Cash transactions between husband-wife do not attract section 269SS – ITAT

Cash transactions between husband-wife do not attract section 269SS if transactions are not for commercial use. Tribunal deleted penalty under section 271D

ABCAUS Case Law Citation:
ABCAUS 2092 (2017) (10) ITAT

The Challenge/Grievance:
The assessee had challenged the order passed by the CIT(A) which confirmed the order of Assessing Officer (AO) imposing penalty u/s 271D of the Income Tax Act, 1961 (Act) for acceptance of cash loan in contravention of section 269SS which provides that no loan or deposit in excess of Rs. 20,000/- can be taken in cash.

Brief Facts of the Case:
The spouse of the assessee on several occasions deposited cash in the savings bank of the assessee so that a property can be purchased in the name of the assessee. However, the negotiations did not materialise and the cash deposited was partly returned by the cheque and partly in cash by the wife to her husband.

The AO treated the cash repayment of loan as attracting the provision of section 269SS and imposed a penalty u/s 271D of the Act.

The CIT(A) upheld the penalty equal to the amount of cash transaction for the alleged violation of the provision of section 269SS.

Aggrieved by the order of CIT(A) the assessee had preferred the present appeal before the Tribunal.

Observations made by the Tribunal:
The ITAT opined that the transaction between wife and husband are protected are not covered u/s 269SS if they are not for commercial use. The provisions are not applicable as husband and wife do not bear a relationship of a depositor/creditor as no interest is involved.

The ITAT observed that otherwise it would disturb the peace of families, promote domestic broils, and weaken the mutual confidence which is the most enduring solace of married life.

Decision/Held:
The penalty levied u/s 271D was directed to be deleted.