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3. On appeal the Ld. CIT(A) deleted the penalties observing as under:

"5.3.4 Respectfully, following the above decision, the contention of the appellant that the journal entries are not covered within the violation of Section 269T is rejected. However, the transactions covered by the journal entries are made in regular course of business with the sister concerns by the appellant. Even in the present case, there is no adverse finding of the AO either in the penalty order u/s 271E of the Act or in the remand report dated 09,08.2016 that any of the impugned transactions is aimed at non commercial reasons and outside the normal business operation. Therefore, though the ITA NO.6614/MUM/2016 (A.Y: 2007-08) & other 39 files M/s. Lodha Builders (P.) Ltd & other group companies appellant has violated the provisions of section 269T of the Act in respect of Journal entries, it has shown reasonable cause and therefore the penalty under section 271E is not leviable."

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 ITA NO.6614/MUM/2016 (A.Y: 2007-08) & other 39 files M/s. Lodha Builders (P.) Ltd & other group companies 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. 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 ITA No. 5745 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 ITA NO.6614/MUM/2016 (A.Y: 2007-08) & other 39 files M/s. Lodha Builders (P.) Ltd & other group companies 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-

Therefore, the Assessing Officer concluded that the assessee by not accepting the loan/deposit by Account Payee Cheque or bank drafts violated the provisions of section 269SS/269T of the Act and accordingly reference for initiation of penalty proceedings u/s. 271D/271E of the Act was made to Addl. CIT, Circle-6, Mumbai in the Assessment Order. After completion of assessments the Assessing Officer by letters dated 11.12.2012 and 26.06.2013 made a reference to the Addl. CIT for initiation of penalty proceedings. Therefore, the facts of the assessee's case in all these cases are identical to the facts as mentioned by the Tribunal in its order in ITA.No. 475 to 481/Mum/2014 dated 27.06.2014 in assessee's own case and associated companies' cases. Thus, respectfully following the said decision of the Coordinate Bench in assessee's own case, we hold that, as the Assessing Officer in the course of the assessment proceedings called for explanation of the assessee in respect of loans accepted and repaid otherwise than by way of Account payee cheque/drafts, considered the reply of the Assessee and rejected the reply by the Assessing Officer holding that the assessee has violated the provisions of section 269SS/269T and also made a reference to the Addl.