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Apart there from, the revenue has assailed the deletion of penalty of Rs. 35,52,90,732/- imposed by the Addl. CIT under Sec. 271E on the following grounds of appeal :

1. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty of Rs.35,52,90,732/- levied u/s.271E 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 and in law, the Ld.CIT(A) having held that the assessee had contravened the provisions of section 269T of the Income Tax Act, 1961, ought to have upheld the levy of penalty u/s.271E as the assessee failed to establish the compelling reasons or genuine business constraints or reasonable cause for having transactions in respect of each and every journal entry with its group concerns."

4. The Addl. CIT after deliberating on the exhaustive submission filed by the assessee was however not persuaded to accept the same. It was observed by the Addl. CIT that the assessee company which was a part of the Lodha Group, which was a major construction group engaged in the construction business and development of real estate had received/accepted and repaid the loans from/to various concerns through Journal entries i.e by way of a mode other than that envisaged u/ss. 269SS and 269T of the I.T Act. The Addl. CIT holding a conviction that the assessee by contravening the provisions of Section 269SS and Section 269T of the I.T Act, had thus rendered itself liable for penalty u/ss. 271D and 271E, respectively. The contention advanced by the assessee that the journal entries pointed out by the A.O did not involve raising of any loan or deposit of money did not find favour with the Addl. CIT. In support of his aforesaid view that the assessee had contravened the provisions of Sec. 269SS and Sec. 269T of the I.T Act, the Addl. CIT relied upon the judgment of the Hon‟ble High Court of Bombay in the case of CIT(Central)-4 vs. Triumph International Finance (India) Ltd. (2012) 345 ITR 0270. It was observed by the Addl. CIT that the Hon‟ble High Court in the said case had observed that where a loan/deposit was repaid by debiting the account through journal entries, it must be held that the assessee had contravened the provision u/s. 269SS of the I.T Act. Insofar the judgment of the Hon‟ble High court of Delhi in the case of Worldwide Township Projects Ltd. ((2014) 367 ITR 433 (Delhi) that was relied DCIT Vs. Mahavir Build Estate - ITA 1480 & 1481/Mum/2017 6 A.Y 2008-09 upon the assessee was concerned, it was observed by the Addl. CIT that the said judgment had not considered the view taken by the Hon‟ble High Court of Bombay in the case of Triumph International Finance (India) Ltd (supra). Apart there from, the Addl. CIT was also not persuaded to subscribe to the claim of the assessee that the acceptance and the repayment of the loans by way of journal entries would fall within meaning of "reasonable cause" as envisaged in section 273B of the I.T Act. In sum and substance, the Addl. CIT being of the view that not only the assessee had contravened the provisions of section 269SS and section 269T of the I.T Act, but had also failed to make out a case of a reasonable cause u/s. 273B, therefore, imposed a penalty u/s 271D of Rs. 38,09,55,274/- and u/s. 271E of Rs. 35,52,90,732/-.

5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee assailed the imposition of penalty by the Addl. CIT u/ss. 271D and 271E primarily on three grounds viz. (i) that as per Explanation 3 to Sec. 147 of the I.T Act, the A.O had no jurisdiction to initiate/or make a reference to the Joint Commissioner of Income-tax in respect of technical penalties u/ss. 271D and 271E as the same had no relation to the alleged escaped assessment of income; (ii). that as the journal entries pointed out by the A.O did not involve any loan or deposit of money, therefore, in the absence of any violation of the provisions of Sec. 269SS and 269T of the IT Act, no penalty could have been imposed u/ss. 271D and 271E; and (ii). there was a reasonable cause u/s 273B for the assessee to have carried out the transactions by way of journal entries. The CIT(A) after deliberating on the contentions advanced by the assessee rejected the contention advanced by it that the A.O in the course of the reassessment proceedings had no jurisdiction to initiate/or make a reference to the Joint Commissioner of Income-tax in respect of technical penalties u/ss. 271D and 271E. Insofar the contravention of the provisions of Sec. 269SS and 269T was concerned, it was observed by the CIT(A) DCIT Vs. Mahavir Build Estate - ITA 1480 & 1481/Mum/2017 7 A.Y 2008-09 that as the assessee had accepted and repaid the loans amounting to Rs. 38,09,55,274/- and Rs. 35,52,90,732/- by way of journal entries i.e other than by way of account payee cheques and drafts, therefore, there was a violation of the mode of accepting and repaying of the loans as envisaged in the aforesaid statutory provisions. As regards the contention of the assessee that there was a „reasonable cause‟ for carrying out the aforesaid transactions by way of Journal entries, the CIT(A) was persuaded to accept the same. The CIT(A) after deliberating on the scope and gamut of the term „reasonable cause‟ in the backdrop of certain judicial pronouncements, observed that the same means an honest belief founded upon 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. The CIT(A) after referring to the judgment of the Hon‟ble High Court of Bombay in the case of CIT vs. Triumph International Finance (India) Ltd. (2012) 345 ITR 270 (Bom) observed that the genuineness of the transaction made through journal entries was not in doubt and it was neither shown in the assessment proceedings or in the course of the penalty proceedings that unaccounted income of the lender or the borrower was involved. In sum and substance, it was observed by the CIT(A) that the transactions by way of journal entries were not bonafide or had been undertaken to evade tax. Insofar the reasonable cause for having carried out the transactions by way of journal entries i.e in contravention of the provisions of Sec. 269SS and Sec. 269T of the I.T Act was concerned, it was observed by the CIT(A) that the same was backed by a reasonable cause. It was noticed by the CIT(A) that the assessee had entered into transactions by way of journal entries with its group concerns under the bonafide belief that such transactions would not be hit by the provisions of Sec. 269SS and Sec. 269T on the basis of the judicial decisions on the issue, including that of the High Court of Delhi in the case of CIT Vs. Noida Toll Bridge Co. Ltd. (2003) DCIT Vs. Mahavir Build Estate - ITA 1480 & 1481/Mum/2017 8 A.Y 2008-09 262 ITR 260 (Del). Apart there from, it was observed by the CIT(A) that the loan transactions by way of journal entries were undertaken by the assessee for various commercial reasons like assigning of receivables for operational efficiency, payment on behalf of group concern for squaring transactions, for ease in consolidation of accounts, rectification entries etc. It was also noticed by the CIT(A) that the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Triumph International Finance (India) Ltd. (2012) 345 ITR 270 (Bom) holding that repayment of loan/deposit by way of journal entries was in contravention of provisions of Sec. 269T had been given after the close of the financial year 2011-12 relevant to A.Y 2012-13. In the backdrop of the aforesaid facts, it was observed by the CIT(A) that the aforesaid reasons constituted a reasonable cause within the meaning of Sec. 273B of the I.T Act , specifically in light of the fact that there was no finding of fact that such transactions were undertaken by the assessee to evade tax. The CIT(A) while concluding as hereinabove relied on the decision of the ITAT, Mumbai in the case of Lodha Builders Pvt. Ltd. Vs. ACIT [ITA No. 476 to 481/Mum/2014; dt. 27.06.2014) for A.Y 2009-10 and five other group cases, wherein under identical facts and circumstances the penalty imposed u/ss. 271D and 271E was quashed for the reason that there was a reasonable cause for the assessee to have undertaken such transactions by way of journal entries. Insofar the observation of the Addl. CIT that the spirit of the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Triumph International Finance (India) Ltd. (2012) 345 ITR 270 (Bom) was that only such transactions which were in the nature of squaring up with the same party would be entitled to claim the benefit of „reasonable cause‟ u/s 273B was concerned, the same did not find favour with the CIT(A). It was observed by the CIT(A) that in the case before the Hon‟ble High Court the assessee and its sister concern viz. M/s Triumph Securities Ltd. had transactions of purchase and sale with common customers and the credit/debit liabilities were settled through journal entries and it DCIT Vs. Mahavir Build Estate - ITA 1480 & 1481/Mum/2017 9 A.Y 2008-09 was held that the transactions in question were undertaken not with a view to receive loans/deposits in contravention of Sec. 269SS, but in view to extinguish the mutual liability of paying//receiving the amounts by the assessee and its sister concern to the customers. On the basis of his aforesaid conviction that the assessee had a „reasonable cause‟ within the meaning of Sec. 273B of the I.T Act for accepting and repaying loans from/to its „sister concerns‟ by way of journal entries, the CIT(A) deleted the penalty imposed by the Addl. CIT under Sec. 271D of Rs. 38,09,55,274/- and under Sec. 271E of Rs. 35,52,90,732/-.

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 DCIT Vs. Mahavir Build Estate - ITA 1480 & 1481/Mum/2017 11 A.Y 2008-09 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 :