS GIVEN SOME FALSE ENT RIES IN HIS ACCOUNTS, HE SHOULD NOT ESCAPE BY GIVING SOME FALSE ENTRIES IN H IS ACCOUNT, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. TH E ASSESSEE FURTHER CONTENDED THAT THERE IS NO RECEIPT OF ANY LOAN/DEPO SIT OR REPAYMENT IN ANY OTHER MODE OTHER THAN THE ACCOUNT PAYEE CHEQUE. IT IS MERELY A CASE OF ASSIGNMENT OF DEBT BY ONE GROUP ENTITY TO ANOTHER G ROUP ENTITY AND JOURNAL ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 8 ENTRIES HAVE BEEN PASSED TO RECORD SUCH ASSIGNED TR ANSACTIONS. THE PROVISION OF SECTION 269SS AND 269T ARE NOT APPLICABLE ON SUC H GENUINE TRANSACTIONS. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS N OT MADE ANY OBSERVATION THAT TRANSACTIONS IN QUESTION ARE NOT OUT OF BUSINE SS EXIGENCY OR WAS DONE WITH A MOTIVE TO EVADE TAX. PENALTIES CANNOT BE LEV IED IN A MECHANICAL MANNER. THE PROVISIONS OF SECTION 269SS AND SECTION 269T ARE NOT APPLICABLE WHERE TRANSACTION IS BETWEEN SISTER CONC ERNS. THE LD. CIT(A) AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE CONCLUDED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS AND 269T O F THE ACT. HOWEVER, THE LD CIT(A) CONCLUDED THAT THE ASSESSEE HAS GIVEN SUF FICIENT EXPLANATION WITHIN THE MEANING OF SECTION 273B , PARTICULARLY I N THE FACTS THAT THERE IS NO FINDING THAT SUCH TRANSACTIONS WERE UNDERTAKEN TO E VADE THE TAX. THE LD CIT(A) ALSO FOLLOWED THE DECISION OF TRIBUNAL IN LO DHA BUILDER PVT LTD VS ACIT IN (ITA NO. 476/M/2014 AND 481/M/2014 DATED 27 .06.2014 FOR AY 2009-10. 8. THE HON'BLE BOMBAY HIGH COURT IN ASSESSEES GROUP C ASE IN CIT VS. AJINATH HITECH BUILDERS PRIVATE AND OTHERS (SUPRA), ON SIMILAR GROUNDS ON THE QUESTION WHETHER THE TRIBUNAL IS JUSTIFIED IN D ELETING THE PENALTY U/S. 271 HELD THAT HERE WAS REASONABLE CAUSE U/S. 273B AND H ELD AS UNDER ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 9 3. REGARDING QUESTION NO.(I) :- (A) THE COMMON IMPUGNED ORDER OF THE TRIBUNAL ARISES FROM THE ORDERS PASSED BY THE ADDL. COMMISSIONER OF INCOME TAX IMPOSING PENALTY UPON THE RESPONDENTS UNDER SEC TION 271D OF THE ACT FOR BREACH OF SECTION 269SS OF THE ACT. THIS PENALT Y WAS IMPOSED INASMUCH AS DURING THE PREVIOUS YEAR RELEVANT TO THE SUBJECT ASSESSMENT YEAR, THE RESPONDENTS HAD ACCEPTED LOANS / DEPOSITS BY WAY OF PASSING JOURNAL ENTRIES IN ITS BOOKS OF ACCOUNTS, IN BREACH OF SECTION 269S S OF THE ACT. IN TERMS SECTION 269SS OF THE ACT PROHIBITS A PERSON FROM TA KING / ACCEPTING ANY LOAN / DEPOSIT OR SPECIFIED SUM, OTHERWISE BY AN ACCOUNT PAYEE CHEQUE OR BY AN ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CL EARING SYSTEM OF A BANK IF THE AMOUNT INVOLVED IS IN EXCESS OF RS.20,000/-. TH IS IMPOSITION OF PENALTY UNDER SECTION 271D OF THE ACT, WAS UPHELD BY A COMM ON ORDER DATED 31 ST DECEMBER, 2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS). ON FURTHER APPEAL, THE IMPUGNED ORDER DATED 27 TH JUNE, 2014 OF THE TRIBUNAL, INTER ALIA HELD THAT PENALTY UNDER SECTION 271D OF THE ACT IS NOT IMPOSABLE IN VIEW OF SECTION 273B OF THE ACT. THIS FOR THE REASO N THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE TO COMPLY WITH SEC TION 269SS OF THE ACT. (B) ON MERITS OF THE ISSUE, THE PARTIES BEFORE US ARE AGREED THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT RECEIPT OF ANY ADVANCE / LOAN BY WAY OF JOURNAL ENTRIES IS IN BREACH OF SECTION 269SS OF TH E ACT AS THE DECISION OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. TRIUMPH INTERNATIONA L FINANCE (I) LTD. 345 ITR 270 IS BINDING UPON IT. HOWEVER, THE REVENUE'S GRIEVANC E IS WITH THE IMPUGNED ORDER DATED 27 TH JUNE, 2014 OF THE TRIBUNAL FURTHER HOLDING NO PENALTY UNDER SECTION 271D OF THE ACT IS IMPOSABLE IN VIEW OF SECTION 273B OF THE ACT IN THE PRESENT FACTS. THIS IS SO AS THE TRIBUNAL HOLDS THAT THE FAILURE TO COMPLY WITH SECTION 269SS OF TH E ACT WAS ON ACCOUNT OF REASONABLE CAUSE ON THE PART OF THE RESPONDENTS. TH IS FINDING OF REASONABLE CAUSE WAS ON THE APPLICATION OF PARAMETERS LAID DOW N BY THIS COURT IN ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 10 TRIUMPH INTERNATIONAL FINANCE (SUPRA) TO DETERMINE REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 269SS OF THE ACT. (C) MR. MOHANTY, THE LEARNED COUNSEL FOR THE REVENU E SEEKS TO CHALLENGE THE IMPUGNED ORDER OF THE TRIBUNAL ON THE GROUND THAT S ECTION 273B OF THE ACT WILL HAVE NO APPLICATION AS THE TEST OF REASONABLE CAUSE IS NOT SATISFIED :IN THE PRESENT FACTS FOR THE FOLLOWING REASONS :- (I) THE DECISION OF THIS COURT IN TRIUMPH INTE RNATIONAL FINANCE (SUPRA) WILL HAVE NO APPLICATION AS THAT WAS OF THE CASE OF ONLY ONE TRANSACTION WHILE IN THIS CASE, THERE ARE NUMEROUS TRANSACTIONS REFLECTED THROUGH THE PASSING OF JOURNAL ENTRIES; (II) THE REASONS SET OUT FOR TAKING ADVANCES / DEPOSITS BY WAY OF JOURNAL ENTRY WOULD NOT SATISFY THE TEST OF REASONABLE CAU SE; AND (III) THE NON-SATISFACTION OF SHOWING REASONABLE CAUSE AS REQUIRED UNDER SECTION 273B OF THE ACT GIVES RISE TO A QUESTION OF LAW AS IT IS A LEGAL INFERENCE TO BE DRAWN FROM PRIMARY FACTS AS HELD BY THE APEX COURT IN PREMIER BREWERIES LTD. VS. COMMISSIONER OF INCOME T AX 372 ITR 180. THUS, IT IS SUBMITTED THIS QUESTION REQUIRES ADMISS ION AS IT GIVES RISE TO A SUBSTANTIAL QUESTION OF LAW; (D) WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL HAS ON APPLICATION OF THE TEST LAID DOWN FOR ESTABLISHMENT OF REASONABLE CAUSE, FOR BREACH OF SECTION 269SS OF THE ACT BY THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) FOUND THAT THERE IS A REASONABLE CA USE IN THE PRESENT FACTS TO HAVE MADE JOURNAL ENTRIES REFLECTING DEPOSITS. THE TRIBUNAL WHILE RELYING UPON THE ORDER OF THIS COURT IN TRIUMPH INTERNATION AL FINANCE (SUPRA) HAS HELD THAT IN THE PRESENT FACTS, NEITHER THE GENUINE NESS OF RECEIPT OF LOANS / DEPOSITS BY WAY OF AN ADJUSTMENT THROUGH JOURNAL EN TRIES CARRIED OUT IN THE ORDINARY COURSE OF BUSINESS HAS BEEN DOUBTED IN THE REGULAR ASSESSMENT PROCEEDINGS. IT HELD IN THE PRESENT FACTS THE TRANS ACTION BY WAY OF JOURNAL ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 11 ENTRIES WAS UNDISPUTEDLY DONE TO RAISE FUNDS FROM S ISTER CONCERNS, TO ADJUST OR TRANSFER BALANCES TO CONSOLIDATE DEBTS, TO CORRE CT CLERICAL ERRORS ETC. FURTHER, THE TRIBUNAL RECORDS THAT AS OBSERVED BY T HIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) THAT JOURNAL ENTRIES CONSTITUTED A RECOGNIZED MODES OF RECORDING OF TRANSACTIONS AND IN THE ABSEN CE OF ANY ADVERSE FINDING BY THE AUTHORITIES THAT THE JOURNAL ENTRIES WERE MA DE WITH A VIEW TO ACHIEVE PURPOSES OUT SIDE THE NORMAL BUSINESS OPERATIONS OR THERE WAS ANY INVOLVEMENT OF MONEY, THEN, IN THESE FACTS THERE WA S A REASONABLE CAUSE FOR NOT COMPLYING WITH SECTION 269SS OF THE ACT. (E) MR. MOHANTY'S SUBMISSION THAT THE TEST LAID DO WN IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) WILL HAVE NO APPLICAT ION IN THE PRESENT FACTS IN VIEW OF THE LARGE NUMBER OF ENTRIES IN THIS CASE AS COMPARED TO ONLY ONE ENTRY IN THE CASE BEFORE THIS COURT. THE TEST OF RE ASONABLE CAUSE CAN NOT, IN THE PRESENT FACTS BE DETERMINED ON THE BASIS OF THE NUMBER OF ENTRIES. IF THERE WAS A REASONABLE CAUSE FOR MAKING THE JOURNAL ENTRI ES, THEN, THE NUMBER OF ENTRIES MADE, WILL NOT MAKE ANY DIFFERENCE. BESIDES , ON FACTS, THE TRIBUNAL WAS SATISFIED WITH THE REASONS GIVEN BY THE ASSESSE E FOR REASONABLE CAUSE AND THIS FINDING IS NOT SHOWN TO BE PERVERSE. FINAL LY, THE ISSUE OF THERE BEING A REASONABLE CAUSE OR NOT IS AN ISSUE OF FACT. NO I NFERENCE OF LAW AND / OR ISSUE OF INTERPRETATION IS TO BE MADE. THE DECISION RELIED UPON BY THE REVENUE IN CASE OF PREMIER BREWERIES LTD.(SUPRA) CO NCERNED ITSELF WITH THE ISSUE OF A CLAIM FOR DEDUCTION UNDER SECTION 37 OF THE ACT ON THE BASIS OF THE AGREEMENTS ENTERED INTO BETWEEN THE PARTIES. THE IN FERENCE OF LAW IN THAT CASE WAS WHETHER ON THE FACTS, IT COULD BE INFERRED THAT THE CLAIM FOR DEDUCTION IS IN RESPECT OF EXPENDITURE INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. THUS, IT WOULD INVOLVE A QUESTION OF INTERPRETATION OF THE AGREEMENTS ETC. FROM WHICH AN INFERENCE IS T O BE DRAWN. FURTHER, IT ALSO INVOLVES APPLICATION OF PRINCIPLES OF LAW TO T HE FACTS FOR THE PURPOSES OF ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 12 DEDUCTIONS AND, THEREFORE, IT WOULD LEAD TO A QUEST ION OF LAW. THEREFORE, THE COURT HELD IN THE FACTS OF THAT CASE THAT A QUESTIO N OF LAW DOES ARISE. (F) IN THIS CASE, THE ISSUE OF REASONABLE CAUSE IS AN INFERENCE OF FACT FROM FACTS AND, THEREFORE, A QUESTION OF FACT. THE SUPRE ME COURT DECISION IN SREE MEENAKSHI MILLS LTD. VS. COMMISSIONER OF INCOME TAX , 31 ITR 28 HAD LAID DOWN THE TESTS TO DETERMINE A QUESTION OF LAW AND / OR FACT. IN THE ABOVE CONTEXT, THE COURT OBSERVED THAT WHEN THE FINDING I S ONE OF FACT, THE FACT THAT IT ITSELF IS AN INFERENCE FROM OTHER BASIC FACTS, W ILL NOT ALTER ITS CHARACTER AS ONE OF FACT. THEREFORE, THE ISSUE OF THERE BEING RE ASONABLE CAUSE OR NOT, IS A QUESTION OF FACT AND UNLESS IT IS SHOWN TO BE PERVE RSE, WE WOULD NORMALLY NOT INTERFERE. (G) IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY T HE TRIBUNAL ON THE FACTS BEFORE IT, IS A POSSIBLE VIEW AND DOES NOT GIVE RIS E TO ANY SUBSTANTIAL QUESTION OF LAW. (H) IN ANY EVENT, AS RIGHTLY POINTED OUT BY MR. SRI DHARAN, LEARNED SENIOR COUNSEL FOR THE RESPONDENTS ASSESSES, THE ORDER OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) WAS RENDERED ON 12 TH JUNE, 2012. THIS, WAS IN AN APPEAL FILED BY THE REVENUE FROM THE ORDER OF TH E TRIBUNAL DATED 29 TH JANUARY, 2008, WHICH HAD HELD THAT DEPOSITS / LOANS RECEIVED THROUGH JOURNAL ENTRIES DO NOT FALL WITH THE MISCHIEF OF SECTION 26 9SS OF THE ACT, SO AS TO INVITE PENALTY UNDER SECTION 271D OF THE ACT. THIS, THE TRIBUNAL DID BY FOLLOWING ITS EARLIER ORDERS IN THE CASE OF V.N. PA REKH LTD. AND KETAN PAREKH AS INDICATED IN THE ORDER OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA). OUR ATTENTION WAS ALSO INVITED TO NUMEROUS REPORTED DECISIONS OF THE TRIBUNAL IN THE CASES OF SUNFLOWER BUILDERS VS. DY.CIT, 1997 (61) ITD (PUNE) 227, ASST.CIT VS. RUCHIKA CHEMICALS & INVEST MENT (P) LTD. 2004 (88) TTJ (DELHI) 85 AND ASST.CIT VS. LALA MURARI LA L & SONS, 2004(2) SOT (LUCK) 543 WHEREIN IT HAS BEEN HELD JOURNAL ENTRIES IN THE BOOK OF ACCOUNTS INDICATING DEPOSIT / LOANS WILL NOT FALL FOUL OF SE CTION 269SS OF THE ACT. ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 13 BESIDES, THE DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. NOIDA TOLL BRIDGE CO. LTD. 262 ITR 260 INTER ALIA HELD THAT PAYMENT OF RS.4.85 CRORES MADE BY THE ASSESSES BY A JOURNAL ENTRY IN I TS BOOKS OF ACCOUNT BY CREDITING THE ACCOUNT OF ILFS, WOULD NOT FALL FOUL OF SECTION 269SS OF THE ACT. THIS PARTICULARLY IN THE ABSENCE OF ANY PAYMENT BE INGMADE IN CASH. (I) IN THE PRESENT FACTS, THE PERIOD DURING WHICH T HE JOURNAL ENTRIES WERE MADE BY THE RESPONDENTS WAS IN THE PREVIOUS YEAR RE LEVANT TO THE ASSESSMENT YEAR 2009-10 I.E. FINANCIAL YEAR 2008-09. AT THAT T IME, THE DECISIONS OF THE TRIBUNAL IN THE CASES OF TRIUMPH INTERNATIONAL (SUP RA) AND DECISION OF VH. PAREKH (P) LTD., KETAN V PAREKH, SUNFLOWER BUILDERS (SUPRA), RUCHIKA CHEMICALS (SUPRA), LALA MURARI LAL (SUPRA) AND THE DECISION OF THE DELHI HIGH COURT IN NOIDA TOLL BRIDGE CO. LTD. (SUPRA) WE RE HOLDING THE FIELD. THUS, NOT IN BREACH OF SECTION 269SS OF THE ACT. IN THE ABOVE VIEW, WHILE AGREEING WITH THE SUBMISSION OF MR. MOHANTY, LEARNE D COUNSEL FOR THE APPELLANT THAT THE DECISION OF THIS COURT IN TRIUMP H INTERNATIONAL FINANCE (SUPRA) HAS ONLY CLARIFIED / STATED THE POSITION AS ALWAYS EXISTING IN LAW, THE RECEIVING OF DEPOSITS / LOANS THROUGH JOURNAL ENTRI ES WOULD CERTAINLY BE HIT BY SECTION 269SS OF THE ACT. NEVERTHELESS, PRIOR TO THE DECISION OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA), T HERE WAS REASONABLE CAUSE FOR RESPONDENTS TO RECEIVE DEPOSIT / LOAN T HROUGH JOURNAL ENTRIES. THIS NON-COMPLIANCE WITH SECTION 269SS OF THE ACT W OULD CERTAINLY BE A REASONABLE CAUSE UNDER SECTION 273B OF THE ACT FOR NON-IMPOSITION OF PENALTY UNDER SECTION 271D OF THE ACT. (J) IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL IN THE IMPUGNED ORDER HOLDING THAT NO PENALTY CAN BE IMPOSED UPON T HE RESPONDENTS AS THERE WAS A REASONABLE CAUSE IN TERMS OF SECTION 271B OF THE ACT FOR HAVING ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 14 RECEIVED LOANS / DEPOSITS THROUGH JOURNAL ENTRIES I S AT THE VERY LEAST IS A POSSIBLE VIEW IN THE FACTS OF THE CASE. (K) THEREFORE, THE QUESTION AS POSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. 9. FURTHER CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESS EES GROUP CASE IN DCIT VS. AASHTHAVINAYAK ESTATE COMPANY LTD. (SUPRA), WHI LE DEALING WITH IDENTICAL GROUND OF APPEAL HELD AS UNDER:- 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE DELIBERATE D ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THE IR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COURS E OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. WE HA D ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE TRIBUNAL IN THE GROUP CAS ES OF THE ASSESSEE WHICH WAS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT AS STATED ABOVE. 6. FROM THE RECORD WE FOUND THAT AO HAS LEVIED PEN ALTY U/S.271D FOR ACCEPTING LOAN BY WAY OF JOURNAL ENTRIES. THE ASSES SING OFFICER HAD PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (3 45 ITR 270) RENDERED ON 12.06.2012. IT IS NOT DISPUTED THAT IN THIS JUDGMEN T IT WAS HELD THAT THERE WAS VIOLATION OF THE PROVISIONS OF S. 269T OF THE ACT I N A CASE WHERE THE LOAN WAS REPAID BY WAY OF A JOURNAL ENTRY ENTAILING LEVY OF PENALTY U/S. 271E OF THE ACT. HOWEVER, AT THE SAME TIME IT WAS ALSO HELD THA T LEVY OF PENALTY COULD BE AVOIDED ON SHOWING REASONABLE CAUSE. IN THE PREMISE S, LEVY OF PENALTY U/SS. 271D OF THE ACT IS NOT AUTOMATIC, BUT THE GENUINENE SS OR OTHERWISE OF THE REASONS DUE TO WHICH REPAYMENT WAS MADE BY JOURNAL ENTRY HAS TO BE CONSIDERED JUDICIOUSLY. ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 15 7. IN THE ORDER REPORTED AS LODHA BUILDERS (P) LTD . V. ACIT [2014] 163 TTJ 778 (MUM), A BUNCH OF APPEALS BELONGING TO LODHA GR OUP (TO WHICH THE PRESENT ASSESSEE BELONGS) INVOLVING IDENTICAL ISSUE , WAS DISPOSED OF BY THE CO-ORDINATE BENCH IN WHICH LEVY OF SIMILAR PENALTIE S WAS HELD TO BE NOT SUSTAINABLE AS THERE WAS A REASONABLE CAUSE, COPIES OF WHICH HAVE BEEN PLACED ON RECORD. IN DECIDING THE DISPUTE IN FAVOUR OF THE ASSESSEE, THE HON'BLE TRIBUNAL HAD CONSIDERED AND APPLIED THE RAT IO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (345 ITR 270). 8. THE AFORESAID ORDER OF THE HON'BLE TRIBUNAL WAS APPROVED BY THE HONBLE JURISDICTIONS! HIGH COURT IN THEIR JUDGMENT AND ORD ER DATED 06.02.2018 IN THE CASE OF CIT V. AJINATH HI-TECH BUILDERS PVT LTD . AND OTHERS, COPIES OF WHICH HAVE ALSO BEEN PLACED ON RECORD. IN THIS CASE , IT WAS ALSO HELD THAT PRIOR TO THE JUDGMENT IN CIT V. TRIUMPH INTERNATION AL FINANCE (I) LTD. (345 ITR 270), THERE WERE SERIES OF ORDERS ON THIS POINT HOLDING THAT JOURNAL ENTRY WOULD NOT FALL FOUL OF S. 269SS OF THE ACT. SINCE T HE JUDGMENT IN CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (345 ITR 270 ) WAS RENDERED ON 12.06.2012, IT WAS HELD, THAT THE ASSESSEE COULD HA VE HAD A BONAFIDE BELIEF PRIOR TO THAT DATE THAT THERE WAS NO VIOLATION OF S . 269SS OF THE ACT IN ACCEPTING LOAN BY JOURNAL ENTRY. 9. WHILE DECIDING THE ISSUE, THE CIT(A) HAS ALSO FO LLOWED THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF GROUP CONCERN OF THE CASE. THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATI ON ARE SAME, ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A) FOR DELETING THE PENALTY IMPOSED U/S.271D BY RELYING ON THE DECI SION OF JURISDICTIONAL HIGH COURT IN GROUP CASE OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 16 10. CONSIDERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEE GROUP CASE IN AJINATH HI TECH BUILDER PVT LTD (SUPR A), TRIUMPH INTERNATIONAL FINANCE(I) LTD (SUPRA) DATED 12.06.20 12 AND IN ASSESSEES GROUP CASE IN DCIT VS. AASHTHAVINAYAK ESTATE COMPAN Y LTD. (SUPRA) THAT THERE WAS REASONABLE CAUSE FOR THE ASSESSEE TO RECE IVE DEPOSITS OF LOAN OR REPAYMENT OF LOANS THROUGH JOURNAL ENTRIES. THEREFO RE, IN OUR VIEW THE ASSESSEES CASE IS SQUARELY FALLS UNDER A REASONABL E CAUSE WITHIN THE MEANING OF SECTION 273B. THE CASE IS ALSO COVERED BY THE DE CISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEE GROUP CASE IN AJINATH HI TECH BUILDER PVT LTD (SUPRA), DCIT VS. AASHTHAVINAYAK ESTATE COM PANY LTD. (SUPRA) . THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDING OF LD. CIT(A). 11. IN THE RESULT APPEALS OF THE REVENUE FOR AY 2008-09 IN ITA NO.127, 128/MUM/2017 ARE DISMISSED. 12. IN APPEALS FOR AY 2009-10, THE REVENUE HAS RAIS ED IDENTICAL GROUNDS OF APPEAL FOR DELETING THE PENALTY U/S. 271D/271E. AS WE HAVE ALREADY DELETED THE PENALTY ON SIMILAR GROUNDS IN APPEAL FOR AY 200 8-09, THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, THE APPEAL S FOR AY 2009-10 FILED BY THE REVENUE ARE ALSO DISMISSED WITH SIMILAR OBSERVA TION. ITA NO. 127 TO 130 MUM 2017-M/S. SAHAJANAND HI TECH CONSTR UCTION PVT. LTD. 17 12. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2019. SD/- SD/- (G. S. PANNU ) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEM BER MUMBAI, DATE: 26.06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR K BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI