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2018 (1) TMI 796 - AT - Income TaxPenalty u/s 271D and 271E - money has been given by the assessee to his son/wife - Held that - Assessee had accepted the loan in cash of ₹ 4,00,000/- from Shri Mithun Banik Mazumder, (son of the assessee) and repaid ₹ 1,50,000/-. Assessee repaid loan to his another son Sri Indranil Banik Mazumder at ₹ 2,25,098/- and also repaid loan to his wife Smt. Sandhya banik Mazumder at ₹ 54,928/. All these transactions are between husband and wife, and between father and son, being close relative of one family. We also note that assessee is a salaried employee and not a businessman. Therefore, based on the facts narrated above, these transactions do not fall within the ambit of sections 269SS and 269T of the Act. To support the family members, the money has been given by the assessee to his son/wife. This is simply a transfer of money from one family member to another family member to support day to day expenses, educational expenses and other family expenses. We are of the view that the transaction between son and father and wife and husband, for giving a support and help, in law, is not a loan or deposit in stricter sense of section 269SS of the Act and it is only a financial support, therefore, penalty imposed by the Assessing Officer and confirmed by the ld CIT(A) needs to be deleted under section 269SS and 269T - Decided in favour of assessee.
Issues:
Appeal against penalty orders under sections 271D and 271E of the Income Tax Act, 1961 for Assessment Year 2010-11. Detailed Analysis: Issue 1: Grounds of Appeal The appellant challenged the penalty under section 271D as bad in law, disputing the confirmation of the penalty amount and arguing that the transactions were between close relatives and not in the nature of a loan or deposit, hence not falling under section 271D. Additionally, the appellant contended that a bona fide belief regarding the transactions should be considered under section 273B. Issue 2: Assessment and Penalty Proceedings The Assessing Officer (AO) initiated penalty proceedings under sections 271D and 271E after observing that the appellant accepted and repaid loans in cash from family members, contravening sections 269SS and 269T of the Income Tax Act. The AO imposed penalties of ?4,00,000 and ?4,30,026 under sections 271D and 271E, respectively. Issue 3: Appeal to CIT(A) The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the penalties imposed by the AO, reiterating the AO's stance on the contravention of sections 269SS and 269T. Issue 4: Arguments Before ITAT The appellant argued before the ITAT that the transactions were for family support and not commercial in nature, thus not falling under sections 269SS and 269T. Citing precedents, the appellant emphasized that transactions between close relatives for financial support do not constitute loans or deposits under the Act. Issue 5: ITAT Decision Upon careful consideration, the ITAT found that the transactions between family members, being close relatives, did not breach sections 269SS and 269T. Relying on previous judgments, the ITAT concluded that the transactions were for familial support and not loans or deposits, warranting the quashing of the penalties under sections 271D and 271E. Conclusion The ITAT allowed the appeal, setting aside the penalties imposed under sections 271D and 271E for the Assessment Year 2010-11, emphasizing the familial nature of the transactions and their exclusion from the purview of sections 269SS and 269T.
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