SHREEPATI DEVELOPER & BUILDER LTD, MUMBAI V. ADDL CIT 5(3), MUMBAI

ITA 7198/MUM/2014

• Counselvise Citation: 719819914 RSA 2014
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: A V SONDE
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO S . 7197 & 7198/M/2014 ASSESSMENT YEAR: 2010 - 11 M/S. SHREEPATI DEVELOPER & BUILDER LTD., 4 TH FLOOR, S HREEPATI ARCADE, A.K. MARG, NANA CHOWK, MUMBAI 400 036 PAN: AALCS2344H VS. THE ADDL. COMMISSIONER OF INCOME TAX - 5(3), MUMBAI AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. SONDE, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 24.03 .201 5 DATE OF PRONOUNCEMENT : 15.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED TWO APPEALS PREFERRED BY THE ASSESSEE RELEVANT TO THE SAME ASSE SSMENT YEAR I.E. A.Y. 2010 - 11 HAVE ARISEN FROM TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] BOTH DATED 16.10.2014 IN RELATION TO PENALTY LEVIED UNDER SECTION 271D AND 271E OF THE INCOME TAX AC T (HEREINAFTER REFERRED TO AS THE ACT) . 2. FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE FACTS FROM ITA NO.7197/M / 2014 AGITATING THE CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271D OF THE ACT. ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 2 ITA NO.7197/M/2014 3. THE BRIEF FACTS OF THE CASE AS BR OUGHT OUT BY THE LD. CIT(A) IN HIS ORDER ARE THAT THE ASSESSEE COMPANY HAS BEEN ENGAGED IN THE BUSINESS OF DEVELOPER AND BUILDER. DURING THE ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTED THAT THE ASSESSEE COMPANY HAD ACCEPTED LOANS OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE S OR DRAFTS. THE AO HELD THAT IT WAS THE VIOLATION OF THE PROVISIONS OF SECTION 269SS , AS PER WHICH , ANY LOAN OR DEPOSIT AMOUNTING TO RS.20,000/ - OR MORE ACCEPTED BY A PERSON OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQU E OR DRAFT HAS BEEN PROHIBITED , THE VIOLATION OF WHICH ATTRACTS PENALTY UNDER SECTION 271D OF THE ACT. THE AO THEREFORE INITIATED THE PENALTY PROCEEDINGS. THE ASSESSEE SUBMITTED THAT THERE WERE VALID REASONS FOR ACCEPTING THE LOANS BY WAY OF ADJUSTMENTS THROUGH JOURNAL ENTRIES. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY OF RS. 15,23,37,169/ - UNDER SECTION 271D OF THE ACT. 4 . IN APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT AS PER THE DETA IL, THE ASSESSEE HAD RECEIVED LOAN OF RS. 14,40,57,000/ - FROM MR. R.R. CHAT U R VEDI BY ACCOUNT PAYEE CHEQUE WHICH WAS OUT OF THE PURVIEW OF PROVISIONS OF SECTION 269SS OF THE ACT. WITH RESPECT TO LOAN FROM MS. VEENA CHATURVEDI OF RS.70,35,000/ - , SHREEPATI L OGISTICS INDIA LTD. OF RS.20,000/ - AND YASHWANT V. MALBARI OF RS.3,10,000/ - TRANSFERRED THROUGH JOURNAL ENTRIES , THE SAME WAS ORIGINALLY ACCEPTED BY THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUE AND SUBSEQUENTLY TRANSFERRED TO MR. R.R. CHATURVEDI THROUGH JO URNAL ENTRIES. ON BEHALF OF THE ASSESSEE COMPANY , MR. R.R. CHATURVEDI HAD PAID RS. 5,24,482/ - TO USL SHINRAI AUTOMOBILES LTD. AND RS.10,754/ - TOWARDS CLUB MEMBERSHIP FROM HIS BANK ACCOUNT. SINCE THE PAYMENT WAS MADE ON BEHALF OF THE ASSESSEE COMPANY, THE SAME WAS TRANSFERRED THROUGH J/V CREDITING TO MR. R.R. ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 3 CHATURVEDI LOAN ACCOUNT. IT WAS ALSO SUBMITTED THAT ALL THE ENTRIES ROUTED THROUGH JOURNAL ENTRIES WERE ORIGINALLY RECEIVED BY THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUE AND NO CASH WAS INVOL VED IN IT. IN THE TAX AUDITED REPORT, THE AUDITOR HAD ERRONEOUSLY MENTIONED THAT ENTIRE AMOUNT OF RS. 15,23,37,169/ - WAS ACCEPTED OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CHEQUE. ON REALIZING THE MISTAKE, THE AUDITOR HAD GIVEN CERTIFICATE RECTIF YING THE MIS TAKE WHICH WAS ALSO SUBMITTED TO THE AO. THE RELEVANT EVIDENCES INCLUDING COPY OF LEDGER ACCOUNT OF MR. R.R. CHATURVEDI IN THE BOOKS OF THE ASSESSEE COMPANY WERE ALSO SUBMITTED. IT WAS ALSO SUBMITTED THAT WITH RESPECT TO THE AMOUNT OF RS. 1,48,25,034/ - P AID FOR MOTOR VEHICLE , ONLY RS.5,24,482/ - WAS PAID BY MR. R.R. CHATURVEDI AND BALANCE AMOUNT OF RS.1,43,00,552/ - WAS PAID BY THE ASSESSEE COMPANY FROM ITS OWN ACCOUNT BY WAY OF ACCOUNT PAYEE CHEQUE. IT WAS FURTHER SUBMITTED THAT OUT OF THE TOTAL LOAN ACCE PTED OF RS.15,23,37,169/ - FROM MR. R.R. CHATURVEDI , ONLY RS.3,20,000/ - WAS RECEIVED BY CASH WHICH WAS RECEIVED FOR PAYMENT OF STAMP DUTY. IN RELATION TO THE PURCHASE OF LAND IN KALAPUR WHICH IS A REMOTE AREA AND LACKS BANKING FACILITIES, THE TRANSACTION WAS MADE IN CASH DUE TO THE COMPELLING CIRCUMSTANCES . THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. HE, RELYING UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. TRI U MP H INTERNATIONAL FINANCE (I) LTD. ITA NO. 5746/M/2010 DECIDED ON 12.06.2012, HELD THAT THE REPAYMENT OF LOAN BY ANY OTHER MODE EXCEPT BY WAY OF ACCOUNT PAYEE CHEQUE/DRAFT ATTRACTS THE PENALTY UNDER SECTION 271D OF THE ACT UNLESS THE ASSESSEE SHOWS A REASONABLE CAUSE FOR ACCEPTING SUCH PAYMENT. HE HELD THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS AND ACCORDINGLY UPHELD THE ORDER OF THE AO LEVYING THE PENALTY. 5 . BEFORE US, THE LD. A.R. OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE HAS SUBMITTED THAT THE ASSESSEE HAD NOT DONE ANY ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 4 TRANSACTION TO CIRCUMVENT THE PROVISIONS OF LAW , EVEN , ORIGINALLY ALL THE AMOUNT WAS RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUE AND THAT THE AO HAD NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE REGARDING THE NECESSITY OF THE TRANSACTIONS AND WRONGLY RELIED UPON THE ERRONEOUS REPORT OF THE AUDITOR AND IGNORED THE CERTIFICATE OF THE AUDITOR THROUGH WHICH THE MISTAKE WAS RECTIFIED. HE HAS FURTHER RELIED UPON SERIES OF DECISIONS OF THE TRIBUNAL WHEREIN IT HAS BEEN HELD THAT IF THE TRANSACTIONS A RE OTHERWISE BONAFIDE OR GENUINE AND THE REASONS OF FERED BY THE ASSESSEE CONSTITUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B, THE PENALTY UNDER SECTION 271D IS NOT ATTRACTED. THE LD. A.R. HAS RELIED UPON THE FOLLOWING DECISIONS IN THIS RESPEC T: 1. DECISION OF MUMBAI INCOME TAX TRIBUNAL IN CASE OF LODHA BUILDERS PVT . LTD . PRONOUNCED ON 27 JUNE 2014 (163 TTJ 778) 2. DECISION OF BOMBAY HIGH COURT IN CASE OF TRIUMPH INTERNATIONAL FINANCE INDIA LTD PRONOUNCED ON 12 JUNE 2012 (345 ITR 270) 3. DECISION OF BOMBAY HIGH COURT IN CASE OF TRIUMPH INTERNATIONAL FINANCE INDIA LTD (ITA 5745 OF 2010) DATED 17 AUGUST 2012. 4. DECISION OF DELHI HIGH COURT IN CASE OF WORLDWIDE TOWNSHIP PROJECTS LTD PRONOUNCED ON 21 MAY 2014 (269 CTR 444) 5. DECISION OF DELHI INCOME TAX TR IBUNAL IN CASE OF DINESH JAIN PRONOUNCED ON 16 MAY 2014 (34 ITR (TRIB.) 709) 6. DECISION OF DELHI HIGH COURT IN CASE OF NOIDA TOLL BRIDGE CO LTD PRONOUNCED ON 28 JANUARY 2003 (139 TAXMAN 115 (DELHI) 7. DILLU CINE ENTERPRISES (P) LTD VS. ADDL. CIT PRONOUNCED O N 17 SEPTEMBER 2001 (80 ITD 484) 8. DECISION OF ALLAHABAD HIGH COURT IN CASE OF M/S. SAURABH ENTERPRISES (INCOME TAX APPEAL NO.242 OF 2005) ORDER DATED 11 DECEMBER 2013 . 6 . IT MAY BE OBSERVED THAT SECTION 269T OF THE ACT PROVIDES FOR MODE OF REPAYMENT OF C ERTAIN DEPOSITS. IT STIPULATES THAT NO COMPANY INCLUDING A BANKING COMPANY, COOPERATIVE SOCIETY OR FIRM SHALL REPAY TO ANY PERSON ANY ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 5 DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WHO HAD MADE THE DEPOSIT IF, THE AMOUNT OF DEPOSIT TOGETHER WITH INTEREST IS RS.20,000 OR MORE. SECTION 271E DEALS WITH PENALTIES IMPOSABLE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269T. SECTION 273B OF THE ACT PROVIDES THAT NO PENALTY IS IMPO SABLE FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THEREFORE, A COMBINED READING OF THE PROVISIONS OF SECTIONS 271E AND 273B OF THE ACT MAKES IT CLEAR THAT IF THE ASSESSEE SHOWS REASONABLE CAUSE FOR THE FAILURE TO COMPLY WITH ANY PROVISION REFERRED TO THEREIN, THE PENALTY FOR ITS VIOLATION SHALL NOT BE IMPOSABLE ON THE ASSESSEE. 6.1 WE FURTHER FIND THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF LODHA BUILDERS PVT. L TD. VS. ACIT ITA NO. 476/M/2014 AND OTHERS DECIDED ON 27.06.2014 IS SQURELY APPLICABLE TO THE CASE OF THE ASSESSEE AS THE ISSUE BEFORE THE TRIBUNAL WAS RELATING TO THE TRANSFER OF AMOUNT BY WAY OF GENERAL ENTRIES. THE TRIBUNAL IN THE SAID CASE HAS MADE T HE FOLLOWING OBSERVATIONS: 29. SUBMISSION OF THE ASSESSEE JUSTIFYING THE CLAIM OF IMMUNITY U/S 273B OF THE ACT TO THE IMPUGNED JOURNAL ENTRIES IS AS UNDER: A) 'THE SEVEN CATEGORIES OF ENTRIES AND A VERY BRIEF EXPLANATION. B) THESE ENTRIES ARE WITH SISTER CONCERNS AND ASSOCIATES. THE VIEW IN THE PENALTY ORDER THAT DURGESHWARI IS AN INDEPENDENT CONCERN IS INCORRECT BECAUSE PENALTY ORDER ITSELF STARTS WITH THE SENTENCE THAT 'ASSESEE HAS TAKEN FROM SISTER CONCERNS'. C) IT HAS BEEN PROVED BEFORE THE ADDL. CIT AND CIT (A) THAT THERE IS ABSOLUTELY NO CASH INVOLVED AND THE SOURCE CAN BE TRACED TO A/C PAYEE CHEQUES ONLY. ADDL. CIT HAS FAILED TO REFUTE THIS BUT ONLY IN ORDER TO STRENGTHEN HIS CASE ON FLIMSY GROUND HE MAKES A PRESUMPTIVE ASSERTION THAT THESE ENTRIES HAS BEEN PASSED TO CAMOUFLAGE THE SOURCES AND TO EVADE TAX. D) THERE IS NO ATTEMPT EITHER IN ASSESSMENT ORDER OR IN ORDER TO DOUBT THE SOURCE OF THE ENTRIES AND TO TAKE ANY CONSEQUENTIAL ACTION UNDER RELEVANT PROVISIONS OF THE INCOME TAX ACT. SO, APPELLANT S ON SOURCE OF ENTRIES BEING A/C PAYEE CHEQUE IS CORRECT. ' ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 6 30. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE HON BLE HIGH COURT HAS LAID DOWN THE BROAD PRINCIPLES FOR DETERMINING THE REASONABLE CAUSE WITHIN TH E MEANING OF SECTION 273B OF THE ACT. THE JU DGMENT IN THE CASE OF TRIUMPH INTERNATIONAL (I) LTD DATED 12.6.2012 (THIS JUDGMENT IS DIFFERENT FROM THAT OF JUDGMENT OF TRIUMPH INTERNATIONAL (I) LTD DATED 17.8.2012) AND IT EXPLAINS THE GUIDELINES FOR THE EXPRESSION 'REASONABLE CAUSE'. 31. THE CONTENTS O F PARAS 23 AND 24 OF THE SAID OF JUDGMENT OF THE HON BLE HIGH COURT IN THE CASE OF TRIUMPH INTERNATIONAL (I) LTD, DATED 12.6.2012 REPORTED IN 345 ITR 370 (BOM) ARE RELEVANT AND THE SAME READS AS UNDER: '23. THE EXPRESSION 'REASONABLE CAUSE' USED IN SECTION 273B IS NOT DEFINED UNDER THE ACT. UNLIKE THE EXPRE SSION 'SUFFICIENT CAUSE' USED IN SECTION 249(3), 253(5) AND 260A(2A) OF THE ACT, THE LEGISLATURE HAS USED THE EXPRESSION 'REASONABLE CAUSE' IN SECTION 273B OF THE ACT. A CAUSE WHICH IS REASONABLE MAY NOT BE A SUFFICIENT CAUSE. THUS, THE EXPRESSION 'REASONA BLE CAUSE' WOULD HAVE WIDER CONNOTATION THAN THE EXPRESSION 'SUFFICIENT CAUSE'. THEREFORE, THE EXPRESSION 'REASONABLE CAUSE' IN SECTION 273B FOR NON - IMPOSITION OF PENALTY UNDER SECTION 271E WOULD HAVE TO BE CONSTRUED LIBERALLY DEPENDING UPON THE FACTS OF E ACH CASE. 24. IN THE PRESENT CASE, THE CAUSE SHOWN BY THE ASSESSEE FOR REPAYMENT OF THE LOAN/DEPOSIT OTHERWISE THAN BY ACCOUNT - PAYEE CHEQUE/BANK DRAFT WAS ON ACCOUNT OF THE FACT THAT THE ASSESSEE WAS LIABLE TO RECEIVE AMOUNT TOWARDS THE SALE PRICE OF THE S HARES SOLD BY THE ASSESSEE TO THE PERSON FROM WHOM LOAN/DEPOSIT WAS RECEIVED BY THE ASSESSEE. IT WOULD HAVE BEEN AN EMPTY FORMALITY TO REPAY THE LOAN/DEPOSIT AMOUNT BY ACCOUNT - PAYEE CHEQUE/DRAFT AND RECEIVE BACK ALMOST THE SAME AMOUNT TOWARDS THE SALE PRIC E OF THE SHARES. NEITHER THE GENUINENESS OF THE RECEIPT OF LOAN/DEPOSIT NOR THE TRANSACTION OF REPAYMENT OF LOAN BY WAY OF ADJUSTMENT THROUGH BOOK ENTRIES CARRIED OUT IN THE ORDINARY COURSE OF BUSINESS HAS BEEN DOUBTED IN THE REGULAR ASSESSMENT. THERE IS N OTHING ON RECORD TO SUGGEST THAT THE AMOUNTS ADVANCED BY INVESTMENT TRUST OF INDIA TO THE ASSESSEE REPRESENTED THE UNACCOUNTED MONEY OF THE INVESTMENT TRUST OF INDIA OR THE ASSESSEE. THE FACT THAT THE ASSESSEE COMPANY BELONGS TO THE KETAN PAREKH GROUP WHIC H IS INVOLVED IN THE SECURITIES SCAM CANNOT BE A GROUND FOR SUSTAINING PENALTY IMPOSED UNDER SECTION 271E OF THE ACT IF REASONABLE CAUSE IS SHOWN BY THE ASSESSEE FOR FAILING TO COMPLY WITH THE PROVISIONS OF SECTION 269T. IT IS NOT IN DISPUTE THAT SETTLING THE CLAIMS BY MAKING JOURNAL ENTRIES IN THE RESPECTIVE BOOKS IS ALSO ONE OF THE RECOGNIZED MODES OF REPAYING LOAN/DEPOSIT. THEREFORE, IN THE FACTS OF THE PRESENT CASE, IN OUR OPINION, THOUGH THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T, THE ASS ESSEE HAS SHOWN REASONABLE CAUSE AND, THEREFORE, THE DECISION OF THE TRIBUNAL TO DELETE THE PENALTY IMPOSED UNDER SECTION 271E OF THE ACT DESERVES ACCEPTANCE.' ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 7 32. FROM THE ABOVE EXTRACTS FROM THE JUDGMENT OF JURISDICTIONAL HIGH COURT, IT IS CLEAR THAT THE JOURNAL ENTRIES ARE HIT BY THE RELEVANT PROVISIONS OF SECTION 269SS OF THE ACT. HOWEVER, IT IS THE FINDING OF THE HON BLE HIGH COURT THAT COMPLETING THE 'EMPTY FORMALITIES' OF PAYMENTS AND REPAYMENTS BY ISSUING/RECEIVING CHEQUE TO SWAP/SQUIRE UP THE TRANSACTIONS, IS NOT THE INTENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT, WHEN THE TRANSACTIONS ARE OTHERWISE BONAF IDE OR GENUINE. SUCH REASONS OF THE ASSESSEE CONSTITUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. IN THE LIGHT OF THE ABOVE RATIO OF JUDGMENT, WE ANALYSE THE FACTS OF THE PRESENT CASE HERE AS UNDER. 33. WE FIND THAT THERE IS NO FIND ING OF AO IN THE ORDER OF THE AO DURING THE ASSESSMENT PROCEEDINGS THAT THE IMPUGNED TRANSACTIONS CONSTITUTES UNACCOUNTED MONEY AND ARE NOT BONA FIDE OR NOT GENUINE. AS SUCH, THERE IS NO INFORMATION OR MATERIAL BEFORE THE AO TO SUGGEST OR DEMONSTRATE THE S AME. IN THE LANGUAGE OF THE HONBLE HIGH COURT, NEITHER THE GENUINENESS OF THE RECEIPT OF LOAN/DEPOSIT NOR THE TRANSACTION OF REPAYMENT OF LOAN BY WAY OF ADJUSTMENT THROUGH BOOK ENTRIES CARRIED OUT IN THE ORDINARY COURSE OF BUSINESS HAS BEEN DOUBTED IN THE REGULAR ASSESSMENT. ADMITTEDLY, THE TRANSACTIONS BY WAY OF JOURNAL ENTRIES ARE AIMED AT THE EXTINGUISHMENT OF THE MUTUAL LIABILITIES BETWEEN THE ASSESSEES AND THE SISTER CONCERNS OF THE GROUP AND SUCH REASONS CONSTITUTE A REASONABLE CAUSE. 34. IN THE PRES ENT CASE, THE CAUSES SHOWN BY THE ASSESSEE FOR RECEIVING OR REPAYMENT OF THE LOAN/DEPOSIT OTHERWISE THAN BY ACCOUNT - PAYEE CHEQUE/BANK DRAFT, WAS ON ACCOUNT OF THE FOLLOWING, NAMELY: ALTERNATE MODE OF RAISING FUNDS; ASSIGNMENT OF RECEIVABLES; SQUARING UP TR ANSACTIONS; OPERATIONAL EFFICIENCIES/MIS PURPOSE; CONSOLIDATION OF FAMILY MEMBER DEBTS; CORRECTION OF ERRORS; AND LOANS TAKEN IN CASE. IN OUR OPINION, ALL THESE REASONS ARE, PRIMA FACIE, COMMERCIAL IN NATURE AND THEY CANNOT BE DESCRIBED AS NON - BUSINESS BY ANY MEANS. FURTHER, WE ASKED OURSELVES AS TO WHY SHOULD THE ASSESSEE UNDER CONSIDERATION TAKE UP ISSUING NUMBER OF ACCOUNT PAYEE CHEQUES / BANK DRAFTS WHICH CAN BE ACCOUNTED BY THE JOURNAL ENTRIES. THIS BEING THE SPIRIT OF HON BLE HIGH COURT OF BOMBAY, WE ADOPT THE SAME TO THE PRESENT IS SUE. AS SUCH, THE SAME IS BINDING ON US. WHAT IS THE POINT IN ISSUING HUNDREDS OF ACCOUNT PAYEE CHEQUES / ACCOUNT PAYEE BANK DRAFTS BETWEEN THE SISTER CONCERNS OF THE GROUP, WHEN TRANSACTIONS CA N BE ACCOUNTED IN BOOKS USING JOURNAL ENTRIES, WHICH IS ALSO AN ACCEPTED MODE OF ACCOUNTING? IN OUR OPINION, ON THE FACTUAL MATRIX OF THESE CASES UNDER CONSIDERATION, JOURNAL ENTRIES SHOULD ENJOY EQUAL IMMUNITY ON PAR WITH ACCOUNT PAYEE CHEQUES OR BANK DRA FTS. OF COURSE, THE ABOVE CONCLUSION APPLY SO LONG AS THE TRANSACTIONS ARE FOR BUSINESS PURPOSES AND DO NOT INVOLVE UNACCOUNTED MONEY AND THEY ARE GENUINE. IN FACT, SUCH JOURNAL ENTRIES SHALL SAVE LARGE NUMBER OF CHEQUE BOOKS FOR THE BANKS. 35. FURTHER, TH ERE IS NO DISPUTE THAT THE IMPUGNED JOURNAL ENTRIES IN THE RESPECTIVE BOOKS WERE DONE WITH THE VIEW TO RAISE FUNDS FROM THE SISTER CONCERNS, TO ASSIGN THE RECEIVABLE AMONG THE SISTER CONCERNS, TO ADJUST OR TRANSFER THE BALANCES, TO ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 8 CONSOLIDATE THE DEBTS, T O CORRECT THE CLERICAL ERRORS ETC. IN THE LANGUAGE OF THE HON BLE HIGH COURT, THE SAID JOURNAL ENTRIES CONSTITUTES ONE OF THE RECOGNIZED MODES OF RECORDING THE LOAN/DEPOSIT. THE COMMERCIAL NATURE AND OCCURRENCE OF THESE TRANSACTIONS BY WAY OF JOURNAL ENTRIES IS IN THE NORMAL COURSE OF BUSINESS OPERATION OF THE GRO U P CONCERNS. IN THIS REGARD, THERE IS NO ADVERSE FINDING BY THE AO IN THE REGULAR ASSESSMENT. AO HAS NOT MADE OUT IN THE ASSESSMENT THAT ANY OF THE IMPUGNED TRANSACTIONS IS AIMED AT NON COMMERCIAL REASONS AND OUTSIDE THE NORMAL BUSINESS OPERATIONS. AS SUCH , THE PROVIS IONS OF SECTION 269SS AND 269T OF THE ACT SHALL NOT BE ATTRACTED WHERE THERE IS NO INVOLVEMENT OF THE MONEY AS HELD BY THE HON BLE HIGH COURT OF DELHI IN THE ABOVE CITED CASES, SUPRA. THEREFORE, IN THE FACTS OF THE PRESENT CASE, IN OUR OPINIO N, THOUGH THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS / 269T OF THE ACT IN RESPECT OF JOURNAL ENTRIES, THE ASSESSEE HAS SHOWN REASONABLE CAUSE AND, THEREFORE, THE PENALTY IMPOSED UNDER SECTION 271D/E OF THE ACT ARE NOT SUSTA INABLE. REGARDING AN AMOUNT OF MONEY SAID TO HAVE BEEN PAID IN VIOLATION OF THE SAID PROVISIONS, THE SAME NEEDS TO BE DELETED IN VIEW OF OUR DECISION ON THE LEGAL ISSUE DISCUSSED IN PARA 16 TO 22 OF THE THIS ORDER. ACCORDINGLY, THE GROUNDS RAISED IN THIS REGARD ARE ALLOWE D. 7 . WE FIND THAT THE ABOVE OBSERVATIONS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL ARE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. IN THE CASE IN HAND, THE TRANSACTIONS WERE CARRIED OUT BETWEEN THE DIRECTOR OF THE ASSESSEE COMPANY AND THE COMPANY ITSELF. ALL THE LOANS WERE ORIGINALLY RECEIVED BY THE ASSESSEE COMPANY THROUGH ACCOUNT PAYEE CHEQUE BUT DUE TO THE REASONS EXPLAINED BY THE A SSESSEE , SOME AMOUNTS WERE TRANSFERRED TO THE ACCOUNT OF MR. R.R. CHATURVEDI , WHICH WERE PASSED ON TO THE ASSESSEES ACCOUNT BY WAY OF JOURNAL ENTRIES . IT IS NOT THE CASE OF THE REVENUE THAT THE IMPUGNED TRANSACTIONS CONSTITUTE UNACCOUNTED MONEY OR THAT T HE SAME WERE NOT BONAFIDE OR NOT GENUINE. THE LOWER AUTHORITIES HAVE NOT CONTROVERTED THE EXPLANATIONS GIVEN BY THE ASSESSEE. THE REVENUE HAS NOT SUFFERED ANY LOSS AND THERE WAS NO ATTEMPT OF ANY MONEY LAUNDERING OR EVASION OF TAX OR CONCEALMENT OF INCO ME . RESPECTFULLY FOLLOWING THE ABOVE FINDING OF THE TRIBUNAL GIVEN IN ALMOST SIMILAR CIRCUMSTANCES, WE HOLD THAT IN THE CASE IN HAND, THE EXPLANATION PUT FORTH BY TH E ASSESSEE - COMPANY, FALLS WITHIN THE SCOPE OF PHRASE 'REASONABLE CAUSE' AS PROVIDED UNDER SECTION 273B OF THE INCOME TAX ACT, 1961. SO, IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE PENALTY IMPOSED UPON THE ASSESSEE ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 9 BY THE AO AND FURTHER CONFIRMED BY THE CIT(A) IS HEREBY ORDERED TO BE DELETED. APPEAL NO. 7198/M/2012 8 . IN THIS CASE, THE PENALTY HAS BEEN LEVIED BY THE AO ON ACCOUNT OF REPAYMENT OF LOAN OTHER THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR DRAFT WHICH WAS IN VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT. THE ASSESSEE HAS GIVEN SIMILAR EXPLANATION FOR REPAYMENT OF THE AMOUNT THROUGH JO URNAL ENTRIES. THE RELEVANT PART OF THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LOWER AUTHORITIES IS REPRODUCED AS UNDER: DURING THE ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS, THE APPELLANT HAD GIVEN DETAILS OF ALL THE TRANSACTIONS APPELL ANT COMPANY HAD WITH MR. R.R. CHATURVEDI AND MRS. VEENA CHATURVEDI. THE DETAILS OF THE SAME ARE AS UNDER: MR. R.R. CHATURVEDI S. NO. PARTICULARS AMOUNT (RS.) AMOUNT (RS.) 1 AMOUNT REPAID BY ACCOUNT PAYEE CHEQUE 74,70,909 2 AMOUNT TRANSFERRED THROUGH JOURNAL ENTRIES DILIP M JINDAL 1,17,96,141 PARSHURAM S. KADAM 5,00,000 RAM BABA DUDHAVADE 5,00,000 1,27,96,141 3 AMOUNT REPAID BY CASH 3,20,000 TOTAL 2,05,87,050 MRS. VEENA CHATURVEDI S. NO. PARTICULARS AMOUNT (RS.) 1 AMOUNT TRANSFERRE D TO MR. RR CHATURVEDI THROUGH JOURNAL ENTRY 70,35,000 TOTAL 70,35,000 AS PER THE ABOVE CHART, IN CASE OF MR. R R CHATURVEDI THE APPELLANT HAD REPAID RS . 74,70,909 / - THROUGH ACCOUNT PAYEE CHEQUE WHICH IS OUT OF THE PURVIEW OF PROVISIONS OF SECTION 269T OF THE ACT. WITH RESPECT TO A MOUNT REPAID TO MR. R R CHATURV EDI THROUGH JOURNAL ENTRIES, THE APPELLANT HAD ORIGINALLY GIVEN ADVANCE FOR PURCHASE OF PROPERTY TO MR. DILIP JINDAL, MR PARSURAM KADAM AND MR. RAM BABA DUDHAVADE BY ACCOUNT PAYEE CHEQUE. ON THE REQUEST OF THOSE PARTIES, THE AMOUNT RECEIVABLE FROM THEM WAS ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 10 ADJUSTED AGAINST THE AMOUNT PAYABLE TO MR. R R CHATURVEDI. IN CASE OF MRS. VEENA CHATURVEDI THE APPELLANT HAD ACQUIRED LOANS FROM MRS. VEENA CHATURVEDI IN THE PRECEDING YEARS THROUGH ACCOUNT PAY EE CHEQUES. DURING THE YEAR UNDER CONSIDERATION, SHE REQUESTED THE COMPANY TO TRANSFER THE LOAN INTO HER HUSBAND'S LOAN ACCOUNT WITH THE COMPANY. THEREFORE, THE ACCOUNT OF VEENA CHATURVEDI WAS DEBITED WITH RS. 70.35,000/ - AND MR. R. R. CHATURVEDI'S LOAN AC COUNT WAS CREDITED WITH THE SAME AMOUNT. IN VIEW OF THE COMPANY, THE LIABILITY STILL EXITS. THE LOAN STILL EXITS, THUS THE QUESTION OF REPAYMENT OTHERWISE THAN AN ACCOUNT PAYEE CHEQUE DOES NOT ARISE. DURING THE ASSESSMENT PROCEEDINGS AS WELL AS IN PENALTY PROCEEDINGS, THE APPELLANT HAD SUBMITTED THE BANK STATEMENTS OF THE APPELLANT COMPANY & MR. P. R. CHATURVEDI AND ALL THE PARTIES TO WHOM APPELLANT HAD ADVANCED MONEY FOR PURCHASE OF PROPERTY AND THE SAME WAS RECEIVABLE WHICH WAS ULTIMATELY TRANSFERRED TO M R. R. R. CHATUIVEDI THROUGH JOURNAL ENTRIES (THE LEDGER OF MR. R. R CHATURVEDI IS ENCLOSED AS ANNEXURE 4 OF THE PAPER BOOK). IT WAS ALSO SUBMITTED THAT ALL THE ENTRIES ROUTED THROUGH JOURNAL ENTRIES WERE ORIGINALLY ADVANCED BY THE APPELLANT COMPANY BY ACCO UNT PAYEE CHEQUE AND NO CASH WAS INVOLVED IN IT. THIS WAS VERIFI ED BY AC AS WELL AS ADDL . CIT AND SAME FORMS PART OF ASSESSMENT/ PENALTY RECORDS. IN THE TAX AUDIT REPORT, THE AUDITOR HAD ERRONEOUSLY MENTIONED ENTIRE AMOUNT OF PS. 2,76,22,050/ - AS REPAID OT HERWISE THAN BY ACCOUNT PAYEE CHEQUE. ON REALIZING THE MISTAKE, AUDITOR HAD GIVEN CERTIFICATE DATED 16. 10.2 010 RECTIFYING THE MISTAKE. DURING THE PENALTY PROCEEDINGS, THE SAME WAS SUBMITTED TO THE ADDITIONAL CIT VIDE LETTER DATED 20.05.2013. (THE CERTIFIC ATE IS ENCLOSED AS ANNEXURE 2 AND THE SUBMISSION DATED 20.05.2013 IS ENCLOSED AS ANNEXURE 15 OF THE PAPER BOOK). IN SHORT, OUT OF THE TOTAL LOAN REPAID OF RS. 2,05,87,050 / - TO MR. R. R. CHATURVEDI ONLY RS. 3,20,000/ - WAS REPAID BY CASH. AS REGARDS THE CASH PAID OF RS. 3,20,000 / - IS CONCERNED, THE SAID AMOUNT WAS TAKEN FOR PAYMENT OF STAMP DUTY. THE APPELLANT COMPANY HAS ACQUIRED LAND IN KHALAPUR WHICH IS A REMOTE AREA IN MAHARASHTRA AND LACKS BANKING FACILITIES. THE APPELLANT HAD TO PAY STAMP DUTY FOR PURCH ASE OF THE LAND IN KHALAPUR. MR. R. R. CHATURVEDI HAD MADE CASH PAYMENT FOR THE STAMP DUTY TO BE PAID ON BEHALF OF THE APPELLANT COMPANY. THE AMOUNT SO REPAID TO THE DIRECTOR IN CASH WAS RECEIVED ALSO IN CASH. THIS TRANSACTION WAS MADE IN CASH DUE TO MERE NEED OF THE SITUATION. 9. FROM THE ABOVE, IT MAY BE OBSERVED THAT THE ASSESSEE HAS DULY EXPLAINED THE JOURNAL ENTIRES AND THE NECESSITY FOR THE SAME. THE GENUINENESS OF THE TRANSACTIONS IS NOT DISPUTED. NO MALAFIDE ACT IS ATTRIBUTED TO THE ABOV E TRANSACTIONS. THE REVENUE HAS NOT SUFFERED ANY LOSS AND THERE WAS NO ATTEMPT OF ANY MONEY LAUNDERING OR EVASION OF TAX OR CONCEALMENT OF INCOME. THE ITA NOS.7197 & 7198/M/2014 M/S. SHREEPATI DEVELOPER & BUILDER LTD. 11 FINDINGS GIVEN BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF LODHA BUILDERS PVT. LTD. (SUPR A) ARE SQUARELY APPLICABLE ON THIS ISSUE ALSO. RESPECTFULLY FOLLOWING THE SAME, THE PENALTY LEVIED UNDER SECTION 271E IN THIS CASE IS ALSO ORDERED TO BE DELETED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 15.04.2 01 5 . SD/ - SD/ - ( R.C. SHARMA ) ( SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.042015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.