2013 (3) TMI 265

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....nted as loan and interest debited?" 2. The assessee was a partner in four firms and Proprietor in Reliance Realtors. In the assessment year 2005-2006, assessee had taken loan from the four firms which were found to be in cash. The Assessing Officer initiated penalty proceedings under Section 271D of Income Tax Act and imposed penalty of Rs.18 lakhs. The Commissioner of Income Tax (Appeals) dismissed the appeal (ITA.No.68/07-08) and assessee preferred further appeal (ITA.No.142/Mds/08) before the Income Tax Appellate Tribunal. Tribunal remitted the matter to the Assessing Officer to give a definite finding whether the transaction was between the firm and partner. The Assessing Officer passed a fresh order (17.07.2008) that the assessee in....

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....nd the Tribunal were not correct in saying that the transactions were between firms and partner and prayed that the substantial question of law be answered infavour of the Revenue. 4. We have heard Mr.M.P.Senthil Kumar, learned counsel appearing for the assessee. 5. The assessee had taken the amounts from four firms which were found to be in cash and the Assessing Officer has considered these payments were in violation of Section 269SS of the Act. Stand of assessee is that the amounts were taken in his capacity as partner and it cannot be taken as an independent transaction and there is no violation of Section 269SS of the Act. The partnership firm has no separate legal entity. There is no separate identification between the firm and ....

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.... is not a juristic person and there is no separate identity for the firm and partners and that the transactions between the firm and the partner cannot be brought within the meaning of Section 269SS of the Act. 8. Apart from the issue about the separate entity, being a partner the assessee had drawn amounts from the firms and there are no reasons to doubt the genuineness of the transactions. This Court in Commissioner of Income Tax v. Kundrathur Finance and Chit Co. [(2006) 283 ITR 329 (Mad)] following the decision of the Hon'ble Supreme Court in Assistant Director of Inspection (Investigation) v. Kum.A.B.Shanthi [(2002) 255 ITR 258 (SC)] held that "if there was genuine and bonafide transaction and the tax payer could not get a loan or d....