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2017 (2) TMI 1507 - AT - Income TaxPenalty u/s.271D - assessee received cash loans from his two partnership firms - violation u/s 269SS - proof of bonafied belief - whether transactions between a firm and partner do not attract the rigor of 269SS and 269T? - HELD THAT - Revenue fails to dispute all the stated decisions holding that Section 269SS is not attracted in transactions between a partnership firm and its partner not partaking the character of a loan and deposit in general law as held in another co-ordinate bench decision in ITO vs. Bharat kumar Dayaram Patel 2010 (10) TMI 1228 - ITAT AHMEDABAD . We accordingly draw support therefrom and uphold the CIT(A) s order under challenge deleting Section 271D penalty in question. - Decided against revenue.
Issues: Appeal against deletion of penalty under Section 271D of the Income Tax Act, 1961 for assessment year 2009-10.
Analysis: 1. The appeal was filed by the Revenue against the CIT(A)-6, Ahmedabad's order deleting a penalty of ?17.80 lacs imposed by the Assessing Officer under Section 271D of the Income Tax Act, 1961. The penalty was imposed due to the assessee receiving cash loans from two partnership firms, which was considered a violation of Section 269SS of the Act. 2. The CIT(A) based the deletion of the penalty on various decisions, including the judgment in Shrepak Enterprises vs. DCIT and the Rajasthan High Court's decision in CIT vs. Lokhpat Film Exchange. These decisions established that transactions between a firm and its partner do not attract the provisions of Section 269SS and 269T of the Act if done under a bonafide belief. The Revenue contested this decision. 3. After considering the arguments from both sides, the Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal. The Tribunal referred to the Kerala High Court's decision in Grihalakshmi Vision vs. Addl. CIT but relied on the decision in ITO vs. Bharat Kumar Dayaram Patel to support the conclusion that Section 269SS is not attracted in transactions between a partnership firm and its partner. Therefore, the penalty under Section 271D was not applicable in this case. 4. The Tribunal's decision was pronounced on February 15, 2017, upholding the deletion of the penalty under Section 271D for the assessment year 2009-10.
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