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PER AMARJIT SINGH, JUDICIAL MEMBER; 1. This is an appeal filed by revenue and the cross-objection filed by the assessee against the order dated 31.08.2016 passed by the Commissioner of Income Tax (Appeals)- 49, Mumbai for assessment year 2011- 12 in which the penalty levied by the AO under section 271D has been ordered to be deleted. 2. The revenue has raised following ground of appeal. (1) On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in deleting penalty of Rs.5,03,15,487/-levied under section 271D of the Income tax Act 1961 on the ground that genuineness of the transaction made through journal entries is not in doubt. (2) On the facts and in the circumstances of the case in law, the learned Commissioner (Appeals) having held that assessee had contravened the provision of section 269SS of the Income tax Act 1961, ought to have upheld the levy of penalty under section 271D as the assessee failed to establish the compelling reason or genuine business constraint or reasonable cause for having connection in respect of each and every journal entry with its group concern.
The Cross objection raised by the assessee.:- 3. “1. The Ld. CIT(A) ought to have held that the order u/s 271D & 271E of the Act was illegal and bad in law as it was passed beyond the period of limitation provided in clause (c of S. 275(1) of the I.T. Act, 1961. 2. The respondent craves leave to add to, alter, amend or delete any of the foregoing cross-objection”
The brief facts of the case are that a search and seizure action u/s 132(1) of the I.T. Act was conducted at Lodha Group by the Investigation Wing on 10.01.2011. M/s. Simtools Pvt. Ltd. is an entity which is connected to the Lodha CO.No. 136/M/2018 A.Y.2011-12 Group. During the search, it was found that the Lodha Group was engaged in suppression of sale receipts by receiving car parking receipts outside the books of accounts. Simultaneously, instances of receipt of on money also showed that the group was indulging in receipt of on money over and above the disclosed receipts. When confronted with the evidences, the statement of Shri Abinandan Lodha, the key person of Lodha Group was recorded on 12/01/2011 who made a declaration of Rs.199.80 Crs in the hands of various entities of Lodha Group. He made the voluntary disclosure in the name of various entities of Lodha Group. He also made the disclosure of additional income in the hands of Simtools P. Ltd. for various assessment years as mentioned below:-
Sr. No. A.Y. Amount of disclosure Ground on which disclosure is made 1 2010-11 487 lacs Undisclosed cash receipt on sale of car parking 2 2011-12 47.52 lacs Undisclosed cash receipt on sale of car parking Total 535 lacs
Accordingly notices u/s 153C dated 27.09.2012 were issued and served upon the assessee requiring assessee to furnish returns of income for the various assessment years including A.Y. under consideration. In compliance of notice, the assessee furnished the return of income on 29.09.2011 declaring total income to the tune of Rs.5,32,73,099/- after claiming the deduction under Chapter VIA of Rs.59,19,233/-. The 3 CO.No. 136/M/2018 A.Y.2011-12 assessee accepted to repay the loan in contravention of provision 269SS/269T of the I.T. Act. The total entry was found to the tune of Rs.5,03,15,487/-. After the completion of the assessment, the penalty u/s 271D of the Act was initiated and the AO levied the penalty to the tune of Rs.5,03,15,487/-. Aggrieved by this order, the assessee filed an appeal before the CIT(A) who deleted the penalty, therefore, the revenue has filed the present appeal before us.
We have heard the argument advanced by the Ld. Representative of the parties and perused the material available on record. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the penalty, therefore, the finding of the CIT(A) is wrong and against law and facts and is liable to be set aside. However on the other hand, the Ld. Representative of the assessee has refuted the said contention. At the outset, the learned AR of the assessee submits that the grounds of appeal
raised by revenue is covered in favour of assessee by the decision of Hon’ble jurisdictional High Court in assessee’s group cases in CIT Vs AjinathHitech builders Private Limited& others in ITA’s No. 171, 172, 202, 2.3, 218 and 219 of 2015 dated 06th February 2018 and further by the decision of co-ordinate bench of Tribunal in CIT versus Aasthavinayak Estate Company Ltd ( 2017 dated
31. May 2018 and CIT Vs National Standard India Ltd ( ITA No.
CO.No. 136/M/2018 A.Y.2011-12 6607/M/2016 and 6609/M/2016 dated 6th June 2018, therefore, the CIT(A) has passed the order judiciously and correctly which is not liable to interfere with at this appellate stage. The learned AR of the assessee further submits that the journal entries were made prior to 12 June 2012 as the present appeal pertains to assessment year 2012-13, therefore, the ratio of decision in case title as CIT Vs Trump International (I) Ltd dated 12 June 2012 (345 ITR 270)/ [22 Taxmann.com 138(Bom)] is not applicable. The ACIT levied the penalty under section 271D on the observation that the assessee accepted loan/ deposits from sister concern through journal entries i.e. otherwise then account payee cheque/draft and thereby violated the provisions of section 269SS. The assessee has taken journal entries of Rs. 10,99,595/-from Dharamnath Buildtech & Farm Pvt Ltd. The assessing officer further held that the assessee has not made out any case of reasonable cause under section 273B by making the reference the decision of honorable Bombay High Court in Trump International Finance (i) Ltd (supra). Before Commissioner (Appeals) the assessee urged that the journal entries have been made with the group concern under the bonafide belief that such transaction would not be hit by the provisions of section 269 SS in view of the various judicial decision on this issue, including the decision of Delhi High Court in case of NOIDA Toll Bridge (262 ITR 260) and such loan by way of journal entries transaction were undertaken for various commercial reasons like assigning or receivable for 5 ITA No. 6608/M/2016 CO.No. 136/M/2018 A.Y.2011-12 operational efficiency, payment on the group concern for squaring up connection, for ease of consolidation of accounts, rectification entries etc. The learned Commissioner (Appeals) after referring the decision of Bombay High Court in Trump International (supra) held that repayment of loan /deposit by way of journal entries was in contravention of provision of section 269SS has been given after the close of financial year 2011-12 relevant to assessment year 2012-13. The learned Commissioner (Appeals) concluded that reasons disclosed by assessee constitute reasonable cause within the meaning of section 273B of the Act; particularly in light of the fact that there is no finding that such transaction was undertaken to evade the tax. The learned Commissioner (Appeals) while considering the contention of assessee also observed that there is no finding that transaction by way of journal entries were not made to evade tax. The finding of the CIT(A) is based upon the decision of Bombay High Court in the assessee’s sister concern case title as CIT Vs AjinathHitech builders Private Limited& others in ITA’s No. 171, 172, 202, 2.3, 218 and 219 of 2015 dated 06th February 2018. The ratio of other judgments relied by the assessee is also applicable to the facts and circumstances of the present case. The assessee relied upon the other judgments such as CIT versus Aasthavinayak Estate Company Ltd ( 2017 dated 31 May 2018 and CIT Vs National Standard India Ltd ( ITA No. 6607/M/2016 and 6609/M/2016 dated 6th June 2018. Further, it also 6