TMI Blog2013 (6) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... Act could not be levied. The loans which were considered by the lower authorities, in the light of provisions of section 269SS read with section 271D of the Act, were prior to the date of becoming a partner of the assessee-firm. - Both the lender and borrower are agriculturists and did not have any income chargeable to tax - no penalty - decided in favor of assessee. - ITA No. 42 of 2012 (O&M) - - - Dated:- 10-5-2012 - MR. AJAY KUMAR MITTAL. AND MR. G.S. SANDHAWALIA. JJ. PRESENT: Mr. Gaurav Singh Hooda, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. Delay in refiling the appeal condoned. 2. The revenue has claimed the following substantial questions of law in this appeal filed under Section 260A of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t while making the assessment in the case of M/s Ree Filling Station, Kotkapura for the assessment year 2005-06, the Assessing Officer came to know that one of the partners, Inderjit Sharma, i.e. the assessee had introduced capital of Rs.12,54,160/- by taking loans in cash from his friends and relatives violating the provisions of Section 269SS of the Act. Accordingly, penalty proceedings in terms of Section 271D of the Act were initiated and penalty of Rs.10.27 lacs was levied on 21.8.2009. It was held that the lenders were neither agriculturists nor it was a case that the assessee was a mere agriculturist. Against the imposition of penalty under Section 271D of the Act, the assessee filed an appeal before the Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government; (b) any banking company, post office savings bank or cooperative bank; (c) any corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to Section 269SS of the Act shows that where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable under the Act, then the provisions of Section 269SS of the Act are not applicable. As a corollary it would follow that where Section 269SS of the Act is not applicable, the penalty under Section 271D of the Act could not be levied. 8. The Tribunal in the present case recorded that the assessee had become partner in the firm on 26.8.2004 whereas the loans which were taken by him were prior to the date of becoming partner in the firm. It was also recorded that the lender and the borrowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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