2009 (12) TMI 1030 - AT - Income Tax

Summary

Issues involved: Appeal against the order of Ld. CIT(A) Meerut dated 6.7..2009 in an appeal against the order levying penalty u/s 271D of the Income Tax Act 1961.

Summary:

Issue 1: Challenge to canceling the penalty levied u/s 271D of the Act

The appellant, an agriculturist, purchased agricultural land for &8377; 14,40,000 in cash, funded by temporary loans from family members. The assessing officer imposed a penalty u/s 271D for violating section 269SS. The appellant argued the loans were due to genuine reasons, such as family relations and urgent need for money. Ld. CIT (A) ruled that no unaccounted money was involved, and the loans were not to evade tax. The penalty was deemed not applicable due to reasonable cause under section 273B.

Issue 2: Interpretation of sections 269SS, 271D, and 273B

Penalty u/s 271D applies when a person contravenes section 269SS by accepting loans exceeding &8377; 20,000 in cash. However, section 273B provides for no penalty if reasonable cause is proven. In this case, the loans from family members were seen as assistance rather than formal loans, given the urgent need for cash to purchase agricultural land. The genuine intent of the appellant and the nature of the transactions led to the confirmation of the Ld. CIT (A) order.

Conclusion:

The appeal against canceling the penalty u/s 271D was dismissed, as the loans from family members for purchasing agricultural land were considered genuine and not for tax evasion purposes. The order of Ld. CIT (A) was upheld based on the reasonable cause under section 273B.