2011 (10) TMI 776 - AT - Income Tax

Summary

Issues involved: Appeal against the order of CIT(A) confirming penalty u/s. 271D for violation of provisions of section 269SS of the Income-tax Act, 1961.

Summary:
The appellant received an advance of Rs. 5 lakhs from a relative, Smt. Jayanti Ghosh, through various modes of payment. The Assessing Officer (AO) initiated penalty proceedings u/s. 271D for receiving Rs. 5,00,000 in cash, in contravention of section 269SS. The JCIT, Range-1, Hooghly levied a penalty of Rs. 4 lakhs, which was partially confirmed by the CIT(A). The appellant contested the penalty before the ITAT Kolkata.

The ITAT considered the appellant's explanation that the transactions were between family members and thus exempt from the provisions of section 269SS. Citing precedents from the Hon'ble Gujarat High Court and Hon'ble Madras High Court, it was established that transactions among relatives, without interest charges, do not violate the Act. The Tribunal also noted that the appellant had a reasonable cause for the transactions, supported by an affidavit from a legal expert.

After reviewing the evidence and legal precedents, the ITAT concluded that no violation of sections 269SS and 269T occurred, and there was a reasonable cause for the transactions. Therefore, the penalty u/s. 271D was deleted, and the appeal of the assessee was allowed.

The judgment was pronounced on 28.10.2011.