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2019 (10) TMI 283 - AT - Income TaxPenalty proceedings u/s 271D - violation of provisions of section 269SS - HELD THAT - Similar issue was considered by the coordinate bench of ITAT,Jaipur bench in Smt. Kusum Dhamani.v. Additional Commissioner of Income-tax, Range-5, Jaipur, 2015 (4) TMI 144 - ITAT JAIPUR and held that where assessee running a proprietorship concern, took cash loans from her husband carrying on another proprietorship business on account of business exigencies for making payments to labourers and lenders, there being no violation of provisions of section 269SS, impugned penalty order passed under section 271D was to be set aside. In the instant case, the assessee has taken a loan from his wife due to business expediency and the AO has not doubted the genuineness and the sources of the loan. Therefore, respectfully following the view taken by this Tribunal and the decision of coordinate Bench in the case of Smt. Kusum Dhamani 2015 (4) TMI 144 - ITAT JAIPUR we hold that the penalty is not leviable in this case and accordingly, we set aside the orders of the lower authorities and delete the penalty. - Decided in favour of assessee.
Issues Involved:
1. Violation of Section 269SS of the Income Tax Act. 2. Levy of Penalty under Section 271D of the Income Tax Act. 3. Genuineness and Source of the Loan. 4. Business Expediency and Family Transactions. Issue-Wise Detailed Analysis: 1. Violation of Section 269SS of the Income Tax Act: The primary issue revolves around the assessee receiving a loan of ?15 lakhs in cash from his wife, which was deemed a violation of Section 269SS of the Income Tax Act. Section 269SS prohibits acceptance of loans or deposits in cash exceeding ?20,000 to curb black money transactions. The Joint Commissioner of Income Tax (JCIT) initiated penalty proceedings under Section 271D for this violation. 2. Levy of Penalty under Section 271D of the Income Tax Act: The JCIT, not convinced by the assessee's explanation, levied a penalty of ?15 lakhs under Section 271D, read with Section 269SS. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who confirmed the penalty, stating that the loan was accepted in cash, thus violating the provisions. 3. Genuineness and Source of the Loan: The assessee argued that the loan was genuine, taken from his wife for business purposes, and the source of the loan was explained in her hands. The wife, being an income tax assessee with a valid PAN, further supported the genuineness of the transaction. The assessee referenced a similar case (Penmetsa Venkata Soma Raju) where the Tribunal held that in genuine family transactions, the levy of penalty under Section 271D was not proper. 4. Business Expediency and Family Transactions: The Tribunal examined the facts and noted that the loan was taken for purchasing machinery due to business expediency. The source of the loan was not in dispute, and there was no involvement of unaccounted money. The Tribunal emphasized that transactions between close relatives, especially when genuine and for business purposes, should be viewed leniently. It referenced several cases where penalties were not levied in similar circumstances, highlighting that the intent of Section 269SS was to curb black money, not to penalize genuine family transactions. Conclusion: The Tribunal concluded that the penalty under Section 271D was not justified in this case. The loan was genuine, taken from a close relative for business purposes, and the source was duly explained. The Tribunal set aside the orders of the lower authorities and deleted the penalty, allowing the appeal of the assessee. Order: The appeal of the assessee is allowed, and the penalty levied under Section 271D is deleted. The order was pronounced in the open court on 25th September 2019.
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