Tribunal upholds deletion of penalty under Section 271D for cash loans between partnership firm and partner The Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271D of the Income Tax Act for the assessment year 2009-10. The Tribunal ...
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Tribunal upholds deletion of penalty under Section 271D for cash loans between partnership firm and partner
The Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271D of the Income Tax Act for the assessment year 2009-10. The Tribunal found that transactions between a partnership firm and its partner, involving cash loans, did not contravene Sections 269SS and 269T of the Act if conducted in good faith. Therefore, the penalty imposed by the Assessing Officer was deemed inapplicable, and the Revenue's appeal was dismissed.
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 Rs. 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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