VIMAL ENTERPRISES, MUMBAI V. JT CIT RG 31(3), MUMBAI

ITA 6930/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0317 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 15-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: HARISH P SHAH
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI D.T GARASIA , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER ITA NO.6930/MUM./2016 (ASSESSMENT YEAR: 2012 - 13) VIMAL ENTERPRISES 8/81, THE PIRAMAL NAGAR, S.V. RD., GOREGOAN (W) MUMBAI 400062 PAN AAFFV2987A . APPELLANT V/S JOINT, CIT, RANGE 31(3) MUMBAI . RESPONDENT ASSESSEE BY : SHRI. HARISH P. SHAH REVENUE BY : M S. POOJA SWAROOP DATE OF HEARING 15.05.2017 DATE OF ORDER - 14 .06 .2017 O R D E R PER: MANJUNATHA G. THIS APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST ORDER OF THE CIT(A) - 42, MUMBAI DATED 19.08.2016 AND IT PERTAINS TO THE ASSESSMENT YEAR 2012 - 13 . VIMAL ENTERPRISES ITA NO.6930/MUM./2016 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURE OF PRINTED POLYTHENE BAGS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 20 12 - 13 ON 14.09.2012 DECLARING TOTAL INCOME OF RS.1,38,060/ - . T HE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 27.03.2015, ASSESSING THE TOTAL INCOME OF THE A SSESSEE AT RS.1,38,060/ - . HOWEVER, THE A.O WHILE COMPLETING THE ASSESSMENT , OBSERVED THAT THE ASSESSEE HAS ACCEPTED LOANS IN EXCESS OF PRESCRIBED LIMITS OTHERWISE THEN BY WAY OF ACCOUNT PAY CHEQUE OR DRAFTS, THEREBY VIOLATED THE PROVISION OF SECTION 269SS O F THE ACT, WHICH ATTRACTS PENALTY U/S. 271D OF THE INCOME TAX ACT OF 1961. 3. THE JOINT COMMISSIONER OF THE INCOME TAX - 31(3), MUMBAI, BASED ON THE OBSERVATIONS OF THE ASSESSING OFFICER , INITIATED PENALTY PROCEEDINGS U/S. 271D OF THE I.T. ACT, 1961 AND ACC ORDINGLY , ISSUED A SHOW CAUSE NOTICE DATED 01.09.2015 WHICH WAS DULY SERVED ON THE ASSESSEE , REQUIRING IT TO SHOW CAUSE AS TO WHY PENA LTY SHALL NOT BE LEVIED U/S.271 D OF THE ACT, FOR CONTRAVENTION OF PROVISION OF SECTION 269SS OF THE I.T. ACT, 1961. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE HAS FILED ITS REPLY VIDE LETTER DATED 30.08.2015 AND SUBMITTED THAT THERE IS NO CONTRAVENTION OF SECTION 296SS, AS IT HAS ACCEPTED LOANS BY WAY OF VIMAL ENTERPRISES ITA NO.6930/MUM./2016 3 BOOK ADJUSTMENT, BY PASSING NECESSARY JOURNAL ENTRIES IN THE B OOKS ACCOUNTS FOR TRANSFER OF EXISTING UNSECURED LOANS BORROWED BY ITS SISTER CONCERN M/S. ATLANTA INTERNATIONAL. THE ASSESSEE FURTHER SUBMITTED THAT THE REASON FOR TRANSFER OF LOANS APPEARING IN THE BOOKS OF M/S. ATLANTA INTERNATIONAL IS THAT , ITS BANKERS WERE INSISTING FOR ADDITIONAL CAPITAL CONTRIBUTION FROM THE PARTNERS/THEIR FRIENDS AND RELATIVES FOR THE PURPOSE OF AVAILING FINANCIAL FACILITIES, THEREFORE IT HAS TRANSFERRED UNSECURED LOANS TAKEN IN THE NAME OF ITS SISTER CONCERNS TO ITS BOOKS OF ACCOUN TS ON THE BONAFIDE BELIEF THAT ACCEPTING LOAN BY BOOK ADJUSTMENT, THROUGH JOURNAL ENTRIES WOULD NOT ATTRACT THE PROVISION OF SECTION 269SS OF THE I.T. ACT, 1961. 5 . THE A.O AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND ALSO ANALYSES OF THE PROVISION OF SECTION 269SS AND 271D OF THE ACT, OBSERVED THAT THE PROVISION OF SECTION 271D DOESNT MENTIONED ANYTHING ABOUT THE LOANS BEING TAKEN IN CASH. THE PROVISION IS ON ACCEPTING ANY LOAN OR DEPOSIT OTHERWISE THEN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT (OR USE OF ELECTRONIC CLEARANCE SYSTEM THROUGH THE BANK DRAFT). FROM THE READING OF PROVISION OF SECTION 271D , IT IS CLEAR THAT IF A LOAN OR DEPOSIT IS ACCEPTED OTHER WISE THEN BY WAY OF ACCOUNT PAYEE CHEQUE OR BANK DRAFT , THEN IT IS IN CONTRAVENTION OF PROVISION S OF SECTION 269SS , WHICH ATTRACTS PENALTY U/S. 271D OF THE ACT. THE A.O FURTHER OBSERVED THAT THOUGH VIMAL ENTERPRISES ITA NO.6930/MUM./2016 4 SECTION 273 B EXCLUDES CERTAIN FAILURE S REFERRED TO IN THE PROVISION OF SECTION 271D , TO GET IMMUNITY FROM PENALTY , THE ONUS IS ON THE ASSESSEE TO PROVE THAT THERE WAS A REAS ONABLE CAUSE FOR THE SAID FAILURE . T HE ASSESSEE , NEITH ER BEFORE THE A.O NOR DURING PENALTY PROCEEDINGS FAILED TO PROVE REASONS FOR NOT ACCEPT ING THE LOANS BY WAY OF MODES REFERRED TO IN SECTION 269SS OF THE ACT. THEREFORE , OPINED THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF SECTION 269SS , WHICH ATTRACTS PENALTY U/S. 271D OF THE ACT. ACCORDINGLY , LEVIED PENALTY OF RS.21 ,51,464/ - , EQUAL TO THE AMOUNT OF LOAN/DEPOSIT TAKEN/ACCEPTED. 6 . AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) , THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT THERE IS NO V IOLATION OF PROVISION S OF SECTION 269SS OF THE ACT, AS IT HAS ACCEPTED LOANS BY WAY OF BOOK ADJUSTMENT BY PASSING NECESSARY JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS FOR THE EXISTING LOANS APPE ARED IN THE BOOKS OF ACCOUNTS OF ITS SISTER CONCERNS. THE REASON S FOR TRANSFERRING EXISTING LOANS FROM THE BOOKS OF ITS SISTER CONCERNS IS THAT ITS BANKERS ARE INSTATING FOR ADDITIONAL CAPITAL CONTRIBUTION FROM THE PARTNER S OR THEIR FRIENDS & ASSOCIATES FOR THE PURPOSE OF EXTENDING CREDIT FACILITIES. THE ASSESSEE UNDER BONAFIDE BELIEF , THAT ACCEPTANCE OF LOANS BY WAY OF BOOK VIMAL ENTERPRISES ITA NO.6930/MUM./2016 5 ADJUSTMENT , WOULD NOT ATTRACT PROVISION OF SECTION 269SS, HAS TRANSFERRED EXISTING LOANS FROM ITS SISTER CONCERNS TO ITS BOOKS ACCOUNTS, THEREFORE IT CANNOT BE CONSIDERED AS ACCEPTANCE OF LOANS OTHE R THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR BANK DRAFTS . IN SUPPORT OF ITS ARGUMENT S, RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT , IN THE CASE CIT VS . TRIUMPH INTERNATIONAL FINANCE (INDIA) LTD. (2012) 245 ITR 270 (BOM) . 7 . THE CIT(A) , AFTER CONSIDER ING THE RELEVANT SUBMISSIONS OF THE ASSESSEE , HELD THAT ACCEPTING LOANS BY WAY OF BOOK ADJUSTMENT THROUGH JOURNAL ENTRIES IS VIOLATION OF SECTION 269SS AND THE PENALTY U/S. 271D OF THE ACT, WAS CORRECTLY IMPOSED. WITH THESE OBSERVATIONS , UPHELD PENALTY L EVIED BY THE A.O AND DISMISSED APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE CIT(A) ORDER , THE ASSESSEE IS IN APPEAL BEFORE US. 8 . THE LD. A.R FOR THE ASSESSEE , SUBMITTED THAT THE LD. CIT(A) WITHOUT GIVING PROPER/SUFFICIENT OPPORTUNITY AND DISREGARDING THE BONAFIDE AND GENUINE EXPLANATION OF THE ASSESSEE ERRED IN HOLDING THAT ACCEPTING LOAN BY WAY OF BOOK TRANSACTION THROUGH JOURNAL ENTRY IS A VIOLATION OF SECTIO N 269SS , WHICH ATTRACTS PENALTY U/S.271D OF THE ACT. THE A.R FURTHER SUBMITTED THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE ALLEGED TRANSACTION WAS NOT VIMAL ENTERPRISES ITA NO.6930/MUM./2016 6 WITHIN THE PURVIEW OF THE PROVISION OF SECTION 269SS OF THE ACT. IT IS FURTHER ARGUED THE ASSESS EE HAS ACCEPTED LOANS BY BOOK ADJUSTMENT AND TRANSFERRED EXISTING LOANS APPEARED IN THE BOOKS ACCOUNTS OF ITS SISTER CONCERN M/S. ATLANTA INTERNATIONAL ON THE BONAFIDE BELIEF THAT ACCEPTING LOANS BY BOOK ADJUSTMENT WOULD NOT ATTRACT PENALTY PROVISIONS OF S ECTION 271D. IT IS FURTHER SUBMITTED THAT IT HAS ACCEPTED LOANS, AS ITS BANKERS INSISTING FOR ADDITIONAL CONTRIBUTION FROM THE PARTNERS AND THEIR FRIENDS FOR THE PURPOSE OF EXTENDING CREDIT FACILITIES. THE A.R FURTHER SUBMITTED THAT THE A.O ERRED IN LEVYI N G PENALTY WITHOUT THEIR BEING A N Y FINDING IN THE ASSESSMENT ORDER OR THE PENALTY ORDE R THAT ACCEPTANCE OF LOAN WAS NOT BONAFIDE TRANSACTION AND THAT THE ENTRIES WERE MADE WITH A VIEW TO EVADE TA X. THE ASSESSEE HAS ACCEPTED LOANS UNDER BONAFIDE BELIEF THAT THESE TRANSACTIONS ARE NOT HIT BY THE PROVISION S OF SECTION 269SS AND ALSO FACT THAT THERE IS REASONABLE CAUSE FOR NOT ACCEPTING THE LOANS BY WAY OF CHEQUES OR BANK DRAFTS AND THEREFORE , THE AO WAS COMPLETELY ERRED IN LEVYING PENALTY , BRUSHING ASIDE EXPLA NATION FILED BY THE ASSESSEE. IN SUPPORT OF HIS ARGUMENT S, RELIED UPON THE FOLLOWING JUDGMENTS. I) ITO VS. RAM ALINGESWARA COMMERCIAL C OMPLEX AND ANR . (2016) 47 CCH 00 52 VISHAKHAPATNAM TRIBUNAL II) ACIT VS. LALA MURARI LAL AND SONS (2004) 2 SIT 543 (L UCK) III) CIT VS. NATVARLAL PURSHOTTAMDAS PAREKH (203 ITR 5) VIMAL ENTERPRISES ITA NO.6930/MUM./2016 7 IV) CIT VS. NOIDA TOLL BRIDGE CO. LIMITED (2562 ITR 260) V) BOMBAY CONDUCTORS & ELECTRICALS LIMITED VS. OCIT 56 TT J(AHD) 580 VI) CIT VS. GOVIND KUMAR 119 TAXMAN 110 (RAJ) VII) SUNFLOWER BU ILDERS (P) LTD. VS. OCIT 61 ITO 227 (PUNE) VIII) ITO VS. ARNAR NATH SHIVRAJ (HUF) ;1 SOT 346 (AGRA) IX) ACIT VS. GUJARAT AMBUJA PROTEINS LTD. 3 SOT 811 (AHD.) 9 . O N THE OTHER HAND , THE LD. DR STRONGLY SUPPORTED ORDER OF THE CIT(A). THE D.R FURTHER SUBMITTED THAT THE PROVISION S OF SECTION 271D WOULD APPLY, IF ASSESSEE ACCEPTS LOANS OR DEPOSITS IN CONTRAVENTION OF THE PROVISION OF SECTION 269SS OF THE ACT. IN THIS CASE , THE ASSESSEE H AS ACCEPTED UNSECURED LOANS OTHERWISE THEN BY WAY OF ACCOUNT PAYEE CHEQUE OR BANK DRAFT, IN CONTRAVENTION OF SECTION 269SS OF THE ACT, AND HENCE , THE A.O WAS RIGHTLY INVOKED THE PROVISION OF SECTION 271D OF THE ACT. 10 . WE HAVE HEARD BOTH THE PARTIES, PERU SED THE MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A . O LEVIED PENALTY U/S.271D OF T HE ACT, FOR CONTRAVENTION OF PROVISION OF SECTION 269SS OF THE ACT. ACCORDING TO THE A . O , THE ASSESSEE ACCEPTED UNSECURED LOANS OTHERWISE THEN BY WAY OF ACCOUNT PAYEE CHEQUE OR BANK DRAFTS IN CONTRAVENTION OF PROV ISIONS OF SECTION 269SS OF THE ACT. I T IS THE CONTENTION OF THE ASSESSEE THAT THERE IS NO CONTRAVENTION OF PROVISION S OF SECTION 269SS OF THE ACT , VIMAL ENTERPRISES ITA NO.6930/MUM./2016 8 AS IT HAS ACCEPTED LOANS BY WAY OF BOOK ADJUSTMENTS THROUGH JOURNAL ENTRIES TO TRANSFER EXISTING LOANS APPEARED IN THE BOOKS OF ITS SISTER CONCERNS. T HE ASSESSEE FURTHER CONTENDED THAT THE REASONS FOR ACCEPTING LOANS BY WAY OF BOOK ADJUSTMENT IS THAT ITS BANKERS INSISTING FOR ADD ITIONAL CONTRIBUTION FROM ITS PARTNERS OR FR OM THEIR FRIENDS AND RELATIVES F OR THE PURPOSE OF EXTEN DING CREDIT FACILITY. THE ASSESSEE HAS ACCEPTED LOANS UNDER BONAFIDE BELIEF THAT ACCEPTANCE OF LOANS BY BOOK ADJUSTMENTS WOULD NOT ATTRACT PROVISION OF S ECTI ON 269SS AND ALSO THERE WAS A BU SINESS EXIGENCY IN ACCEPTING LOANS WHICH COME UNDER REASONABLE CAUSE AS DEFINED U/S. 273B OF THE ACT. 11 . THE PROVISION OF 271D OF THE ACT , PROVIDES FOR LEVY OF PENALTY , FOR CONTRAVENTION OF SECTION 269SS OF TH E ACT. SECTION 269SS OF THE ACT , PROHIBIT S ACCEPTANCE OF LOANS OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. AS PER THE PROVISION OF SECTION 271D, IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOSITS IN EXCESS OF SPECIFIED SOME IN CONTRAVENTION OF THE PROVISIO N OF SECTION 269SS, HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY, A SUM EQUAL AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. T HEREFORE , AS PER THE PROVISION OF SECTION 271D R.W.S. 269SS OF THE ACT, IF A PERSON ACCEPTS LOANS IN EXCESS OF SPECIFIED LIMIT OTHERWISE THEN BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, THEN SUCH VIMAL ENTERPRISES ITA NO.6930/MUM./2016 9 PERSON IS LIABLE FOR PENALTY OF EQUAL AMOUNT OF LOAN OR DEPOSIT SO TAKEN OR ACCEPTED U/S. 271D OF THE ACT. I N THIS CASE, NO DOUBT THE ASSESSEE HAS ACCEPTED LOANS IN EXCESS OF SPECIFIED LIMITS, OTHERWISE THEN BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. THEREFORE, WE ARE OF THE CONSIDER ED VIEW THAT THE ASSESSEE HAS ACCEPTED LOANS IN CONTRAVENTION OF THE PROVISION OF SECTION 269SS OF THE ACT. 12 . HAVING SAID, LET US EXAMINE WHETHER ANY REASON ABLE CAUSE FOR NOT ACCEPTING LOANS BY WAY OF ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. THE ASSESSEE CLAI MS THAT IT HAS ACCEPTED LOANS BY BOOK ADJUSTMENT BY PASSING JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS FOR TRANSFER OF EXISTING LOAN S APPEARED IN THE BOOKS OF ACCOUNTS OF ITS SISTER CONCERNS. THE ASSESSEE FURTHER CLAIMS THAT THESE LOANS WERE ACCEPTED BY ITS SISTER CONCERN, T HROUGH PROPER BANKING CHANNEL. I T WAS FURTHER CONTENDED THAT IT HAS TRANSFERRED EXISTING LOANS OF ITS SISTER CONCERNS, BECAUSE ITS BANKERS WERE INSISTING FOR BRINGING IN MORE CAPITAL CONTRIBUTION IN THE FORM OF OWN CAPITAL OR LOANS AND ADV ANCES FROM PARTNERS OR THEIR FRIENDS AND R ELATIVE FOR THE PURPOSE EXTENDING CREDIT FACILITI ES. THE ASSESSEE CLAIMS THAT THESE LOAN S ARE GENUINE TRANSACTION WHICH WERE ACCEPTED BY WAY OF CHEQUES BY ITS SISTER CONCERN. THE ASSESSEE FURTHER CLAIMS THAT IT WAS UNDER THE BONAFIDE BELIEF THAT, ACCEPTANCE OF LOANS OR DEPOSIT BY BOOK VIMAL ENTERPRISES ITA NO.6930/MUM./2016 10 ADJUSTMENT WOULD NOT ATTRACT THE PROVISION OF SECTION S 269SS OF THE ACT. THERE IS A REASONABLE CAUSE, FOR FAILURE TO COMPLY WITH THE PROVISION OF SECTION 269SS OF THE ACT, THEREFORE PE NALTY CANNOT BE LEVIED U/S. 271D OF THE ACT. 13 . HAVING HEARD BOTH THE SIDES AND CONSIDER ED MATERIAL ON RECORD , WE FIND THAT THE ASSESSEE HAS ACCEPTED LOANS BY WAY OF JOURNAL ENTRIES. THE ASSESSEE HAS TRANSFERRED LOANS STANDING IN THE NAME OF ITS SISTER CO NCERN TO ITS BOOKS OF ACCOUNTS FOR THE PURPOSE OF ENHANCING ITS OWN FUNDS AS PER THE REQUIREMENT OF ITS BANKERS FOR THE PURPOSE AVAILING CREDIT FACILITIES. THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING DETAILS OF LOAN LEDGERS OF PARTIES APPEARED IN THE BO OKS OF ACCOUNT OF M/S. ATLANTA INTERNATIONAL AND ALS O LEDGER ACCOUNTS OF LOAN CREDITORS IN THE BOOKS OF ACCOUNTS . ON PERUSAL OF DETAILS FIELD BY THE ASSESSEE , WE FIND THAT THESE LOANS HAVE BEEN TRANSFERRED BY BOOK ADJU STMENT BY WAY JOURNAL ENTRIES. W E FURT HER NOTICED THAT THE ASSESSEE HAS PAID INTERE ST ON THESE LOANS AFTER DUL Y DEDUCTING APPLICABLE TDS. WE FURTHER OBSERVED THAT, ITS NOT A CASE OF A.O THAT THESE LOANS ARE NOT GENUINE TRANSACTIONS. THE AO NEITHER DOUBTED GENUINENESS OF THE LOAN NOR THESE ARE NOT A BONAFIDE TRANSACTION OR THAT THE ENTRI ES WERE MADE WITH A VIEW TO EVADE TAX. IN THE ABSENCE OF ANY FINDING AS TO GENUINENESS OF THE TRANSACTIONS OR THE LOANS WERE ACCEPTED TO EVADE TAXES, PENALTY CANNOT BE LEVIED VIMAL ENTERPRISES ITA NO.6930/MUM./2016 11 U/S. 271D OF THE ACT, MERELY THERE I S VIOLATION OF SECTION 269SS OF THE ACT. NO DOUBT, THE ASSESSEE HAS ACCEPTED LOANS IN EXCESS OF SPECIFIED AMOUNT , OTHERWISE THEN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT, WHICH VIOLATES THE PROVISION OF SECTION 269SS OF THE ACT. THE REASONS G IVEN BY THE ASSESSEE FOR ACCEPTING LOANS OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR BANK DRAFT IN CONTRAVENTION OF SECTION 269SS OF THE ACT, APPEARS TO BE REASONABLE AND COMES UNDER REASONABLE CAUSE AS PROVIDED U/S.273B OF THE ACT. THE PROVISION OF SECTI ON 273B PROVIDES FOR IMMUNITY FROM LEVY OF PENALTY, IF SUCH PERSON PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE REFERRED TO IN THE SAID PROVISION OF THE ACT. IN THIS CASE , ON PERUSAL FACTS AVAILABLE ON RECORDS , WE FIND THAT THE REASONS GIVEN BY TH E ASSESSEE FOR ACCEPTING LOANS BY WAY OF BOOK OF ADJUSTMENT COMES UNDER THE REASONABLE CAUSE AS PROVIDED U/S. 273B AND HENCE , PENALTY CANNOT BE LEVIED U/S. 271D OF THE ACT, FOR CONTRAVENTION OF PROVISION OF SECTION 269SS OF THE ACT. 14 . COMING TO THE CASE LAW S RELIED UPON BY THE ASSESSEE , AS WELL AS THE CIT(A) . T HE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE HIGH COURT OF BOMBAY , IN THE CASE OF CIT V S TRIUMPH INTERNATIONAL FINANCE(INDIA) LTD . (2012) 245 ITR 270. THE LD. CIT (A) ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE MENTIONED ABOVE TO CONFIRM THE PENALTY LEVIED BY THE A.O. WE HAVE VIMAL ENTERPRISES ITA NO.6930/MUM./2016 12 GONE THROUGH THE CASE LAW RELIED UPON BY BOTH THE PARTIES. ON PERUSAL OF THE DECISION OF HONBLE HIGH COURT , WE FIND THAT THEIR LORDSHIP S IN THE FIRST PHASE , HELD TH AT TAKING OF LOANS/ REPAYING LOANS THROUGH J OURNAL ENTRIES IS A VIOLATION OF THE PROVISION OF SECTION 269SS OF THE ACT. HOWEVER , IN THE SECOND PHASE , THE HONBLE COURT OBSERVED THAT IN THE ABSENCE OF ANY FINDING IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER TO THE EFFECT THAT THE REPAYMENT OF LOAN OR DEPOSIT WAS NOT A BONAFIDE TRANSACTION AND WAS MADE WITH A VIEW TO EVADE TAX, THE CAUSE SHOWN BY THE ASSESSEE WAS A REASONABLE CAUSE AND IN VIEW OF SECTION 273B OF THE ACT, NO PENAL TY U/S. 271E COULD BE IMPOSED FOR CONTRAVENTION OF PROVISION S OF SECTION 26 9T. THE RELEVANT PORTION O F THE ORDER IS EXTRACTED BELOW: HELD, (I) THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT REPAYMENT OF LOAN OR DEPOSIT THROUGH JOURNAL ENTRIES DID NOT VIOLATE THE PROVISIONS OF SECTION 269T OF THE ACT. II) THAT IT WOULD HAVE BEEN AN EMPTY FORMALITY TO REPAY THE LOAN OR DEPOSIT AMOUNT BY ACCOUNT - PAYEE CHEQUE OR DRAFT AND RECEIVE BACK ALMOST THE SAME AMOUNT TOWARDS THE SALE PRICE OF THE SHARES. NEITHER THE GENUINENESS OF THE RECEIPT OF LOAN OR DEPOSIT NOR THE TRANSACTION OF REPAYMENT OF LOAN BY WAY OF ADJUSTMENT THROUGH BOOK ENTRIES CARRIED OUT IN THE ORDINARY COURSE OF BUSINESS HAD BEEN DOUBTED IN THE REGULAR ASSESSMENT. THERE WAS VIMAL ENTERPRISES ITA NO.6930/MUM./2016 13 NOTHIN G ON RECORD TO SUGGEST THAT THE AMOUNTS ADVANCED BY I TO THE ASSESSEE REPRESENTED THE UNACCOUNTED MONEY OF I OR THE ASSESSEE. THE FACT THAT THE ASSESSEE - COMPANY BELONGED TO A GROUP INVOLVED IN THE SECURITIES SCAM COULD NOT BE A GROUND FOR SUSTAINING PENALT Y IMPOSED UNDER SECTION 271E OF THE ACT IF REASONABLE CAUSE WAS SHOWN BY THE ASSESSEE FOR FAILING TO COMPLY WITH THE PROVISION OF SECTION 269T. SETTLING CLAIMS BY MAKING JOURNALS ENTRIES IN THE RESPECTIVE BOOKS IS ALSO ONE OF THE RECOGNIZED MODES OF REPAYI NG LOAN OR DEPOSITS. THEREFORE, ON THE FACTS, IN THE ABSENCE OF ANY FINDING RECORDED IN THE ASSESSMENT ORDER OF IN THE PENALTY ORDER TO THE EFFECT THAT THE REPAYMENT OF LOAN OR DEPOSIT WAS NOT A BONA FIDE TRANSACTION AND WAS MADE WITH A VIEW TO EVADE TAX, THE CAUSE SHOWN BY THE ASSESSEE WAS REASONABLE CAUSE AND IN VIEW OF THE SECTION 273B OF THE ACT, NO PENALTY UNDER SECTION 271E COULD BE IMPOSED FOR CONTRAVENING THE PROVISIONS OF SECTION 269T OF THE ACT. 15 . THE LD. CIT(A) HAS CONSIDERED PART OF THE JUDGMENT AND IGNORED OTHER PART OF THE JUDGMENT TO CONFIRM PENALTY LEVIED U/S. 271D OF THE ACT. NO DOUBT, WE ARE OF THE CONSIDER ED VIEW THAT PENALTY U/S. 271D IS LEVIABLE FOR ACCEPTING OF LOAN OR DEPOSIT IN CONTRAV ENTION OF SECTION 269SS OF THE ACT. HOWEVER, THE GENUINE TRANSACTIONS AND BONAFIDE EXPLANATIONS CANNOT TAKE AW AY THE RIGHT OF THE ASSESSEE OF IMMUNITY PROVIDED U/S. 271D O F THE ACT. THEREFORE, WE ARE OF THE CONSIDER ED VIEW THAT THE EXPLANATIONS VIMAL ENTERPRISES ITA NO.6930/MUM./2016 14 OFFERED BY THE ASSESSEE APPEARS TO BE COMING WITHIN THE PURVIEW OF THE PROVISIONS OF SECTION 273B OF THE ACT , AND HENCE , PE NALTY CANNOT BE LEVIED U/S. 271D, FOR CONTRAVENTION OF PROVISION S OF SECTION 269SS OF THE ACT. THEREFORE, WE DIRECT THE AO TO DELETE PENALTY LEV IED U/S 271 D OF THE ACT. 16 . IN THE RESULT , THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .0 6 .2017 SD/ - SD/ - ( D.T. GARASIA ) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 .06 .2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI VIMAL ENTERPRISES ITA NO.6930/MUM./2016 15