MANJRI HORSE BREEDERS FARM PRIVATE LIMITED,MUMBAI, MAHARASHTRA vs. DCIT CIRCLE 2(2)(1), MUMBAI, MUMBAI, MAHARASHTRA

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BENERJEE (JUDICIAL MEMBER)

ITA No.376 and 377/MUM/2026 Assessment Year: 2020-21

Manjri Horse Breeders Farm Private Deputy Commissioner of Income Limited, 41/44, Sp Centre, Minoo Desai Tax, Circle 2(2)(1), Aayakar Vs. Marg, Colaba S.O. Mumbai, Mumbai – Bhawan, M.K. Road, Mumbai – 400005, Maharashtra. 400020, Maharashtra. PAN NO. AAFCM 3756 K APPELLANT RESPONDENT

: NONE Assessee by : Shri Rajesh Kumar Yadav, (CIT. DR) Department by Date of Hearing : 20.04.2026 : 19.05.2026 Date of pronouncement ORDER PER BENCH

The present two appeals, preferred by the assessee, arise out of separate orders both dated 22.12.2025 passed by the Learned Additional Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], pertaining to Assessment Year 2020-21, whereby penalties under Sections 271D and 271E of the Income-tax Act, 1961 (“the Act”) came to be affirmed on account of

Manjri Horse Breeders Manjri Horse Breeders 2 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

acceptance and repayment of loans otherwise than through the acceptance and repayment of loans otherwise than through the acceptance and repayment of loans otherwise than through the prescribed banking channels. prescribed banking channels.

“1. Ground No. 1 Validity of the penalty order: 1. Ground No. 1 Validity of the penalty order: 1.1. The learned Commissioner of Income 1.1. The learned Commissioner of Income-tax (Appeals) ("Ld. CIT(A)") has erred in tax (Appeals) ("Ld. CIT(A)") has erred in law in confirming the order dated March 22, 2023 passed under section 271D of the order dated March 22, 2023 passed under section 271D of the order dated March 22, 2023 passed under section 271D of the Income-tax Act, 1961 ("the Act"). tax Act, 1961 ("the Act"). 1.2. The Appellant submits that the Ld. CIT(A) failed to appreciate that the 1.2. The Appellant submits that the Ld. CIT(A) failed to appreciate that the 1.2. The Appellant submits that the Ld. CIT(A) failed to appreciate that the impugned penalty order was without jurisdiction and/or otherwise not in impugned penalty order was without jurisdiction and/or otherwise not in impugned penalty order was without jurisdiction and/or otherwise not in accordance with the provisions of the Act, and was therefore bad in law and of no e with the provisions of the Act, and was therefore bad in law and of no e with the provisions of the Act, and was therefore bad in law and of no legal effect. 1.3. The Appellant submits that the impugned order passed under section 271D 1.3. The Appellant submits that the impugned order passed under section 271D 1.3. The Appellant submits that the impugned order passed under section 271D of the Act deserves to be held as null and void and be quashed. of the Act deserves to be held as null and void and be quashed. of the Act deserves to be held as null and void and be quashed. Without prejudice to the abo Without prejudice to the above: 2. Ground No. 2 - - Levy of penalty of Rs. 1,28,74,43,161/ Levy of penalty of Rs. 1,28,74,43,161/-under section 271D of the Act:

Manjri Horse Breeders Manjri Horse Breeders 3 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

2.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under 2.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under 2.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under section 271D of the Act on the alleged ground of non section 271D of the Act on the alleged ground of non-compliance with the compliance with the provisions of section 2695S of the Act. section 2695S of the Act. 2.2. The Appellant submits that, having regard to the facts and circumstances of 2.2. The Appellant submits that, having regard to the facts and circumstances of 2.2. The Appellant submits that, having regard to the facts and circumstances of the case and the correct interpretation of law, it cannot be held that there was the case and the correct interpretation of law, it cannot be held that there was the case and the correct interpretation of law, it cannot be held that there was any failure to comply with the provisions of section 2695S of the Act, and any failure to comply with the provisions of section 2695S of the Ac any failure to comply with the provisions of section 2695S of the Ac consequently, no penalty under section 271D is levlable. consequently, no penalty under section 271D is levlable. The Appellant submits that the impugned order confirming levy of penalty under The Appellant submits that the impugned order confirming levy of penalty under The Appellant submits that the impugned order confirming levy of penalty under section 271D of the Act deserves to be quashed. section 271D of the Act deserves to be quashed. 3. Ground No. 3- Applicability of reasonable cause under Section Applicability of reasonable cause under Section 2738 of Applicability of reasonable cause under Section the Act: 3.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under 3.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under 3.1. The Ld. CIT(A) has erred in law in confirming the levy of penalty under section 2710 of the Act without properly considering the applicability of section section 2710 of the Act without properly considering the applicability of section section 2710 of the Act without properly considering the applicability of section 273B of the Act. 3.2. The Appellant submits that the transactions in question were undertaken 3.2. The Appellant submits that the transactions in question 3.2. The Appellant submits that the transactions in question with bona fide intent, for legitimate business purposes, and in the ordinary with bona fide intent, for legitimate business purposes, and in the ordinary with bona fide intent, for legitimate business purposes, and in the ordinary course of business, and therefore, constitute reasonable cause within the course of business, and therefore, constitute reasonable cause within the course of business, and therefore, constitute reasonable cause within the meaning of section 2738 of the Act. meaning of section 2738 of the Act. 3.3. The Appellant submits that the impugned order co 3.3. The Appellant submits that the impugned order confirming penalty under nfirming penalty under section 271D of the Act is liable to be quashed on account of existence of section 271D of the Act is liable to be quashed on account of existence of section 271D of the Act is liable to be quashed on account of existence of reasonable cause.” 4. Briefly stated, the relevant facts are that the assessee is Briefly stated, the relevant facts are that the assessee is Briefly stated, the relevant facts are that the assessee is engaged in the business of real estate development, operation of engaged in the business of real estate development, operation of engaged in the business of real estate development, operation of stud farms, breeding and raising of horses, and allied activities. The breeding and raising of horses, and allied activities. The breeding and raising of horses, and allied activities. The return of income for the year under consideration was filed on return of income for the year under consideration was filed on return of income for the year under consideration was filed on 31.03.2021 declaring a total income of Rs.41,48,09,140/-. The case 31.03.2021 declaring a total income of Rs.41,48,09,140/ 31.03.2021 declaring a total income of Rs.41,48,09,140/ was selected for scrutiny assessment and statutory notices issued was selected for scrutiny assessment and statutory notices issued was selected for scrutiny assessment and statutory notices issued under the Act were duly complied with by the assessee. During the under the Act were duly complied with by the assessee. During the under the Act were duly complied with by the assessee. During the course of assessment proceedings, the Assessing Officer observed course of assessment proceedings, the Assessing Officer observed course of assessment proceedings, the Assessing Officer observed that that that the the the assessee assessee assessee had had had accepted accepted accepted loans loans loans aggregating aggregating aggregating to to to Rs.1,20,67,43,195/- otherwise than by account payee cheque, bank otherwise than by account payee cheque, bank

Manjri Horse Breeders Manjri Horse Breeders 4 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

draft or electronic clearing system from Late Mr. Cyrus P. Mistry electronic clearing system from Late Mr. Cyrus P. Mistry electronic clearing system from Late Mr. Cyrus P. Mistry and M/s Joyville Shapoorji Housing Pvt. Ltd. The assessment was and M/s Joyville Shapoorji Housing Pvt. Ltd. The assessment was and M/s Joyville Shapoorji Housing Pvt. Ltd. The assessment was thereafter completed under Section 143(3) on 27.09.2022. thereafter completed under Section 143(3) on 27.09.2022. thereafter completed under Section 143(3) on 27.09.2022. 4.1 The explanation furnished by the assessee before the The explanation furnished by the assessee before the The explanation furnished by the assessee before the authorities below wa authorities below was that a loan of Rs.120 crores had originally s that a loan of Rs.120 crores had originally been availed from Deutsche India Investment Pvt. Ltd. (“DIIPL”) for been availed from Deutsche India Investment Pvt. Ltd. (“DIIPL”) for been availed from Deutsche India Investment Pvt. Ltd. (“DIIPL”) for acquisition of land and that the said borrowing was secured by acquisition of land and that the said borrowing was secured by acquisition of land and that the said borrowing was secured by pledge of shares belonging to one of the promoters, Late Mr. Cyrus pledge of shares belonging to one of the promoters, Late Mr. Cyrus pledge of shares belonging to one of the promoters, Late Mr. Cyrus P. Mistry. It was contended that, in December 2019, a decision was t was contended that, in December 2019, a decision was t was contended that, in December 2019, a decision was taken by the promoter to liquidate a part of the pledged TCS shares taken by the promoter to liquidate a part of the pledged TCS shares taken by the promoter to liquidate a part of the pledged TCS shares so as to facilitate repayment of the outstanding liability owed by the so as to facilitate repayment of the outstanding liability owed by the so as to facilitate repayment of the outstanding liability owed by the assessee assessee assessee to to to DIIPL. DIIPL. DIIPL. Pursuant Pursuant Pursuant thereto, thereto, thereto, the the the lender lender lender adjusted adjusted adjusted Rs.120,67,43,195/-, , the loan of Rs. 120 crores together with the loan of Rs. 120 crores together with accrued interest of Rs. 67,43,195/ Rs. 67,43,195/- from the sale proceeds of the from the sale proceeds of the pledged shares and transferred the balance, if any, to the account pledged shares and transferred the balance, if any, to the account pledged shares and transferred the balance, if any, to the account of the promoter. The assessee thereafter passed corresponding of the promoter. The assessee thereafter passed corresponding of the promoter. The assessee thereafter passed corresponding journal entries in its books treating the said amount as loan al entries in its books treating the said amount as loan al entries in its books treating the said amount as loan received from Late Mr. Cyrus P. Mistry. received from Late Mr. Cyrus P. Mistry. The total amount repaid The total amount repaid of Rs.120,67,43,195/-, was , was treated by the assessee treated by the assessee in its books of accounts as a loan from as a loan from late Mr. Cyrus P Mistry. 4.2 In relation to M/s Joyville Shapoorji Housing Pvt. Ltd., M/s Joyville Shapoorji Housing Pvt. Ltd., The M/s Joyville Shapoorji Housing Pvt. Ltd., assessee submitted that it submitted that it had sold its land to Joyville in August to Joyville in August 2019, for for Rs. Rs. 1,53,35,93,587 1,53,35,93,587/- and and had had received received

Manjri Horse Breeders Manjri Horse Breeders 5 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

Rs.1,30,99,70,056/- against this land in the same financial year. same financial year. The Joyville deducted Rs. deducted Rs.8,07,37,320/- towards various expenses towards various expenses such as approval fee, labour charges etc., from the amount payable such as approval fee, labour charges etc., from the amount payable such as approval fee, labour charges etc., from the amount payable to the assessee as they to the assessee as they claimed to have incurred such expenses on incurred such expenses on behalf of the assessee behalf of the assessee. The balance amount of Rs. 14,28,86 . The balance amount of Rs. 14,28,86,211/- was receivable from Joyville. was receivable from Joyville. According to the assessee, said amount According to the assessee, said amount of Rs.8,07,37,320/- was was adjusted through journal entries adjusted through journal entries. 4.3 In view of the transaction view of the transactions of receipt of loan otherwise than by of receipt of loan otherwise than by way of account payee cheque payee cheque from Mr. Cyrus P Mistry Mr. Cyrus P Mistry, the ld AO was of view that same was in contravention of provisions of section was of view that same was in contravention of provisions of section was of view that same was in contravention of provisions of section 269SS and liable for penalty u/s 271D of the Act. or penalty u/s 271D of the Act. or penalty u/s 271D of the Act. Regarding acceptance of amount of Rs.8,06,99,966/ acceptance of amount of Rs.8,06,99,966/- from Joyville by way of from Joyville by way of general entry was also held t general entry was also held to be in contraventions of provisions of in contraventions of provisions of section 269SS and attracting penalty u/s 271D attracting penalty u/s 271D of the Act. of the Act. 4.4 On the other hand On the other hand, return of loan pertaining to assessee to return of loan pertaining to assessee to Deutsche Bank by the promoter, was also considered as return of Bank by the promoter, was also considered as return of Bank by the promoter, was also considered as return of loan otherwise by than by way o loan otherwise by than by way of account payee cheque and held in payee cheque and held in contravention of provisions of section 269SS of Act, attracting contravention of provisions of section 269SS of Act, contravention of provisions of section 269SS of Act, penalty u/s 271E of the Act. penalty u/s 271E of the Act.

4.5 The Ld. AO accordingly referred the matter Ld. AO accordingly referred the matter Ld. AO accordingly referred the matter of initiating of penalty u/s 271D and 171E to the penalty u/s 271D and 171E to the Ld. Additional Commissioner of Additional Commissioner of Income-tax who is authorised to initiate penalty und who is authorised to initiate penalty und who is authorised to initiate penalty under relevant

Manjri Horse Breeders Manjri Horse Breeders 6 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

provisions. The Ld. provisions. The Ld. Addl CIT accordingly initiated penalty for accordingly initiated penalty for violation of provisions of section violation of provisions of section 269SS and 269ST of the Act of the Act.

4.6 The ld Addl CIT considered t The ld Addl CIT considered the assessee’s explanation but he assessee’s explanation but found unsatisfactory. The assessee contended that the loan of ound unsatisfactory. The assessee contended that the loan of ound unsatisfactory. The assessee contended that the loan of Rs.1,20,67,43,195/- from Late Shri Cyrus Mistry was accepted for from Late Shri Cyrus Mistry was accepted for repayment of dues to Deutsche Investments India Private Limited repayment of dues to Deutsche Investments India Private Limited repayment of dues to Deutsche Investments India Private Limited (DIIPL), and that the transaction was recorded through journal (DIIPL), and that the transaction was recorded through journal (DIIPL), and that the transaction was recorded through journal entries. It was further claimed that, in view of section 273B of the ries. It was further claimed that, in view of section 273B of the ries. It was further claimed that, in view of section 273B of the Act, no penalty under section 271D was leviable as there existed a Act, no penalty under section 271D was leviable as there existed a Act, no penalty under section 271D was leviable as there existed a reasonable cause for reassignment of the liability in the name of the reasonable cause for reassignment of the liability in the name of the reasonable cause for reassignment of the liability in the name of the promoter. The ld Addl CIT , however noted that the assessee failed promoter. The ld Addl CIT , however noted that the as promoter. The ld Addl CIT , however noted that the as to substantiate the existence of any compelling or reasonable cause to substantiate the existence of any compelling or reasonable cause to substantiate the existence of any compelling or reasonable cause for accepting the transaction otherwise than through prescribed for accepting the transaction otherwise than through prescribed for accepting the transaction otherwise than through prescribed banking channels. The plea that there was no mala fide intention or banking channels. The plea that there was no mala fide intention or banking channels. The plea that there was no mala fide intention or deliberate violation of law was also not s deliberate violation of law was also not supported by any upported by any satisfactory explanation regarding compliance with section 269SS. satisfactory explanation regarding compliance with section 269SS. satisfactory explanation regarding compliance with section 269SS. Further, no plausible explanation was furnished in respect of the Further, no plausible explanation was furnished in respect of the Further, no plausible explanation was furnished in respect of the specified sum of Rs.8,06,99,966/ specified sum of Rs.8,06,99,966/- received from M/s Joyville received from M/s Joyville Shapoorji Housing Private Limited in contravention of section Shapoorji Housing Private Limited in contravent Shapoorji Housing Private Limited in contravent 269SS of the Act. Accordingly, it was concluded that the assessee 269SS of the Act. Accordingly, it was concluded that the assessee 269SS of the Act. Accordingly, it was concluded that the assessee had violated the provisions of section 269SS by accepting had violated the provisions of section 269SS by accepting had violated the provisions of section 269SS by accepting loan/deposit/specified sum otherwise than through prescribed loan/deposit/specified sum otherwise than through prescribed loan/deposit/specified sum otherwise than through prescribed banking modes and had failed to establish reasonable cause under banking modes and had failed to establish reasonable cau banking modes and had failed to establish reasonable cau section section section 273B. 273B. 273B. Consequently, Consequently, Consequently, penalty penalty penalty under under under section section section 271D 271D 271D

Manjri Horse Breeders Manjri Horse Breeders 7 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

amounting to Rs.1,28,74,43,161/ amounting to Rs.1,28,74,43,161/- was levied, being equal to the was levied, being equal to the amount so accepted in contravention of the Act. amount so accepted in contravention of the Act. The relevant part of The relevant part of the order u/s 271D is reproduced as under: the order u/s 271D is reproduced as under:

“3.5 Point-wise consideration of reply of the assessee including analysis consideration of reply of the assessee including analysis consideration of reply of the assessee including analysis of case law relied upon: of case law relied upon: The reply of the assessee has been duly considered but not found acceptable as The reply of the assessee has been duly considered but not found acceptable as The reply of the assessee has been duly considered but not found acceptable as discussed hereunder: discussed hereunder: 1. The assessee in its reply dated 20.02.2023 has stated that total loan 1. The assessee in its reply dated 20.02.2023 has stated that total loan 1. The assessee in its reply dated 20.02.2023 has stated that total loan amounting to Rs. 1206743195/ amounting to Rs. 1206743195/-has been accepted from Late Cyrus Mistry to has been accepted from Late Cyrus Mistry to repay the loan directly to Deutsche Investments India Private Limited (DIIPL) on repay the loan directly to Deutsche Investments India Private Limited (DIIPL) on repay the loan directly to Deutsche Investments India Private Limited (DIIPL) on behalf of the assessee. The assessee has passed the journal entry for the loan behalf of the assessee. The assessee has passed the journal entry for the loan behalf of the assessee. The assessee has passed the journal entry for the loan from Late Cyrus Mistry from Late Cyrus Mistry The assessee has stated that as per section 2738 of the The assessee has stated that as per section 2738 of the Income-tax Act, 1961 no penalty could be levied u/s. 271D of the Act since there tax Act, 1961 no penalty could be levied u/s. 271D of the Act since there tax Act, 1961 no penalty could be levied u/s. 271D of the Act since there was a reasonable cause for re was a reasonable cause for re-assign the loan in the name of assign the loan in the name of promoter i.e. Late Cyrus Mistry and to repay the loan by s Cyrus Mistry and to repay the loan by selling off the shares pledged elling off the shares pledged by the promoter. However, the assessee has not sufficiently explained the reasonable promoter. However, the assessee has not sufficiently explained the reasonable promoter. However, the assessee has not sufficiently explained the reasonable assignment of the said loan. cause for re-assignment of the said loan 2. The assessee has also stated that there has been no non-compliance on its 2. The assessee has also stated that there has been no non 2. The assessee has also stated that there has been no non part bonafide intenti part bonafide intention behind the said transaction deliberately or with malafide on behind the said transaction deliberately or with malafide intention. However, the assessee has failed to show the intention. However, the assessee has failed to show the explanation regarding explanation regarding specified sum of 3. Further, the assessee has not provided any 3. Further, the assessee has not provided any explanation regarding specified explanation regarding specified sum of Rs.8.06,99,966 9,966/- received from M/s Joyville Shapoorji Housing Private Shapoorji Housing Private Limited in contraventio Limited in contravention to provisions of section 269SS of the Act of the Act. 3.6 Citation of relevant case laws: Not Applicable 3.6 Citation of relevant case laws: Not Applicable 3.7 Conclusion drawn for Imposition of Penalty: Conclusion drawn for Imposition of Penalty: As discussed above, the assessee has failed to establish the fact that As discussed above, the assessee has failed to establish the fact that As discussed above, the assessee has failed to establish the fact that there had been circumstances beyond its control which attributed in accepting there had been circumstances beyond its control which attributed in accepting there had been circumstances beyond its control which attributed in accepting loan/deposits/specified sum otherwise than the banking channel. The action of loan/deposits/specified sum otherwise than the banking channel. The action of loan/deposits/specified sum otherwise than the banking channel. The action of the assessee had clearly viol the assessee had clearly violated the provisions of section 269SS and therefore ated the provisions of section 269SS and therefore liable for penalty u/s.271D of the Act. Thus, in my opinion, the assessee has liable for penalty u/s.271D of the Act. Thus, in my opinion, the assessee has liable for penalty u/s.271D of the Act. Thus, in my opinion, the assessee has failed to comply with the provisions of section 269SS and hence liable to pay, by failed to comply with the provisions of section 269SS and hence liable to pay, by failed to comply with the provisions of section 269SS and hence liable to pay, by way of penalty a sum equal to the amount of t way of penalty a sum equal to the amount of the loan or deposit or specified sum he loan or deposit or specified sum so accepted otherwise than the banking channel. Accordingly, I hereby levy a so accepted otherwise than the banking channel. Accordingly, I hereby levy a so accepted otherwise than the banking channel. Accordingly, I hereby levy a penalty u/s.271D of the IT Act of Rs. 1,28,74,43,161/ penalty u/s.271D of the IT Act of Rs. 1,28,74,43,161/- equal to the amount of equal to the amount of loan or deposit or specified sum so accepted otherwise than by an account payee loan or deposit or specified sum so accepted otherwise than by an loan or deposit or specified sum so accepted otherwise than by an

Manjri Horse Breeders Manjri Horse Breeders 8 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

cheque or account payee bank draft or use of electronic clearing system through a cheque or account payee bank draft or use of electronic clearing system through a cheque or account payee bank draft or use of electronic clearing system through a bank account.” 4.7 Identical order for levy of penalty u/s 271E was passed by the Identical order for levy of penalty u/s 271E was passed by the Identical order for levy of penalty u/s 271E was passed by the ld Addl CIT. 5. The Ld. CIT(A), after an elaborate consideration of the The Ld. CIT(A), after an elaborate consideration of the The Ld. CIT(A), after an elaborate consideration of the statutory provisions and the judicial precedents governing the field, statutory provisions and the judicial precedents governing the field, statutory provisions and the judicial precedents governing the field, upheld the penalties by holding that transactions effected merely upheld the penalties by holding that transactions effected merely upheld the penalties by holding that transactions effected merely through journal entries fall within the mischief of Sections 269SS through journal entries fall within the mischief of Sections 269 through journal entries fall within the mischief of Sections 269 and 269T of the Act unless the assessee is able to demonstrate and 269T of the Act unless the assessee is able to demonstrate and 269T of the Act unless the assessee is able to demonstrate existence of “reasonable cause” within the meaning of Section 273B existence of “reasonable cause” within the meaning of Section 273B existence of “reasonable cause” within the meaning of Section 273B of the Act. The appellate authority extensively relied upon the of the Act. The appellate authority extensively relied upon the of the Act. The appellate authority extensively relied upon the judgment of the Hon’ble Bombay High Court in judgment of the Hon’ble Bombay High Court in CIT vs. Triump CIT vs. Triumph International Finance (I) Pvt. Ltd. reported in [2012] 345 ITR 270 reported in [2012] 345 ITR 270 International Finance (I) Pvt. Ltd. (Bom), as also the decisions of the Hon’ble Supreme Court in ADIT (Bom), as also the decisions of the Hon’ble Supreme Court in (Bom), as also the decisions of the Hon’ble Supreme Court in vs. Kum. A.B. Shanthi [2002] 255 ITR 258 (SC) and [2002] 255 ITR 258 (SC) and CIT vs. Adinath vs. Kum. A.B. Shanthi Builders (P.) Ltd. [2019] 102 taxmann.com 57 (SC). [2019] 102 taxmann.com 57 (SC). 5.1 Similarly, the Ld. CIT(A) upheld the penalty u/s 271E with Similarly, the Ld. CIT(A) upheld the penalty u/s 271E with Similarly, the Ld. CIT(A) upheld the penalty u/s 271E with almost same finding. 6. We have carefully considered the orders of the authorities We have carefully considered the orders of the authorities We have carefully considered the orders of the authorities below and the material available on record. below and the material available on record. At the outset, At the outset, we may like to mention that despite notifying like to mention that despite notifying none attended ended on behalf of the assessee during the course of hearing. The assessee during the course of hearing. The appeals were listed for appeals were listed for hearing on 02.04.2026 and on said date the matter was adjourned hearing on 02.04.2026 and on said date the matter was hearing on 02.04.2026 and on said date the matter was

Manjri Horse Breeders Manjri Horse Breeders 9 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

to 13.04.2026 at the request of the learned counsel for the assessee 2026 at the request of the learned counsel for the assessee 2026 at the request of the learned counsel for the assessee for filing of a paper book. On paper book. On 13.04.2026, again the assessee again the assessee sought further time and submitted that the assessee was in the process of further time and submitted that the assessee was in the process of further time and submitted that the assessee was in the process of preparing and filing paper book filing paper book and on his request the matter was his request the matter was adjourned finally to 20.04.2026. During the course of the hearing adjourned finally to 20.04.2026. During the course of the hearing adjourned finally to 20.04.2026. During the course of the hearing on 20.04.2026, the Ld. Counsel was notified that the Ld. Counsel was notified that next next date would be a final opportunity be a final opportunity. Despite all the opportunities, neither anyone , neither anyone attended nor was any adjournment sought nor was any adjournment sought on behalf of the assessee on behalf of the assessee on date of hearing of matter on date of hearing of matter. Therefore, we were of the opinion that herefore, we were of the opinion that the assessee was not interested in prosecuting this appeal. he assessee was not interested in prosecuting this appeal. he assessee was not interested in prosecuting this appeal. Accordingly, the same was heard same was heard ex-parte qua the assessee after qua the assessee after hearing the arguments of the hearing the arguments of the learned Departmental Representative learned Departmental Representative (DR). 6.1 The section 269SS and 269T prescribe that any loan or The section 269SS and 269T prescribe that any loan or The section 269SS and 269T prescribe that any loan or deposit or sale/purchase of property transactions beyond certain sit or sale/purchase of property transactions beyond certain sit or sale/purchase of property transactions beyond certain pecuniary limit has to be carried out through banking channels pecuniary limit has to be carried out through banking channels pecuniary limit has to be carried out through banking channels only and violation make liable for penalty u/s 271D and 271E of only and violation make liable for penalty u/s 271D and 271E of only and violation make liable for penalty u/s 271D and 271E of the Act. For ready reference, said provisions are reproduced as the Act. For ready reference, said provisions are reproduced as the Act. For ready reference, said provisions are reproduced as under: Section 269SS “269SS. No person shall take or accept from any other person (herein referred to “269SS. No person shall take or accept from any other person (herein referred to “269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an as the depositor), any loan or deposit or any specified sum, otherwise than by an as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing account payee cheque or account payee bank draft or use of electronic account payee cheque or account payee bank draft or use of electronic system through a bank account or through such other electronic mode as may be system through a bank account or through such other electronic mode as may be system through a bank account or through such other electronic mode as may be prescribed, if,—

Manjri Horse Breeders Manjri Horse Breeders 10 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

(a) the amount of such loan or deposit or specified sum or the aggregate (a) the amount of such loan or deposit or specified sum or the aggregate (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or amount of such loan, deposit and specified sum; or (b) on the date of taking or (b) on the date of taking or accepting such loan or deposit or specified sum, accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such any loan or deposit or specified sum taken or accepted earlier by such any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has person from the depositor is remaining unpaid (whether repayment has person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining u fallen due or not), the amount or the aggregate amount remaining u fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together (c) the amount or the aggregate amount referred to in clause (a) together (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is with the amount or the aggregate amount referred to in clause (b), is with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more: twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or that the provisions of this section shall not apply to any loan or that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or deposit or specified sum taken or accepted from, or any loan or deposit or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by, specified sum taken or accepted by,— (a) the Government; (a) the Government; (b) any banking company, post office savings bank or co-operative (b) any banking company, post office savings bank or co (b) any banking company, post office savings bank or co bank; (c) any corporation established by a Central, State or Provincial Act; (c) any corporation established by a Central, State or Provincial Act; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 (d) any Government company as defined in clause (45) of section 2 (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); of the Companies Act, 2013 (18 of 2013); (e) such other institution, association or body or class of institutions, (e) such other institution, association or body or class of in (e) such other institution, association or body or class of in associations or bodies which the Central Government may, for associations or bodies which the Central Government may, for associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official reasons to be recorded in writing, notify in this behalf in the Official reasons to be recorded in writing, notify in this behalf in the Official Gazette: Gazette: Provided further that the provisions of this section shall not apply to any loan or Provided further that the provisions of this section shall not apply to any loan or Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or ied sum, where the person from whom the loan or deposit or ied sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and specified sum is taken or accepted, are both having agricultural income and specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeabl neither of them has any income chargeable to tax under this Act: e to tax under this Act: Provided also that the provisions of this section shall have effect, as if for the Provided also that the provisions of this section shall have effect, as if for the Provided also that the provisions of this section shall have effect, as if for the words "twenty thousand rupees", the words "two lakh rupees" had been words "twenty thousand rupees", the words "two lakh rupees" had been words "twenty thousand rupees", the words "two lakh rupees" had been substituted in the case of any deposit or loan where, substituted in the case of any deposit or loan where,–– (a)such deposit is acce (a)such deposit is accepted by a primary agricultural credit society or a pted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its operative agricultural and rural development bank from its operative agricultural and rural development bank from its member; or (b) such loan is taken from a primary agricultural credit society or a (b) such loan is taken from a primary agricultural credit society or a (b) such loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural developme operative agricultural and rural development bank by its operative agricultural and rural developme member.

Manjri Horse Breeders Manjri Horse Breeders 11 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

Explanation.—For the purposes of this section, For the purposes of this section,— (i)banking company" means a company to which the provisions of the Banking (i)banking company" means a company to which the provisions of the Banking (i)banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section institution referred to in section 51 of that Act; (ii)"co-operative bank", "primary agricultural credit society" and "primary co operative bank", "primary agricultural credit society" and "primary co operative bank", "primary agricultural credit society" and "primary co- operative agricultural and rural development bank" shall have the meanings operative agricultural and rural development bank" shall have the meanings operative agricultural and rural development bank" shall have the meanings respectively assigned to them in the Explanation to sub respectively assigned to them in the Explanation to sub-section (4) of section 80P; section (4) of section 80P; (iii)"loan or deposit" means loan or deposit of money; ii)"loan or deposit" means loan or deposit of money; (iv) "specified sum" means any sum of money receivable, whether as advance or (iv) "specified sum" means any sum of money receivable, whether as advance or (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the otherwise, in relation to transfer of an immovable property, whether or not the otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. transfer takes place.” “Section 269ST 269ST. No person shall receive an amount of two lakh rupees or more No person shall receive an amount of two lakh rupees or more No person shall receive an amount of two lakh rupees or more— (a) in aggregate from a person in a day; or in aggregate from a person in a day; or (b) in respect of a single transaction; or in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a in respect of transactions relating to one event or occasion from a in respect of transactions relating to one event or occasion from a person, otherwise than by an otherwise than by an account payee cheque or an account payee bank account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or draft or use of electronic clearing system through a bank account or draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed: through such other electronic mode as may be prescribed: through such other electronic mode as may be prescribed: Provided that the provisions of this section shall not apply to Provided that the provisions of this section shall not apply to Provided that the provisions of this section shall not apply to— (i) any receipt by any receipt by— (a) Government; Government; (b) any banking company, post office savings bank or co any banking company, post office savings bank or co-operative any banking company, post office savings bank or co bank; (ii) transactions of the nature referred to in section 269SS; transactions of the nature referred to in section 269SS; transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central such other persons or class of persons or receipts, which the Central such other persons or class of persons or receipts, which the Central Government may, by notificati Government may, by notification in the Official Gazette, specify. on in the Official Gazette, specify. Explanation.—For the purposes of this section, For the purposes of this section,— (a) "banking company" shall have the same meaning as assigned to it in "banking company" shall have the same meaning as assigned to it in "banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; clause (i) of the Explanation to section 269SS;

Manjri Horse Breeders Manjri Horse Breeders 12 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

(b) "co-operative bank" shall have the same meaning operative bank" shall have the same meaning as assigned to it in operative bank" shall have the same meaning clause (ii) of the Explanation to section 269SS. clause (ii) of the Explanation to section 269SS.”

6.2 We find that the legal position governing the controversy is no We find that the legal position governing the controversy is no We find that the legal position governing the controversy is no longer res integra. The Hon’ble Bombay High Court in CIT Vs. longer res integra. The Hon’ble Bombay High Court in longer res integra. The Hon’ble Bombay High Court in Triumph International Finance (India) Private Limited dated Triumph International Finance (India) Private Limited d Triumph International Finance (India) Private Limited d 12.06.2012 reported in [2012] 245 ITR 270 (Bom) reported in [2012] 245 ITR 270 (Bom) has reported in [2012] 245 ITR 270 (Bom) unequivocally held that repayment or acceptance of loans through unequivocally held that repayment or acceptance of loans through unequivocally held that repayment or acceptance of loans through journal entries constitutes a technical violation of Sections 269SS journal entries constitutes a technical violation of Sections 269SS journal entries constitutes a technical violation of Sections 269SS and 269T of the Act. However, the Hon’ble Court simultaneously and 269T of the Act. However, the Hon’ble Court simultaneously and 269T of the Act. However, the Hon’ble Court simultaneously held that penalty may yet be avoided where the assessee is able to d that penalty may yet be avoided where the assessee is able to d that penalty may yet be avoided where the assessee is able to establish existence of “reasonable cause” under Section 273B of the establish existence of “reasonable cause” under Section 273B of the establish existence of “reasonable cause” under Section 273B of the Act. The distinction between a bona fide transaction and existence Act. The distinction between a bona fide transaction and existence Act. The distinction between a bona fide transaction and existence of reasonable cause has also been lucidly explained by the Hon’ble of reasonable cause has also been lucidly explained by th of reasonable cause has also been lucidly explained by th Supreme Court in Kum. A.B. Shanthi Kum. A.B. Shanthi (supra), wherein it was held (supra), wherein it was held that genuineness of the transaction alone is insufficient and that that genuineness of the transaction alone is insufficient and that that genuineness of the transaction alone is insufficient and that the the the assessee assessee assessee must must must independently independently independently establish establish establish compelling compelling compelling circumstances justifying deviation from the prescribed statutory circumstances justifying deviation from the prescribed statuto circumstances justifying deviation from the prescribed statuto mode. 6.3 In the present case, however, we find ourselves in agreement In the present case, however, we find ourselves in agreement In the present case, however, we find ourselves in agreement with the findings recorded by the Ld. CIT(A) that the assessee has with the findings recorded by the Ld. CIT(A) that the assessee has with the findings recorded by the Ld. CIT(A) that the assessee has failed to discharge the burden cast upon it under Section 273B of failed to discharge the burden cast upon it under Section 273B of failed to discharge the burden cast upon it under Section 273B of the Act. Neither before the authorities below nor before this the Act. Neither before the authorities below nor before this the Act. Neither before the authorities below nor before this Tribunal has the assessee demonstrated any compelling business Tribunal has the assessee demonstrated any compelling business Tribunal has the assessee demonstrated any compelling business

Manjri Horse Breeders Manjri Horse Breeders 13 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

exigency or unavoidable circumstance necessitating routing of the exigency or unavoidable circumstance necessitating routing of the exigency or unavoidable circumstance necessitating routing of the impugned impugned impugned transactions transactions transactions through through through journal journal journal entries entries entries instead instead instead of of of recognized banking channels. No material has been brought on recognized banking channels. No material has been brought on recognized banking channels. No material has been brought on record to explain as to why the sale proceeds of the promoter’s explain as to why the sale proceeds of the promoter’s explain as to why the sale proceeds of the promoter’s pledged shares could not first be credited to the promoter and pledged shares could not first be credited to the promoter and pledged shares could not first be credited to the promoter and thereafter advanced to the assessee through permissible banking thereafter advanced to the assessee through permissible banking thereafter advanced to the assessee through permissible banking modes. Similarly, in respect of the adjustment entries passed with modes. Similarly, in respect of the adjustment entries passed with modes. Similarly, in respect of the adjustment entries passed with M/s Joyville ville ville Shapoorji Shapoorji Shapoorji Housing Housing Housing Pvt. Pvt. Pvt. Ltd., Ltd., Ltd., no no no satisfactory satisfactory satisfactory explanation or contemporaneous material has been furnished to explanation or contemporaneous material has been furnished to explanation or contemporaneous material has been furnished to establish establish establish existence existence existence of of of any any any reasonable reasonable reasonable cause cause cause within within within the the the contemplation of Section 273B. contemplation of Section 273B. In the instant case, the n the instant case, the Ld. CIT(A) is of the view that no reasonable cause exist in the case of the o reasonable cause exist in the case of the o reasonable cause exist in the case of the assessee. The relevant finding of the Ld. CIT(A) is reproduced as assessee. The relevant finding of the Ld. CIT(A) is reproduced as assessee. The relevant finding of the Ld. CIT(A) is reproduced as under: “The Hon’ble Bombay High Court in the case of Triumph International has The Hon’ble Bombay High Court in the case of Triumph International has The Hon’ble Bombay High Court in the case of Triumph International has not declared all the Journal Entries to be illegal. In fact, Journa declared all the Journal Entries to be illegal. In fact, Journal Entries l Entries are part and parcel of accrual system of accounting. The Hon’ble parcel of accrual system of accounting. The Hon’ble Bombay High Court Bombay High Court judgement only requires that the assessee needs to judgement only requires that the assessee needs to establish the reasonable establish the reasonable cause for passing the Journal Entries. The cause for passing the Journal Entries. The liberal interpretation of the provisions liberal interpretation of the provisions of Section 273B is in accordance Section 273B is in accordance with the judgement of the Bombay High Court in with the judgement of the Bombay High Court in the case of Triumph the case of Triumph International wherein at para 23 of the decision, the High International wherein at para 23 of the decision, the High Court observed that “Unlike the expression “sufficient cause that “Unlike the expression “sufficient cause‟ used in Section that “Unlike the expression “sufficient cause 249(3), 253(5) and 260A(2A) of the Act, the legislature has used the expression 260A(2A) of the Act, the legislature has used the expression 260A(2A) of the Act, the legislature has used the expression “reasonable cause‟ in Section 273B of the Act. A cause which is in Section 273B of the Act. A cause which is reasonable may not be a sufficient cause. Thus, the expression not be a sufficient cause. Thus, the expression “reasonable cause “reasonable cause‟ would have wider connotation than the expression er connotation than the expression “sufficient cause “sufficient cause‟. Therefore, the expression “reasonable cause‟ in Section 273B for non-imposition of penalty expression “reasonable cause imposition of penalty under section 271E would under section 271E would have to be construed liberally depending upon the have to be construed liberally depending upon the facts of each case. The Hon'ble Supreme Court in ADIT (Inv) v. Kum. The Hon'ble Supreme Court in ADIT (Inv) v. Kum. A.B. Shanthi (2002) 255 A.B. Shanthi (2002) 255 ITR 258 (SC) firmly established this principle, holding that firmly established this principle, holding that merely proving the firmly established this principle, holding that

Manjri Horse Breeders Manjri Horse Breeders 14 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

genuineness or bona fide nature of a transaction is genuineness or bona fide nature of a transaction is wholly insufficient to escape wholly insufficient to escape the penalty regime under sections 271D and the penalty regime under sections 271D and 271E. The Court explicitly 271E. The Court explicitly stated that apart from demonstrating the bona that apart from demonstrating the bona fides of the transaction, the assessee fides of the transaction, the assessee must affirmatively prove the must affirmatively prove the existence of "reasonable cause" coming within the existence of "reasonable cause" coming within the purview of section 273B that compelled non 273B that compelled non-compliance with the prescribed mode compliance with the prescribed mode of transaction. This seminal judgment crystallized the distinction between a n. This seminal judgment crystallized the distinction between a n. This seminal judgment crystallized the distinction between a "genuine transaction" and a "transaction with reasonable cause," two concepts "genuine transaction" and a "transaction with reasonable cause," two "genuine transaction" and a "transaction with reasonable cause," two that are fundamentally different in taxation jurisprudence. The Supreme Court's that are fundamentally different in taxation jurisprudence. The that are fundamentally different in taxation jurisprudence. The rationale was that the statutory p rationale was that the statutory provisions are designed to curb the introduction to curb the introduction of unaccounted funds into the financial system of unaccounted funds into the financial system and prevent transactions from and prevent transactions from circumventing banking channels which circumventing banking channels which maintain audit trails and transparency. maintain audit trails and transparency. It is important to mention here that the Hon’ble It is important to mention here that the Hon’ble Supreme court had Supreme court had dismissed SLP against High Court ruling that receipt of deposits/loans against High Court ruling that receipt of deposits/loans received through journal received through journal entries is in breach of section 269SS in the case of [2019] 102 taxmann.com 57 [2019] 102 taxmann.com 57 entries is in breach of section 269SS in the case (SC) Commissioner of Income (SC) Commissioner of Income-tax, (Central) IV v. Adinath Builde tax, (Central) IV v. Adinath Builders (P.) Ltd. 03/12/2018. The judgement is The judgement is as under “High Court by impugned order held that receipt of any advance or “High Court by impugned order held that receipt of any advance or “High Court by impugned order held that receipt of any advance or loan by way of journal entries is in breach of section 269SS way of journal entries is in breach of section 269SS – – It further held that journal entries constitute a recognized mode of journal entries constitute a recognized mode of recordi recording of transactions and in absence of any adverse finding by and in absence of any adverse finding by authorities that journal entries authorities that journal entries were made with a view to achieve were made with a view to achieve purpose outside normal business purpose outside normal business operations or there was any operations or there was any involvement of money, there was a involvement of money, there was a reasonable cause for not reasonable cause for not complying with section 269SS and penalty under ith section 269SS and penalty under section 271D was section 271D was not to be imposed - Whether Special Leave Petition filed Whether Special Leave Petition filed against impugned order w impugned order was to be dismissed - Held, yes” Held, yes” Although the SLP was dismissed but the key points from this judgement is that Although the SLP was dismissed but the key points from this judgement Although the SLP was dismissed but the key points from this judgement the Hon’ble SC has also confirmed that transactions through SC has also confirmed that transactions through journal entry SC has also confirmed that transactions through violates the provisions of Sec 269 but the relief was given to violates the provisions of Sec 269 but the relief was given to the assessee only on the assessee only on the ground of reasonable cause u/s 273B. the ground of reasonable cause u/s 273B. The Supreme Court's subsequent decision in CIT(C) v. Adinath Builders (P) The Supreme Court's subsequent decision in CIT(C) v. Adinath Builder The Supreme Court's subsequent decision in CIT(C) v. Adinath Builder Ltd. (2019) 261 Taxman 168 : 102 taxmann.com 57 (SC) reinforced the Ltd. (2019) 261 Taxman 168 : 102 taxmann.com 57 (SC) Ltd. (2019) 261 Taxman 168 : 102 taxmann.com 57 (SC) principle that where loans or deposits are accepted principle that where loans or deposits are accepted through journal entries, through journal entries, penalty under section 271D shall not be imposed penalty under section 271D shall not be imposed if: 1. journal entries constitute a recognized mode of journal entries constitute a recognized mode of recording transactions; recording transactions; 2. there is absence of any adverse finding that entries were made with mala fide there is absence of any adverse finding that entries were made with mala fide there is absence of any adverse finding that entries were made with mala fide purpose or outside normal business operations; and purpose or outside normal business operations; and 3. there is no involvement of actual money. The Supreme Court, by dismissing there is no involvement of actual money. The Supreme Court, by dismissing there is no involvement of actual money. The Supreme Court, by dismissing the Special Leave Petition f the Special Leave Petition filed by the revenue, gave judicial benediction to the iled by the revenue, gave judicial benediction to the view that reasonable cause can be established by demonstrating that the view that reasonable cause can be established by demonstrating that the view that reasonable cause can be established by demonstrating that the transaction was bona fide, genuine, and the journal entry was merely a mode transaction was bona fide, genuine, and the journal entry was merely a mode transaction was bona fide, genuine, and the journal entry was merely a mode of recording a transaction that did not involve cash outflow or inflow in of recording a transaction that did not involve cash o of recording a transaction that did not involve cash o violation of the statutory prescription. violation of the statutory prescription.

Manjri Horse Breeders Manjri Horse Breeders 15 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

The operative distinction that emerged from judicial interpretation is The operative distinction that emerged from judicial interpretation is The operative distinction that emerged from judicial interpretation is this: while non-compliance with section 269T (in terms of the mode of compliance with section 269T (in terms of the mode of compliance with section 269T (in terms of the mode of repayment) constitutes a technical violation, section repayment) constitutes a technical violation, section 273B operates as a 273B operates as a statutory statutory statutory exception exception exception providing providing providing relief relief relief where where where reasonable reasonable reasonable cause cause cause is is is demonstrated. Reasonable cause in the context of loan Reasonable cause in the context of loan repayment through general entry encompasses situations where: general entry encompasses situations where: (1) the transaction is genuinely entered between parties (1) the transaction is genuinely entered between parties (1) the transaction is genuinely entered between parties with no finding of black money or unaccounted funds; black money or unaccounted funds; (2) commercial exigencies or business constraints necessitated (2) commercial exigencies or business constraints necessitated (2) commercial exigencies or business constraints necessitated settlement through general entry rather than physical cheques; through general entry rather than physical cheques; (3) the transaction was not in the nature of money laundering or (3) the transaction was not in the nature of money laundering or (3) the transaction was not in the nature of money laundering or introduction of unaccounted income; and n of unaccounted income; and (4) the mode of entry (journal adjustment) was adopted in good (4) the mode of entry (journal adjustment) was adopted in good (4) the mode of entry (journal adjustment) was adopted in good faith belief that it constituted compliance or in the ordinary course that it constituted compliance or in the ordinary course that it constituted compliance or in the ordinary course of business without specific intent to circumvent the statute. specific intent to circumvent the statute. However, the mere assertion of However, the mere assertion of commercial convenience or commercial convenience or administrative efficiency, if unsupported by credible evidence, shall efficiency, if unsupported by credible evidence, shall efficiency, if unsupported by credible evidence, shall not constitute reasonable cause. Similarly, if the assessee is a reasonable cause. Similarly, if the assessee is a financial institution or financial institution or company engaged in lending business, the company engaged in lending business, the standard for demonstrating standard for demonstrating reasonable cause is more stringent, as easonable cause is more stringent, as such entities are presumed to have such entities are presumed to have full awareness of statutory full awareness of statutory prescriptions. However, the burden of proving reasonable cause under section 273B rests However, the burden of proving reasonable cause under section 273B However, the burden of proving reasonable cause under section 273B entirely upon the assessee. If the assessee successfully entirely upon the assessee. If the assessee successfully establishes that genuine establishes that genuine business constraints, absence of mala fide business constraints, absence of mala fide intent, and the bona fide nature of the intent, and the bona fide nature of the transaction constituted compelling transaction constituted compelling circumstances for adopting the general entry circumstances for adopting the general entry mode, penalty may be mode, penalty may be mitigated or deleted in reliance upon the Supre mitigated or deleted in reliance upon the Supreme Court's judgments in Kum. A.B. Shanthi, Triumph International Finance, and Adinath Kum. A.B. Shanthi, Triumph International Finance, and Adinath Kum. A.B. Shanthi, Triumph International Finance, and Adinath Builders precedents. precedents. In view of the above detailed observations and respectfully following the various In view of the above detailed observations and respectfully following the In view of the above detailed observations and respectfully following the judicial precedents relied upon hereinabove, i hold that it is a duty of the judicial precedents relied upon hereinabove, i hold that it is a judicial precedents relied upon hereinabove, i hold that it is a appellant to establish the proper reasonable cause within the meaning of section appellant to establish the proper reasonable cause within the appellant to establish the proper reasonable cause within the 273B of the Act for routing the transaction through 273B of the Act for routing the transaction through Journal entries in books of Journal entries in books of accounts. The appellant had failed to accounts. The appellant had failed to establish the reasonable cause that why establish the reasonable cause that why the appellant had not chosen ellant had not chosen the mode of payment through banking channel. The the mode of payment through banking channel. The appellant had failed appellant had failed to establish any reasonable cause that what were the to establish any reasonable cause that what were the factors which prohibit or inconvenient caused for not making payment through prohibit or inconvenient caused for not making payment through prohibit or inconvenient caused for not making payment through banking channel and why the appell channel and why the appellant had chosen the way of payment through ant had chosen the way of payment through journal entries. Hence the transactions passed through Journal Entries would be journal entries. Hence the transactions passed through Journal Entries journal entries. Hence the transactions passed through Journal Entries hit by the provisions of sections 269SS and 269T of the Act, since reasonable hit by the provisions of sections 269SS and 269T of the Act, hit by the provisions of sections 269SS and 269T of the Act,

Manjri Horse Breeders Manjri Horse Breeders 16 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

cause is not established in the instant case, the cause is not established in the instant case, the assessee company would not get ee company would not get immunity from levy of penalty thereon. immunity from levy of penalty thereon. In view the above, I am of the view that the penalty levied u/s 271E r.w.s 274 of In view the above, I am of the view that the penalty levied u/s 271E r.w.s In view the above, I am of the view that the penalty levied u/s 271E r.w.s the Act is justified as the appellant has failed to justify reasonable cause to the Act is justified as the appellant has failed to justify reasonable the Act is justified as the appellant has failed to justify reasonable violate the statute provision violate the statute provisions of section 269T of the Act during s of section 269T of the Act during the course of assessment proceedings as well as appellate proceedings. assessment proceedings as well as appellate proceedings. Thus, the ground no.2 of the appeal is dismissed.” Thus, the ground no.2 of the appeal is dismissed.

6.4 The statutory mandate contained in Sections 269SS and 269T The statutory mandate contained in Sections 269SS and 269T The statutory mandate contained in Sections 269SS and 269T is intended to ensure transparency and traceability in financial is intended to ensure transparency and traceability in financial is intended to ensure transparency and traceability in financial transactions and to curb proliferation of unaccounted money. Once transactions and to curb proliferation of unaccounted money. Once transactions and to curb proliferation of unaccounted money. Once the violation stands established, the onus squarely shifts upon the the violation stands established, the onus squarely shifts upon th the violation stands established, the onus squarely shifts upon th assessee to prove existence of reasonable cause so as to claim assessee to prove existence of reasonable cause so as to claim assessee to prove existence of reasonable cause so as to claim immunity immunity immunity from from from penalty. penalty. penalty. Mere Mere Mere assertion assertion assertion of of of bona bona bona fides fides fides or or or administrative convenience, unsupported by cogent evidence, administrative convenience, unsupported by cogent evidence, administrative convenience, unsupported by cogent evidence, cannot suffice to dilute the rigour of the statutory provisions. Before cannot suffice to dilute the rigour of the statutory provisions. cannot suffice to dilute the rigour of the statutory provisions. us also no justification justification or explanation has been filed in support of or explanation has been filed in support of the reasonable cause the reasonable cause. The assessee has not explained as why the explained as why the amount realised from the sale of the shares of the promoter was amount realised from the sale of the shares of the promoter was amount realised from the sale of the shares of the promoter was transferred directly to the transferred directly to the Deutsche Bank instead Deutsche Bank instead of transferring the said realization the said realization of the shares to the bank accout of bank accout of said promoter and thereafter accepting the loan by the company from promoter and thereafter accepting the loan by the company from promoter and thereafter accepting the loan by the company from the said promoter through Banking channel. N . No compelling circumstances for following a short circumstances for following a short cut route of accepting loan form of accepting loan form promoter by journal entry and return of loan to Bank by way of omoter by journal entry and return of loan to Bank by way of omoter by journal entry and return of loan to Bank by way of journal entry has been explained on the part of the assessee. been explained on the part of the assessee. been explained on the part of the assessee. Regarding Regarding Regarding another another another transaction transaction transaction of of of accepting accepting accepting amount of

Manjri Horse Breeders Manjri Horse Breeders 17 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

Rs.8,06,99,966/- from Joyville by way of journal entry from Joyville by way of journal entry from Joyville by way of journal entry also no reasonable cause has been explained as why the assessee did not has been explained as why the assessee did not has been explained as why the assessee did not follow the provisions of section 269SS of the Act. follow the provisions of section 269SS of the Act.

6.5 In view of the foregoing discussion, we are of the considered In view of the foregoing discussion, we are of the considered In view of the foregoing discussion, we are of the considered opinion that the Ld. CIT(A) was fully justified in sustaining the opinion that the Ld. CIT(A) was fully justified in sustaining the opinion that the Ld. CIT(A) was fully justified in sustaining the penalties levied under penalties levied under Sections 271D and 271E of the Act. We do Sections 271D and 271E of the Act. We do not find any perversity, legal infirmity or factual error in the not find any perversity, legal infirmity or factual error in the not find any perversity, legal infirmity or factual error in the impugned impugned orders warranting interference impugned orders orders warranting warranting interference by this interference by by this this Tribunal. Tribunal. Tribunal. Accordingly, the orders of the Ld. CIT(A) are upheld. Accordingly, the orders of the Ld. CIT(A) are upheld.

Order pronounced in the open Court on ounced in the open Court on 19/ /05/2026.

Sd/- Sd/ Sd/- (ANIKESH BENERJEE) (ANIKESH BENERJEE (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: ___/05/2026 M. Ranganath Vittal , Sr. P.S. M. Ranganath Vittal , Sr. P.S.

Manjri Horse Breeders Manjri Horse Breeders 18 Farm Private Limited ITA Nos.376 and 377 s.376 and 377/MUM/2026

Copy of the Order forwarded to Copy of the Order forwarded to :

BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai