2014 (3) TMI 1163 - AT - Income Tax

Penalty u/s 271D - contravention of the provisions of section 269SS - cash found during the survey which was surrendered - cash loans on various dates exceeding ₹ 20,000/- from relatives - reasonable cause u/s 273B - HELD THAT - We find that actually the assessee has not taken any loan from the sons but excess cash which was found during the survey has been surrendered in the names of two sons of the assessee. Later on, when entries were required to be made against the surrendered income then the same was shown as loans from two sons. In the case of CIT v Sunil Kumar Goel 2009 (3) TMI 131 - PUNJAB AND HARYANA HIGH COURT wherein the assessee had accepted cash loans on various dates exceeding ₹ 20,000/- from relatives, penalty was held to be not imposable as held 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 273B. Also see SAINI MEDICAL STORE. 2005 (3) TMI 66 - PUNJAB AND HARYANA HIGH COURT . Thus if the transactions are between relatives and without any malafide intention, then penalty is not leviable. In this case before us, it is merely a technical breach of law because assessee might not have taken any loan but to record the surrender income, the same has been shown in the names of the sons - Decided in favour of assessee.

Summary

Issues Involved:
- Appeal against penalty imposed under section 271D for contravention of section 269SS of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Penalty Imposition under Section 271D
The appeal was filed against the penalty imposed under section 271D for contravening section 269SS of the Income-tax Act, 1961. The assessee had surrendered excess stock and cash during a survey, recording the amount in the names of two sons as a loan. The Assessing Officer initiated penalty proceedings, which were confirmed by the Ld. CIT(A). The main argument was that since the amount was surrendered and recorded in the names of the sons, without any malafide intention, penalty should not have been levied.

Analysis: The Tribunal noted that the excess cash was surrendered in the names of the sons, not as a loan taken by the assessee. Citing precedents, including the case of CIT v Sunil Kumar Goel, it was established that transactions between relatives without malafide intent do not attract penalty. The Tribunal found it to be a technical breach as the amount was recorded in the sons' names for accounting purposes. Relying on legal reasoning, the Tribunal concluded that this was not a suitable case for penalty imposition and thus decided to delete the penalty.

Conclusion:
The Tribunal allowed the assessee's appeal, emphasizing that the technical breach of recording the surrendered income in the sons' names did not warrant penalty imposition. The decision was based on legal precedents and the absence of malafide intent in the transactions. The penalty under section 271D was deleted, highlighting the importance of reasonable cause in such cases.