DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, SILIGURI, SILIGURI vs. SUNIL KUMAR KUNDU, SILIGURI

Brief facts of the case of the assessee is that the assessee is a partnership firm furnished its return of income for AY 2016-17. During the course of assessment u/s Assessment Year: 2016-17 Sunil Kumar Kundu 143(3) of the Act, it was found from the examination of assessee’s ledger of M/s Tarai Transport Corporation that the assessee had repaid advance received by it from M/s Tarai Transport Corporation in cash, thereby violating the provision of Section 269T of the Act as a result of which the penalty proceedings u/s 271( e) of the Act was initiated and penalty of Rs. 1,00,00,000/-.

Aggrieved by the said penalty order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed and penalty levied by the AO has been directed to be deleted.

The Ld. D.R has challenged the impugned order thereby submitting that the Ld. CIT(A) erred in deleting the penalty u/s 271(e) ignoring the reality that the present case is not squarely covered by the decision of Hon’ble ITAT, Kolkata bench passed in its sister concern i.e. M/s Tarai Transport Corporation for the same assessment year. The ld. D.R further submits that in the case of M/s Tarai Transport Corporation, the Kolkata Tribunal has deleted the penalty as similar to its case of AY 2001-02 and there is no doubt that the said order travelled up to the Apex Court wherein SLP filed by the Department has dismissed but the present case is totally on a different facts.

Contrary to that the Ld. A.R supports the impugned order thereby submitting that the assessee firm and its sister concern shared same business premises and had one common partner and all the partners in the assessee firm and the sister concern are the immediate blood family members and no outsider party is a partner in either the assessee firm or its sister concern M/s Tarai Transport Corporation. The Ld. A.R further submits that the transaction was not in the nature of loan transaction rather the transaction had arisen due to payment of some expenses like fright and labour charges of the sister concern. It has further been argued that in fact amount was transferred to the account of assessee through banking channel. The Ld. Counsel further submits that in fact the assessee firm had not taken or accepted any loan or deposit or any other specified sum rather in fact paid certain amount on behalf of M/s Tarai Transport Corporation which Assessment Year: 2016-17 Sunil Kumar Kundu was reimbursed to it through banking channel so there was no violation of Section 269T of the Act. The Ld. Counsel submits that the Ld. CIT(A) has deleted the penalty after going over the several judicial pronouncements and further giving full emphasis on the order passed by the ITAT, Kolkata Bench in the case of M/s Tarai Transport Corporation for the same assessment year. So, there is no illegality in the impugned order.

Upon hearing the submission of the counsel for the respective parties, we have perused the order passed by the Ld. CIT(A) as well as the order of AO. It admits of no doubt that the penalty u/s 271(d) amounting to Rs. 17,00,00,000/- was imposed for the same assessment year of M/s Tarai Transport Corporation allegedly for taking or accepting the loan in violation of provision of Section 269SS and for the same transaction penalty u/s 271(e ) of the Act amounting to Rs. 1 crore has been imposed on the assessee company allegedly for violating the Section 269T of the Act. The submission of the AR is that his case is squarely covered in the decision of Kolkata ITAT passed in the case of M/s Tarai Transport Corporation vs. JCIT in for AY 2016-17 dated 5.6.2024. We further find that the order passed in M/s Tarai Transport Corporation by ITAT, Kolkata has been travelled to the Hon’ble Calcutta High Court and upto the Apex Court and SLP filed by the department has also been dismissed by the Hon’ble Supreme Court so the order passed in in case of M/s Tarai Transport Corporation becomes its finality. The submission of Ld. D.R is that there is no connection with the assessee company and M/s Tarai Transport Corporation. We find that there is a transaction between the assessee company and its sister concern namely M/s Tarai Transport Corporation. The transaction between the assessee company and its sister concern is essential to the nature of current account. It is further pertinent to mention here that Shri Sanjit Kundu is a common partner in both the firms. It is well settled that the withdrawal of addition made in the partners capital account in cash is not a violation of Section 269SS or 269T of the Act. The operative portion of the order passed by the Ld. CIT(A) held thus: