Penalty u/s 271D deleted for cash loan from father mother and brothers as loan was from close family relations and there was a reasonable cause u/s 273B
ABCAUS Case Law Citation:
ABCAUS 2927 (2019) (05) ITAT
Important Case Laws Cited/relied upon by the parties
CIT vs. M. Yeshodha reported in 351 ITR 265
CIT vs. Sunil Kumar Goel reported in 315 ITR 163
CIT vs. Manoj Lalwani reported in 260 ITR 590
Sunil Kumar Sood vs. Jt. CIT
The assessee had challenged the order of the CIT(A) in sustaining the penalty levied by the Assessing Officer (AO) u/s 271D of the Income Tax Act, 1961 (the Act) for contravention of section 269SS of the Act.
The assessee had purchased a property and had taken cash assistance from his father, mother and brother the assessee was not having sufficient funds to pay the stamp duty.
considering the immediate need of funds, she had asked them for help. Relying on various decisions, The AO was of the view that the assessee had violated the provisions of section 269SS and accordingly he initiated penalty proceedings u/s 271D of the Act by issue of notice.
It was submitted that due to the urgent need of funds, the assessee was helped by her parents and brother, therefore, there was a reasonable cause on the part of the assessee for the failure as provided u/s 273B of the Act and, therefore, penalty u/s 271D was not applicable.
However, the AO was not satisfied with the arguments advanced by the assessee and held that the penalty u/s 271D was clearly attracted since the assessee had violated the provisions of section 269SS of the Act and the assessee failed to prove any reasonable cause. He, therefore, levied penalty u/s 271D of the Act.
On appeal by the assessee, the CIT(A) opined that submissions of the appellant that money was required and provided by her relatives on the date of making payment towards purchase of stamp duty was not acceptable since from the circumstances involved bonafide and reasonable cause of the appellant did not exist. The CIT(A) was of the view that the property transaction are not completed in a day or two and had there was any immediate and bona fide need of money, appellant could have taken the amounts through banking channel which easily could be withdrawn from bank, but appellant did not exercise this option. Therefore he upheld the action of the Assessing Officer.
Before the Tribunal, it was submitted that the assessee had accepted cash loan from her parents and brother to meet the cost of stamp duty required for purchase of a property. It was the case of the assessee that the assessee was under bona fide belief that there was no breach of any provision of law and there was no intention of the assessee to evade tax. Further, there was a reasonable cause on the part of the assessee to accept such cash loan since it was required on the day of registration to meet the payment of stamp duty on purchase of the house.
The Tribunal observed that it was an admitted fact that the transaction took place between the assessee and her parents and brother and their credit worthiness was not in dispute.
The Tribunal noted that Hon’ble High Court had held that the transaction of loan between father in law and daughter in law in cash cannot be subject matter of levy of penalty u/s 271D of the Act. In another case it was held that a family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established ‘reasonable cause’ under section 273 B of the Act’ and, therefore, the provisions of section 271D are not applicable.
It was further noted that in yet another case, the Hon’ble High Court had held that when the loan in cash has been taken in view of urgent need connected with export, Tribunal was justified in deleting the penalty u/s 271D of the IT Act. Also the Coordinate Bench of the Tribunal had held that where the assessee has taken loan from his wife for the purchase of house which is for the benefit of the whole family, penalty levied u/s 271D of the Act was not justified.
The Tribunal also took note of the various decisions relied on by the assessee to supports the case wherein under identical circumstances where the assessees had received loans in cash from close family relations, penalty levied u/s 271D was deleted.
The Tribunal opined that since the assessee had received cash loan from her parents and brother to meet the stamp duty cost for purchase of a house property for own living, therefore, it was not a fit case for levy of penalty u/s 271D of the Act and the provisions of section 273B will come to the rescue of the assessee as a reasonable cause.