2021 (4) TMI 378 - AT - Income Tax

Levy of penalty u/s 271D - cash loan received from mother in violation of provision of Section 269SS - HELD THAT - We noted that the assessee has received cash loan from mother of the assessee - It was claimed by the assessee that this is a temporary advances by the mother to her son as per her own finance without there any business necessity for accepting the loans or advances from any one for the business of the assessee. We noted that this advance or loan of ₹ 3 lacs in cash is between blood relations i.e. mother and son. The mother has given this loan of ₹ 3 lacs to her son. As relying on SMT. M. YESODHA 2013 (2) TMI 211 - MADRAS HIGH COURT we delete the penalty and allow the appeal of the assessee.

Summary

Issues:
Levy of penalty under section 271D of the Income Tax Act for cash loan received from mother in violation of Section 269SS.

Analysis:
1. The appeal was against the order of the CIT(A) confirming the penalty under section 271D for receiving a cash loan of ?3 lacs from the mother, violating Section 269SS. The assessee contended that the penalty order was illegal due to improper notice issuance under section 274.
2. The Assessing Officer initiated penalty proceedings after noting the cash receipt from the mother, contravening Section 269SS. Despite the assessee's explanation that it was a temporary advance, the penalty was levied by the JCIT-Range. The CIT(A) upheld this decision.
3. The Tribunal considered the relationship between the mother and son, similar to a case in the Madras High Court where a cash gift was given by the father-in-law. The Tribunal cited that where transactions are bona fide, penalties should not be imposed, as seen in previous judgments.
4. Referring to the Madras High Court case of M. Yesodha, the Tribunal found no error in deleting the penalty based on the genuine nature of the transaction and the relationship between the parties. The Tribunal allowed the appeal, following the principles laid down in the cited case.
5. Ultimately, the Tribunal ruled in favor of the assessee, deleting the penalty and allowing the appeal based on the decision of the Madras High Court and the genuine nature of the transaction between the mother and son.

This detailed analysis covers the issues involved in the judgment, the arguments presented, the legal precedents cited, and the final decision reached by the Tribunal.