TaxTMI 
TaxTMI 
2022 (1) TMI 235
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....itially this appeal was adjudicated and dismissed vide order dated 23.08.2019 due to Low Tax Affect. However, the order dated 23.08.2019 was recalled on filing Miscellaneous Application(M.A.) by the Revenue in M.A.No.31/SRT/2020 in order dated 08.04.2021. Accordingly, this appeal came up for hearing afresh. The Revenue raised the following grounds of appeal: "i) On the facts and in circumstances of the case, the order of the CIT(a) is perverse in law as the CIT(A) has not considered the fact that a firm and its partners are separate entities for the purposes of Sec 269SS & Sec 271D of the Act and the same has been held in the decision of Hon'ble High Court Kerala in the case of Grihalakshmi Vision vs Additional Commissioner of Inco....
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....ncome. Subsequently, the Joint Commissioner of Income Tax (ld.JCIT) levied penalty under section 271D of the Act. The ld.JCIT while passing the penalty order recorded that assessee firm received loan of Rs. 75 lakhs in cash from one of its partner namely Dayaswarup J.Patel, and repayment and interest of such loan was made in subsequent year. The assessee has not shown the said transaction in its books of accounts. The ld.JCIT of the view that the assessee has violated the provision of section 269SS of the Act, which attracts penalty under section 271D of the Act. The ld.JCIT issued notice under section 274 r.w.s 271D dated 08.09.2016. The assessee filed its reply dated 19.09.2016 wherein it was contended that the firm has neither received, ....
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....inating material was found and seized. On the basis of seized material, it was proved that assessee firm has received loan in cash from one of its partners. The said transaction was in violation of section 269SS of the Act, which attract penalty under section 271D of the Act. The ld.JCIT levied penalty after giving fair and reasonable opportunity to the assessee. The ld.CIT(A) deleted the penalty by holding that transaction of loan and interest have not been proved and further no asset found or seized is sought to be explained by way of cash loan. The difference claim that loan is genuine and assessee disputes it. The ld.Sr.DR submits that firm and individual are separate entities and the loan was in violation of section 269SS of the Act. ....
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....ecision of Hon'ble Delhi High Court in CIT vs. Muthoot Financiers 371 ITR 408 Delhi [2015] 55 taxmann.com 202 (Del). Hon'ble Rajasthan High Court in CIT vs. Lokpat Film Exchange (Cinema) 304 ITR 179 (Raj), Hon'ble Madras High Court in CIT vs. V.Shiva Kumar [2013] 32 taxmann.com 62 Madras/354 ITR 9 (Mad) and decision of Surat Bench of Tribunal in The Nizar Taluka Khedut Sahakari Kharid Vechan Sangh Ltd., vs. JCIT in ITA No.3157/AHD/2015 dated 03.12.2019. 7. In other alternative submission, the ld.AR of the assessee submits that assessee firm was dissolved vide deed of resolution dated 01.04.2011 and the partnership came to an end. The dissolution of firm was informed to AO on 03.06.2011, the copy of acknowledgment of such receipt by Asses....
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....eme Court in CIT vs. Jal Laxmi Rice Mills held that where no satisfaction was recorded for initiating penalty under section 271E of the Act, the impugned penalty order deserved to be set-aside. In our view, the ration of decision of Hon'ble Apex Court is squarely applicable on the facts of the present case. Therefore, the penalty order is liable to be set-aside. 10. We also find merit in the submission ld.AR of the assessee that no penalty under section 271D of the Act can be imposed on assessee firm in respect of transaction inter-se between the assessee and its partners for violation of section 269SS of the Act. The submission of ld.AR finds support from the decision of Hon'ble Rajasthan High Court in CIT vs. Lokpat Film Exchange (....