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2021 (10) TMI 967 - AT - Income TaxLevy of penalty u/s 271D - violation of the provisions of section 269SS - payment of construction expenses incurred in cash towards the purchase of construction material and payment to labourers - HELD THAT - On persual of the registered sale deed, we find that there is payment of consideration by way of demand draft for ₹ 6 lacs which has been paid in advance and remaining amount of ₹ 1 lacs which has been paid in cash at the time of registry and handing over of the possession. As stated at the Bar by the ld AR that the assessee had no option but to discharge the remaining consideration in cash at the time of registry as so insisted by the seller of the property and in absence thereof, the deal might have not fructified. The explanation so furnished as reasonable and plausible and donot find any malafide in the explanation so submitted as everything is flowing from the registered sale deed where transactions have been duly documented including the payment through demand draft and cash which is from the known sources of funds contributed by the assessee s husband - assessee has explained the payment of construction expenses which are also required to be incurred in cash towards the purchase of construction material and payment to labourers. We therefore find that the assessee has offered reasonable explanation justifying the cash transactions and thus, in the entirety of facts and circumstances of the case and considering various decisions cited at the Bar which also support the case of the assessee especially the decision of the Coordinate Bench in case of Tuhinara Begum 2017 (10) TMI 1321 - ITAT KOLKATA where there was a reverse situation where the wife gave money to husband for construction of house which was held not exigible for levy of penalty u/s 271D, we are of the considered view that the assessee doesn t deserve to be punished by way of levy of penalty u/s 271D for receiving money from her husband for purchase of family property and hence, the same is directed to be deleted. - Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Levy of penalty under Section 271D of the Income Tax Act for contravention of Section 269SS. 3. Applicability of Section 269SS to cash transactions between close relations, specifically between husband and wife. 4. Reasonable cause under Section 273B justifying the non-compliance with Section 269SS. Detailed Analysis: 1. Delay in Filing the Appeal: At the outset, the Tribunal noted there was a delay in filing the present appeal. After hearing both parties and considering the material placed on record, the delay was condoned, and the appeal was admitted for adjudication. 2. Levy of Penalty under Section 271D: The assessee challenged the confirmation of the levy of penalty under Section 271D of the Income Tax Act. The penalty was imposed for receiving a loan in cash from her husband, which was alleged to be in contravention of Section 269SS. The assessee argued that the cash received was not a loan but a financial help for purchasing a plot and constructing a house, and thus, Section 269SS should not apply. 3. Applicability of Section 269SS to Cash Transactions between Close Relations: The assessee contended that Section 269SS does not bar genuine cash transactions of loans between close relations, such as husband and wife, especially when there is no intention to evade taxes. The assessee cited various case laws to support this contention, including decisions from the Rajasthan High Court and ITAT Benches, which held that Section 269SS does not apply to transactions between close relations if there is a reasonable cause. 4. Reasonable Cause under Section 273B: The assessee argued that there was a reasonable cause for receiving the cash, as the money was used for purchasing a family residence and not for any commercial purpose. The Tribunal considered several precedents where penalties under Section 271D were deleted due to reasonable cause, including the case of CIT vs. Raj Kumar Sharma and CIT vs. Sunil Kumar Goel. The Tribunal found that the assessee had a reasonable cause within the meaning of Section 273B, as the transaction was genuine and there was no intention to evade taxes. Tribunal's Findings: The Tribunal observed that the transaction involved the purchase of a plot and construction thereon, with the plot registered in the name of the assessee and funded by her husband. The practice of registering property in the wife's name was noted to be influenced by family and societal factors and government incentives. The Tribunal found the explanation provided by the assessee reasonable and plausible, noting that the payment details were documented in the registered sale deed. The Tribunal also considered the urgency and necessity of making cash payments as explained by the assessee. The Tribunal concluded that the assessee had offered a reasonable explanation justifying the cash transactions. Citing various decisions supporting the assessee's case, the Tribunal held that the assessee did not deserve to be penalized under Section 271D for receiving money from her husband for purchasing family property. Consequently, the penalty was directed to be deleted. Judgment: The appeal of the assessee was allowed, and the penalty under Section 271D was deleted. Order Pronounced: The order was pronounced in the open Court on 21/10/2021.
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