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Facts
During a survey and subsequent reassessment, the AO found that the assessee accepted cash from partners (treated as capital introduction) and partners withdrew cash (treated as against capital accounts). Penalties were levied under Section 271D and 271E for alleged violations of Section 269SS and 269T, respectively.
Held
The Tribunal held that Section 269SS and 269T are not applicable to capital contributions made by partners to an LLP or cash withdrawals made by partners from their capital accounts. Consequently, the penalties imposed under Section 271D and 271E were deleted.
Key Issues
Applicability of Section 269SS and 269T to capital introductions and withdrawals by partners of an LLP, and consequential penalties under Section 271D and 271E.
Sections Cited
271D, 269SS, 133A, 147, 148, 271E, 269T
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the assessee against the penalty order of the Commissioner of Income-tax (Appeals), Kolkata-27, (hereinafter referred to as the “Ld. CIT(A)”] dated 25.09.2025 for the AY 2017-18.
2. The issue raised by the assessee is against the order of ld. CIT (A) confirming the penalty as imposed by the ld. AO of ₹5,20,000/- u/s 271D of the Act in respect of amount accepted in violation of Section 269SS of the Act.
2846/KOL/2025 4. The only issue raised by the assessee is against the penalty of ₹3,02,000/- as imposed by the ld. AO u/s 271E of the Act.
After hearing the rival contentions and perusing the materials available on record, we find that the partners of the LLP have withdrawn some money in cash aggregating to ₹3,02,000/- from their capital accounts which were treated by the ld. AO to have been withdrawn in violation of Provisions of Section 269T of the Act and imposed penalty of ₹3,02,000/- u/s 271E of the Act. The ld. CIT (A) confirmed the said penalty order passed by the ld. AO. In our considering view the
In the result, the both appeal of the assessee is allowed.
Order pronounced in the open court on 17.02.2026.