2010 (4) TMI 1209 - AT - Income Tax

Summary

Issues Involved:
1. Penalty u/s 271D for cash loan transactions.
2. Revenue appeal regarding monetary limits for filing appeals.
3. Addition towards difference in cost of construction u/s 69.

Summary:

Issue 1: Penalty u/s 271D for cash loan transactions
The assessee appealed against the CIT(A)'s order confirming a penalty of Rs. 2 lakhs u/s 271D for accepting a cash loan from his son, arguing that the transaction was a family loan and should be exempt under section 273B. The Tribunal referenced the case of Vanamadi Satyanarayana, Kakinada Vs. ACIT, emphasizing that penalties u/s 271D should consider the surrounding circumstances and the bona fide nature of family transactions. The Tribunal concluded that the penalty was not justified and deleted it, stating, "In case of family transactions, the bonafide of the assessees should not be doubted."

Issue 2: Revenue appeal regarding monetary limits for filing appeals
The revenue's appeal against the CIT(A)'s order was dismissed because the revenue effect was less than Rs. 2,00,000, in line with the jurisdictional High Court's judgment in C.I.T. Vs A. Rajendra Prasad. The Tribunal noted, "the revenue has to necessarily follow them and if a case falls under one of the exceptions provided in the circulars, a specific ground should be raised in that regard." Since no such ground was raised, the appeal was dismissed.

Issue 3: Addition towards difference in cost of construction u/s 69
The assessee contested the addition of Rs. 5,26,199/- made by the A.O. towards the difference in the cost of construction of a house. The A.O. had referred the matter to the D.V.O., who estimated the cost at Rs. 23.69 lakhs. After allowing for self-supervision charges and rate differences, the A.O. arrived at a difference of Rs. 5,26,199/-. The Tribunal found that the A.O.'s calculations were incorrect and that the proper rebates were not applied. The Tribunal concluded, "If the rebate on account of self-supervision and the rate difference and also investment in further years are allowed to the assessee no addition is called for on account of unexplained investment in the construction of the property." Consequently, the addition was deleted.

Conclusion:
The Tribunal allowed the assessee's appeal regarding the penalty u/s 271D and the addition u/s 69, while dismissing the revenue's appeal due to the monetary limit. The orders of the CIT(A) were set aside accordingly.