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TMI Blog2010 (10) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- imposed under section 271E of the Income Tax Act for violating the provisions of section 269T, holding that the transactions between the assessee and M/s. Akshar Gems were related to capital account transactions only and not related to loan account transactions as the transaction with the firm and partners did not attract the provisions of section 269SS and 269T, without appreciating the fact that the transactions have been accounted by the assessee as loans and advances and deposits . 3. The brief facts of the case are that the assessee is against levy of penalty on repayment of capital to M/s Akshar Gems, in which he is a partner for alleged violation of action 269T of the Act. The assessee had filed return of income sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sub head of Loans, Advances and Deposits as per the grouping made as per accounting software and there was no intention on the part of the assessee to treat the said account as Loan which was clear from the fact that the balance was shown under the main head Current Liabilities and not under the head Loans and Advances . In the books of firm as well as the appellant only one account was maintained and no separate accounts like capital account and loan accounts were maintained. He also submitted that he was under a bonafide belief that the transaction with the partnership firm did not attract the provisions of Section 269T. However, the reply of the assessee was not accepted on the ground that his contention was incorrect as he himsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions made by partners to firm could not be treated as loans or deposits. The assessee argued that when the transactions were held to be of capital account transactions in the case of the recipient firm, the same transaction could not he termed as loan transaction in the hands of the assessee who made payment to the said firm. 5. After considering the submissions of the assessee the Learned Commissioner of Income Tax (Appeals) held as under:- I have gone through the penalty order as well as the submission made by the ARs. At the outset, it is worth mentioning that the appellant had made repayment to the firm M/s. Akshar Gems for which the penalty U/s. 271E of the Act was imposed and similar penalty U/s. 271D of the Act was imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm as well as the appellant. From a copy of capital account in M/s. Akshar Gems, it is observed that there were transactions of movement of capital during the year to and from the firm and also there were transactions of interest on capital/ salary to partner and payment of income tax. Thus, the transaction in the said account also gives a picture of capital account transactions and therefore, the payment made by a partner to a firm or repayment by the firm to a partner cannot take the character of loan or deposit. On perusal of audited balance sheet it was also observed that the debit balance of capital account of the appellant was shown in Schedule A being Statement of Partner's Capital Account and the same was reflected accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of the provisions of Section 269T of the Act and therefore, the penalty of ₹ 16,00,000/- imposed on the appellant is not justifiable and the same is directed lo be deleted. In the result this ground stands allowed. 6. We have heard the rival submissions and perused the materials available on record. In the instant case the Learned Assessing Officer levied penalty under section 271E for the alleged violation of Section 269T in respect of cash transaction with M/s. Akshar Gems. The penalty levied was deleted by the Learned Commissioner of Income Tax(Appeals). We find that for the same transaction penalty under section 271D was also levied by the Learned Assessing Officer in the case of M/s. Akshar Gems which was deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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