COMMISSIONER OF INCOME TAX Vs. V.SIVAKUMAR

JUDGEMENT

(1.) The Revenue has preferred this appeal on the following substantial question of law:-

(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 individual was a partner in four firms from where funds had been advanced to the assessee and imposed a penalty of Rs.18 lakhs. In the appeal (ITA.No.89/08-09) preferred by the assessee, Commissioner of Income Tax (Appeals) allowed the appeal holding that the transactions between the partner and the firm do not partake the character of a Loan or Deposit and therefore, there is no applicability of the provisions of Section 269SS of the Act. The further appeal (ITA.No.408/Mds/2009) preferred by the Revenue was dismissed by the Tribunal on the finding that the assessee acted bonafide and that there was a reasonable cause within the meaning of Section 273B of the Act.

(3.) Mr.N.V.Balaji, learned counsel for Revenue submitted that though the assessee is partner of the firms, he has taken loan from the firms by cash in his capacity as Proprietor of Reliance Realtors and the Assessing Officer had recorded factual finding and in view of the consequences of violation of Section 269SS, justified in imposing penalty under Section 271D of the Act. Learned counsel for Revenue endeavoured to distinguish the cases relied upon by the Tribunal and submitted that the Assessing Officer has recorded factual finding that money has been advanced from the firms as loan and the same was debited from the accounts of the proprietary concern which would show that the transactions between the firms and the assessee were not in his capacity as a partner and while so, Commissioner of Income Tax (Appeals) and 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.