2019 (5) TMI 1259 - AT - Income Tax

Penalty u/s 271D - loan transaction took place between the assessee and her parents and brother - reasonable cause under section 273 B - HELD THAT - The Delhi Bench of the Tribunal in the case of Sunil Kumar Sood vs. Jt. CIT 2018 (6) TMI 1122 - ITAT DELHI held that where the assessee has taken loan from his wife for the purchase of house which is for the benefit of the whole family penalty levied u/s 271D of the Act is not justified. Various other decisions relied on by the assessee in the synopsis also supports her case wherein under identical circumstances where the assessees had received loans in cash from close family relations penalty levied u/s 271D was deleted. Since the assessee in the instant case has received cash loan from her parents and brother to meet the stamp duty cost for purchase of a house property for her own living therefore that it is not a fit case for levy of penalty u/s 271D of the Act and the provisions of section 273B will come to the rescue of the assessee as a reasonable cause. therefore set aside the order of the CIT(A) and direct the JCIT to delete the penalty. - Decided in favour of assessee.

Summary

Issues involved:
Challenge to penalty under section 271D of the IT Act for accepting cash loans from family members for stamp duty payment.

Detailed Analysis:

Issue 1: Challenge to penalty under section 271D
The assessee challenged the penalty of ?3,25,000 levied under section 271D for accepting cash loans from family members. The Assessing Officer noted cash loans taken by the assessee from family members, which violated section 269SS. The JCIT initiated penalty proceedings, which the assessee contested, citing urgent need for funds and help from family members. The JCIT imposed the penalty, upheld by the CIT(A), who found no reasonable cause for the violation. The CIT(A) observed that the appellant failed to prove a reasonable cause for accepting the cash loans. The Tribunal considered the arguments, relevant case laws, and circumstances. It noted the genuineness of the transactions, the purpose of the loans for stamp duty payment, and the family relationship. Relying on legal precedents, the Tribunal found no breach of law or intention to evade tax. It concluded that the penalty under section 271D was not justified and directed the deletion of the penalty.

Conclusion:
The Tribunal allowed the appeal, setting aside the penalty imposed under section 271D, emphasizing the genuine nature of the transactions, the family relationships, and the absence of any intention to evade tax. The decision highlighted the importance of considering reasonable cause and the specific circumstances of the case in penalty proceedings related to cash loans from family members for legitimate purposes.