Penalty u/s 271D-Cash received to get a good bank balance certificate for visa of the daughter constituted a reasonable cause within the meaning of section 273B
ABCAUS Case Law Citation:
ABCAUS 2933 (2019) (05) ITAT
The only issue in the instant appeal filed by the assessee was as to whether the CIT(A) was justified in confirming the penalty imposed u/s 271D of the Act for violation of provision u/s 269SS of the Act.
Section 269SS of the Income Tax Act, 1961 (the Act) puts an embargo in accepting/taking loans/deposits in cash in excess of Rs. 20000/-. Further section 271D of the Act provides for levy of penalty equal to the amount of the receipt. However the penalty is subject to the existence of any good and sufficient reasons for the contraventions.
The appellant assessee, in the instant case had received cash payments from different persons of which individual receipts were more than Rs. 20,000/- each. Accordingly, the the Assessing Officer (AO) initiated penalty proceedings u/s 271D of the Act.
During the course of such penalty proceedings, the assessee submitted that he was sending his daughter abroad for education purpose and in order to get Visa he was required to furnish bank certificate showing the substantial fund in his bank account.
The assessee contended that in order to meet such purpose, the fund under question was raised for a temporary period of one week from his friends and relatives and after obtaining bank certificate the said fund was withdrawn from the bank account and repaid back to the respective persons.
The assessee also furnished the necessary evidences i.e. bank certificate, education documents etc. before the AO However did not accept the submissions of the assessee and A.O imposed the impugned penalty u/s 271D of the Act.
On appeal by the assessee, the CIT(A) confirmed the penalty.
The Tribunal observed that the AO did not dispute that call letter issued by the respective university in USA and the granting of Visa to the daughter relevant to the year under consideration.
The Tribunal found that the only objection raised by the AO was that there was ample time between the issuing of call letter and granting of Visa and the assessee could have arranged the said funds through banking channels i.e. account payee cheques and drafts.
The Tribunal found that the provision of section 273B of the Act was incorporated in the Act which provides that no penalty shall be imposable on a persons or an assessee, as the case may be, for any failure, referred to in the said provision, if the assessee proves that there was reasonable cause for such failure.
The Tribunal also noted that both the authorities below did not dispute that the assessee received such cash deposits in bank accounts from different parties in order to get the bank certificate to show his monetary capacities in getting Visa for his daughter to pursue higher studies in foreign country.
In view of the above, the Tribunal opined that the explanation given by the assessee constituted a reasonable cause within the meaning of section 273B of the Act. Therefore the order of CIT(A) was not justified.
Accordingly, the Tribunal cancelled the penalty imposed by the AO and as confirmed by the CIT(A).