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2013 (5) TMI 583 - AT - Income TaxPenalty u/s 271E - violation of the provisions of sec. 269T - Held that:- A careful perusal of the provisions of sec. 269T would show that the said provisions are attracted only if the principal and the interest are paid together and further the aggregate amount of such payment is Rs.20,000/- or more. According to the assessee, he has been paying interest on these two loans at the end of every year. In the year under consideration also, according to him, the interest was paid prior to the payment of principal amount and the principal amount of Rs.18,000/- each was paid subsequently. Thus, the claim of the assessee is that the interest amount and the principal amount were paid in two different occasions. The claim of the assessee, if accepted, would not lead to contravention of the provisions of sec. 269T since the principal amount repaid was less than Rs.20,000/- in both the cases. It is seen that the said claim was not controverted by the tax authorities. Since, it was claimed that he has been paying interest to these creditors at the end of every year there appears to be some veracity in the claim that he paid interest initially. Since the principal amount outstanding was less than Rs.20,000/- in each case, the said explanation also constitutes reasonable cause. With regard to the amount repaid to Sri M. Suryanarayanamurthy, the claim of the assessee that the amount outstanding in his name actually represented his capital amount, when the business concern was run as a partnership firm up to 31.3.2002& Shri M. Suryanarayanamurthy is the brother of the assessee. When the partnership firm was dissolved, the capital balance remained in the business books and the same was repaid during the year under consideration. The fact that the balance outstanding in the name of Sri M. Suryanarayanamurthy represents is capital balance is not disputed. There does not appear to be any difference of opinion with regard to the fact that the repayment of capital balance in cash would not attract the provisions of sec. 269T since it does not constitute loan or deposit. Thus the view entertained by the assessee that the amount outstanding in the name of Sri M. Suryanarayanmurthy does not constitute loan or deposit cannot be considered as an altogether false view - direct AO to delete the penalty levied. In favour of assessee.
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