Penalty u/s 271D for taking cash loan from father and paternal aunt deleted following various decisions of High Courts and Tribunals
ABCAUS Case Law Citation:
ABCAUS 3001 (2019) (06) ITAT
Important Case Laws Cited/relied upon by the parties:
Mohan Karkare Vs. DCIT (1995)(127 Taxation 104)
CIT v. Sunil Kumar Goel [2009] 315 ITR 163/183 Taxman 53
Smt. Deepika vs. Addl
Yeshodha 351 ITR 265(Mad )
CIT vs. T.S.Rengarajan CIT
The assessee had filed the appeal challenging the order passed by CIT(A) confirming the penalty levied by the Additional Commissioner of Income tax for taking cash loans in violation of provisions of Section 269SS of the Income Tax Act, 1961 (the Act).
The AO, while completing the assessment u/s 143(3) r.w.s. 254 of the Act noticed that the assessee had taken loans in cash from his father and paternal aunt which was in violation of provisions of section 269SS of the Act.
The penalty proceedings u/s 271D was initiated by the Addl. CIT.
The assessee stated that the loans were not taken at a time and the same was taken instalments. It was submitted that the assessee was under the belief that the provisions of section 269SS of the Act would be attracted only if the borrowings made in cash at each stage exceeds the limit of Rs. 20,000/-.
It was further submitted that the loans had been taken from family members and as per various decisions, the loan transactions between family members would not attract provisions section 269SS.
However, the Addl. CIT was not convinced with the contentions of the assessee and accordingly levied penalty u/s 271D of the Act. The CIT(A) also confirmed the same.
The Tribunal noted that the co-ordinate bench of Tribunal had considered an identical issue and held that the transactions between family members would not attract penalty u/s 271D of the Act.
The Tribunal noted that in the instant case also, the assessee had taken loan from his father and paternal aunt, who were family members. It was also noted that the co-ordinate bench had followed the decision rendered by Hon’ble Punjab & Haryana High Court wherein it had been held that the family transactions would fall within the meaning of “reasonable cause” u/s 273B of the Act. Further the Hon’ble Madras High Court had cancelled the penalty in respect of loan transactions between father in law and daughter in law.
It was further noted that the decision rendered by the Coordinate Bench was followed by another co-ordinate bench.
Consistent with the view taken by the coordinate bench which had been rendered by following various decisions of High Courts and Tribunal, the Tribunal held that the impugned penalty was not sustainable.
Accordingly the Tribunal set aside the order passed by CIT(A) and directed that the penalty be deleted.
