2019 (5) TMI 1214 - AT - Income Tax

Levy of penalty u/s 271D - availing loan in cash from father - HELD THAT - We find from the facts narrated above that assessee had given reasonable cause for availing loan in cash from his father within the meaning of section 271D of the Act. Hence, the assessee would be out of the rigours of the levy of penalty u/s 271D of the Act. The assessee had placed reliance on the decision in the case of CIT vs. Smt. M. Yasoda 2013 (2) TMI 211 - MADRAS HIGH COURT wherein the loan received by that assessee from her father-in-law was subjected to levy of penalty under section 271D of the Act and the Hon ble High Court ordered cancellation of penalty thereon. In view of the aforesaid facts and respectfully following the judicial precedent relied upon hereinabove, we direct the ld. A.O to cancel the penalty u/s 271D of the Act in the facts and circumstances of the case. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues:
Levy of penalty under section 271D of the Income Tax Act, 1961 for receiving a cash loan from father.

Analysis:
The appeal before the Appellate Tribunal arose from the order of the Commissioner of Income Tax (Appeals) against the penalty order under section 271D of the Act for the Assessment Year 2008-09. The main issue was whether the penalty imposed by the Commissioner was justified in the given circumstances.

The assessee did not appear during the proceedings, despite earlier representation by an authorized representative who had filed an adjournment letter. The facts revealed that the assessee had received a cash loan of ?2,00,000 from his father, leading to the initiation of penalty proceedings. The Assessing Officer observed that the loan could have been made through a cheque or draft since the father had a bank account. The assessee explained that the cash was used due to the father's ill health and urgent need for money. However, the Commissioner upheld the penalty, prompting the appeal.

The Tribunal considered the reason provided by the assessee for receiving the cash loan as reasonable cause under section 271D of the Act. Additionally, the assessee cited a precedent from the Madras High Court where a similar penalty was canceled. Relying on this precedent, the Tribunal directed the Assessing Officer to cancel the penalty in the present case, leading to the allowance of the assessee's appeal.

In conclusion, the Appellate Tribunal allowed the appeal, canceling the penalty imposed under section 271D of the Income Tax Act, 1961.