Where assessee received capital from the partner in cash, it did not tentamount to loan or deposit and therefore, penalty under section 271D was not to be levied for violation of section 269SS.
FULL TEXT OF THE ITAT JUDGMENT
1. This appeal of the revenue arises out of the order for the Asst Year 2009-10 of the Learned Commissioner of Income Tax (Appeals)-6, Kolkata [in short the Ld. ITA] in Appeal No. 208/CIT(A)-6/Kol/15-16 dated 02.11.2016 against the order passed by the J.C.I.T- Range-24, Hooghly [ in short the ld AO] under section 271D of the Act dated 10.2015 for the Asst Year 2009-10.
2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the penalty levied u/s 271D of the Act in the facts and circumstances of the case.
3. The brief facts of this issue is that the assessee is a partnership firm engaged in the business of trading in marbles and granites. During the year under appeal, the assessee had received an amount of Rs.12,00,000/- on various dates from its partner Shri Avijit Saha towards capital contribution made by the said partner in the assessee firm. The ld. AO made an observation that this receipt of capital contribution from the partner by the assessee firm tantamount to loan or deposit and since the same was received in cash, it had violated the provisions of section 269SS of the Act and accordingly penalty u/s 271D of the Act being 100% of the loan amount would be exigible in the instant case. The ld. AO accordingly levied penalty u/s 27 1D of the Act.
4. The ld. CIT(A) observed that introduction of capital contributed by a partner in the partnership firm does not fall under the ambit of loan or deposit within the meaning of section 269SS of the Act. Moreover, he observed that the partner has duly reflected this introduction of capital of Rs.12,00,000/- in the partnership firm (i.e. assessee firm) in his individual balance sheet. The ld. CIT(A) also observed that the assessee firm also had treated the receipt of Rs. 12,00,000/- from the partner as capital introduced by the said partner. Accordingly he deleted the penalty levied u/s 271D of the Act.
5. We have heard the rival submissions. We find that the capital contributed by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Act and accordingly we do not find any infirmity in the order of the ld. CIT(A) cancelling the penalty levied thereon. Hence, we do not deem it fit to interfere in the order of the ld. CIT(A). Accordingly the grounds raised by the revenue are dismissed.
6. In the result, the appeal of the revenue is dismissed.