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Income Tax Appellate Tribunal, PUNE ‘A’ BENCH, PUNE
Before: HON’BLE SHRI S. S. GODARA & SHRI G. D. PADMAHSHALI
ORDER PER G.D. PADMAHSHALI, AM; The present appeal of the Revenue anent to assessment year 2012-13 [for short ‘AY’] is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short ‘CIT(A) /NFAC’] dt. 19/12/2023 passed u/s 250 of the Income- tax Act, 1961 [for short ‘the Act’], which ascended out of order of penalty dt. 14/03/2019 passed u/s 271E by the JCIT Ratnagiri Range, Ratnagiri [for short ‘AO’]
The case was called twice, none appeared at the bequest of the respondent assessee, in absence of any application seeking adjournment and none prosecution, we deem it fit to proceed & adjudicate the issue on merits u/r 25 of ITAT-Rules, 1963.
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With the able assistance from the Revenue we proceeded and from the records it transpired that; 3.1 The respondent assessee is a partnership firm where husband Mr Rajendra Joshi and his spouse Mrs Resham Joshi are the only partners who jointly/commonly & exclusively also constituted another partnership firm namely ‘M/s The Jagrut Motors’ a ‘sister concern’, dealing in identical and like business of automobile dealership, trading in accessories and spare-parts etc.
3.2 During the course of assessment it was noticed that, the assessee repaid ₹68,90,000/- in cash to its sister concern against the repayment of loans/advance ₹75,34,545/- taken by it in discharging its Maharashtra Value Added Tax [in short ‘MVAT’] Liability which was paid by its sister concern.
3.3 On a reference from the assessing officer, the Ld. AO initiated the penalty proceedings by issue of show cause notice u/s 271E r.w.s. 274 of the Act. Upon assessee’s failure to establish exceptional circumstances which triggered such contravention of section 269SS and failure to prove reasonable cause behind such contravention in terms of section 273B of the Act, the Ld. AO culminated the penalty proceedings by imposing a penalty of equivalent amount repayment u/s 271E of the Act.
3.4 When assessee challenged the imposition in an appeal, the Ld. NFAC placing reliance on the decision of co-ordinate bench rendered in assessee’s own case in deleted the penalty on merits. Against such deletion of penalty, the Revenue is before us in the present appeal.
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During the course of physical hearing, the Ld. DR adverting our attention to para 7 and its counter parts candidly submitted that the issue of contravention has been adjudicated on merits in favour of assessee and the Revenue is not in appeal thereagainst.
After hearing to Ld. DR; and subject to the provisions of rule 18 of ITAT, Rules perused the material placed on record; case laws relied upon and duly considered the facts of the case in the light of settled legal position.
We find this issue of contravention of provisions of section 269T in relation to repayment of loan/advances by one partnership firm to other partnership firm in cash where both the firms were constituted exclusively by husband & wife i.e. equal, common & same partners is adjudicated by the Ld. NFAC in favour of the respondent assessee in light of the co-ordinate bench’s decision in assessee’s own case in dt. 20/01/2023 wherein vide para 7 onwards it was held that; 7.1 We notice that, the Hon’ble Apex Court in ‘ADA Investigation Vs Kumar AB Shanti’ reported in 255 ITR 258 explained the object behind insertion of section 269SS of the Act, as; "The object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called leader also to manipulate his records later to suit the plea of the taxpayer. The main object of section 269SS was to curb this menace". 7.2 Keeping in mind the aforestated judicial precedents, we are finding it difficult to digest how a transaction between oneself can be coloured as loan / advances, where both appellant and its sister concern are constituted as FIRM exclusively ITAT-Pune Page 3 of 4
M/s Jagrut Motors, by same partners from a single family, and where the transactions between them were exclusively on account of current transaction i.e. in the nature of current account wherefore no interest has been found charged.
7.3 Since the members constituting firm are referred individually as partners and collectively as firm, the transaction between two sister concern firms are noting but transaction between partners themselves, and thus between oneself in the present case because constituents of both these firms are same person from a family i.e. Husband & wife, for the reason provisions of section 269SS cannot be made applicable and same finds force in Hon’ble Supreme Court decision in ‘CIT Vs RM Chidambaram Pillai’ reported in 106 ITR 272. In the light of the above reasoning, we find the orders of both the tax authorities below as erroneous, consequently we set-aside the order of Ld. NFAC and quash the order of penalty as unwarranted. (Emphasis supplied)
In view of the above, on equi-ground we do not see any reason to interfere with the decision of Ld. NFAC. In absence of any contrary binding judicial precedents brought to our attention by the appellant Revenue requiring us to deviate therefrom, we affirm the order of Ld. NFAC.
In result, this appeal of the Revenue is DISMISSED. U/r 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Tuesday 28th day of May, 2024.
-S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; ददनाांक / Dated : 28th day of May, 2024. आदेश की प्रतितिति अग्रेतिि / Copy of the Order forwarded to :
1. 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent.
3. The NFAC, Delhi (India) 5. DR, ITAT, Pune A Bench, Pune. 6. गार्डफ़ाइल / Guard File.
4. The CIT Concerned. आदेशानुसार / By order. वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, पुणे / ITAT, Pune.
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