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TMI Blog2016 (12) TMI 1875X X X X Extracts X X X X X X X X Extracts X X X X ..... dited as advance from customers with an endorsement To advance memo no- to- from customers and also found the entire sale to M/s.C.M.Roy Sons. The assessee takes advances from its customers and makes payment to its firm time to time for meeting the business needs. We hold that the money received or paid in the above circumstances specially between the partners and its firm can be treated in the nature of advance and not loan or deposit as contemplated in sec.269SS of the Act and that the payments between the partnership firm and its partner and vice versa are payment to self. As discussed above the advances received by the assessee were from proper source and there is no doubt the genuineness of the transactions. In such circumstances, the penalty imposed u/s.271E of the Act is not maintainable - we cancel the penalty levied by the A.O. u/sec.271E - Decided against revenue. - I.T.A. No. 2425/KOL/2013 - - - Dated:- 14-12-2016 - SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Shri Sal long Yaden, Addl.CIT, DR None appeared for the assessee ORDER Shri S.S. Viswanethra Ravi, JM :- This appeal by the revenue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,31,400/- U/Sec. 271E of the Act 9. The CIT-A by relying on the decision of Hon ble High Court of Rajasthan in the case of ITO Vs. Lokhpat Film Exchange (Cinema) reported in 304 ITR 172 (Raj) and on a decision of Kolkata Tribunal in ITA No.1916/Kol/2004 held that the firm and partners are not separate and cancelled the penalty imposed by the AO. 10. Before us the ld.DR submits that the Assessee himself admitted that he repaid the loan amounts to the said firm C.M.Roy Sons in the assessment proceedings and changed his version during the penalty proceedings with a new theory that he is the partner in the said firm and relied on the decision of Hon ble High Court of Kerala in the case of Grihalakshmi Version reported in (2015) 63 taxmann.com 196 (Kerala) and argued that there was no such material to show that the Assessee is partner in the said firm and to show further on which basis repayments were made to the said firm and urged to allow the appeal. 11. Heard Ld.DR and perused the material available on record. Taking into consideration the facts borne by the record and we may examine the facts and law laid down thereon in the case supra relied on by the Ld.DR. The brief f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer confirmed by the Appellate Commissioner and the Tribunal that it was a loan or deposit that was received by the assessee also has to be upheld and we do so. 13. In the aforesaid decision, the contention of the Assessee was that the money taken from partners and sister concerns does not constitute a loan or deposit, but however, the Hon ble High Court upheld the findings of the authorities below in favour of the Revenue on the ground that the Assessee could not produce any material whatsoever to infer that the said receipts were anything other than loans or deposits. In the present case, the contention of the Assessee was that in the penalty proceedings vide its letter dt:15-11-2010 admitting the fact that it is a loan repaid to his partnership firm and such repayment does not attract the provisions under Section 269SS of the Act as there was no term lender and borrower exists between the partner and its firm. We find that basing on which submissions the CIT-A cancelled the penalty imposed by the AO placing reliance on the decision in the case of CIT vs Lokhpat Film Exchange (cinema) of Hon ble High Court of Rajasthan reported in 304 ITR 172 (Raj), held under the general prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that for the purpose of ss. 269SS and 269T also the firm and partners cannot be considered to be separate entity and deleted the penalty. Hence, these two appeals are before us raising the common issue in both appeals. 4. The firm was constituted with a particular object of constructing cinema and is now no more in existence. Sec. 273B has mitigated the penalty to be levied under ss. 271D and 271E by providing that where assessee is able to establish that there was reasonable cause for failure to comply with ss. 269SS and 269T, no penalty is leviable. 5. By considering the decision of the Supreme Court in the aforesaid decision and considering the facts that under the general provision relating to Partnership Act that partnership firm is not a juristic person and for inter relationship different remedies are provided to enforce the rights arising out of their inter se transactions, the issue about separate entities apart, it cannot be doubted that the assessee has acted bona fide and his plea that inter se transactions between the partners and the firm are not governed by the provisions of ss. 269SS and 269T was bona fide and reasonable ground existed on which they had n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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