Partnership Firm Loan Repayments via Journal Entries Exempt from Penalties Under Income Tax Act.

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....The ITAT held that where a partnership firm repays loans to its partners by journal entries/book entries, such transactions are not covered u/ss 269SS/269T of the Act, as a partnership firm is not distinct from its partners under general laws. The repayment by journal entry falls outside the ambit of section 269T, and such transactions are entitled to immunity u/s 273B, which stipulates that penalty u/s 271E is not imposable if there was reasonable cause for failure to accept/repay loans/deposits in prescribed modes. The journal entries were made in bona fide belief based on judicial precedents, without any finding of tax evasion intent. Consequently, the assessee's appeal was allowed.....