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2021 (10) TMI 1208 - AT - Income TaxPenalty u/s 271D and penalty u/s 271E - Assessee for taking loan in cash and repaying the loan in cash - failure to comply with the provisions of secs. 269SS and 269T - HELD THAT - The material in record clearly goes to show that the assessee as well as Dr. P Dayananda Pai who were admittedly nephew and uncle and confirmed that the loans were personal loans to enable the assessee to purchase a flat. The source of cash has also been explained by Dr. P Dayananda Pai in his letter addressed to the AO dated 21/2/2013. The facts as asserted by the assessee and supported by Dr. P Dayananda Pai have not been controverted with any material by the Revenue - We concur with the view of the CIT(A) that the moneys in question were received and repaid for personal transaction and there is no material to come to the conclusion that these were in relation to any business transactions. The decision relied on by the ld.Counsel for the assessee before us and several other decisions clearly supports the proposition that acceptance and repayment of cash for personal purpose between near relatives do not attract the provisions of sec.269AA and 269T. Hon ble Madras High Court held that receipt of cash by the daughter-in-law from father-in-law does not attract the provisions of sec. 269SS of the Act. Similarly in SRI MANSUR ALI LASKAR 2011 (12) TMI 732 - ITAT KOLKATA wherein, it was held that niece, uncle, aunty, wife of brother, wife s sister and cousin are part of family members and the transactions with sister-in-law and nephew should also to be considered as a transaction between family members - Decided against revenue.
Issues Involved:
1. Imposition of penalty under Section 271D of the Income Tax Act. 2. Imposition of penalty under Section 271E of the Income Tax Act. 3. Determination of whether the transactions were personal or business-related. 4. Condonation of delay in filing appeals by the Revenue. Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271D of the Income Tax Act: The Revenue initiated proceedings under Section 271D against the assessee for accepting loans in cash exceeding ?20,000, which is in violation of Section 269SS of the Act. The Assessing Officer (AO) was not satisfied with the explanation provided by the assessee, which stated that the transactions were personal in nature and between close relatives. The AO imposed a penalty, concluding that there was no reasonable cause for the violation. 2. Imposition of Penalty under Section 271E of the Income Tax Act: Similarly, proceedings under Section 271E were initiated for repaying loans in cash exceeding ?20,000, violating Section 269T of the Act. The AO imposed penalties, asserting that the transactions were business-related and not personal, as claimed by the assessee. 3. Determination of Whether the Transactions Were Personal or Business-related: The assessee contended that the transactions were personal loans from his uncle, Dr. P Dayananda Pai, intended to support him after his father's demise. The assessee argued that these transactions were not loans in the traditional sense and thus did not attract the provisions of Sections 269SS and 269T. The CIT(A) accepted this explanation, relying on various ITAT decisions that personal transactions between close relatives do not attract these provisions. The CIT(A) concluded that the transactions were personal, supported by confirmation letters from Dr. P Dayananda Pai, and deleted the penalties. 4. Condonation of Delay in Filing Appeals by the Revenue: The Revenue filed appeals with a delay of 590 days, citing procedural delays and correspondence issues. The Tribunal condoned the delay, finding it to be due to reasonable cause and purely technical in nature. Detailed Judgment Analysis: The Tribunal considered the submissions and evidence provided by both parties. The key contention from the Revenue was that the transactions were business-related, given that both the assessee and his uncle were involved in real estate. However, the Tribunal noted that the AO's observations did not conclusively establish that the transactions were business-related. The Tribunal emphasized the personal nature of the transactions, as confirmed by Dr. P Dayananda Pai's letters, which stated that the monies were given to support the assessee personally. The Tribunal also referred to several judicial precedents, including ITAT Kolkata Bench's decision in Jagmohan Sharma Vs. JCIT, which held that transactions between close relatives for personal purposes do not attract the provisions of Sections 269SS and 269T. The Tribunal found that the CIT(A)'s decision to cancel the penalties was justified, as the transactions were personal and not business-related. In conclusion, the Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s order to delete the penalties imposed under Sections 271D and 271E of the Act. The Tribunal's decision was based on the personal nature of the transactions and the lack of evidence to classify them as business-related. Final Decision: The appeals by the Revenue were dismissed, and the penalties imposed by the AO under Sections 271D and 271E were canceled.
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