Loans advanced by partner to firm does not fall in the purview of Sec 269SS

Brief Facts of the case:

The respondent assessee in all these appeals are partnership firms engaged in the business of banking and registered under the Kerala Money Lending Act. The assessees had filed return of income and the same was accepted in due course. Thereafter, notice under Section 148 of

the Act was issued to the respondent-assessees. During the course of the reassessment proceedings, it was it was found that the firm had accepted advances from the partners, during the various years in cash as Total advances made by the partners in 2 financial years to the firm: Rs. 16, 29,09,000.

The Assessing Officer taking the view that the partners and the firm being two distinct and separate entities/persons thus, transaction of advances in cash between them in excess of limits prescribed under Sec 269SS is contravention of the same section , attracting penalty of equivalent to amount of advances u/s 271D.Acordingly,assessee was slapped with the penalty amounting to Rs. . 16,29,09,000. u/s 271D.

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