DCIT CC 8(2), MUMBAI V. WHITE FEATHER FILMS LTD, MUMBAI

ITA 7651/MUM/2016

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8193 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reasonable cause; Set aside
• Section: 271D; 271E; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 7642/MUM/2016 Assessment Year: 2010-11 & ITA No. 7651/MUM/2016 Assessment Year: 2010-11 Dy. CIT Cent. Cir-8(2), 6 th floor, Room No. 658, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s White Feather Films Ltd., SVP Nagar, MHADA Bungalow, No. 91, Four Bungalow, Andheri West, Mumbai-400053 PAN No. AAACW 4428 R Appellant Respondent Revenue by : Mr. Hoshang B. Irani, DR Assessee by : None Date of Hearing : 28/07/2022 Date of pronouncement : 12/08/2022 ORDER PER OM PRAKASH KANT, AM These two appeals by the Revenue are directed against two separate orders both dated 13.02.2015 passed by the Ld. Commissioner of Income Tax (Appeals)-50, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2010-11 in relation to penalty levied u/s 271D and 271E of the Income Act’) respectively. Both the penalties are arising from common transaction and therefore same were heard together and disposed off by way of this consolidated order for convenience. 2. At the outset, we may like to mention tha the hearing neither anyone attended on behalf of the assessee nor any adjournment was sought. The notice for hearing was served through the registered post as well as through Departmental Representative. On last few occasions i.e. 1 11.12.2019, 26.02.2020, 05.03.2020, 14.10.2020, 04.03.2021, 18.05.2021, 02.08.2021, 18.10.2021, 14.12.2021, 07.02.2022, 21.03.2022, 24.05.2022, 31.05.2022 neither anyone attended nor any adjournment was sought. Further, it is to be n for hearing dated 18.05.2021 was served on the assessee through the Departmental Representative. circumstances of the case, we felt it appropriate to hear the appeal M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 levied u/s 271D and 271E of the Income-tax Act, 1961 (in short ‘the Act’) respectively. Both the penalties are arising from common transaction and therefore same were heard together and disposed off by way of this consolidated order for convenience. At the outset, we may like to mention that despite notifying for the hearing neither anyone attended on behalf of the assessee nor any adjournment was sought. The notice for hearing was served through the registered post as well as through Departmental Representative. On last few occasions i.e. 17.07.2019, 01.10.2019, 11.12.2019, 26.02.2020, 05.03.2020, 14.10.2020, 04.03.2021, 18.05.2021, 02.08.2021, 18.10.2021, 14.12.2021, 07.02.2022, 21.03.2022, 24.05.2022, 31.05.2022 neither anyone attended nor any adjournment was sought. Further, it is to be noted that for hearing dated 18.05.2021 was served on the assessee through he Departmental Representative. Therefore, in the facts and circumstances of the case, we felt it appropriate to hear the appeal M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 2 tax Act, 1961 (in short ‘the Act’) respectively. Both the penalties are arising from common transaction and therefore same were heard together and disposed off by way of this consolidated order for convenience. t despite notifying for the hearing neither anyone attended on behalf of the assessee nor any adjournment was sought. The notice for hearing was served through the registered post as well as through Departmental 7.07.2019, 01.10.2019, 11.12.2019, 26.02.2020, 05.03.2020, 14.10.2020, 04.03.2021, 18.05.2021, 02.08.2021, 18.10.2021, 14.12.2021, 07.02.2022, 21.03.2022, 24.05.2022, 31.05.2022 neither anyone attended nor oted that notice for hearing dated 18.05.2021 was served on the assessee through Therefore, in the facts and circumstances of the case, we felt it appropriate to hear the appeal ex-parte qua the assessee and decide after hearing arguments of the Ld. Departmental Representative (DR) of the Revenue. Accordingly, we proceeded to hear the appeal. 3. The facts in brief of income for the year unde income. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Act were issued and complied with. The Assessing Officer noted that the assessee had accepted/paid loans in contravention of provision of section 269SS/269T and therefore, he referred the matter to the Addl. CIT Range 10, Mumbai (in short ‘the Add. CIT’) 271D/271E of the Act. The Ld. Addl. CIT noted that the assessee had received loan amounting to cheque from the following parties: Sr. No. 1. Mr. Rakesh Sarin 2. Mrs. Renu Sarin 3. Rakesh Sarin HUF 4. Mr. Akshay Sarin M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 qua the assessee and decide after hearing arguments of the Ld. Departmental Representative (DR) of the Revenue. Accordingly, we proceeded to hear the appeal. The facts in brief of the case are that assessee filed its return of income for the year under consideration on 06.10.2010 declaring Nil income. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Act were issued and complied with. The Assessing Officer noted that the assessee d/paid loans in contravention of provision of section 269SS/269T and therefore, he referred the matter to the Addl. CIT (in short ‘the Add. CIT’) for levy of penalty u/s 271D/271E of the Act. The Ld. Addl. CIT noted that the assessee had eceived loan amounting to ₹1,43,00,000/- by way of account payee cheque from the following parties: Name of the Lender Amount ( Mr. Rakesh Sarin 30,00,000/ Mrs. Renu Sarin 32,00,000/ Rakesh Sarin HUF 27,00,000/ Mr. Akshay Sarin 18,00,000/ M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 3 qua the assessee and decide after hearing arguments of the Ld. Departmental Representative (DR) of the Revenue. Accordingly, the case are that assessee filed its return of r consideration on 06.10.2010 declaring Nil income. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Act were issued and complied with. The Assessing Officer noted that the assessee d/paid loans in contravention of provision of section 269SS/269T and therefore, he referred the matter to the Addl. CIT for levy of penalty u/s 271D/271E of the Act. The Ld. Addl. CIT noted that the assessee had by way of account payee Amount (₹) 30,00,000/- 32,00,000/- 27,00,000/- 18,00,000/- 5. Akshay Mercantile Pvt. Ltd. 6. Akshay Communication Pvt. Ltd. 7. Dhanabakkam Enterprises 3.1 During the previous year 2009 appearing in the ledger account of above 8 parties be termed as ‘original creditor’ assessee were transferred to the account of two other persons namely Ashna Sarin ( (₹6,00,000/-) (i.e. which would be termed as new creditor) of passing journal entries in the books of account of the assessee company. 3.2 The Addl. CIT initiated the proceedings u/s 271D and 271E the Act by way of issue show cause assessee that : a) the original creditors as well as the new creditors belonged to one known as Sarin family and b) loans were transferred as per the request of the persons involved consequent to a family arrangement in the Sarin Family. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 Akshay Mercantile Pvt. Ltd. 10,00,000/ Akshay Communication Pvt. Ltd. 15,00,000/ Dhanabakkam Enterprises 1,43,00,000/ During the previous year 2009-10, the credit balances appearing in the ledger account of above 8 parties (i.e. termed as ‘original creditor’) in the books of account of the assessee were transferred to the account of two other persons Ashna Sarin (₹1,37,00,000/-) and Akshay Sarin HUF (i.e. which would be termed as new creditor) of passing journal entries in the books of account of the assessee The Addl. CIT initiated the proceedings u/s 271D and 271E the Act by way of issue show cause notice. It was submitted by the a) the original creditors as well as the new creditors belonged to one known as Sarin family and b) loans were transferred as per the request of the persons sequent to a family arrangement in the Sarin M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 4 10,00,000/- 15,00,000/- 6,00,000/- 1,43,00,000/- 10, the credit balances (i.e. which could in the books of account of the assessee were transferred to the account of two other persons ) and Akshay Sarin HUF (i.e. which would be termed as new creditor) by way of passing journal entries in the books of account of the assessee- The Addl. CIT initiated the proceedings u/s 271D and 271E of . It was submitted by the a) the original creditors as well as the new creditors belonged to b) loans were transferred as per the request of the persons sequent to a family arrangement in the Sarin c) neither any cash loan was received nor any loans were repaid in Cash by the Appellant. d) genuineness of these loans and repayment of the same were never doubted at any point of time including at the assessment. 4. The Addl. CIT however, was not convinced with the reply of the assessee. According to him, in view of the decision of the Hon’ble Bombay High Court in the case of (I) Ltd., 22 Taxman 138 of journal entries and accepting loan from new creditors by way of journal entry, contravenned respectively and therefore, he levied penalty u/s 271E and 271D of the Act respectively for paymen acceptance of the loan from the new creditors respectively. 5. On further appeal, the assessee raised two grounds against levy of the penalty u/s 271D and 271E of the Act. The Ld. CIT(A) dismissed Ground No. 1 in bo Ground No. 2 of the appeal. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 c) neither any cash loan was received nor any loans were repaid in Cash by the Appellant. d) genuineness of these loans and repayment of the same were never doubted at any point of time including at the The Addl. CIT however, was not convinced with the reply of the assessee. According to him, in view of the decision of the Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd., 22 Taxman 138 repayment of loan to old creditors by way of journal entries and accepting loan from new creditors by way of contravenned the provisions of section respectively and therefore, he levied penalty u/s 271E and 271D of the Act respectively for payment of the loan by the old creditors and acceptance of the loan from the new creditors respectively. On further appeal, the assessee raised two grounds against levy of the penalty u/s 271D and 271E of the Act. The Ld. CIT(A) dismissed Ground No. 1 in both the penalties, however, allowed the 2 of the appeal. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 5 c) neither any cash loan was received nor any loans were repaid d) genuineness of these loans and repayment of the same were never doubted at any point of time including at the time of The Addl. CIT however, was not convinced with the reply of the assessee. According to him, in view of the decision of the Hon’ble Triumph International Finance n to old creditors by way of journal entries and accepting loan from new creditors by way of the provisions of section 269T/269SS respectively and therefore, he levied penalty u/s 271E and 271D of t of the loan by the old creditors and acceptance of the loan from the new creditors respectively. On further appeal, the assessee raised two grounds against levy of the penalty u/s 271D and 271E of the Act. The Ld. CIT(A) th the penalties, however, allowed the 6. Aggrieved the Revenue is in appeal before the Tribunal. The Ground raised against deletion of penalty u/s 271D of the Act reproduced as under: (i) "On the facts and circumstances of erred in deleting the penalty of Rs. 1,43,00,000/ the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." (ii) On the facts and circu having held that the assessee had contravened the provisions of section 269SS of the Income Tax Act, 1961, erred in not upholding the levy of penalties 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." 6.1 Similarly, the grounds 271E are reproduced as under: "On the facts and circumstances erred in deleting the penalty of Rs.2,43,00,000/ the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." (ii) On the facts and cir having held that the assessee had contravened the provisions of M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 Aggrieved the Revenue is in appeal before the Tribunal. The Ground raised against deletion of penalty u/s 271D of the Act reproduced as under: (i) "On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the penalty of Rs. 1,43,00,000/- levied u/s 271D of the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." (ii) On the facts and circumstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of section 269SS of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271D as the assessee failed to establish the reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal Similarly, the grounds raised against deletion of penalty u/s 271E are reproduced as under: "On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the penalty of Rs.2,43,00,000/- levied u/s 271E of the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." (ii) On the facts and circumstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 6 Aggrieved the Revenue is in appeal before the Tribunal. The Ground raised against deletion of penalty u/s 271D of the Act are the case and in law, the CIT(A) levied u/s 271D of the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." mstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of section 269SS of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271D as the assessee failed to establish the reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal against deletion of penalty u/s of the case and in law, the CIT(A) levied u/s 271E of the Income Tax Act, 1961 on the ground that the genuineness of the transaction made through journal entries is not in doubt." cumstances of the case and in law, the CIT(A) having held that the assessee had contravened the provisions of section 269T of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271E 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." 7. We have heard the submissions of the Ld. DR of the Revenue. As far as appeal against the deletion o concerned, we find that following grounds were raised by the assessee before the Ld. CIT(A): 1. On the facts and circumstances of the case, the Ld. AO erred in passed order u/s 271D of the Income Tax Act, 1961. 2. On the facts and circumstances of the case, the Ld justified in imposing penalty of Act, on the loans accepted by journal entries. 7.1 The Ld. CIT(A) dismissed the Ground No. 1 holding that in view of decision of the Hon’ble Bombay High Court accepting the loan way of passing journal entries amounts to contravention of section 269SS of the Act. However, in para 5.3 of the impugned order, the Ld. CIT(A) deleted the penalty on the ground that accepting deposits by way of journal entries was a transa M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 section 269T of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271E as the assessee failed to establish the reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal We have heard the submissions of the Ld. DR of the Revenue. As far as appeal against the deletion of penalty u/s 271D is find that following grounds were raised by the sessee before the Ld. CIT(A): On the facts and circumstances of the case, the Ld. AO erred in passed order u/s 271D of the Income Tax Act, 1961. On the facts and circumstances of the case, the Ld. AO is not justified in imposing penalty of ₹1,43,00,000/- u/s 271D of the Act, on the loans accepted by journal entries. The Ld. CIT(A) dismissed the Ground No. 1 holding that in view of decision of the Hon’ble Bombay High Court accepting the loan way of passing journal entries amounts to contravention of section of the Act. However, in para 5.3 of the impugned order, the Ld. CIT(A) deleted the penalty on the ground that accepting deposits by way of journal entries was a transaction in the M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 7 section 269T of the Income Tax Act, 1961, erred in not upholding the levy of penalties u/s 271E as the assessee failed to establish the reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal We have heard the submissions of the Ld. DR of the Revenue. f penalty u/s 271D is find that following grounds were raised by the On the facts and circumstances of the case, the Ld. AO erred in . AO is not u/s 271D of the The Ld. CIT(A) dismissed the Ground No. 1 holding that in view of decision of the Hon’ble Bombay High Court accepting the loan by way of passing journal entries amounts to contravention of section of the Act. However, in para 5.3 of the impugned order, the Ld. CIT(A) deleted the penalty on the ground that accepting deposits ction in the nature of the bonafide and not with a view to avoid tax. The relevant finding of the Ld. CIT(A) is reproduced as under : “5.3 The facts of the case in Triumph International Finance (I) Ltd, (22 Taxman.com 138) are very similar to the facts of this case whi is before me. In this case also there was no finding recorded in the assessment orders or in the penalty orders to the effect that the repayments of loans/deposits were not bona fide transactions and were made with a view to evade tax. The appellant sub the loans were transferred from some persons of Sarin family ( 'original creditors') to some other persons ('new creditors) by passing necessary journal entries in the books of the appellant. In my view, returning the loan amounts to the 'origi account payee cheques by the appellant and then receiving the same amount from the 'new creditors' by account payee cheques by the appellant would have been a empty formality in this case. As regards the reliance of the Addl. CIT on the d Zalte (136 taxman 644) and in the case of K.V. George (42 taxmann.com 261), I find that those cases are distinguishable on facts as in those cases the loans were taken in cash (and not by passing journal entries as in the the Addl. CIT was not justified in imposing penalty under section 271D of the Act in this case. Therefore, the second ground of appeal is allowed.” 7.2 On perusal of the impugned order, we find that Ground No. 2 raised before the Ld. CIT(A) was challenging the finding, the Ld. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 fide and not with a view to avoid tax. The relevant finding of the Ld. CIT(A) is reproduced as under : The facts of the case in Triumph International Finance (I) Ltd, (22 Taxman.com 138) are very similar to the facts of this case whi is before me. In this case also there was no finding recorded in the assessment orders or in the penalty orders to the effect that the repayments of loans/deposits were not bona fide transactions and were made with a view to evade tax. The appellant sub the loans were transferred from some persons of Sarin family ( 'original creditors') to some other persons ('new creditors) by passing necessary journal entries in the books of the appellant. In my view, returning the loan amounts to the 'original creditors' by account payee cheques by the appellant and then receiving the same amount from the 'new creditors' by account payee cheques by the appellant would have been a empty formality in this case. As regards the reliance of the Addl. CIT on the decisions in the case of Dhanji R. Zalte (136 taxman 644) and in the case of K.V. George (42 taxmann.com 261), I find that those cases are distinguishable on facts as in those cases the loans were taken in cash (and not by passing journal entries as in the present case). Therefore, in my view, the Addl. CIT was not justified in imposing penalty under section 271D of the Act in this case. Therefore, the second ground of appeal is On perusal of the impugned order, we find that Ground No. 2 raised before the Ld. CIT(A) was challenging the finding, the Ld. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 8 fide and not with a view to avoid tax. The relevant finding of The facts of the case in Triumph International Finance (I) Ltd, (22 Taxman.com 138) are very similar to the facts of this case which is before me. In this case also there was no finding recorded in the assessment orders or in the penalty orders to the effect that the repayments of loans/deposits were not bona fide transactions and were made with a view to evade tax. The appellant submitted that the loans were transferred from some persons of Sarin family ( 'original creditors') to some other persons ('new creditors) by passing necessary journal entries in the books of the appellant. In my nal creditors' by account payee cheques by the appellant and then receiving the same amount from the 'new creditors' by account payee cheques by the appellant would have been a empty formality in this case. As regards ecisions in the case of Dhanji R. Zalte (136 taxman 644) and in the case of K.V. George (42 taxmann.com 261), I find that those cases are distinguishable on facts as in those cases the loans were taken in cash (and not by present case). Therefore, in my view, the Addl. CIT was not justified in imposing penalty under section 271D of the Act in this case. Therefore, the second ground of appeal is On perusal of the impugned order, we find that Ground No. 2 raised before the Ld. CIT(A) was challenging the finding, the Ld. Addl. CIT not for imposing penalty u/s 271D of the Act on the loans accepted by the journal entry. Thus the conclusion in respect Ground No. 1, which the Ld. CIT(A) has arrived, the conclusion in respect of Ground No. 2. In the Ground No. 2 before the Ld. CIT(A), there was no such the transaction, still he decided that too agains Hon’ble Bombay High Court in the case of the Finance (I) Ltd. (supra) has specifically observed that irrespective w was bonafide or non amount through journal entries was in the nature of contravention of section 269T. The relevant part of the order of the Hon’ble Bombay High Court is reproduced as under: “In the present case, it is not in dispute that the assessee repaid loan/deposit by debiting the account through journal entries. The question is, whether such repayment of loan/deposit is in contravention of the modes of repayment set out in section 269T. The argument advanced by the assessee that the bona M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 Addl. CIT not for imposing penalty u/s 271D of the Act on the loans accepted by the journal entry. Thus the conclusion in respect , which the Ld. CIT(A) has arrived, should have been the conclusion in respect of Ground No. 2. In the Ground No. 2 before the Ld. CIT(A), there was no such issue of bona still he decided that too against the finding of the Hon’ble Bombay High Court in the case of the Triumph International Finance (I) Ltd. (supra), wherein the Hon’ble Bombay High Court has specifically observed that irrespective whether the transaction was bonafide or non-bonafide, repayment of loan by debiting amount through journal entries was in the nature of contravention of section 269T. The relevant part of the order of the Hon’ble Bombay High Court is reproduced as under: In the present case, it is not in dispute that the assessee repaid loan/deposit by debiting the account through journal entries. The question is, whether such repayment of loan/deposit is in contravention of the modes of repayment set out in section The argument advanced by the assessee that the bona M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 9 Addl. CIT not for imposing penalty u/s 271D of the Act on the loans accepted by the journal entry. Thus the conclusion in respect of should have been the conclusion in respect of Ground No. 2. In the Ground No. 2 raised issue of bonafide nature of t the finding of the Triumph International wherein the Hon’ble Bombay High Court hether the transaction ent of loan by debiting amount through journal entries was in the nature of contravention of section 269T. The relevant part of the order of the Hon’ble In the present case, it is not in dispute that the assessee has repaid loan/deposit by debiting the account through journal entries. The question is, whether such repayment of loan/deposit is in contravention of the modes of repayment set out in section The argument advanced by the assessee that the bona fide transaction of repayment of loan/deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of section 269T cannot be accepted, because, the section does not make any distinction bet fide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit wi interest if any exceeds the limits prescribed therein. the argument that only in cases where any loan or deposit is repaid by an outflow of funds, section 269T provides for repayment by an account payee cheque/draft cannot be accepted because section 269T neither refers to the repayment of loan/deposit by outflow of funds nor refers any of other permissible modes of repayment of loan/deposit, but merely puts an embargo on repayment of loan/deposit except by the modes specified therein. Therefo loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of section 269T. [Para 19] 7.3 In view of the above para 5.3, being contrary to the decision of the Hon’ble Bombay High Court, is set aside. M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 transaction of repayment of loan/deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of section 269T cannot be accepted, because, the section does not make any distinction between the bona fide and non fide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit wi interest if any exceeds the limits prescribed therein. Similarly, the argument that only in cases where any loan or deposit is repaid by an outflow of funds, section 269T provides for repayment by an account payee cheque/draft cannot be accepted section 269T neither refers to the repayment of loan/deposit by outflow of funds nor refers any of other permissible modes of repayment of loan/deposit, but merely puts an embargo on repayment of loan/deposit except by the modes specified therein. Therefore, in the present case, where loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of section 269T. [Para 19]” [Emphasis supplied externally] above, the finding arrived by the Ld. CIT(A) in contrary to the decision of the Hon’ble Bombay High M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 10 transaction of repayment of loan/deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of section 269T cannot be accepted, because, the section does ween the bona fide and non-bona fide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit with Similarly, the argument that only in cases where any loan or deposit is repaid by an outflow of funds, section 269T provides for repayment by an account payee cheque/draft cannot be accepted section 269T neither refers to the repayment of loan/deposit by outflow of funds nor refers any of other permissible modes of repayment of loan/deposit, but merely puts an embargo on repayment of loan/deposit except by the modes re, in the present case, where loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened [Emphasis supplied externally] finding arrived by the Ld. CIT(A) in contrary to the decision of the Hon’ble Bombay High 7.4 The Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has been raised before the lower authorities. 7.5 In view of the above grounds of appeal of the Revenue in ITA No. 7642/M/2016 are allowed. 8. As far as deletion of penalty u/s 271E the facts and circumstances are identical original creditors by way of journal entry controvert the provision of section 269SS), interlinked with the transaction of accepting loan from new creditors. 9. The finding of the Ld. CIT(A) in para 5.3 of the impugned order is against the ratio of the Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) and therefore, M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 The Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has before the lower authorities. In view of the above grounds of appeal of the Revenue in ITA No. 7642/M/2016 are allowed. As far as deletion of penalty u/s 271E of the Act facts and circumstances are identical i.e. (the loan repaid original creditors by way of journal entry controvert the provision of section 269SS), interlinked with the transaction of accepting loan The finding of the Ld. CIT(A) in para 5.3 of the impugned order f the Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) and therefore, M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 11 The Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has In view of the above grounds of appeal of the Revenue in ITA of the Act is concerned, i.e. (the loan repaid by the original creditors by way of journal entry controvert the provision of section 269SS), interlinked with the transaction of accepting loan The finding of the Ld. CIT(A) in para 5.3 of the impugned order f the Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) and therefore, following our finding in ITA No. 7642/M/2016, the grounds raised by the Revenue in the present appeal are also allowed. 10. In the result, both the allowed. Order pronounced in the open Court in Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 12/08/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 our finding in ITA No. 7642/M/2016, the grounds raised in the present appeal are also allowed. In the result, both the appeals filed by the Revenue are ounced in the open Court in 12/08/2022. Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai M/s White Feather Films Ltd. ITA Nos. 7642 & 7651/M/2016 12 our finding in ITA No. 7642/M/2016, the grounds raised in the present appeal are also allowed. appeals filed by the Revenue are /08/2022. Sd/- OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai