DCIT CEN CIR 7(3), MUMBAI V. SIMTOOS P.LTD, MUMBAI

ITA 7123/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1629 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Question of law; Reasonable cause; Set aside
• Section: 273B; 143(3); 271D; 271E; 271B; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.7123/M/2016 ASSESSMENT YEAR: 2011-12 DCIT, CENT. CIR.-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SIMTOOLS PVT. LTD., 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI 400 018 PAN: AAECS 1757M (APPELLANT) (R ESPONDENT) CO NO.207/M/2018 (ITA NO.7123/M/2016) ASSESSMENT YEAR: 2011-12 M/S. SIMTOOLS PVT. LTD., 412, 17G. VARDHMAN CHAMBER, CAWASJEE PATEL STREET, FORT, MUMBAI - 400 001 PAN: AAECS 1757M VS. DCIT, CENT. CIR.-7(3), 6 TH FLOOR, ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) ITA NOS.7130 & 7131/M/2016 ASSESSMENT YEARS: 2009-10 & 2008-09 DCIT, CENT. CIR.-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SIDDHANATH RESIDENTIAL PARADISE P. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI 400 018 PAN: AAECP 1486A (APPELLANT) (R ESPONDENT) ITA NO.7132/M/2016 ASSESSMENT YEAR: 2009-10 DCIT, CENT. CIR.-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SIDDHANATH RESIDENTIAL PARADISE P. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 2 WORLI, MUMBAI 400 018 PAN: AAECP 1486A (APPELLANT) (R ESPONDENT) ITA NO.7133/M/2016 ASSESSMENT YEAR: 2008-09 DCIT, CENT. CIR.-7(3), ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SIDDHANATH RESIDENTIAL PARADISE P. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI 400 018 PAN: AAECP 1486A (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI MANOJ KUMAR SINGH, D.R. SHRI S. ABHIRAMA KAARTIKEYAN, D.R. DATE OF HEARING : 12.07.2019 DATE OF PRONOUNCEMENT : 13.09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS AND CROSS OBJECTIONS HAVE BEEN PREFERRED AGAINST THE ORDERS DATED 15.09.2016 OF TH E COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2008-09, 2 009-10 & 2011-12. 2. SINCE THE FACTS AND ISSUES INVOLVED THEREIN ARE IDENTICAL IN NATURE, HENCE THE SAME ARE HEARD TOGETHER AND ARE B EING DISPOSED OF BY THIS COMMON ORDER. ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 3 3. FOR THE SAKE OF CONVENIENCE, THE GROUNDS FROM IT A NO.7123/M/2016 A.Y. 2011-12 OF REVENUES APPEAL ARE TAKEN WHICH ARE REPRODUCED AS UNDER: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS. 1,73,56,40,689 /- LEVIED U/$.271E OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT 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 P ROVISIONS OF SECTION 269T OF THE INCOME TAX ACT, 1961, OUGHT TO HAVE UPHELD THE LEVY OF PENALTY U/S.271E AS THE ASSESSEE FAILED TO ESTABLISH THE COMPELLING REASONS OR GENUINE BUSINESS CONSTRAINTS OR REASONABLE CAUSE FOR HAVING TRANSACTIONS IN RESP ECT OF EACH AND EVERY JOURNAL ENTRY WITH ITS GROUP CONCERNS. 4. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF PENALTY OF RS.173,56,50,689/- AS LEVIED BY THE A O UNDER SECTION 271E OF THE ACT ON THE GROUND THAT ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 269T OF THE A CT. 5. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE HAS VIOLA TED THE PROVISIONS OF SECTION 269T OF THE ACT. THE AO AFTE R COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28.03.2013 MADE A REFERENCE TO THE ADDITIONAL CIT T HROUGH COMMUNICATION DATED 26.06.2013 INTIMATING THAT ASSE SSEE HAS REPAID LOANS AMOUNTING TO RS.173,56,40,689/- TO VAR IOUS SISTER CONCERNS THROUGH JOURNAL ENTRIES AND HENCE REPAID T HE LOANS BY A MODE WHICH IS OTHERWISE THAN THROUGH ACCOUNT PAYE E CHEQUE/DRAFT AND HAS COMMITTED A VIOLATION OF PROVI SIONS OF SECTION 269T OF THE ACT. THE ADDITIONAL CIT ISSUED NOTICE TO THE ASSESSEE ON 27.03.2014 TO SHOW CAUSE AS TO WHY THE PENALTY UNDER SECTION 271E OF THE ACT SHOULD NOT BE LEVIED FOR VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT. THE ASSE SSEE SUBMITTED ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 4 BEFORE THE ADDITIONAL CIT THAT PENALTY IS NOT LEVIA BLE AS THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SECTION 269T OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE ADDITIONAL CIT THAT PROVISIONS OF SECTION 271E OF THE ACT ARE NOT APPLI CABLE TO THE TRANSACTIONS BETWEEN THE SISTER CONCERNS AS NO TAX EVASION ON ACCOUNT OF PASSING OF SUCH JOURNAL ENTRIES HAS TAKE N PLACE AND THERE EXISTED A REASONABLE CAUSE AS ENVISAGED UNDE R SECTION 273B OF THE ACT. THE ADDITIONAL CIT BRUSHED ASIDE THE CONTENTIONS OF THE ASSESSEE AND HELD THAT THE ASSES SEE HAS VIOLATED THE PROVISIONS OF SECTION 269T BY REPAYING LOANS BY WAY OF JOURNAL ENTRIES AND THUS LEVIED PENALTY OF RS.1 73,56,50,689/- UNDER SECTION 271E VIDE ORDER DATED 10.09.2014. TH E LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 5.4.4 RESPECTFULLY, FOLLOWING THE ABOVE DECISION, THE CONTENTION OF THE APPELLANT THAT THE JOURNAL ENTRIES ARE NOT COVERED WITHIN THE PROVISIONS OF SECTION 269T IS REJECTED. HOWEVER, THE TRANSACTIONS COVERED BY THE JOURNAL ENTRIES ARE MADE IN REGULAR COURSE OF BUSINESS WITH THE SISTER CONCERNS BY THE APPELLANT. EVEN IN THE PRESENT CASE, THERE IS NO ADVERSE FINDING OF THE AO EITHER IN THE PENALTY ORDER U/S 271E OF THE ACT OR IN THE REMAND REPORT DATED 09.08 .2016 THAT ANY OF THE IMPUGNED TRANSACTIONS IS AIMED AT NON COMMERCIAL REASONS AND OUTSIDE THE NORMAL BUSINESS OPERATION. THEREFORE, THOUGH THE APPELLANT HAS VIOL ATED THE PROVISIONS OF SECTION 269T OF THE ACT IN RESPECT OF JOURNAL ENTRIES, IT H AS SHOWN REASONABLE CAUSE AND THEREFORE THE PENALTY UNDER SECTION 271E IS NOT LEV IABLE. 6. THE LD. A.R., AT THE OUTSET SUBMITTED THAT THE I SSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE ASSESSEES OWN CASE IN ITA NO.6608/M/2012 A.Y. 2011 -12 VIDE ORDER DATED 09.07.2018. THE LD. A.R., THEREFORE, S UBMITTED THAT IN VIEW OF THE SAID ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL THE APPEAL OF THE REVENUE MAY KINDLY BE DISMISSED. FURTHER, THE LD. A.R. ALSO SUBMITTED THAT THE ISSUE IS ALSO SQUARELY ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 5 COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASES OF SISTER CONCERNS/RELATED CONCERNS IN ITA NO .171 OF 2015 CIT VS. AJITNATH HI-TECH BUILDERS PVT. LTD., IN I TA NO.172 OF 2015 - CIT VS. LODHA PROPERTIES DEVELOPMENT PVT. L TD., IN ITA NO.202 OF 2015 CIT VS. LODHA CROWN BUILDMART PVT. LTD., IN ITA NO.213 OF 2015 CIT VS. LODHA BUILDERS PVT. LT D., IN ITA NO.218 OF 2015 CIT VS. ADINATH BUILDERS PVT. LTD. AND IN ITA NO.219 OF 2015 CIT VS. ASHTHAVINAYAK REAL ESTATE PVT. LTD. IN WHICH IDENTICAL ISSUE INVOLVED I.E. THE IMPOSITION OF PENALTY UNDER SECTION 271D FOR VIOLATION OF PROVISION OF SE CTION 269SS OF THE ACT WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE LD. A.R. ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT THE SLP FIL ED BY THE REVENUE WHICH ALSO STOOD DISMISSED BY THE HONBLE SUPREME COURT IN SLP(CIVIL) 01 DIARY NO.42791 OF 2018 ARISI NG OUT OF ORDER OF THE HONBLE BOMBAY HIGH COURT IN 172 OF 20 15 DATED 6.2.2018. 7. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AO HEAVILY BY SUBMITTING THAT THE ASSESSEE HAS VIOLATE D THE PROVISIONS OF SECTION 269SS OF THE ACT AS THE VARIO US LOANS WERE REPAID THROUGH JOURNAL ENTRIES. THOUGH THESE WERE MADE BETWEEN THE SISTER CONCERNS BUT WERE NOT COVERED UN DER THE PROVISIONS OF SECTION 269SS OF THE ACT AS ONLY MOD E OF PAYMENT PROVIDED THEREIN IS EITHER BY WAY OF ACCOUNT PAYEE CHEQUE OR DRAFT. THE LD. A.R., THEREFORE, PRAYED THAT THE OR DER OF LD. CIT(A) MAY BE REVERSED AND ORDER OF AO MAY BE RESTORED. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS DONE THE REPAYMENT OF LOANS BY WAY OF JOURNAL ENTRIES WITHIN THE GROUP ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 6 CONCERNS. AS PER THE ASSESSEE THE SAID ENTRIES WER E MADE OUT OF BUSINESS CONSIDERATIONS AND IN ORDER TO CARRY ON TH E BUSINESS OF THE ASSESSEE EFFICIENTLY AND MORE EFFICACIOUSLY. T HIS IS ALSO UNDISPUTED THAT THERE WAS NO TAX EVASION BY WAY OF REPAYMENT OF THESE LOANS BY JOURNAL ENTRIES. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.6608/M/20 16 A.Y. 2011-12 WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUN AL HAS HELD AS UNDER: 5. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) HAS WRONGLY DELE TED THE PENALTY, THEREFORE, THE FINDING OF THE CIT(A) IS WRONG AND AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. HOWEVER ON THE OTHER HAND, THE LD. REPRESENTATIVE O F THE ASSESSEE HAS REFUTED THE SAID CONTENTION. AT THE OUTSET, THE LEARNED AR OF T HE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY REVENUE IS COVERED IN F AVOUR OF ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN AS SESSEES GROUP CASES IN CIT VS AJINATHHITECH BUILDERS PRIVATE LIMITED& OTHERS IN I TAS NO. 171, 172, 202, 2.3, 218 AND 219 OF 2015 DATED 06TH FEBRUARY 2018 AND FURTHE R BY THE DECISION OF CO- ORDINATE BENCH OF TRIBUNAL IN CIT VERSUS AASTHAVINA YAK ESTATE COMPANY LTD ( ITA NO. 602/M/ 2017 DATED 31 MAY 2018 AND CIT VS NATION AL STANDARD INDIA LTD ( ITA NO.6607/M/2016 AND 6609/M/2016 DATED 6TH JUNE 2018, THEREFORE, THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO INTERFERE WITH AT THIS APPELLATE STAGE. THE LEARNED AR OF THE ASSESSE E FURTHER SUBMITS THAT THE JOURNAL ENTRIES WERE MADE PRIOR TO 12 JUNE 2012 AS THE PRES ENT APPEAL PERTAINS TO ASSESSMENT YEAR 2012-13, THEREFORE, THE RATIO OF DE CISION IN CASE TITLE AS CIT VS TRUMP INTERNATIONAL (I) LTD DATED 12 JUNE 2012 (345 ITR 270)/ [22 TAXMANN.COM 138(BOM)] IS NOT APPLICABLE. THE ACIT LEVIED THE PE NALTY UNDER SECTION 271D ON THE OBSERVATION THAT THE ASSESSEE ACCEPTED LOAN/ DEPOSI TS FROM SISTER CONCERN THROUGH JOURNAL ENTRIES I.E. OTHERWISE THEN ACCOUNT PAYEE C HEQUE/DRAFT AND THEREBY VIOLATED THE PROVISIONS OF SECTION 269SS. THE ASSES SEE HAS TAKEN JOURNAL ENTRIES OF RS. 10,99,595/-FROM DHARAMNATH BUILDTECH & FARM PVT LTD. THE ASSESSING OFFICER FURTHER HELD THAT THE ASSESSEE HAS NOT MADE OUT ANY CASE OF REASONABLE CAUSE UNDER SECTION 273B BY MAKING THE REFERENCE THE DECI SION OF HONORABLE BOMBAY HIGH COURT IN TRUMP INTERNATIONAL FINANCE (I) LTD ( SUPRA). BEFORE COMMISSIONER (APPEALS) THE ASSESSEE URGED THAT THE JOURNAL ENTRI ES HAVE BEEN MADE WITH THE GROUP CONCERN UNDER THE BONAFIDE BELIEF THAT SUCH T RANSACTION WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 269 SS IN VIEW OF THE VAR IOUS JUDICIAL DECISION ON THIS ISSUE, INCLUDING THE DECISION OF DELHI HIGH COURT IN CASE OF NOIDA TOLL BRIDGE (262 ITR 260) AND SUCH LOAN BY WAY OF JOURNAL ENTRIES TRANSACTION WERE UNDERTAKEN FOR VARIOUS COMMERCIAL REASONS LIKE ASSIGNING OR RECEIVABLE FOR OPERATIONAL EFFICIENCY, PAYMENT ON THE GROUP CONCERN FOR SQUARING UP CONNECTION, FO R EASE OF CONSOLIDATION OF ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 7 ACCOUNTS, RECTIFICATION ENTRIES ETC. THE LEARNED CO MMISSIONER (APPEALS) AFTER REFERRING THE DECISION OF BOMBAY HIGH COURT IN TRUM P INTERNATIONAL (SUPRA) HELD THAT REPAYMENT OF LOAN /DEPOSIT BY WAY OF JOURNAL E NTRIES WAS IN CONTRAVENTION OF PROVISION OF SECTION 269SS HAS BEEN GIVEN AFTER THE CLOSE OF FINANCIAL YEAR 2011-12 RELEVANT TO ASSESSMENT YEAR 2012-13. THE LEARNED CO MMISSIONER (APPEALS) CONCLUDED THAT REASONS DISCLOSED BY ASSESSEE CONSTI TUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT; PARTICULARL Y IN LIGHT OF THE FACT THAT THERE IS NO FINDING THAT SUCH TRANSACTION WAS UNDERTAKEN TO EVADE THE TAX. THE LEARNED COMMISSIONER (APPEALS) WHILE CONSIDERING THE CONTEN TION OF ASSESSEE ALSO OBSERVED THAT THERE IS NO FINDING THAT TRANSACTION BY WAY OF JOURNAL ENTRIES WERE NOT MADE TO EVADE TAX. THE FINDING OF THE CIT(A) IS BASED UPON THE DECISION OF BOMBAY HIGH COURT IN THE ASSESSEES SISTER CONCERN CASE TITLE AS CIT VS AJINATHHITECH BUILDERS PRIVATE LIMITED& OTHERS IN I TAS NO. 171, 172, 202, 2.3, 218 AND 219 OF 2015 DATED 06TH FEBRUARY 2018. THE RATIO OF OTHER JUDGMENTS RELIED BY THE ASSESSEE IS ALSO APPLICABLE TO THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE. THE ASSESSEE RELIED UPON THE OTHER JUDGMENTS SUCH A S CIT VERSUS AASTHAVINAYAK ESTATE COMPANY LTD ( ITA NO. 602/M/ 2017 DATED 31 M AY 2018 AND CIT VS NATIONAL STANDARD INDIA LTD ( ITA NO. 6607/M/2016 AND 6609/M /2016 DATED 6TH JUNE 2018. FURTHER, IT ALSO CAME INTO NOTICED THAT THE CASE OF THE ASSESSEE PERTAINS TO THE A.Y. OF 2012-13, THEREFORE, THE RATIO OF DECISION IN CAS E TITLE AS CIT VS TRUMP INTERNATIONAL (I) LTD DATED 12 JUNE 2012 (345 ITR 2 70)/ [22 TAXMANN.COM 138(BOM)] IS NOT APPLICABLE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHI CH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. RESULTANTLY, THE APPE AL OF THE REVENUE IS HEREBY ORDERED TO BE DISMISSED. 6. CROSS-OBJECTION SINCE THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATE D WHILE DECIDING THE APPEAL OF THE REVENUE ABOVE, THEREFORE, IN THE SAID CIRCUMSTA NCES, ADJUDICATING THE CROSS- OBJECTION WOULD ONLY BE ACADEMIC IN NATURE. 9. FURTHER, HONBLE BOMBAY HIGH COURT IN ITA NO.172 OF 2015 & ORS. IN CASE OF CIT VS. LODHA PROPERTIES DEVELOPM ENT PVT. LTD. & OTHERS HAS DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE BY HOLDING THAT NO PENALTY CAN BE IMPOSED UNDER SECTIO N 271D OF THE ACT FOR HAVING ACCEPTED LOANS/DEPOSITS THROUGH JOURNAL ENTRIES AS THERE WAS A REASONABLE CAUSE. THE OPERA TIVE PART OF THE DECISION IS REPRODUCED AS UNDER: 3. REGARDING QUESTION NO.(I) :- (A) THE COMMON IMPUGNED ORDER OF THE TRIBUNAL ARISE S FROM THE ORDERS PASSED BY THE ADDL. COMMISSIONER OF INCOME TAX IMPOSING PENAL TY UPON THE RESPONDENTS UNDER SECTION 271D OF THE ACT FOR BREACH OF SECTION 269SS OF THE ACT. THIS PENALTY WAS IMPOSED INASMUCH AS DURING THE PREVIOUS YEAR RE LEVANT TO THE SUBJECT ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 8 ASSESSMENT YEAR, THE RESPONDENTS HAD ACCEPTED LOANS / DEPOSITS BY WAY OF PASSING JOURNAL ENTRIES IN ITS BOOKS OF ACCOUNTS, IN BREACH OF SECTION 269SS OF THE ACT. IN TERMS SECTION 269SS OF THE ACT PROHIBITS A PERSON F ROM TAKING / ACCEPTING ANY LOAN / DEPOSIT OR SPECIFIED SUM, OTHERWISE BY AN ACCOUNT P AYEE CHEQUE OR BY AN ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING S YSTEM OF A BANK IF THE AMOUNT INVOLVED IS IN EXCESS OF RS.20,000/-. THIS IMPOSITI ON OF PENALTY UNDER SECTION 271D OF THE ACT, WAS UPHELD BY A COMMON ORDER DATED 31 ST DECEMBER, 2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS). ON FURTHE R APPEAL, THE IMPUGNED ORDER DATED 27 TH JUNE, 2014 OF THE TRIBUNAL, INTER ALIA HELD THAT P ENALTY UNDER SECTION 271D OF THE ACT IS NOT IMPOSABLE IN VIEW OF SECTION 273B OF THE ACT. THIS FOR THE REASON THAT THERE WAS A REASONABLE CAUSE JOT THE FA ILURE TO COMPLY WITH SECTION 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 / LO AN BY WAY OF JOURNAL ENTRIES IS IN BREACH OF SECTION 269SS OF THE ACT AS THE DECISION OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. TRIUMPH INTERNATIONAL FINANCE (I) LTD. 345 ITR 270 IS BINDING UPON IT. HOWEVER, THE REVENUE'S GRIEVANCE IS WITH THE IM PUGNED ORDER DATED 27 TH JUNE, 2014 OF THE TRIBUNAL FURTHER HOLDING NO PENALTY UND ER 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 SECT ION 269SS OF THE ACT WAS ON ACCOUNT OF REASONABLE CAUSE ON THE PART OF THE RESP ONDENTS. THIS FINDING OF REASONABLE CAUSE WAS ON THE APPLICATION OF PARAMETE RS LAID DOWN BY THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) TO DETERMINE REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 269SS OF T HE 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 INTERNATIONAL FINANCE (SUPRA) WILL HAVE NO APPLICATION AS THAT WAS OF THE CASE OF ONLY ONE T RANSACTION WHILE IN THIS CASE, THERE ARE NUMEROUS TRANSACTIONS REFLECTED THROU GH 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 CAUSE; 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 TAX, 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 TRIBU NAL HAS ON APPLICATION OF THE TEST LAID DOWN FOR ESTABLISHMENT OF REASONABLE CAUS E, FOR BREACH OF SECTION 269SS OF THE ACT BY THIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) FOUND THAT THERE IS A REASONABLE CAUSE IN THE PRESENT FACTS TO HAVE MADE JOURNAL ENTRIES REFLECTING DEPOSITS. THE TRIBUNAL WHILE RELYING UPO N THE ORDER OF THIS COURT IN ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 9 TRIUMPH INTERNATIONAL FINANCE (SUPRA) HAS HELD THAT IN THE PRESENT FACTS, NEITHER THE GENUINENESS OF RECEIPT OF LOANS / DEPOSITS BY WAY O F AN ADJUSTMENT THROUGH JOURNAL ENTRIES CARRIED OUT IN THE ORDINARY COURSE OF BUSIN ESS HAS BEEN DOUBTED IN THE REGULAR ASSESSMENT PROCEEDINGS. IT HELD IN THE PRES ENT FACTS THE TRANSACTION BY WAY OF JOURNAL ENTRIES WAS UNDISPUTEDLY DONE TO RAISE F UNDS FROM SISTER CONCERNS, TO ADJUST OR TRANSFER BALANCES TO CONSOLIDATE DEBTS TO CORRECT CLERICAL ERRORS ETC. FURTHER, THE TRIBUNAL RECORDS THAT AS OBSERVED BY T HIS COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) THAT JOURNAL ENTRIES CONSTITUTED A RECOGNIZ ED MODES OF RECORDING OF TRANSACTIONS AND IN THE ABSENCE OF ANY ADVERSE FINDING BY THE AUTHORITIES THAT THE JOURNAL ENTRIES WERE MADE WITH A VIEW TO ACHIEVE PURPOSES OUT SIDE- THE NORMAL BUSINESS OPERATIONS OR THERE WAS A NY INVOLVEMENT OF MONEY THEN, IN THESE FACTS THERE WAS A REASONABLE CAUSE FOR NOT COMPLYING WITH SECTION 269SS OF THE ACT. (E) MR. MOHANTY'S SUBMISSION THAT THE TEST LAID DOW N IN TRIUMPH INTERNATIONAL FINANCE (SUPRA) WILL HAVE NO APPLICATION IN THE PRESENT FACTS IN VI EW OF THE LARGE NUMBER OF ENTRIES IN THIS CASE AS COMPARED TO ONLY ONE ENTRY IN THE CASE BEFORE THIS COURT. THE TEST OF REASONABLE 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 ENTRIES, THEN, THE NUMBER OF ENTRIES MADE, WILL NOT MAKE ANY DIFFERENCE. BESIDES, ON FACTS, THE TRIBUNAL WAS SATISFIED WITH THE REASONS GIVEN BY THE ASSESSEE FOR REASONABLE CAUSE AND THIS FINDING IS NOT SHOWN TO BE PERVERSE. FINALLY, THE ISSUE OF THERE BEING A REASONABLE CAUSE OR NOT IS AN ISSU E OF FACT. NO INFERENCE OF LAW AND / OR ISSUE OF INTERPRETATION IS TO BE MADE. THE DEC ISION RELIED UPON BY THE REVENUE IN CASE OF PREMIER BREWERIES LTD. (SUPRA) CONCERNED ITSELF WITH THE ISSUE OF A CLAIM FOR DEDUCTION UNDER SECTION 37 OF THE ACT ON THE BA SIS OF THE AGREEMENTS ENTERED INTO BETWEEN THE PARTIES. THE INFERENCE OF LAW IN T HAT CASE WAS WHETHER ON THE FACTS, IT COULD BE INFERRED THAT THE CLAIM FOR DEDU CTION IS IN RESPECT OF EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. THUS, IT WOULD INVOLVE A QUESTION OF INTERPRETATION OF THE AGREEME NTS ETC. FROM WHICH AN INFERENCE IS TO BE DRAWN. FURTHER, IT ALSO INVOLVES APPLICATI ON OF PRINCIPLES OF LAW TO THE FACTS FOR THE PURPOSES OF DEDUCTIONS AND, THEREFORE, IT W OULD LEAD TO A QUESTION OF LAW. THEREFORE, THE COURT HELD IN THE FACTS OF THAT CASE THAT A QUESTION 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 SUPREME COURT DE CISION 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 A BOVE CONTEXT, THE COURT OBSERVED THAT WHEN THE FINDING IS ONE OF FACT, THE FACT THAT IT ITSELF IS AN INFERENCE FROM OTHER BASIC FACTS, WILL NOT ALTER ITS CHARACTER AS ONE OF FACT. THEREFORE, THE ISSUE OF THERE BEING REASONABLE CAUSE OR NOT, IS A QUESTION OF FAC T AND UNLESS IT IS SHOWN TO BE PERVERSE, 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 RISE TO AN Y 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 I N TRIUMPH INTERNATIONAL FINANCE (SUPRA) WAS RENDERED ON 12 TH JUNE, 2012. THIS, WAS IN AN APPEAL FILED BY THE REVENUE FROM THE ORDER OF THE TRIBUNAL DATED 29 TH JANUARY, 2008, WHICH HAD HELD ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 10 THAT DEPOSITS / LOANS RECEIVED THROUGH JOURNAL ENTR IES DO NOT FALL WITH THE MISCHIEF OF SECTION 269SS OF THE ACT, SO AS TO INVITE PENALT Y UNDER SECTION 271D OF THE ACT. THIS, THE TRIBUNAL DID BY FOLLOWING ITS EARLIER ORD ERS IN THE CASE OF VN. PAREKH 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 & INVESTMENT (P) LTD . 2004 (88) TTJ (DELHI)85 AND ASST.CIT VS. LALA MURARI LAL & SONS, 2004(2) SOT (L UCK) 543 WHEREIN IT HAS BEEN HELD JOURNAL ENTRIES IN THE BOOK OF ACCOUNTS INDICATING DEPOSIT / LOANS WILL NOT FALL FOUL OF SECTION 269SS OF THE ACT. BESIDES, THE DELHI HIGH C OURT 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 EN TRY IN ITS 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 BEING MA DE 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 RELEVANT T O THE ASSESSMENT YEAR 2009-10 I.E. FINANCIAL YEAR 2008-09. AT THAT TIME, THE DECI SIONS OF THE TRIBUNAL IN THE CASES OF TRIUMPH INTERNATIONAL (SUPRA) AND DECISION OF VH. PAREKH (P) LTD., KETAN V PAREKH, SUNFLOWER BUILDERS (SUPRA), RUCHIKA CHEMICALS (SUPR A), LALA MURARI LAL (SUPRA) AND THE DECISION OF THE DELHI HIGH COURT IN NOIDA TOLL BRIDGE CO. LTD. (SUPRA) WERE HOLDING THE FIELD. THUS, NOT IN BREACH OF SECTION 2 69SS OF THE ACT. IN THE ABOVE VIEW, WHILE AGREEING WITH THE SUBMISSION OF MR. MO HANTY, 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 CERT AINLY BE HIT BY SECTION 269SS OF THE ACT. NEVERTHELESS, PRIOR TO THE DECISION OF THI S COURT IN TRIUMPH INTERNATIONAL FINANCE (SUPRA), THERE WAS REASONABLE CAUSE FOR RESPONDENTS TO RECEIVE DEPOSIT / LOAN THROUGH JOURNAL ENTRIES. THIS NON-COMPLIANC E WITH SECTION 269SS OF THE ACT WOULD 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 T HE 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 AC T FOR HAVING RECEIVED LOANS / DEPOSITS THROUGH JOURNAL ENTRIES IS AT THE VERY LEA ST 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. 10. WE FURTHER FIND THAT THE SAID DECISION OF THE H ONBLE BOMBAY HIGH COURT WAS AFFIRMED BY THE HONBLE BOMBA Y HIGH COURT IN SLP(E) PARA NO.42719 OF 2018 DATED 18.12.2 018. IN THE PRESENT CASE ALSO THERE EXITED REASONABLE CAUSE FOR ACCEPTING THE LOANS BY WAY OF JOURNAL ENTRIES AND THUS DO NOT FIN D ANY ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 11 INFIRMITY IN THE ORDER OF LD. CIT(A). SINCE THE C ASE OF THE ASSESSEE IS FULLY COVERED AS DISCUSSED ABOVE, WE AR E INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING THE AP PEAL OF THE REVENUE. CO NO.207/M/2018 11. SINCE THE ISSUE HAS BEEN DECIDED AND ADJUDICATE D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE WHILE DECID ING THE APPEAL OF THE REVENUE, THEREFORE CROSS OBJECTION FI LED BY THE ASSESSEE BECOMES ACADEMIC IN NATURE AND NEED NO ADJ UDICATION. ITA NOS.7130 & 7131/M/2016, ITA NO.7132/M/2016 & ITA NO.7133/M/2016 12. THE ISSUE INVOLVED IN THESE APPEALS IS IDENTICA L TO THE ONE AS STATED ABOVE IN ITA NO.7123/M/2016 FOR A.Y. 2011 -12. THEREFORE, OUR FINDINGS IN ITA NO.7123/M/2016 FOR A .Y. 2011-12 WOULD, MUTATIS MUTANDIS APPLY TO THESE APPEALS AS WELL. ACCORDINGLY, THE ALL THESE APPEALS OF THE REVENUE A RE DISMISSED. 13. RESULTANTLY, ALL THE APPEALS OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2019. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.09.2019. * KISHORE, SR. P.S. ITA NO.7123/M/2016 & ORS. M/S. SIMTOOLS PVT. LTD. & ORS. 12 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.