DCIT CEN CIR 7(3), MUMBAI V. MAHAVIR BULD ESTATE P.LTD, MUMBAI

ITA 1480/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4262 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK A PERAMPURIA
• Keywords: Income from undisclosed sources; Bonafide belief; Period of limitation; Reasonable cause; Time period of passing order; Reassessment proceedings
• Section: 273B; 143(3); 271D; 271E

Judgement Text

DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 1 D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ./ I.T.A. NO.1480 & 1481/ MUM/2017 ( / ASSESSMENT YEAR: 2008 - 09) DCIT, CENTRAL CIRCLE 7(3) R.NO. 655 6 TH FLOOR, AAYAKAR BHAVAN, M.K ROAD, MUMBAI 400 020 / V. M/S. MAHAVIR BUILD ESTATE P. LTD., (NOW MERGED WITH PALAVA DWELLERS P. LTD.), 261, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSE S ROAD, WORLI MUMBAI - 4000018 ./ PAN : AAFCM0474Q REVENUE BY: SHRI. VIVEK A. PERAMPURIA (DR) ASSESSEE BY : SHRI. RAVIKANT PATHAK / DATE OF HEARING : 15.02.201 9 / DATE OF PRONOUNCEMENT : 13 .03.2019 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER : THE PRESENT APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT(A) - 49, MUMBAI, DATED 01.12.2016, WHICH IN TURN ARISES FROM THE RESPECTIVE ORDER S PASSED BY THE ADDITIONAL CIT, CENTRAL RANGE - 7, MUMBAI U/SS. 271D AND 271E OF THE INCOME TAX ACT, 1961(I.T. ACT), BOTH DATED 01.12.2016. AS THE ISSUES INVOLVED IN THE PRESENT APPEALS ARE INEXTRICABLY INTERWOVEN AND INTERLINKED, THEREFORE, THE SAME A RE BEING TAKEN UP AND DISPOSED OFF TOGETHER BY WAY OF A CONSOLIDATED ORDER. WE SHALL HEREIN ADVERT TO THE APPEAL S OF THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE CIT(A) WHEREIN THE LATTER HA S DELETED THE PENALTY OF RS. 38,09,55,274/ - AND RS. 35,52,90, 732/ - IMPOSED BY THE ADDL . CIT U/S S . 271D AND 271E OF THE I.T ACT , RESPECTIVELY . THE DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 2 REVENUE ASSAILING THE ORDER OF THE CIT(A) AGAINST THE DELETION OF PENALTY OF RS. 38,09,55,274/ - UNDER SEC. 271D HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.38,09,55,274/ - LEVIED U/S.271D OF THE INCOME TAX ACT, 1961 ON THE GROUND T HAT GENUINENESS OF THE TRANSACTION MADE THROUGH JOURNAL ENTRIES IS NOT IN DOUBT.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAVING HELD THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961, OUGHT TO HAVE UPHELD THE LEVY OF PENALTY U/S.271D 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 WITH ITS GROUP CONCERNS. APART THERE FROM, THE REVENUE HAS ASSAILED THE DELETION OF PENALTY OF RS. 35,52,90,732/ - IMPOSED BY THE ADDL. CIT UNDER SEC. 271E ON THE FOLLOWING GROUNDS OF APPEAL : 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS. 35,52,90,732/ - LEVIED U/S.271 E OF THE INCOME TAX ACT, 1961 ON THE GROUND T HAT GENUINENESS OF THE TRANSACTION MADE THROUGH JOURNAL ENTRIES IS NOT IN DOUBT.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD.CIT(A) HAVING HELD THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269 T OF THE INCOME TAX ACT, 1961, OUGHT TO HAVE UPHELD THE LEVY OF PENALTY U/S.271 E AS THE ASSESSEE FAILED TO ESTABLISH THE COMPELLING REASONS OR GENUINE BUSINESS CONSTRAIN TS OR REASONABLE CAUSE FOR HAVING TRANSACTIONS IN RESPECT OF EACH AND EVERY JOURNAL ENTRY WITH ITS GROUP CONCERNS. 2. BRIEFLY STATED, THE ASSESSEE COMPANY IS A GROUP ENTITY OF LODHA GROUP AND IS ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT AND CONSTRUCTIO N OF REAL ESTATE PROPERTIES . THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A. Y 2008 - 09 ON 29.09.2008, DECLARING LOSS OF R S . 29,129/ - .THE CASE OF THE ASSESSEE WAS REOPENED AND ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 OF THE I.T ACT, VIDE AN ORDER DATED DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 3 30.03.2015 , DETERMINING ITS TOTAL INCOME AT RS. 1,88,430/ - . THE A . O WHILE FRAMING THE ASSESSMENT OBSERVED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD BOTH RECEIVED AND REPAID CERTAIN LOANS FROM/TO ITS SISTER CONCERNS THR OUGH JOURNAL ENTRIES I.E OTHERWISE TH A N THROUGH ACCOUNT PAYEE CHEQUES OR BANK DRAFTS. ON THE BASIS OF THE AFORESAID FACTS, THE A.O BEING OF THE VIEW THAT THE ASSESSEE HAD VIOLATED THE PROVISION S OF SEC. 269SS AND SEC. 269T OF THE I.T ACT, REFERRED THE MATT ER TO THE ADDITIONAL CIT, C ENTRAL RANGE - 7 , MUMBAI FOR NECESSARY ACTION REGARDING INITIA TION OF PENALTY PROCEEDINGS U/SS. 271D AND 271E OF THE I.T ACT. 3. ON THE BASIS OF THE AFORESAID REFERENCE MADE BY THE A.O, WHEREIN THE LATTER HAD INTIMATED THROUGH LETT ER DATED 25.06.2015 THAT THE ASSESSEE HAD ACCEPTED LOANS/DEPOSITS FROM ITS VARIOUS SISTER CONCERNS THROUGH JOURNAL ENTRIES I.E. OTHERWISE TH A N BY WAY OF ACCOUNT PAYEE CHEQUES/DRAFTS, THE ADDL. CIT ISSUED A SHOW CAUSE NOTICE (FOR SHORT SCN) CALLING UP ON THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S S . 271D AND 271E MAY NOT BE IMPOSED ON IT. IN REPLY, THE ASSESSEE TRIED TO IMPRESS UPON THE ADDL. CIT THAT NO PENALTY UNDER THE AFORESAID STATUTORY PROVISION S WAS LIABLE TO BE IMPOSED . IN ITS SUBMISSION THE A SSESSEE ASSAILED THE PROPOSED IMPOSITION OF PENALTY U/SS. 271D AND 271E ON MULTIPLE GROUNDS VIZ. (I). THAT THE TRANSFERRING OF THE RIGHTS AND LIABILITIES TO THE SISTER CONCERN BY THE ASSESSEE BY WAY OF JOURNAL ENTRIES DID NOT CONSTITUTE LOAN OF MONEY WIT HIN THE MEANING OF SEC. 269SS/269T OF THE IT ACT; (II). THAT THERE WAS NEITHER ANY AVOIDANCE OF ANY TAX LIABILITY BY TRANSFER OF ASSETS/LIABILITIES THROUGH JOURNAL ENTRIES, NOR WAS THERE ANY REVENUE LOS S TO THE DEPARTMENT ; (I II ). THAT THE JOURNAL ENTRIES PASSED BY THE ASSESSEE WERE GENUINE WITH CORRESPONDING JOURNAL ENTRIES IN THE BOOKS OF THE SISTER CONCERNS AND THE SAID FACT HAD BEEN VERIFIED BY THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ; ( I V). THAT THE JOURNAL ENTRIES WERE PASSED TO AVOID THE DELAY IN PROCEDURAL HASSLES OF PREPARING CHEQUES AND OBTAINING SIGNATURES OF AUTHORISED PERSONS; DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 4 AVOID TEMPORARY ARRANGEMENT OF FUNDS FOR CLEARANCE OF CHEQUES AND EARLIER SETTLEMENT OF THE TRANSACTIONS WHIC H OTHERWISE WOULD INVOLVE DELAY OF 3 - 5 DAYS BESIDES BLOCKING HUGE FUNDS FOR A TEMPORARY PERIOD WITHOUT ANY COMMERCIAL GAIN; FOR SQUARING OFF AND CONSOLIDATION OF RECEIVABLE AND PAYABLE, OPERATIONAL EFFICIENCY AND EASE OF MIS AND CORRECTION OF ERRORS WHILE PASSING THE ENTRIES, THEREFORE, THERE WERE BUSINESS EXIGENCIES FOR PASSING THE JOURNAL ENTRIES. ON THE BASIS OF HIS AFORESAID SUBMISSIONS THE ASSESSEE TRIED TO IMPRESS UPON THE ADDL. CIT THAT NO PENALTY U/SS. 271D AND 271E WAS LIABLE TO BE IMPOSED IN THE H ANDS OF THE ASSESSEE. ALTERNATIVELY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INSTEAD OF SETTLING ITS RIGHTS/LIABILITIES BY FIRST GIVING CHEQUES/BANK DRAFTS TO VARIOUS SISTER CONCERNS AND THEREAFTER RECEIVING THE CHEQUES/BANK DRAFTS FROM THE VERY SAM E SISTER CONCERNS WHICH WOULD HAVE RESULTED INTO AN EMPTY FORMALITY AND A MEANINGLESS RITUAL, HAD OPTED FOR SETTLING THE RIGHTS/LIABILITIES BY PASSING THE JOURNAL ENTRIES FOR THE EASE OF FACILITATING THE TRANSACTION AMONG THE SISTER CONCERNS . IT WAS TH US THE CONTENTION OF THE ASSESSEE THAT AS THE SETTLING OF THE TRANSACTION THROUGH JOURNAL ENTRIES CONSTITUTED A REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B OF THE I.T ACT, THEREFORE, ON THE SAID COUNT ALSO NO PENALTY U/SS 271D AND 271E WAS LIABLE TO BE IMPOSED. IN SUPPORT OF HIS AFORESAID CONTENTION THE ASSESSEE RELIED ON THE JUDGMENT S OF THE HONBLE HIGH COURT OF BOMBAY IN THE CA S E OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (INDIA) LIMITED ITA 5745 & 5746/2010 , WHEREIN THE PENALT IES IMPOSED U/S S . 271 D AND 271E WERE VACATED ON THE GROUND THAT THERE WAS A REASONABLE CAUSE UNDER SEC. 273B FOR THE ASSESSEE TO HAVE RECEIVED THE LOANS/DEPOSITS THROUGH JOURNAL ENTRIES. APART THERE FROM, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SPECIAL LEAVE PETITION (FO R SHORT SLP) FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF THE HONBLE HIGH COURT OF BOMBAY WAS DISMISSED BY THE HONBLE APEX COURT IN SLP NO. 15379/2013. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE AFORESAID JUDGMENT OF THE HONBLE HIGH COUR T OF BOMBAY WAS FOLLOWED BY THE ITAT, MUMBAI IN THE CASE OF ITS SISTER CONCERN VIZ. DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 5 LODHA BUILDERS PVT. LTD. VS. ACIT (ITA 476/MUM/2014) AND THE PENALTIES IMPOSED U/SS. 271D AND 271E INVOLVING IDENTICAL FACTS WERE DELETED. FURTHER , THE ASSESSEE ALSO TOO K SUPPORT OF THE CBDT CIRCULAR NO. 387; DATED 06.07.1984 IN ORDER TO IMPRESS UPON THE A.O THAT AS THE TRANSACTIONS UNDER CONSIDERATION WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ITS SISTER CONCERNS, THEREFORE, THERE WAS NO JUSTIFICAT ION FOR IMPOSING PENALTY U/SS. 271D AND 271E IN THE HANDS OF THE ASSESSEE. 4. THE ADDL. CIT AFTER DELIBERATING ON THE EXHAUSTIVE SUBMISSION FILED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO ACCEPT THE SAME. IT WAS OBSERVED BY THE ADDL. CIT THAT THE ASSES SEE COMPANY WHICH WAS A PART OF THE LODHA GROUP, WHICH WAS A MAJOR CONSTRUCTION GROUP ENGAGED IN THE CONSTRUCTION BUSINESS AND DEVELOPMENT OF REAL ESTATE HAD RECEIVED/ACCEPTED AND REPAID THE LOANS FROM /TO VARIOUS CONCERNS THROUGH JOURNAL ENTRIES I.E BY WAY OF A MODE OTHER THAN THAT ENVISAGED U/SS. 269SS AND 269T OF THE I.T ACT. THE ADDL. CIT HOLDING A CONVICTION THAT THE ASSESSEE BY CONTRAVEN ING THE PROVISIONS OF S ECTION 269SS AND S ECTION 269T OF THE I.T ACT, HAD THUS RENDERED ITSELF LIABLE FOR PENALTY U/S S . 271D AND 271E, RESPECTIVELY . THE CONTENTION ADVANCED BY THE ASSESSEE THAT THE JOURNAL ENTRIES POINTED OUT BY THE A.O DID NOT INVOLVE RAISING OF ANY LOAN OR DEPOSIT OF MONEY DID NOT FIND FAVOUR WITH THE ADDL. CIT. IN SUPPORT OF HIS AFORESAID VIEW THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SEC. 269SS AND SEC. 269T OF THE I.T ACT, THE ADDL. CIT RELIED UPON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT(CENTRAL) - 4 VS. TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD. (2012) 345 ITR 0270 . IT WAS OBSERVED BY THE ADDL. CIT THAT THE HONBLE HIGH COURT IN THE SAID CASE HAD OBSERVED THAT WHERE A LOAN/DEPOSIT WAS REPAID BY DEBITING THE ACCOUNT THROUGH JOURNAL ENTRIES, IT MUST BE HELD THAT THE ASSESSEE HAD CONTRAVENED THE PROVISION U/S. 269SS OF THE I.T ACT. INSOFAR THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF WORLDWIDE TOWNSHIP PROJECTS LTD . ((2014) 367 ITR 433 (DELHI) THAT WAS RELIED DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 6 UPON THE ASSESSEE WAS CONCERNED , IT WAS OBSERVED BY THE ADDL. CIT THAT THE SAID JUDGMENT HAD N OT CONSIDERED THE VIEW TAKEN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD (SUPRA). APART THERE FROM, THE ADDL. CIT WAS ALSO NOT PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE ASSESSEE THAT THE ACCEPTANCE AND THE REPAYMENT OF THE LOAN S BY WAY OF JOURNAL ENTRIES WOULD FALL WITHIN MEANING OF REASONABLE CAUSE AS ENVISAGED IN SECTION 273B OF THE I.T ACT. IN SUM AND SUBSTANCE, THE ADDL. CIT BEING OF THE VIEW THAT NOT ONLY THE ASSESSEE HAD CONTRAVENED THE PROVISION S OF SECTION 269SS AND SECTION 269 T OF THE I.T ACT, BUT HAD ALSO FAILED TO MAKE OUT A CASE OF A REASONABLE CAUSE U/S. 273B, THEREFORE, IMPOSED A PENALTY U/S 271D OF RS. 38,09,55,274/ - AND U/S. 271 E OF RS. 35,52,90,732/ - . 5. AGGRIEVED, THE ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE CIT(A). THE ASSESSEE ASSAILED THE IMPOSITION OF PENALTY BY THE ADDL. CIT U/SS. 271D AND 271E PRIMARILY ON THREE GROUNDS VIZ. (I) THAT AS PER EXPLANATION 3 TO SEC. 147 OF THE I.T ACT, THE A.O HAD NO JURISDICTION TO INITIATE/OR MAKE A REFERENCE TO THE JOINT COMMISSIONER OF INCOME - TAX IN RESPECT OF TECHNICAL PENALTIES U/SS. 271D AND 271E AS THE SAME HAD NO RELATION TO THE ALLEGED ESCAPED ASSESSMENT OF INCOME; (II). THAT AS THE JOURNAL ENTRIES POINTED OUT BY THE A.O DID NOT INVOLVE ANY LOAN OR DEPOSIT OF MONEY, THEREFORE, IN THE ABSENCE OF ANY VIOLATION OF THE PROVISIONS OF SEC. 269SS AND 269T OF THE IT ACT, NO PENALTY COULD HAVE BEEN IMPOSED U/SS. 271D AND 271E; AND (II). THERE WAS A REASONABLE CAUSE U/S 273B FOR THE ASSESSEE TO HA VE CARRIED OUT THE TRANSACTIONS BY WAY OF JOURNAL ENTRIES. THE CIT(A) AFTER DELIBERATI NG ON THE CONTENTIONS ADVANCED BY THE ASSESSEE REJECTED THE CONTENTION ADVANCE D BY IT THAT THE A.O IN THE COURSE OF THE REASSESSMENT PROCEEDINGS HAD NO JURISDICTION TO INITIATE/OR MAKE A REFERENCE TO THE JOINT COMMISSIONER OF INCOME - TAX IN RESPECT OF TECHNICAL PENALTIES U/SS. 271D AND 271E. INSOFAR THE CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS AND 269T WAS CONCERNED, IT WAS OBSERVED BY THE CIT(A) DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 7 THAT AS THE ASSESSEE HAD ACCEPTED AND REPAID THE LOANS AMOUNTING TO RS. 38,09,55,274/ - AND RS. 35,52,90,732/ - BY WAY OF JOURNAL ENTRIES I.E OTHER T H AN BY WAY OF ACCOUNT PAYEE CHEQUES AND DRAFTS, THEREFORE, THERE WAS A VIOLATION OF THE MODE OF ACCEPTING AND REPAYING OF THE LOA NS AS ENVISAGED IN THE AFORESAID STATUTORY PROVISIONS. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THERE WAS A REASONABLE CAUSE FOR CARRYING OUT THE AFORESAID TRANSACTIONS BY WAY OF JOURNAL ENTRIES, THE CIT(A) WAS PERSUADED TO ACCEPT THE SAME. THE CIT (A) AFTER DELIBERATING ON THE SCOPE AND GAMUT OF THE TERM REASONABLE CAUSE IN THE BACKDROP OF CERTAIN JUDICIAL PRONOUNCEMENTS, OBSERVED THAT THE SAME MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHI CH, ASSUMING THEM TO BE TRUE WOULD REASONABLY LEAD ANY ORDINARY PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED, TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE CIT(A) AFTER REFERRING TO THE JUDGMENT OF THE H ONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD. (2012) 345 ITR 270 (BOM) OBSERVED THAT THE GENUINENESS OF THE TRANSACTION MADE THROUGH JOURNAL ENTRIES WAS NOT IN DOUBT AND IT WAS NEITHER SHOWN IN THE ASSESSMEN T PROCEEDINGS OR IN THE COURSE OF THE PENALTY PROCEEDINGS THAT UNACCOUNTED INCOME OF THE LENDER OR THE BORROWER WAS INVOLVED. IN SUM AND SUBSTANCE, IT WAS OBSERVED BY THE CIT(A) THAT THE TRANSACTIONS BY WAY OF JOURNAL ENTRIES WERE NOT BONAFIDE OR HAD BEEN UNDERTAKEN TO EVADE TAX . INSOFAR THE REASONABLE CAUSE FOR HAVING CARRIED OUT THE TRANSACTIONS BY WAY OF JOURNAL ENTRIES I.E IN CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS AND SEC. 269 T OF THE I.T ACT WAS CONCERNED , IT WAS OBSERVED BY THE CIT(A) THAT THE SAME WAS BACKED BY A REASONABLE CAUSE. IT WAS NOTICED BY THE CIT(A) THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS BY WAY OF JOURNAL ENTRIES WITH ITS GROUP CONCERNS UNDER THE BONAFIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT BE HIT BY THE PROVISIONS OF SEC . 269SS AND SEC. 269T ON THE BASIS OF THE JUDICIAL DECISIONS ON THE ISSUE, INCLUDING THAT OF THE HIGH COURT OF DELH I IN THE CASE OF CIT VS. NOIDA TOLL BRIDGE CO. LTD. (2003) DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 8 262 ITR 260 (DEL) . APART THERE FROM, IT WAS OBSERVED BY THE CIT(A) THAT THE LOAN TRANSACTIONS BY WAY OF JOURNAL ENTRIES WERE UNDERTAKEN BY THE ASSESSEE FOR VARIOUS COMMERCIAL REASONS LIKE ASSIGNING OF RECEIVABLES FOR OPERATIONAL EFFICIENCY, PAYMENT ON BEHALF OF GROUP CONCERN FOR SQUARING TRANSACTIONS, FOR EASE IN CONSOLIDATION OF ACCO UNTS, RECTIFICATION ENTRIES ETC. IT WAS ALSO NOTICED BY THE CIT(A) THAT THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD. (2012) 345 ITR 270 (BOM) HOLDING THAT REPAYMENT OF LOAN/DEPOSIT BY W AY OF JOURNAL ENTRIES WAS IN CONTRAVENTION OF PROVISIONS OF SEC. 269T HAD BEEN GIVEN AFTER THE CLOSE OF THE FINANCIAL YEAR 2011 - 12 RELEVANT TO A.Y 2012 - 13. IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE CIT(A) THAT THE AFORESAID REASONS CON STITUTED A REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B OF THE I.T ACT , SPECIFICALLY IN LIGHT OF THE FACT THAT THERE WAS NO FINDING OF FACT THAT SUCH TRANSACTIONS WERE UNDERTAKEN BY THE ASSESSEE TO EVADE TAX. THE CIT(A) WHILE CONCLUDING AS HEREINABOVE RELIED ON THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF LODHA BUILDERS PVT. LTD. VS. ACIT [ITA NO. 476 TO 481/MUM/2014; DT. 27.06.2014) FOR A.Y 2009 - 10 AND FIVE OTHER GROUP CASES , WHEREIN UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE PENALTY IMPOSED U/SS . 271D AND 271E WAS QUASHED FOR THE REASON THAT THERE WAS A REASONABLE CAUSE FOR THE ASSESSEE TO HAVE UNDERTAKEN SUCH TRANSACTIONS BY WAY OF JOURNAL ENTRIES. INSOFAR THE OBSERVATION OF THE ADDL. CIT THAT THE SPIRIT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD. (2012) 345 ITR 270 (BOM) WAS THAT ONLY SUCH TRANSACTIONS WHICH WERE IN THE NATURE OF SQUARING UP WITH THE SAME PARTY WOULD BE ENTITLED TO CLAIM THE BENEFIT OF REASONA BLE CAUSE U/S 273B WAS CONCERNED, THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT IN THE CASE BEFORE THE HONBLE HIGH COURT THE ASSESSEE AND ITS SISTER CONCERN VIZ. M/S TRIUMPH SECURITIES LTD. HAD TRANSACTIONS OF PURCHASE AND SALE WITH COMMON CUSTOMERS AND THE CREDIT/DEBIT LIABILITIES WERE SETTLED THROUGH JOURNAL ENTRIES AND IT DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 9 WAS HELD THAT THE TRANSACTIONS IN QUESTION WERE UNDERTAKEN NOT WITH A VIEW TO RECEIVE LOANS/DEPOSITS IN CONTRAVENTION OF SEC. 269SS, BUT IN VIEW TO EXTINGUISH THE MUTUAL LIABILITY OF PAYING//RECEIVING THE AMOUNTS BY THE ASSESSEE AND ITS SISTER CONCERN TO THE CUSTOMERS. ON THE BASIS OF HIS AFORESAID CONVICTION THAT THE ASSESSEE HAD A REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B OF THE I.T ACT FOR ACCEPTING AND REPAYING LOANS FROM/TO ITS SISTER CONCERNS BY WAY OF JOURNAL ENTRIES, THE CIT(A) DELETED THE PENALTY IMPOSED BY THE ADDL. CIT UNDER SEC. 271D OF RS. 38,09,55,274/ - AND UNDER SEC. 271E OF RS. 35,52,90,732/ - . 6. THE REVENUE BEING AGGRIEVED WITH THE AFORESAID ORDER OF THE CIT(A), WHEREIN THE LATTER HAD DELETED THE PENALTIES IMPOSED U/SS. 271D AND 271E BY THE ADDL. CIT, HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIE D ON THE ORDERS PASSED BY THE ADDL. CIT U/SS. 271D AND 271E OF THE I.T ACT. 7. PER CONTRA, THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE TOOK US THROUGH THE FACTS OF THE CASE. THE LD. A.R SUBMITTED THAT THE CIT(A) HAD BY WAY OF A WELL REASONED ORDER DELETED THE PENALTY IMPOSED BY THE ADDL. CIT UNDER SEC. 271D AND SEC. 271E OF THE I.T ACT. IT WAS SUBMITTED BY THE LD. A.R THAT IN THE COURSE OF THE PROCEEDINGS BEFORE THE ADDL. CIT THE ASSESSEE HAD RELIED ON THE ORDER OF THE HONBLE HI GH COURT OF DELHI IN THE CASE OF CIT VS. WORLDWIDE TOWNSHIP PROJECTS LIMITED (2014) 367 ITR 433 (DEL), WHEREIN IT WAS OBSERVED BY THE HIGH COURT THAT T HE LIABILITY RECORDED IN THE BOOKS OF ACCOUNTS BY WAY OF JOURNAL ENTRIES IS OUTSIDE THE AMBIT OF THE PROV ISION OF SECTION 269SS, BECAUSE PASSING OF SUCH ENTRIES DOES NOT INVOLVE ACCEPTANCE OF ANY LOAN OR DEPOSIT OF MONEY. THE LD. A.R TAKING US THROUGH THE RELEVANT PAGES OF THE ASSESSES PAPER BOOK (FOR SHORT APB) SUBMITTED THAT AS THE ASSESSEE HAD A REASO NABLE CAUSE FOR ACCEPTING AND REPAYING THE LOANS BY WAY OF JOURNAL ENTRIES, THEREFORE, DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 10 THE CIT(A) HAD RIGHTLY VACATED THE PENALTIES IMPOSED BY THE ADDL. CIT U/SS. 271D AND 271E OF THE I.T ACT. 8. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE REVENUE HAS SOUGHT OUR INDULGENCE FOR ADJUDICATING AS TO WHETHER THE CIT(A) IS RIGHT IN LAW AND THE FACTS OF THE CASE IN VACATING THE PENALTY IMPOSED BY THE ADDL . CIT U/SS. 271D AND 271E OF THE I.T ACT. AS OBSERVED BY US HEREINABOVE, THE CIT(A) HAD CONCLUDED THAT AS THE JOURNAL ENTRY TRANSACTIONS OF THE ASSESSEE WITH ITS SISTER CONCERNS WERE FOR MORE THAN THE AMOUNT OF RS. 20,000/ - AND THE SAME WERE NOT THROUGH ACCOUNT PAYEE CHEQUE OR BANK DRAFTS, THERE FORE, THERE WAS A VIOLATION OF THE PROVISIONS OF SEC. 269SS/269T OF THE I.T ACT. APART THEREFROM, THE CIT(A) HAS SUPPORTED HIS AFORESAID OBSERVATION BY RELYING ON THE JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN THE CAS E OF CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (2012) 345 ITR 270 (BOM) FOR A.Y 2003 - 04 AND ITA NO. 5745 OF 2010, DATED 17.08.2012 FOR A.Y 2000 - 01, WHEREIN THE HONBLE HIGH COURT HAD OBSERVED THAT RECEIVING LOANS/DEPOSITS THROUGH JOU RNAL ENTRIES WOULD BE IN VIOLATION OF SEC. 269S OF THE I.T ACT. INSOFAR THE OBSERVATION OF THE CIT(A) THAT THE LOANS OR DEPOSITS ACCEPTED/REPAID BY THE ASSESSEE FROM/TO ITS SISTER CONCERNS BY JOURNAL ENTRIES WAS IN CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS AND SEC. 269T IS CONCERNED, WE ARE IN AGREEMENT WITH THE VIEW THEREIN TAKEN THAT AS THE SAID TRANSACTIONS ARE NOT THROUGH ACCOUNT PAYEE CHEQUE OR DRAFT, THEREFORE, THE SAME IS IN VIOLATION OF THE MODE PRESCRIBED UNDER THE AFORESAID STATUTORY PROVISI ONS. HOWEVER, WE ARE PERSUADED TO SUBSCRIBE TO THE OBSERVATION OF THE CIT(A) THAT THERE WAS A REASONABLE CAUSE FOR THE ASSESSEE TO HAVE CARRIED OUT THE TRANSACTIONS WITH ITS SISTER CONCERNS BY JOURNAL ENTRIES VIZ. (I). THE JOURNAL ENTRIES HAD BEEN MADE W ITH THE GROUP CONCERNS UNDER THE BONAFIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT BE HIT BY THE PROVISIONS OF SEC. 269SS IN VIEW OF VARIOUS JUDICIAL DECISIONS ON THE ISSUE, INCLUDING THE DECISION OF DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 11 HIGH COURT OF DELHI IN THE CASE OF CIT VS. NOIDA TOLL BR IDGE CO. LTD. (2003) 262 ITR 260 (DEL); AND (II). SUCH LOAN S BY WAY OF JOURNAL ENTRY TRANSACTIONS WERE UNDERTAKEN FOR VARIOUS COMMERCIAL REASONS LIKE ASSIGNING OF RECEIVABLES FOR OPERATIONAL EFFICIENCY, PAYMENT ON BEHALF OF GROUP CONCERN FOR SQUARING UP TR ANSACTIONS, FOR EASE IN CONSOLIDATION OF ACCOUNTS, RECTIFICATION ENTRIES ETC. IN OUR CONSIDERED VIEW THE AFORESAID REASONS DO CONSTITUTE A REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B OF THE ACT, PARTICULARLY IN LIGHT OF THE FACT THAT THERE IS NO FI NDING THAT SUCH TRANSACTIONS WERE UNDERTAKEN TO EVADE TAX. OUR AFORESAID VIEW IS FORTIFIED BY THE ORDERS OF THE COORDINATE BENCHES OF THE T RIBUNAL IN THE CASE OF SISTER CONCERN OF THE ASSESSEE VIZ. LODHA BUILDERS PVT. LTD. VS. ACIT [ITA NO. 476 & 481/MU M/2014; DT. 27.06.2014.] , WHEREIN IT HAS BEEN HELD THAT AS THE ASSESSEE HAS SHOWN REASONABLE CAUSE, THEREFORE, PENALTY IMPOSED U/SS. 271D/271E OF THE I.T ACT CANNOT BE SUSTAINED. IN FACT, A CO - ORDINATE BENCH OF THE TRIBUNAL I.E ITAT, B BENCH, MUMBAI IN T HE CASE OF A SISTER CONCERN OF THE ASSESSEE FOR A.Y 2011 - 12 VIZ. DCIT VS. M/S NATIONAL STANDARD INDIA LTD. [ITA NO. 6607/MUM/2016 & 6609; DT. 06.06.2018] WHEREIN IDENTICAL FACTS AND ISSUE WERE INVOLVED, HAD UPHELD THE ORDER OF THE CIT(A) WHO HAD DELETED THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271D AND 271E FOR THE REASON THAT SINCE THE JUDGMENT IN CIT VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (2012) 345 ITR 270 (BOM) WAS RENDERED ON 12.06. 2012, THEREFORE, THE ASSESSEE COULD HAVE HAD A BONAFIDE BELIEF PRIOR TO THAT DATE THAT THERE WAS NO VIOLATION OF SEC. 269SS OF THE I.T ACT IN ACCEPTING LOAN BY JOURNAL ENTRY. IT WAS OBSERVED BY THE TRIBUNAL IN THE AFOREMENTIONED CASE, AS UNDER : 5. WE H AVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE CO URSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. WE HAD ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE TRIBUNAL IN THE GROUP CASE OF THE ASSESSEE EXACTLY ON THE VERY SAME ISSUE, WHICH WAS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COUR T AS STATED ABOVE. DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 12 6. FROM THE RECORD WE FOUND THAT AO HAS LEVIED PENALTY U/S.271D AND 271E FOR ACCEPTING AND REPAYING LOAN BY WAY OF JOURNAL ENTRIES. THE ASSESSING OFFICER HAD PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (345 ITR 270) RENDERED ON 12.06.2012. IT IS NOT DISPUTED THAT IN THIS JUDGMENT IT WAS HELD THAT THERE WAS VIOLATION OF THE PROVISIONS OF S. 269T OF THE ACT IN A CASE WHERE THE LOAN WAS REPAID BY WAY O F A JOURNAL ENTRY ENTAILING LEVY OF PENALTY U/S. 271E OF THE ACT. HOWEVER, AT THE SAME TIME IT WAS ALSO HELD THAT LEVY OF PENALTY COULD BE AVOIDED ON SHOWING REASONABLE CAUSE. IN THE PREMISES, LEVY OF PENALTY U/SS. 271D AND 271E OF THE ACT IS NOT AUTOMATIC , BUT THE GENUINENESS OR OTHERWISE OF THE REASONS DUE TO WHICH REPAYMENT WAS MADE BY JOURNAL ENTRY HAS TO BE CONSIDERED JUDICIOUSLY. 7. IN THE ORDER REPORTED AS LODHA BUILDERS (P) LTD. V. ACIT [2014] 163 TTJ 778 (MUM), A BUNCH OF APPEALS BELONGING TO LOD HA GROUP (TO WHICH THE PRESENT ASSESSEE BELONGS) INVOLVING IDENTICAL ISSUE, WAS DISPOSED OF BY THE CO - ORDINATE BENCH IN WHICH LEVY OF SIMILAR PENALTIES WAS HELD TO BE NOT SUSTAINABLE AS THERE WAS A REASONABLE CAUSE, COPIES OF WHICH HAVE BEEN PLACED ON RECO RD. IN DECIDING THE DISPUTE IN FAVOUR OF THE ASSESSEE, THE HON'BLE TRIBUNAL HAD CONSIDERED AND APPLIED THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. (345 ITR 270). 8. THE AFORESAI D ORDER OF THE HON'BLE TRIBUNAL WAS APPROVED BY THE HONBLE JURISDICTIONS! HIGH COURT IN THEIR JUDGMENT AND ORDER DATED 06.02.2018 IN THE CASE OF CIT V. AJINATH HI - TECH BUILDERS PVT LTD., COPIES OF WHICH HAVE ALSO BEEN PLACED ON RECORD. IN THIS CASE, IT WA S ALSO HELD THAT PRIOR TO THE JUDGMENT IN CIT V. TRIUMPH INTERNATIONAL 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 THE JUDGMENT IN CIT V. TRIUMPH INT ERNATIONAL FINANCE (I) LTD. (345 ITR 270) WAS RENDERED ON 12.06.2012, IT WAS HELD, THAT THE ASSESSEE COULD HAVE HAD A BONA FIDE BELIEF PRIOR TO THAT DATE THAT THERE WAS NO VIOLATION OF S. 269SS OF THE ACT IN ACCEPTING LOAN BY JOURNAL ENTRY. THE RELEVANT OB SERVATIONS OF THE HON'BLE HIGH COURT APPEARING ON PAGES 8 TO 10 OF THE JUDGMENT ARE AS UNDER: (H) IN ANY EVENT, AS RIGHTLY POINTED OUT BY MR. SRIDHARAN, LEARNED SENIOR COUNSEL FOR THE RESPONDENTS ASSESSES, THE ORDER OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) WAS RENDERED ON 12TH JUNE, 2012. THIS, WAS IN AN APPEAL FILED BY THE REVENUE FROM THE ORDER OF THE TRIBUNAL DATED 29TH JANUARY, 2008, WHICH HAD HELD THAT DEPOSITS/LOANS RECEIVED THROUGH JOURNAL ENTRIES DO NOT FALL WITH THE MISCHIEF OF SECTI ON 269SS 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. PAREKH LTD. AND KETAN PAREKH AS INDICATED IN THE ORDER OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SU PRA). 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 & INVESTMENT P) LTD. 2004 (88) TTJ (DELHI) 85 AND ASST CIT VS. LALA MURARI LA I & SONS, 2004(2) SOT (LUCK) 543 WHEREIN IT HAS DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 13 BEEN HELD JOURNAL ENTRIES IN THE BOOK OF ACCOUNTS INDICATING DEPOSIT/ LOANS WILL NOT FALL FOUL OF SECTION 269SS OF THE BESIDES, THE DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX NOIDA TOLL BRIDGE C O. LTD. 262 ITR 260 INTER ALIA HELD THAT PAYMENT OF RS.4.85 CRORES MADE BY THE ASSESSES BY A JOURNAL ENTRY IN ITS BOOKS OF ACCOUNT BY CREDITING THE ACCOUNT OF LLFS, WOULD NOT FALL FOUL OF SECTION 269SS OF THE ACT. THIS PARTICULARLY IN THE ABSENCE OF ANY PA YMENT BEING MADE IN CASH. (I) IN THE PRESENT FACTS, THE PERIOD DURING WHICH THE JOURNAL ENTRIES WERE MADE BY THE RESPONDENTS WAS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009 - 10 I.E. FINANCIAL YEAR 2008 - 09. AT THAT TIME, THE DECISIONS OF THE TRIBUNAL IN THE CASES OF TRIUMPH INTERNATIONAL (SUPRA) AND DECISION OF V.H. PAREKH (P) LTD.. KETAN V. PAREKH, SUNFLOWER BUILDERS (SUPRA), RUCHIKA CHEMICALS (SUPRA). LA/A MURARI LA/ (SUPRA) AND THE DECISION OF THE DELHI HIGH COURT IN NOIDA TOLL BRIDGE CO. L TD, (SUPRA) WERE 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, LEARNED COUNSEL FOR THE APPELLANT THAT THE DECISION OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SU PRA) HAS ONLY CLARIFIED/STATED THE POSITION AS ALWAYS EXISTING IN LAW, THE RECEIVING OF DEPOSITS/ LOANS THROUGH JOURNAL ENTRIES WOULD CERTAINLY BE HIT BY SECTION 269SS OF THE ACT NEVERTHELESS, PRIOR TO THE DECISION OF THIS COURT IN TRIUMPH INTERNATIONAL FI NANCE (SUPRA), THERE WAS REASONABLE CAUSE FOR RESPONDENTS TO RECEIVE DEPOSIT/LOAN THROUGH JOURNAL ENTRIES. THIS NONCOMPLIANCE WITH SECTION 269SS OF THE ACT WOULD CERTAINLY BE A REASONABLE CAUSE UNDER SECTION 273B OF THE ACT FOR NON - IMPOSITION OF PENALTY UN DER SECTION 271D OF THE ACT' 9. FROM THE RECORD WE FOUND THAT THE JOURNAL ENTRIES IN THE PRESENT CASE WERE PASSED IN F.Y. 2010 - 11. THEREFORE, INDISPUTABLY SUCH JOURNAL ENTRIES WERE PASSED PRIOR TO 12.06.2012, THE DATE ON WHICH JUDGMENT OF THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD WAS PRONOUNCED. FURTHER MORE, IN ADDITION TO THE ORDERS OF THE HON'BLE TRIBUNAL, REFERRED TO IN THE AFORESAID JUDGMENT, THERE WERE ALSO MANY OTHER ORDERS RENDERED PRIOR TO CIT V. TRI UMPH INTERNATIONAL FINANCE (I) LTD. [345 ITR 270 (BOM)] HOLDING THAT VIOLATION OF SS. 269SS AND 269T OF THE ACT COULD NOT BE IMPUTED IN ACCEPTING AND REPAYING LOAN BY PASSING A JOURNAL ENTRY. SOME OF THEM ARE: (I) ORDER OF COCHIN BENCH OF THE HON'BLE TRIB UNAL IN MUTHOOT M. GEORGE BANKERS V. ACIT (46 ITD 10), DATED 16.04.1993; (II) ORDER OF AHMEDABAD BENCH OF THE HON'BLE TRIBUNAL IN BOMBAY CONDUCTORS & ELECTRICALS LTD. V. DCIT (90 TAXMAN 138), DATED 30,11.1995; (III) JUDGMENT OF HON'BLE DELHI HIGH COURT I N CIT V. NOIDA TOLL BRIDGE (262 ITR 260), RENDERED ON 28.01,2003; (IV) ORDER OF AGRA BENCH OF THE HON'BLE TRIBUNAL IN ITO V. AMARNATH SHIVRAJ (HUF) (1 SOT 346), DATED 28.02.2003; DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 14 (V) ORDER OF AHMEDABAD BENCH OF THE HON'BLE TRIBUNAL IN ACIT V. GUJARAT A MBUJA PROTEINS LTD. (3 SOT 811), DATED 28.10.2003; (VI) ORDER OF KOLKATA BENCH OF THE HON'BLE TRIBUNAL IN KRISHNA KR PATHAK (HUF) (90 TTJ 940), DATED 12.03.2004; (VII) JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN CIT V. HISSARIA BROS (291 ITR 244), RENDERED ON 21.07.2006; OFF MUMBAI BENCH OF HON'BLE TRIBUNAL IN TRIUMPH INTERNATIONAL FINANCE (I) LTD. IN FTA NO. 542/MUM/2007, DATED 29.01.2008; IX) JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CIT V. BOMBAY CONDUCTORS & ELECTRICALS LT D (301 ITR 328), RENDERED ON 11.02.2008; (X) ORDER OF AHMEDABAD BENCH OF HON'BLE TRIBUNAL IN JITU BUILDERS (P) LTD. V. ADDL. CIT [124 ITD 134 (AHD) (TM)], DATED 16.07.2009; AND (XI) ORDER OF AHMEDABAD BENCH OF HON'BLE TRIBUNAL IN ACIT V. WESTERN INDIA CERAMICS (P.) LTD (20 TAXMANN. COM 317), DATED 12.10.2010. 10. IT WAS ARGUED BY LEARNED DR THAT THE HON'BLE HIGH COURT DECLARES THE LAW AS IT WAS ALWAYS AND, HENCE, THERE WAS CLEARLY VIOLATION OF THE PROVISIONS OF THE ACT. HE FURTHER ARGUED THAT THE ASS ESSEE HAS NOT EXPLAINED REASONABLE CAUSE IN RESPECT OF EACH AND EVERY ENTRY AND, HENCE, THE PENALTIES WERE CORRECTLY LEVIED. 11. AS REGARDS THE FIRST ARGUMENT OF THE LD. DR, WE OBSERVE THAT THE IDENTICAL ARGUMENT WAS RAISED BEFORE THE HON'BLE HIGH COURT IN THE CASE OF AJINATH HI - TECH BUILDERS PVT. LTD. (AND OTHER GROUP COMPANIES OF THE ASSESSEE) (SUPRA). HOWEVER, FINDING NO MERIT IN THE PLEA CANVASSED, IT WAS REJECTED AS PER OBSERVATIONS IN SUB - PARA (I) OF PARA 3 ON PAGE NO. 10 OF THEIR JUDGMENT WHICH REA D AS UNDER: (I) ........................,....._ IN THE ABOVE VIEW, WHILE AGREEING WITH THE SUBMISSION OF MR. MOHANTY. LEARNED COUNSEL FOR THE APPELLANT THAT THE DECISION OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) HAS ONLY CLARIFIED/ STATED THE POSITION AS ALWAYS EXISTING IN LAW, THE RECEIVING OF DEPOSITS/LOANS THROUGH JOURNAL ENTRIES WOULD CERTAINLY BE HIT BY SECTION 269SS OF THE ACT NEVERTHELESS, PRIOR TO THE DECISION OF THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA), THERE WAS REASONABLE CAUSE FOR RESPONDENTS TO RECEIVE DEPOSIT/LOAN THROUGH JOURNAL ENTRIES. ' (EMPHASIS SUPPLIED). 11. SO FAR AS THE SECOND ARGUMENT OF THE ID. DR IS CONCERNED, WE OBSERVE THAT AS PER THE ABOVE DECISION OF THE HON'BLE HIGH COURT, THE ASSESSEE COULD NOT BE VIS ITED WITH PENALTY IN RESPECT OF THE PERIOD PRIOR TO 12.06.2012, THE DAY ON WHICH THE DECISION IN CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. WAS PRONOUNCED. IN LIGHT OF THIS, IT CAN SAFELY BE CONCLUDED THAT THE ASSESSEE BEING UNDER A BONA FIDE BELIEF, CO ULD NOT BE VISITED WITH PENALTIES U/SS. 271D DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 15 AND 271E OF THE ACT. IN ANY CASE, IN LIGHT OF THIS BINDING DECISION, THERE IS NO REQUIREMENT TO ESTABLISH REASONABLE CAUSE IN RESPECT OF EACH AND EVERY ENTRY AS CANVASSED BY THE ID. DR. THE REASONABLE CAUSE IN R ESPECT OF ALL THE ENTRIES IS THE BONA FIDE BELIEF OF THE ASSESSEE THAT THERE WAS NO VIOLATION OF ANY PROVISION OF THE ACT. 13. IN VIEW OF THE ABOVE, WE OBSERVE THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE EXCEPTION CARVED OUT IN THE JUDGMENT O F THE HON'BLE BOMBAY HIGH COURT IN CIT V. TRIUMPH INTERNATIONAL FINANCE (I) LTD. [345 ITR 270 (BOM)]. ACCORDINGLY, BOTH THE PENALTIES WERE NOT EXIGIBLE IN THE PRESENT CASE AS THE ASSESSEE WAS UNDER A BONA FIDE BELIEF AND THERE WAS NO CONTRAVENTION AS PER T HE LAW PREVAILING AS ON THE DATE OF PASSING THE JOURNAL ENTRIES. THE ORDERS OF THE CIT (A), THEREFORE, DO NOT CALL FOR ANY INTERFERENCE. 14 DURING THE COURSE OF HEARING, LEARNED AR SUBMITTED THAT A GROUND REGARDING LIMITATION ASPECT OF THE PENALTY ORDER UNDER RULE 27 OF THE INCOME - TAX (APPELLATE TRIBUNAL) RULES, 1963. IT WAS SUBMITTED THAT THE ISSUE REGARDING LIMITATION PERIOD WAS RAISED FIRST BEFORE THE ADDL. CIT, AND THEREAFTER BEFORE THE CIT (A); AND BOTH THE AUTHORITIES HAVE DISCUSSED THIS PLEA BUT RE JECTED THE CLAIM OF THE ASSESSEE. IN LIGHT OF THE ABOVE FACT, ALTHOUGH THE ASSESSEE HAD NOT FILED ANY APPEAL OR CROSS OBJECTION, IT IS ENTITLED TO RAISE THE SAID ISSUE BEFORE THE HON'BLE TRIBUNAL. IN SUPPORT OF THIS PLEA, ATTENTION OF BENCH WAS INVITED TO RULE 27 OF THE IT(AT) RULES WHICH READS AS UNDER: 'THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. ' 15. HENCE, RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT V. SUN PHARMACEUTICALS INDUSTRIES LTD., (2017) 86 TAXMANN.COM 148) AND ALSO ON THE JUDGMENT OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT V. COMMONWEALTH TRUST (INDIA) LTD. (221ITR 474). 16. WE HAVE CONSIDERED RIVA L CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. SINCE, WE HAVE ALREADY DECIDED THE ISSUE ON MERIT BY FOLLOWING THE ORDER OF THE JURISDICTIONAL HIGH COURT IN THE GROUP CASES OF THE ASSESSEE, WE DO NOT CONSIDER THE PLEA TAKEN BY THE ASSES SEE UNDER RULE 27 OF THE ITAT RULES. 17. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DISMISSED. 9 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND HAVE PERUSED THE AFORESAID ORDER OF THE COORDINATE BENCH OF THE T RIBUNAL I.E. ITAT B BENCH, MUMBAI IN THE CASE OF THE SISTER CONCERN OF THE ASSESSEE VIZ. DCIT CC - 7(3), MUMBAI VS. M/S. NATIONAL STANDARD INDIA LTD. (ITA NO. 6607/MUM/2016) FOR AY 2011 - 12 , AND ARE PERSUADED TO SUBSCRIBE TO THE VIEW THEREIN TAKEN. IN THE BACKDROP DCIT VS. MAHAVIR BUILD ESTATE ITA 1480 & 1481/MUM/2017 A.Y 2008 - 09 16 OF OUR AFORESAID DELIBERATIONS, AS OBSERVED BY US AT LENGTH HEREINABOVE, AS THE ASSESSEE HAD REMAINED UNDER A BONAFIDE BELIEF THAT THE ACCEPTANCE AND REPAYMENT OF LOANS BY JOURNAL ENTRIES DID NOT INVOLVE ANY CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS AND S EC. 269T OF THE I.T ACT , THEREFORE, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT IN THE BACKDROP OF THE SAID REASONABLE CAUSE WITHIN THE MEANING OF SEC. 273B OF THE I.T ACT, NO PENALTY UNDER SEC. 271D AND SEC. 271E COULD HAVE BEEN IMPOSED ON THE ASSESSEE. WE THUS FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAD IN TERMS OF HIS AFORESAID OBSERVATIONS V ACATED THE PENALTY OF RS. 38,09,55,274/ - AND RS. 35,52,90,732/ - IMPOSE D BY THE ADDITIONAL CIT U/S S . 271D AND 271E OF THE I.T ACT, RESPECTIVELY, UPHOLD HIS ORDER. 10 . THE APPEALS FILED BY THE REVENUE I.E ITA NO(S). 1480 & 1481 /MUM/2017 FOR A.Y 2008 - 09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 .03.2019. 13 .03.2019 SD/ - SD/ - (SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13 .03.2019 NISHANTVERMA SR. PRIV ATE SECRETARY COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT - CONCERNED, MUMBAI 5. THE DR BENCH, 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI