2011 (7) TMI 517 - HC - Income Tax

Penalty u/s 271D - Held that;- Since, the assessee with a view to purchase a house obtained loan totaling to Rs.25,22,000/- from the close relatives such as Father, Mother, Sister-in-law, Mother s Brother etc. In the affidavit filed by these relatives, it was stated that they had income from agricultural operations and that loan was advanced to the assessee out of the agricultural income received by them - The Tribunal considered that failure to accept such loans in violation of section 269SS of the Act constituted reasonable cause, therefore it was not a fit case for imposition of penalty under section 271D - appeal dismissed.

Summary

The High Court Bombay upheld the decision of the ITAT to delete the penalty under Section 271D of the Income Tax Act, 1961. The case involved an assessee obtaining a loan from close relatives for purchasing a house, claiming it was from agricultural income. The Tribunal found this to be a reasonable cause, exempting the assessee from penalty. The appeal was dismissed with no costs.