Law:

Section:

JUDGMENT V. Kameswar Rao, J. - This batch of appeals under Section 260-A of the Income Tax Act, 1961 ('Act', in short) even though pertains to the different assessees, involve a singular substantial question of law are being decided by this common order. 2. The substantial question of law as framed in these appeals is as under: "Whether the Income Tax Appellate Tribunal was correct in law and on fact in holding that penalty under Section 271 -D of the Income Tax Act,1961 could be levied on the assessee?" 3. The facts in all these appeals are not disputed. They are common in the sense that the respondent assessee in all these appeals are partnership firms involved in the business of banking and registered under the Kerala Money Lending Act. The assessees had filed return of income and it appears that the return of the income was processed accepting the returned income. Thereafter, notice under Section 148 of the Act was issued to the respondent-assessees. During the course of the assessment proceedings, it was found that the firm had accepted payments from the partners, during the relevant year corresponding to the Assessment Years, in cash. The details of the total amounts paid to the individual firm by the partners in all the aforesaid four appeals are as under: Appeal No. Amount of advance made by the partners Assessment Year Amount of Penalty ITA No. 336/2002 Rs. 2,08,45,000/- 1996-97 Rs.2,08,45,000/- ITA No. 338/2002 Rs.2,29,34,000/- 1998-99 Rs.2,29,34,000/- ITA No. 341/2002 Rs.52,600,000/- 1998-99 Rs.5,90,00,000/- ITA No. 345/2002 Rs.66,530,000/- 1998-99 Rs.66,530,000/- 4. It was the case of the assessees before the Assessing Officer (as noted from ITA No. 341/2002) that in the case of a partnership firm, there is no difference between the firm and the partners. As a partner of the firm, he is a part of the firm itself. Section 269-SS of the Act has no application in a transaction between the partner and the firm. The Assessing Officer, in his order, was of the view that the partners and the firm being two distinct and separate entities/persons are also in the mischief of Section 269-SS of the Act. According to him, the assessees had maintained three…

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