TaxTMI 
TaxTMI 
2010 (10) TMI 734
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case are that assessee is a registered partnership firm having two partners, namely Shri Subhash Chachra and Shri A.K. Chachra. The firm is engaged in the manufacture of garments and their export. It has filed its return of income on 31.10.2002 declaring an income of Rs.35,13,312/- after claiming deduction u/s 80HHC at Rs.19530233/. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) dated 27.10.2003 was sent through speed post for compliance on 19.11.2003. The notice was served manually also upon the assessee on 29.10.2003. The AO after hearing the assessee framed the asstt. u/s 143(3) on 10th November, 2005. It emerges out from the record that the revenue has appointed special auditor who has submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that there is no violation of the provisions of section 269SS and 269T on the part of the assessee firm. Copies of accounts as mentioned hereinabove is enclosed herewith for your ready reference on Page No.113 to 121 of the Paper Book is enclosed." 3. The AO issued notice u/s 271D/271E of the Income Tax Act inviting explanation of the assessee why penalty under these sections be not imposed for making payments in contravention of section 269SS and 269T of the Income Tax Act. The assessee had contended that it has two sister concerns namely Superior Craft India, (hereinafter referred to SCI) and M/s. Supreme Export India, (hereinafter referred to SEI). M/s. SCI is a partnership concern consisting of two partners namely Shri Ashwani ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceeding has not disputed this issue. It was also contended that assessee has not taken any deposits from the sister concern nor it has given any loan to these sister concerns which could be said that such transactions have been made in contravention to section 269T and 269SS. The assessee has produced the details alongwith the books of accounts of other two sister concerns. 4. The AO in the impugned penalty order nowhere pointed out as to how assessee has repaid the loan which can expose it for visiting with penalty u/s 271E. Ld. AO simply made general observation and then made reference to the decision of Hon'ble Supreme Court reported in 255 ITR in the case of Asstt. Director of Investigation vs. Kumari A.B. Shanti. He has not gi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by way of journal entry. The entire payment of Rs.2,01,60,008/- has been made by account payee cheque starting from 1st April 2001 to 17th August, 2001. The assessee has placed on record details of such payments on pages No.37 - 42 of the paper book. The payments have been made through Karnataka Bank. The expenses incurred on behalf of this sister concern and debited to their account by book/journal entry are concerned these relates to the purchases transferred by M/s. Superior Crafts India to the assessee. The net effect of this is that purchases have been debited by the assessee in its account and the amount of M/s. Superior Craft (India) has been credited. The total transaction in this account is Rs.9,66,070/-. On due consideration of th....