Brief facts are, the assessee is a partnership firm. While completing the assessment under section 143(3) of the Act, the Assessing Officer having noticed that the assessee has accepted cash loan of Rs. 11 lakh from one of its partners, Shri Surendra Parikh, was of the view that the assessee has violated the provisions of section 269SS of the Act. Accordingly, he intimated the prescribed authority for initiation of penalty proceedings under section 271D of the Act. Thus, on the basis of such intimation, proceedings under section 271D of the Act was initiated against the assessee for having accepted cash loan amounting to Rs. 11 lakh in violation of section 269SS of the Act. In response to the show cause notice issued, the assessee, vide its reply dated 1st June 2015 submitted that the cash loan was availed from one of the partners. Referring to the definition of "Firm" and "Partner", as per section 2(23) of the Indian Partnership Act, 1932, it was submitted, though, under the Income Tax Act, 1961, a "Firm" and "Partner" are considered to be separate taxable entities, however, as per the general law, they are not considered to be separate and distinct entities. we are of the considered opinion that the assessee has made out a case of reasonable cause for availing cash loan from the partner, therefore, the assessee would be protected by the provisions of section 273B of the Act. Thus, we do not find any justifiable reason to sustain the imposition of penalty under section 271D of the Act. Accordingly, penalty imposed is hereby deleted.