DCIT CEN CIR 7(3), MUMBAI vs. MACROTECH CONSTRUCTION P.LTD, MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M):

(b) Name of the company Lodha Hi-Rise Builders Private Limited has been changed to Bellissimo Hi-Rise Builders Private Limited on 06.01.2016. Copy of certificate of incorporation pursuant to change of name was placed on record.

(c ) Subsequently, Bellissimo Hi-Rise Builders Private Limited has been merged with Lodha Developers Private Limited with appointed date of 01.04.2016.

(d) Further, company Lodha Developers Private Limited has been converted into Public Limited Company on 14.03.2018 . Copy of certificate of incorporation consequent upon conversion to Public Limited Company was placed on record.

(e ) Subsequently, the name of the company Lodha Developers Limited has been changed to Macrotech Developers Limited on 20.05.2019. Copy of certificate of incorporation pursuant to change of name was placed on record.

We find that the revenue had also filed revised Form No. 36 before us by duly mentioning the name of the assessee as under:-

Macrotech Developers Ltd (Since M/s Macrotech Constructions Pvt Ltd merged with M/s Lodha Hi-rise builders pvt ltd and Now merged with M/s Macrotech Developers Ltd)

Hence we proceed to pass these orders in the name of Macrotech Developers Ltd as successor to Macrotech Constructions Pvt Ltd (erstwhile assessee).

4.1. We find that the ld CITA had explained the journal entries thereby proving the genuineness of the transactions carried out by the assessee. The ld CITA had observed that on 2.5.2012, Shreeniwas Cotton Mills Ltd (SNCML) gave loan by cheque of Rs 100 crores to Sahajanand High Tech & Pvt Ltd (Sahajanand). An amount of Rs 100 crroes was given by Sahajanand to Lodha Developers Pvt Ltd (LDPL). On the date of receiving this loan, LDPL has to receive an amount exceeding Rs 100 crores from the assessee, Macrotech Construction Pvt Ltd (MCPL). Instead of receiving the amount from MCPL and give the same to Sahajanand, LDPL settled the account by passing journal entries crediting the account of MCPL and debiting the account of Sahajanand. MCPL on the other hand debited the account of LDPL and credited the account of Sahajanand in its books of account. The amount which was payable to LDPL by the assessee is now payable to Sahajanand. Sahajanand had to pay Rs 100 crores to SNCML and had to receive Rs 100 crores from MCPL. Thus instead of receiving money from assessee and repaying the same to SNCML, Sahajanand settled the account by passing journal entries debiting the account of SNCML and crediting the account of MCPL. To give effect to this, the assessee has debited the account of Sahajanand and credited the account of SNCML. We find that the genuinity of these transactions being carried out through journal entries were not doubted by the revenue.

4.2. We find that the impugned penalties have been levied in respect of following transactions (also appearing in the penalty orders) entered into through journal entries: Penalty u/s 271D Transactions with Lodha Developers Pvt Ltd Sr No. Date Particulars Amount (Rs) 1 22/06/2012 Brand Equities Treaties Limited 47,22,996 2 25/09/2012 Joystar India 98,263 3 09/11/2012 Macrotech Construction 1,600 4 28/02/2013 Shree Ganesh Enterprise 14,675 Total (A) 48,37,534 Transactions with Shreeniwas Cotton Mills Ltd Sr No. Date Particulars Amount (Rs) 1 02/05/2012 Lodha Developers Limited 99,60,29,234 2 22/06/2012 Brand Equities Treaties Limited 31,40,533 3 09/11/2012 Macrotech Construction 1,600 4 28/02/2013 Shree Ganesh Enterprise 14,675 Total (B) 99,91,86,042

Grand total (A + B) 1,00,40,23,576 Penalty u/s 271E Transactions with Lodha Developers Pvt Ltd Sr Date Particulars Amount (Rs) No. 1 02/05/2012 Shreeniwas Cotton Mills Ltd 99,50,00,000 2 14/05/2012 Sonal Super Services 22,796 3 28/05/2012 Sonal Super Services 3,096 4 28/05/2012 Sonal Super Services 8,298 5 05/07/2012 Sonal Super Services 18,225 6 25/07/2012 Sonal Super Services 22,603 7 02/08/2012 Sonal Super Services 18,036 8 29/08/2012 Sonal Super Services 21,668 9 14/09/2012 Sonal Super Services 1,661 10 30/09/2012 Brand Equity Treaties Ltd 36,14,531 11 30/09/2012 Sonal Super Services 6,916 12 06/11/2012 Sonal Super Services 19,353 13 19/11/2012 Sonal Super Services 4,551 14 19/11/2012 Sonal Super Services 2,713 15 19/11/2012 Sonal Super Services 2,205 16 05/12/2012 Sonal Super Services 22,797 17 05/12/2012 Sonal Super Services 20,247 18 25/12/2012 Sonal Super Services 4,638 19 02/01/2013 RCIL A/c RIS500001206999 926 20 03/01/2013 RCIL A/c RIS500001206999 926 21 15/02/2013 Sonal Super Services 2,773 22 26/02/2013 Sonal Super Services 17,348 23 28/02/2013 Super Fabrication 13,100 24 28/02/2013 JK Enterprises 2,621 25 28/02/2013 Shree Sai Enterprise 800 26 28/02/2013 UK Enterprises 66,912 27 07/03/2013 Brand Equity Treaties Limited 48,77,220 28 28/03/2013 Sonal Super Services 15,906 29 28/03/2013 Sonal Super Services 29,891 30 28/03/2013 Sonal Super Services 40,563 31 28/03/2013 Sonal Super Services 48,276 32 29/03/2013 Sonal Super Services 31,488 Total (C) 1,00,39,63,078

Transactions with Shreeniwas Cotton Mills Ltd Sr Date Particulars Amount (Rs.) No. 1 05/07/2012 Sonal Super Services 3,917 2 02/08/2012 Sonal Super Services 4,135 3 30/09/2012 Brand Equity Treaties Limited 58,93,873 4 31/10/2012 Brand Equity Treaties Limited 45,22,389 Total (D) 1,04,24,314 Grand total (C + D) 1,01,43,87,392 4.3. The ld AR vehemently argued that the assessee had genuine reasons and justification of passing the above journal entries during the normal course of business. He submitted that the journal entries passed on or before 12.6.2012 and journal entries passed after 12.6.2012 need to be differentiated while understanding whether the provisions of section 269SS and 269T of the Act were at all violated by the assessee. The significance of 12.6.2012 would be addressed little later. For the sake of convenience, the entries passed on or before 12.6.2012 need to be segregated in respect of penalty u /s 271E and 271D of the Act.

4.4. To start with, journal entries passed on or before 12.6.2012 for which penalty has been levied u/s 271E of the Act are as follows:- Penalty u/s 271E Transactions with Lodha Developers Pvt Ltd Sr Date Particulars Amount (Rs) No. 1 02/05/2012 Shreeniwas Cotton Mills Ltd 99,50,00,000 2 14/05/2012 Sonal Super Services 22,790 3 28/05/2012 Sonal Super Services 3,096 4 28/05/2012 Sonal Super Services 8,298 4.5. We find that the Journal entry passed on 2.5.2012 giving rise to the above transaction at Sr No. 1 is as under:-

Date: 02/05/2012

Lodha Developers Pvt. Ltd.……Dr. Rs.99,60,29,234/- Purchase Account ……...Dr. Rs.39,70,766/- To Shreeniwas Cotton Mills Ltd. Cr. Rs.99,50,00,000/- To Bank Account Cr. Rs.50,00,000/- 4.6. We find that the genuineness of the aforesaid journal entry has not been doubted by the revenue in the instant case and the ld AO had not disputed the fact that the aforesaid transactions had arose in the ordinary course of business of the assessee company. As stated supra, the above journal entry was passed in the books of the assessee on 2.5.2012 (i.e prior to 12.6.2012). During the relevant period, the assessee was under a bonafide belief that the transactions of loan through journal entry do not attract provisions of Section 269SS and 269T of the Act. The said bonafide belief was based on the series of judicial pronouncements laying down the above proposition. However, subsequently, on 12-06-2012, the Hon’ble Jurisdictional High Court rendered a decision in the case of Triumph International Finance (India) Limited (2012) [345 ITR 270]wherein it was held that the transactions through journal entries are also hit by the provisions of section 269SS and 269T of the Act. The decision of Hon’ble Bombay High Court rendered on 12.6.2012 is the significance of that date. Hence prior to the judgement of the Hon’ble Bombay High Court in the case of Triumph International Finance (India) Limited supra, there were series of consistent decisions on sections 269SS & 269T of the Act, holding that mere passing of journal entries will not amount to receipts / payments otherwise than by way of account payee cheque or draft and accordingly the same were not in contravention of provisions of sections 269SS and 269T of the Act and consequently no penalty u/s 271D and 271E of the Act could be levied for the same respectively. The reliance placed on these series of consistent decisions on sections 269SS and 269T of the Act constituted reasonable cause and it was argued that no penalty u/s 271D and 271E of the Act could be levied on the assessee for passing journal entries on or before 12.6.2012.

4.7. We find that the Hon’ble Jurisdictional High Court in a subsequent decision rendered in the case of Ajinath Hi-Tech Builders Pvt Ltd and others (group concern of the assessee) in 172, 202, 203, 218 & 219 of 2015 dated 6.2.2018, has laid down that since the decision in the case of Triumph International Finance was rendered on 12.06.2012,it is to be held thatprior to that,the assessee was under a bonafide belief that the transactions through journal entries were not hit by the provisions of section 269SS and 269T of the Act.

4.8. We find that the Co-ordinate Bench of this Tribunal in the case of Lodha Builders Pvt Ltd and others (39 appeals of group entities of the assessee) in various order dated 31.1.2020, having identical facts and circumstances, after examining the facts and plethora of judgments and CBDT Circulars, held as under:

“9. We have heard the rival submissions, perused the orders of the authorities below and the decisions relied on. The only issue in all these appeals is as to whether there is a reasonable cause within the meaning of the provisions of section 273B of the Act on the loans/deposits taken and repaid through journal entries by the assessee within its group concerns. On a perusal of the orders passed by different Benches of this Tribunal and the decision of the Hon'ble Jurisdictional High Court and also the dismissal of SLPs filed by the revenue, we notice that identical issue has been decided by the Tribunal in various cases in assessee's group concerns and which were travelled to Hon'ble Bombay High Court and also the Hon'ble Supreme Court wherein the Special Leave Petitions filed by the Revenue were dismissed.

10. The Hon'ble Bombay High Court in the case of CIT v. Ajinath Hitech Builders Private Ltd and Others (supra) it was held that prior to the decision in the case of the Triumph International Finance (I) Ltd (supra) there was a reasonable cause for the assessee to receive deposits/loans through journal entries. It is not in dispute that in all these cases the journal entries were passed prior to the decision of the Triumph International Finance (I) Ltd (supra) rendered on 12.06.2012. Therefore, the ratio of the decision in the case of the CIT v. Ajinath Hitech Builders Private Ltd and Others (supra) squarely applies to the facts of the assessee case. We also observe that in the assessee's group case in the case of DCIT v. M/s. Lodha construction in ITA.Nos. 110, 111, 139 to 142/Mum/2017 dated 30.07.2018 held as under: "6. We have considered the rival submission of the parties and have gone through the orders of authorities below. The ACIT levied penalty u/s.271D as well as u/s.271E on his observation that the assessee has accepted loan/deposit from sister concern through journal entries i.e., otherwise then account payee cheque /draft thereby violated provisions of section 269SS and/ or 269T. The Assessing Officer further held that the assessee has not made out any reasonable cause as prescribed 273B of the Act.

7. Before ld. CIT(A) the assessee urged that journal entries is not loan or deposit of money neither there is any unaccounted cash flow money of the group entities. The assessee further contented that Section 269SS was introduced by the Finance Act, 1984. The Circular, gave the purpose of introduction of Section 269SS. The broad purpose of insertion of section 269SS was with the view to counter the device, which enables the tax payer to explain away un accounted cash or unaccounted deposits, the new section 269SS debars person from taking or accepting after 30/6/1984 from any person loan or deposit otherwise by an account payee cheque or account payee bank draft if the amount of loan or deposit or aggregating amount of such loan is Rs.10,000/- or more. The object of insertion of section 269SS was to ensure that tax payer is not allowed to give false explanation for his unaccounted money or if he has given some false entries in his accounts, he should not escape by giving some false entries in his account, he shall not escape by giving false explanation for the same. The assessee further contended that there is no receipt of any loan/deposit or repayment in any other mode other than the account payee cheque. It is merely a case of assignment of debt by one group entity to another group entity and journal entries have been passed to record such assigned transactions. The provision of section 269SS and 269T are not applicable on such genuine transactions. The Assessing officer in the assessment order has not made any observation that transactions in question are not out of business exigency or was done with a motive to evade tax. Penalties cannot be levied in a mechanical manner. The provisions of section 269SS and section 269T are not applicable where transaction is between sister concerns. The ld. CIT(A) after considering the contention of the assessee concluded that the assessee has violated the provisions of section 269SS and 269T of the Act. However, the ld CIT(A) concluded that the assessee has given sufficient explanation within the meaning of section 273B , particularly in the facts that there is no finding that such transactions were undertaken to evade the tax. The ld CIT(A) also followed the decision of Tribunal in Lodha Builder Pvt Ltd Vs ACIT in (ITA No. 476/M/2014 and 481/M/2014 dated 27.06.2014 for AY 2009-10.

8. The Hon'ble Bombay High Court in assessee's group case in CIT Vs. Ajinath Hitech Builders Private and Others (supra), on similar Grounds on the question whether the Tribunal is justified in deleting the penalty u/s. 271 held that here was reasonable cause u/s. 273B and held as under:- "3. Regarding Question No.(i) :- (a) The common impugned order of the Tribunal arises from the orders passed by the Addl. Commissioner of Income Tax imposing penalty upon the respondents under Section 271D of the Act for breach of Section 269SS of the Act. This penalty was imposed inasmuch as during the previous year relevant to the subject assessment year, the respondents had accepted loans / deposits by way of passing journal entries in its books of accounts, in breach of Section 269SS of the Act. In terms Section 269SS of the Act prohibits a person from taking / accepting any loan / deposit or specified sum, otherwise by an account payee cheque or by an account payee bank draft or by use of electronic clearing system of a bank if the amount involved is in excess of Rs.20,000/-. This imposition of penalty under Section 271D of the Act, was upheld by a common order dated 31st December, 2013 passed by the Commissioner of Income Tax (Appeals). On further appeal, the impugned order dated 27th June, 2014 of the Tribunal, inter alia held that penalty under Section 271D of the Act is not imposable in view of Section 273B of the Act. This for the reason that there was a reasonable cause for the failure to comply with Section 269SS of the Act. (b) On merits of the issue, the parties before us are agreed that the Tribunal was correct in holding that receipt of any advance / loan by way of journal entries is in breach of Section 269SS of the Act as the decision of this Court in Commissioner of Income Tax Vs. Triumph International Finance (I) Ltd. 345 ITR 270 is binding upon it. However, the Revenue's grievance is with the impugned order dated 27th June, 2014 of the Tribunal further holding no penalty under Section 271D of the Act is imposable in view of Section 273B of the Act in the present facts. This is so as the Tribunal holds that the failure to comply with Section 269SS of the Act was on account of reasonable cause on the part of the respondents. This finding of reasonable cause was on the application of parameters laid down by this Court in Triumph International Finance (supra) to determine reasonable cause for not complying with the provisions of Section 269SS of the Act. (c) Mr. Mohanty, the learned Counsel for the Revenue seeks to challenge the impugned order of the Tribunal on the ground that Section 273B of the Act will have no application as the test of reasonable cause is not satisfied :in the present facts for the following reasons :- (i) the decision of this Court in Triumph International Finance (supra) will have no application as that was of the case of only one transaction while in this case, there are numerous transactions reflected through the passing of journal entries; (ii) the reasons set out for taking advances / deposits by way of journal entry would not satisfy the test of reasonable cause; and (iii) the non-satisfaction of showing reasonable cause as required under Section 273B of the Act gives rise to a question of law as it is a legal inference to be drawn from primary facts as held by the Apex Court in Premier Breweries Ltd. Vs. Commissioner of Income Tax 372 ITR 180. Thus, it is submitted this question requires admission as it gives rise to a substantial question of law; (d) We find that the impugned order of the Tribunal has on application of the test laid down for establishment of reasonable cause, for breach of Section 269SS of the Act by this Court in Triumph International Finance (supra) found that there is a reasonable cause in the present facts to have made journal entries reflecting deposits. The Tribunal while relying upon the order of this Court in Triumph International Finance (supra) has held that in the present facts, neither the genuineness of receipt of loans / deposits by way of an adjustment through journal entries carried out in the ordinary course of business has been doubted in the regular assessment proceedings. It held in the present facts the transaction by way of journal entries was undisputedly done to raise funds from sister concerns, to adjust or transfer balances to consolidate debts, to correct clerical errors etc. Further, the Tribunal records that as observed by this Court in Triumph International Finance (supra) that journal entries constituted a recognized modes of recording of transactions and in the absence of any adverse finding by the authorities that the journal entries were made with a view to achieve purposes out side the normal business operations or there was any involvement of money, then, in these facts there was a reasonable cause for not complying with Section 269SS of the Act. (e) Mr. Mohanty's submission that the test laid down in Triumph International Finance (supra) will have no application in the present facts in view of the large number of entries in this case as compared to only one entry in the case before this Court. The test of reasonable cause can not,

in the present facts be determined on the basis of the number of entries. If there was a reasonable cause for making the journal entries, then, the number of entries made, will not make any difference. Besides, on facts, the Tribunal was satisfied with the reasons given by the Assessee for reasonable cause and this finding is not shown to be perverse. Finally, the issue of there being a reasonable cause or not is an issue of fact. No inference of law and / or issue of interpretation is to be made. The decision relied upon by the Revenue in case of Premier Breweries Ltd.(supra) concerned itself with the issue of a claim for deduction under Section 37 of the Act on the basis of the Agreements entered into between the parties. The inference of law in that case was whether on the facts, it could be inferred that the claim for deduction is in respect of expenditure incurred wholly and exclusively for the purposes of the business. Thus, it would involve a question of interpretation of the agreements etc. from which an inference is to be drawn. Further, it also involves application of principles of law to the facts for the purposes of deductions and, therefore, it would lead to a question of law. Therefore, the Court held in the facts of that case that a question of law does arise. (f) In this case, the issue of reasonable cause is an inference of fact from facts and, therefore, a question of fact. The Supreme Court decision in Sree Meenakshi Mills Ltd. Vs. Commissioner of Income Tax, 31 ITR 28 had laid down the tests to determine a question of law and / or fact. In the above context, the Court observed that when the finding is one of fact, the fact that it itself is an inference from other basic facts, will not alter its character as one of fact. Therefore, the issue of there being reasonable cause or not, is a question of fact and unless it is shown to be perverse, we would normally not interfere. (g) In the above circumstances, the view taken by the Tribunal on the facts before it, is a possible view and does not give rise to any substantial question of law. (h) In any event, as rightly pointed out by Mr. Sridharan, learned Senior Counsel for the respondents assesses, the order of this Court in Triumph International Finance (supra) was rendered on 12th June, 2012. This, was in an appeal filed by the Revenue from the order of the Tribunal dated 29th January, 2008, which had held that deposits / loans received through journal entries do not fall with the mischief of Section 269SS of the Act, so as to invite penalty under Section 271D of the Act. This, the Tribunal did by following its earlier orders in the case of V.N. Parekh Ltd. and Ketan Parekh as indicated in the order of this Court in Triumph International Finance (supra). Our attention was also invited to numerous reported decisions of the Tribunal in the cases of Sunflower Builders Vs. Dy.CIT, 1997 (61) ITD (Pune) 227, Asst.CIT Vs. Ruchika Chemicals & Investment (P) Ltd. 2004 (88) TTJ (Delhi) 85 and Asst.CIT Vs. Lala Murari Lal & Sons, 2004(2) SOT (Luck) 543 wherein it has been held journal entries in the book of accounts indicating deposit / loans will not fall foul of Section 269SS of the Act. Besides, the Delhi High Court in Commissioner of Income Tax Vs. Noida Toll Bridge Co. Ltd. 262 ITR 260 inter alia held that payment of Rs.4.85 crores made by the assesses by a journal entry in its books of account by crediting the account of ILFS, would not fall foul of Section 269SS of the Act. This particularly in the absence of any payment beingmade in cash. (i) In the present facts, the period during which the journal entries were made by the respondents was in the previous year relevant to the Assessment Year 2009-10 i.e. Financial Year 2008-09. At that time, the decisions of the Tribunal in the cases of Triumph International (Supra) and decision of VH. Parekh (P) Ltd., Ketan V Parekh, Sunflower Builders (supra), Ruchika Chemicals (supra), Lala Murari Lal (supra) and the decision of the Delhi High Court in Noida Toll Bridge Co. Ltd. (supra) were holding the field. Thus, not in breach of Section 269SS of the Act. In the above view, while agreeing with the submission of Mr. Mohanty, learned Counsel for the appellant that the decision of this Court in Triumph International Finance (supra) has only clarified / stated the position as always existing in law, the receiving of deposits / loans through journal entries would certainly be hit by Section 269SS of the Act. Nevertheless, prior to the decision of this Court in Triumph International Finance (supra), there was reasonable cause for respondents to receive deposit / loan through journal entries. This non- compliance with Section 269SS of the Act would certainly be a reasonable cause under Section 273B of the Act for non-imposition of penalty under Section 271D of the Act. (j) In the above circumstances, the view taken by the Tribunal in the impugned order holding that no penalty can be imposed upon the respondents as there was a reasonable cause in terms of Section 271B of the Act for having received loans / deposits through journal entries is at the very least is a possible view in the facts of the case. (k) Therefore, the question as posed does not give rise to any substantial question of law. Thus, not entertained."

9. Further co-ordinate Bench of the Tribunal in Assessee's group case in DCIT vs. Aashthavinayak Estate Company Ltd. (supra), while dealing with identical Ground of appeal

held as under:-

5. We have considered rival contentions and carefully gone through the orders of the authorities below. We have deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. We had also carefully gone through the orders of the Tribunal in the group cases of the assessee which was upheld by the Hon'ble Jurisdictional High Court as stated above.

6. From the record we found that AO has levied penalty u/s.271D for accepting loan by way of Journal entries. The Assessing Officer had placed reliance on the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Triumph International Finance (I) Ltd. (345 ITR 270) rendered on 12.06.2012. It is not disputed that in this judgment it was held that there was violation of the provisions of S. 269T of the Act in a case where the loan was repaid by way of a journal entry entailing levy of penalty u/s. 271E of the Act. However, at the same time it was also held that levy of penalty could be avoided on showing reasonable cause. In the premises, levy of penalty u/ss. 271D of the Act is not automatic, but the genuineness or otherwise of the reasons due to which repayment was made by journal entry has to be considered judiciously.

7. In the order reported as Lodha Builders (P) Ltd. v. ACIT [2014] 163 TTJ 778 (Mum), a bunch of appeals belonging to Lodha group (to which the present assessee belongs) involving identical issue, was disposed of by the coordinate Bench in which levy of similar penalties was held to be not sustainable as there was a reasonable cause, copies of which have been placed on record. In deciding the dispute in favour of the assessee, the Hon'ble Tribunal had considered and applied the ratio laid down by the Hon'ble jurisdictional High Court in the case of CIT v. Triumph International Finance (I) Ltd. (345 ITR 270).

8. The aforesaid order of the Hon'ble Tribunal was approved by the Hon'ble jurisdictions! High Court in their judgment and order dated 06.02.2018 in the case of CIT v. Ajinath Hi-Tech Builders Pvt Ltd. and others, copies of which have also been placed on record. In this case, it was also held that prior to the judgment in CIT v. Triumph International Finance (I) Ltd. (345 ITR 270), there were series of orders on this point holding that journal entry would not fall foul of S. 269SS of the Act. Since the judgment in CIT v. Triumph International Finance (I) Ltd. (345 ITR 270) was rendered on 12.06.2012, it was held, that the assessee could have had a bonafide belief prior to that date that there was no violation of S. 269SS of the Act in accepting loan by journal entry.

9. While deciding the issue, the CIT(A) has also followed the decision of Jurisdictional High Court in case of group concern of the case. The facts and circumstances during the year under consideration are same, accordingly, we do not find any infirmity in the order of CIT(A) for deleting the penalty imposed u/s.271D by relying on the decision of Jurisdictional High Court in group case of the assessee.

10. Considering the decision of Hon'ble Jurisdictional High Court in assessee group case in Ajinath Hi Tech Builder Pvt Ltd (supra), Triumph International Finance(I) Ltd (supra) dated 12.06.2012 and in Assessee's group case in DCIT vs. Aashthavinayak Estate Company Ltd. (supra) that there was reasonable cause for the assessee to receive deposits of loan or repayment of loans through journal entries. Therefore, in our view the assessees case is squarely falls under a reasonable cause within the meaning of section 273B. The case is also covered by the decision of Hon'ble Jurisdictional High Court in assessee group case in Ajinath Hi Tech Builder Pvt Ltd (supra), DCIT vs. Aashthavinayak Estate Company Ltd. (supra). Therefore, we do not find any reason to interfere with the finding of ld. CIT(A)."

11. Similarly, in a recent decision in the case of DCIT v. Mahavir Build Estate Pvt. Ltd., in ITA.No. 1480 & 1481/Mum/2017 dated 13.03.2019 the Coordinate Bench held as under: - "8. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. The revenue has sought our indulgence for adjudicating as to whether the CIT(A) is right in law and the facts of the case in vacating the penalty imposed by the Addl. CIT u/ss. 271D and 271E of the I.T Act. As observed by us hereinabove, the CIT(A) had concluded that as the journal entry transactions of the assessee with its „sister concerns‟ were for more than the amount of Rs. 20,000/- and the same were not through account payee cheque or bank drafts, therefore, there was a violation of the provisions of Sec. 269SS/269T of the I.T Act. Apart therefrom, the CIT(A) has supported his aforesaid observation by relying on the judgment of Hon‟ble High Court of Bombay in the case of CIT Vs. Triumph International Finance (I) Ltd. (2012) 345 ITR 270 (Bom) for A.Y 2003- 04 and of 2010, dated 17.08.2012 for A.Y 2000-01, wherein the Hon‟ble High Court had observed that receiving loans/deposits through journal entries would be in violation of Sec. 269S of the I.T Act. Insofar the observation of the CIT(A) that the loans or deposits accepted/repaid by the assessee from/to its „sister concerns‟ by journal entries was in contravention of the provisions of Sec. 269SS and Sec. 269T is concerned, we are in agreement with the view therein taken that as the said transactions are not through account payee cheque or draft, therefore, the same is in violation of the mode prescribed under the aforesaid statutory provisions. However, we are persuaded to subscribe to the observation of the CIT(A) that there was a reasonable cause for the assessee to have carried out the transactions with its „sister concerns‟ by journal entries viz. (i). the journal entries had been made with the group concerns under the bonafide belief that such transactions would not be hit by the provisions of Sec. 269SS in view of various judicial decisions on the issue, including the decision of High Court of Delhi in the case of CIT Vs. Noida Toll Bridge Co. Ltd. (2003) 262 ITR 260 (Del); and (ii). such loans by way of journal entry transactions were undertaken for various commercial reasons like assigning of receivables for operational efficiency, payment on behalf of group concern for squaring up transactions, for ease in consolidation of accounts, rectification entries etc. In our considered view the aforesaid reasons do constitute a „reasonable cause‟ within the meaning of Sec. 273B of the Act, particularly in light of the fact that there is no finding that such transactions were undertaken to evade tax. Our aforesaid view is fortified by the orders of the coordinate benches of the Tribunal in the case of „sister concern‟ of the assessee viz. Lodha Builders Pvt. Ltd. vs. ACIT [ITA No. 476 & 481/Mum/2014; dt. 27.06.2014.], wherein it has been held that as the assessee has shown reasonable cause, therefore, penalty imposed u/ss. 271D/271E of the I.T Act cannot be sustained. In fact, a co- ordinate bench of the Tribunal i.e ITAT, "B" bench, Mumbai in the case of a „sister concern‟ of the assessee for A.Y 2011-12 viz. DCIT Vs. M/s National Standard India Ltd. [ITA No. 6607/Mum/2016 & 6609; dt. 06.06.2018] wherein identical facts and issue were involved, had upheld the order of the CIT(A) who had deleted the penalty imposed by the A.O under Sec. 271D and 271E for the reason that since the judgment in CIT vs. Triumph International Finance (I) Ltd. (2012) 345 ITR 270 (Bom) was rendered on 12.06.2012, therefore, the assessee could have had a bonafide belief prior to that date that there was no violation of Sec. 269SS of the I.T Act in accepting loan by journal entry. It was observed by the Tribunal in the aforementioned case, as under : "5. We have considered rival contentions and carefully gone through the orders of the authorities below. We have deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. We had also carefully gone through the orders of the Tribunal in the group case of the assessee exactly on the very same issue, which was upheld by the Hon'ble Jurisdictional High Court as stated above.

6. From the record we found that AO has levied penalty u/s.271D and 271E for accepting and repaying loan by way of Journal entries. The Assessing Officer had placed reliance on the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Triumph International Finance (I) Ltd. (345 ITR 270) rendered on 12.06.2012. It is not disputed that in this judgment it was held that there was violation of the provisions of S. 269T of the Act in a case where the loan was repaid by way of a journal entry entailing levy of penalty u/s. 271E of the Act. However, at the same time it was also held that levy of penalty could be avoided on showing reasonable cause. In the premises, levy of penalty u/ss. 271D and 271E of the Act is not automatic, but the genuineness or otherwise of the reasons due to which repayment was made by journal entry has to be considered judiciously.

7. In the order reported as Lodha Builders (P) Ltd. v. ACIT [2014] 163 TTJ 778 (Mum), a bunch of appeals belonging to Lodha group (to which the present assessee belongs) involving identical issue, was disposed of by the coordinate Bench in which levy of similar penalties was held to be not sustainable as there was a reasonable cause, copies of which have been placed on record. In deciding the dispute in favour of the assessee, the Hon'ble Tribunal had considered and applied the ratio laid down by the Hon'ble jurisdictional High Court in the case of CIT v. Triumph International Finance (I) Ltd. (345 ITR 270).

10. It was argued by learned DR that the Hon'ble High Court declares the law as it was always and, hence, there was clearly violation of the provisions of the Act. He further argued that the assessee has not explained reasonable cause in respect of each and every entry and, hence, the penalties were correctly levied.

for any interference. 4.9. We find that in the aforesaid order of this tribunal dated 31.1.2020, all the arguments advanced by the ld DR before us had been duly considered. We find that similar decisions were rendered by the Hon’ble Jurisdictional High Court in the case of Lodha Properties Development Pvt Ltd and Lodha Crown Buildmart Pvt Ltd. We also find that the revenue had preferred Special Leave Petitions (SLPs) against the order of the Hon’ble Bombay High Court in the case of Lodha Properties Development Pvt Ltd in SLP (Civil) No. 42791/2018 dated 10.12.2018 ; CIT vs Lodha Crown Buildmart Pvt Ltd in SLP (Civil) No. 44666/2018 dated 3.1.2019 and CIT vs Lodha Properties Development Pvt Ltd in SLP (Civil) No. 42738/2018 dated 21.1.2019 challenging the deletion of penalties and all these SLPs were dismissed by the Hon’ble Supreme Court.

4.10. In view of aforesaid detailed observations and respectfully following the judicial precedents relied upon hereinabove, we hold that there was reasonable cause on the part of the assessee within the meaning of section 273B of the Act to legally believe that loans / deposits repaid through journal entries upto 12.6.2012, would not be in contravention of provisions of section 269T of the Act and consequentially no penalty u/s 271E of the Act could be levied for the same in the sum of Rs 99,50,34,184/- ( 99,50,00,000 + 22,790+3,096+8,298). Accordingly, we hold that the ld CITA had rightly deleted the penalty u/s 271E of the Act in respect of journal entries passed on or before 12.6.2012 in the sum of Rs 99,50,34,184/-.

4.11. Similarly journal entries passed on or before 12.6.2012 for which penalty has been levied u/s 271D of the Act are as follows:-

Penalty u/s 271D Transaction with Shreeniwas Cotton Mills Ltd

Sr Date Particulars Amount (Rs) No. 1. 02/05/2012 Lodha Developers Limited 99,60,29,234 At the outset, it was clarified by the ld AR that in the impugned order passed u/s. 271D of the Act, the date of the journal entry appearing in respect of the above transaction was incorrectly mentioned as 22.6.2012 as against the correct date of 2.5.2012. In this regard, we find that one effect of the entry dated 2.5.2012 (mentioned in para 4.4 above) has been considered correctly by the Learned Joint Commissioner of Income- tax. However, while considering the corresponding effect of the same entry, the Learned Joint Commissioner of Income-tax has not considered the date correctly. When this was put to ld DR, he fairly agreed that there was a typographical error in the penalty order and that the correct date for the aforesaid transaction was 2.5.2012. We find that the genuineness of the aforesaid transaction has not been doubted by the revenue in the instant case and the ld AO had not disputed the fact that the aforesaid transaction had arose in the ordinary course of business of the assessee company. Since the above entry has been passed prior to 12.06.2012, for the similar observations mentioned in preceding paragraphs, it could be safely concluded that there was reasonable cause within the meaning of section 273B of the Act and hence penalty u/s 271D of the Act is not leviable in the sum of Rs 99,60,29,234/- in respect of loans / deposits accepted through journal entry. Accordingly, we hold that the ld CITA had rightly deleted the penalty u/s 271D of the Act in respect of journal entries passed on or before 12.6.2012 in the sum of Rs 99,60,29,234/-.

4.12. Let us now address the justification for levy of penalty u/s 271D and 271E of the Act in respect of journal entries passed after 12.6.2012.

Entries passed after 12.6.2012 Transaction with Brand Equity Treaties Ltd These entries comprise as follows: Penalty u/s 271E Transactions with Lodha Developers Pvt Ltd (LDPL) Sr Date Particulars Amount No. (Rs) 10 30/09/2012 Brand Equity Treaties 36,14,531 Limited (BETL) 27 07/03/2013 Brand Equity Treaties 48,77,220 Limited

Transactions with Shreeniwas Cotton Mills Ltd (SNCML) Sr Date Particulars Amount No. (Rs.) 3 30/09/2012 Brand Equity Treaties 58,93,873 Limited 4 31/10/2012 Brand Equity Treaties 45,22,389 Limited Penalty u/s 271D The following two amounts are debited to the account of LDPL / SNCML and hence, in any case, wrongly considered by the ld AO to be loan received.

Transaction with Lodha Developers Pvt Ltd Sr Date Particulars Amount No. (Rs) 1 22/06/2012 Brand Equity Treaties Limited 47,22,996

Transaction with Shreeniwas Cotton Mills Ltd Sr Date Particulars Amount No. (Rs) 2 22/06/2012 Brand Equity Treaties Limited 31,40,533 4.13. We find that the ld CITA had observed in para 7.9 of his order that SNCML had to make payment for advertisement to Brand Equity Treaties Limited (BETL) which has purchased flat from the assessee for which amount was receivable from BETL. The amount payable to BETL by SNCML is adjusted against the amount receivable by the assessee by way of passing the journal entries.

Similarly, LDPL had to make payment for advertisement to BETL which has purchased flat from the assessee for which amount was receivable from BETL. The amount payable to BETL by LDPL is adjusted against the amount receivable by the assessee by way of passing the journal entries.

4.14. We find that the genuineness of the aforesaid transactions were neither disputed nor doubted by the revenue. These transactions admittedly were not made with a malafide intent to evade tax. We find that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. We find that these are genuine business transactions entered in the normal course of business. Hence if the aforesaid transactions are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. At the cost of repetition, we find that the journal entries are passed towards amount receivable from BETL towards sale of flats which was adjusted against amount payable to LDPL and SNCML on an understanding that both these companies are liable to pay BETL towards advertisement expenses. Hence it could be safely concluded that these entries were passed out of business constraints and exigencies and for administrative convenience with no malafide intent to evade payment of tax. In our considered opinion, this business constraint and exigency and administrative convenience itself constitutes reasonable cause within the meaning of section 273B of the Act . Hence no penalty u/s 271D and 271E of the Act could be invoked for the same. In this regard, we find that the Hon’ble Jurisdictional High Court had addressed the similar issue whether the aforesaid behaviour of the assessee would constitute reasonable cause u/s 273B of the Act to escape from the rigours of applicability of provisions of section 269SS and 269T of the Act in the case of CIT vs Triumph International Finance (I) Ltd reported in 208 Taxman 299 (Bom). The relevant operative portion of the said decision is reproduced hereunder:-

nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. There is nothing on record to suggest that the amounts advanced by Investment Trust of India to the assessee represented the unaccounted money of the Investment Trust of India or the assessee. The fact that the assessee company belongs to the Ketan Parekh Group which is involved in the securities scam cannot be a ground for sustaining penalty imposed under Section 271E of the Act if reasonable cause is shown by the assessee for failing to comply with the provisions of Section 269T. It is not in dispute that settling the claims by making journal entries in the respective books is also one of the recognized modes of repaying loan/deposit. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269T, the assessee has shown reasonable cause and, therefore, the decision of the Tribunal to delete the penalty imposed under Section 271E of the Act deserves acceptance.

4.15. We also find that the Hon’ble Delhi High Court in the case of CIT vs Worldwide Township Projects Ltd reported in 229 Taxman 560 (Del) in the similar set of facts and circumstances had categorically observed as under:- 8. A plain reading of the aforesaid Section indicates that (the import of the above provision is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liability arises on account of book entries. The object of the Section is to prevent transactions in currency. This is also clearly explicit from clause (iii) of the explanation to Section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money". The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money. In the present case, admittedly no money was transacted other than through banking channels. M/s PACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s PACL India Ltd. In view of this admitted position, no infringement of Section 269SS of the Act is made out. This Court, in the case of Noida Toll Bridge Co. Ltd. (supra), considered a similar case where a company had paid money to the Government of Delhi for acquisition of a land on behalf of the assessee therein. The Assessing Officer levied a penalty under Section 271D of the Act for alleged violation of the provisions of Section 269SS of the Act since the books of the assessee reflected the liability on account of the lands acquired on its behalf. On appeal, the CIT (Appeals) affirmed the penalty. The order of the CIT was successfully impugned by the assessee before the ITAT. On appeal, this Court held as under:— "While holding that the provisions of Section 269SS of the Act were not attracted, the Tribunal has noticed that: (i) in the instant case, the transaction was by an account payee cheque, (ii) no payment on account was made in cash either by the assessed or on its behalf, (iii) no loan was accepted by the assessee in cash, and (iv) the payment of Rs. 4.85 crores made by the assessee through IL & FS, which holds more than 30 per cent. of the paid-up capital of the assessee, by journal entry in the books of account of the assessed by crediting the account of IL & FS. Having regard to the aforenoted findings, which are essentially findings of fact, we are in complete agreement with the Tribunal that the provisions of section 269SS were not attracted on the facts of the case. Admittedly, neither the assessee nor IL & FS had made any payment in cash. The order of the Tribunal does not give rise to any question of law, much less a substantial question of law. We accordingly decline to entertain the appeal. Dismissed."

9. In our view, the present appeal is bereft of any merit and is, accordingly, dismissed.

4.15.1. We find that though the ultimate finding recorded by the Hon’ble Delhi High Court had been subsequently reversed by the decision of Hon’ble Jurisdictional High Court in the case of Triumph International supra, still the observations made by the Hon’ble Delhi High Court on the genuineness of the transactions in the ordinary course of business and the element of ‘reasonable cause’ thereon, would still remain applicable and would have more persuasive value.

4.16. In view of our aforesaid observations and respectfully following the aforesaid judicial precedents relied upon hereinabove, we hold that the ld CITA had rightly held that no penalty u/s 271D of the Act could be levied in respect of transactions with BETL in the sums of Rs 47,22,996/- and Rs 31,40,533/- . Similarly , we hold that the ld CITA had rightly held that no penalty u/s 271E of the Act could be levied in respect of transactions with BETL in the sums of Rs 36,14,531/-, Rs 48,77,220/-, Rs 58,93,873/- and Rs 45,22,389/-.

a) Alternate mode of raising funds b) Assignment of receivables c) Squaring of transactions d) Operational efficiency / MIS purpose e) Consolidation of family member debts f) Correction of error g) Loans taken in cash 5.1. In the instant case, these journal entries in the name of Joystar India amounting to Rs 98,263/- ; Shree Ganesh Enterprise amounting to Rs 14,675/-(twice) ; Macrotech Construction amounting to Rs 1,600/- (twice) ; Sonal Super Services amounting to Rs 3,94,100/- ; RCIL amounting to Rs 1,852/- ; Super Fabrication amounting to Rs 13,100/- ; J K Enterprises amounting to Rs 2,621/- ; Shree Sai Enterprise amounting to Rs 800/- and UK Enterprises amounting to Rs 66,912/-, were passed towards assignment of genuine and bonafide receivables / payables arising out of business expediencies and exigencies in the normal course of business. Hence the same would certainly constitute reasonable cause within the meaning of section 273B of the Act and hence no penalty u/s 271D and 271E of the Act could be levied for the aforesaid sums. Reliance in this regard is placed on the decision of Hon’ble Jurisdictional High Court in the case of Triumph International reported in 208 Taxman 299 (Bom) supra wherein the relevant operative portion is already reproduced hereinabove. Respectfully following the same, we do not find any infirmity in the order of the ld CITA cancelling the levy of penalty in the aforesaid sums of various parties u/s 271D and 271E of the Act.

Order pronounced on 08/04/2021 by way of proper mentioning in the notice board.