Case Law Details
DCIT Vs Macrotech Developers Ltd. (successor to M/s. Bellissimo Crown Buildmart Pvt. Ltd. (ITAT Mumbai)
The ld. CIT(A) gave a categorical finding that the transactions carried out with the aforesaid three parties i.e. Jawala Real Estate Pvt. Ltd., Shreeniwas Cotton Mills Limited & Lodha Developers Private Limited, which are subject matter of levy of penalty u/s.271D of the Act were carried out as an act of assigning of receivables or extinguishment of mutual liability of paying / receiving the amounts by the assessee and its sister concern and its sister concerns to third parties. The ld. CIT(A) held that even assuming that this act is in contravention of provisions of Section 269SS of Act, there is reasonable cause for doing the same and therefore, would not attract the provisions of Section 269SS of the Act. The ld. CIT(A) also took cognizance of the fact that the expression “reasonable cause” has not been defined in the Act, but it has got a wider connotation and thus a sufficient cause. He placed reliance on the decision of the Hon‟ble Supreme Court in the case of Azadi Bachao Andolan vs. Union of India reported in 252 ITR 471 wherein it was held that reasonable cause is a cause which prevents a man of average intelligence and ordinary prudence, acting under normal circumstances without negligence or in connection or want of bonafide. The ld. CIT(A) also placed reliance on the decision of the Hon‟ble Delhi High Court in the case of Woodward Governor India Pvt. Ltd., vs. CIT reported in 118 Taxman 433 wherein the expression “reasonable cause” was described as a probable cause and it means “ an honest belief founded upon the reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do.” Thereafter, the ld. CIT(A) also placed reliance on the decision of the Jurisdictional High Court in the case of Ajinath Hitech Builders Pvt. Ltd, and others (Group company of the assessee) dated 06/02/2018 in ITA Nos. 171, 172, 202, 203, 218 & 2019/Mum/2015 wherein it was clearly held that since the decision of the Hon‟ble Bombay High Court in the case of Triumph International Finance (I) (345 ITR 270) was rendered on 12/06/2012, it is to be held for prior 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. Hence, there was a reasonable cause available to the assessee within the meaning of Section 273B of the Act. The ld. CIT(A) also gave a categorical finding that neither the ld. AO nor the Addl. CIT (who levied the penalty) had made out a case of any malafide intention on the part of the assessee nor any adverse finding has been brought on record with regard to journal entries passed by the assessee in its books for adjustment / assigning of receivables. Accordingly, the ld. CIT(A) deleted the levy of penalty u/s.271D of the Act. Aggrieved, the Revenue is in appeal before us.
3.5. We find the entire gamut of the case had been dealt in detail by the ld. CIT(A) in his order which have already been narrated hereinabove. The same are not reiterated herein for the sake of brevity as they remain undisputed. We find from the aforesaid factual narration and the basis of passing journal entries by the assessee in its books that these entries are merely passed for squaring up of transactions or adjustment of entries. This categorical finding given by the ld. CIT(A) in his order has not been controverted by the Revenue before us. Yet another categorical finding recorded by the ld. CIT(A) which remain uncontroverted by the Revenue before us is that these transactions were not made by the assessee with a malafide intent to evade tax and 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 transactions carried out in the normal course of the business of the assessee. 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.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals in ITA Nos. 3038/Mum/2019, 3046/Mu m/2019, 3049/Mum/2019 & 4054/Mum/2019 for A.Y.2014-15 & 2015-16 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-49, M umbai in appeal No.CIT(A)-49/IT-84/2017-18, CIT(A)-49/IT85/DC.CC.7(3)/20 17-18, CIT(A)-49/IT-81/DC.CC. 7(3)/2017- 18 & CIT(A)- 49/IT-***/****_** respectively dated 12/02/2019, 25/02/2019 & 05/03/2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D & 271E respectively of the Income Tax Act, 1961 (hereinafter referred to as Act).
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