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TMI Blog2016 (12) TMI 1875X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the period of housekeeping maintenance and it was only traced on 25-7-2013 and immediately thereafter, took steps to file appeal and urged to condone the same. Perusing the contents of affidavit, we condone the delay and heard the appeal on merits. 3. None appeared for Respondent Assessee. Therefore, we proceeded to dispose of the appeal hearing the Ld. DR of the Appellant Revenue and perusing the material available on record. 4. The Revenue raised the following effective ground of appeal:- "That the Ld. CIT(A), Asansol has erred in law and on facts by allowing the relief of Rs. 12,31,400/- imposing of penalty by the AO u/s. 271E." 5. The above sole ground is to be decided as to whether the CIT-A justified in deleting the penalty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in ITA No.1916/Kol/2004 held that the firm and partners are not separate and cancelled the penalty imposed by the AO. 10. Before us the ld.DR submits that the Assessee himself admitted that he repaid the loan amounts to the said firm C.M.Roy & Sons in the assessment proceedings and changed his version during the penalty proceedings with a new theory that he is the partner in the said firm and relied on the decision of Hon'ble High Court of Kerala in the case of Grihalakshmi Version reported in (2015) 63 taxmann.com 196 (Kerala) and argued that there was no such material to show that the Assessee is partner in the said firm and to show further on which basis repayments were made to the said firm and urged to allow the appeal. 11. Heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this contention, counsel for the assessee relied on judgments in Commissioner of Income Tax v. T.Perumal (Indul.) [2015] 370 ITR 313 (Mad) and Commissioner of Income Tax v. Muthoot Financiers and another [2015] 371 ITR 408 (Delhi). Reading of these judgments show that these cases were decided on the basis of the documents that were available before the Court. On the other hand, insofar as these cases are concerned, though it is the admitted case that amounts were received from partners and other sister concerns of the assessee and were repaid, there is no material whatsoever to infer that these receipts were anything other than loans or deposits. There is no law that every receipt from a partner or a sister concern cannot, in all circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 304 ITR 172 (Raj), held under the general provision relating to Partnership Act that partnership firm is not a juristic person and for inter relationship different remedies are provided to enforce the rights arising out of their inter se transactions, the issue about separate entities apart, it cannot be doubted that the assessee has acted bona fide and his plea that inter se transactions between the partners and the firm are not governed by the provisions of ss. 269SS of the Act and the relevant portion of which is reproduced herein below: 2. These two appeals arise out of two separate orders passed by the AO levying penalty under ss. 271D and 271E in respect of certain transactions between the assessee firm and its partners descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court has said that there cannot be a contract of service, in strict law, between a firm and one of its partners so as to consider the salary paid to the partner as income from salary held that for the purpose of ss. 269SS and 269T also the firm and partners cannot be considered to be separate entity and deleted the penalty. Hence, these two appeals are before us raising the common issue in both appeals. 4. The firm was constituted with a particular object of constructing cinema and is now no more in existence. Sec. 273B has mitigated the penalty to be levied under ss. 271D and 271E by providing that where assessee is able to establish that there was reasonable cause for failure to comply with ss. 269SS and 269T, no penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS and 269T also, the firm and partners cannot be considered to be separate entity and deleted the penalty. we find that the CIT-A found examined and satisfied that the assesse is a partner in a firm i.e M/s.C.M.Roy & Sons and the AO also during the course of assessment proceedings on perusal of the ledger account in respect of advance receipt and payment found that the Assessee credited an amount of Rs. 23,25,000/- as advance from customers with an endorsement "To advance memo no- to- from customers" and also found the entire sale to M/s.C.M.Roy & Sons. Therefore, the assesse takes advances from its customers and makes payment to its firm time to time for meeting the business needs. We hold that the money received or paid in the above circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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