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TMI Blog2019 (9) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... is a simply transaction of transfer of money from one family members to another family members to support him during medical emergency period and such transaction cannot be treated as loan or advance and transaction falling under the ambit of section 269SS of the Act attracting penalty u/s.271D - transaction between the relatives of family members for giving support and help, is not loan or deposit and it is only a financial support. Penalty imposed by the AO and confirmed by the CIT(A) on account of cash amount received from the members of AOP - there are four members of AOP including the assessee Shri Gourang Chandra Nayak and Shri Sasanka Sekhar Sahu alongwith Shri Manoj Kumar Biwal, wherein, it was agreed between the members of AOP that the contributory amount will be kept with the assessee until a bank account is opened in the name of school. Therefore, the said amount cannot be alleged as transaction of loan or deposit in contravention of section 269SS of the Act. In this situation, the assessee is only a trustee of money till bank account in the name of school is opened and thus, such transaction cannot be named as transactions as loan or advance in cash which attracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for some reasonable cause and duly submitted before the A.O. JCIT. Therefore violation of Sec. 269SS does not attract. Therefore imposition of penalty of ₹ 14,00,000/- u/s 271D is illegal and should be deleted in full. 3. For that, the Ld. CIT(A) is illegal and unjustified towards conforming the penalty of ₹ 14,00,000/- u/s 271D of the Income Tax Act 1961. Out of which ₹ 3,00,000/- Lakh was returned by his father having 91 years old to whom money were given for purchase of*a property the same were given after withdrawn from his bank account on 27.Q9.20T2 . Besides the same ₹ 6,00,000/- Lakh given by the relatives (Brother in law son in law nephew etc) for the purpose of the treatment of cardiac surgery for emergency purpose. the same is non refundable in nature t. ₹ 8,00,000/- Lakh is collected to run a school pursuant to an agreement ot AUP and copy of the agreement is submitted to JCIT and CIT(A). Out of which the Ld. A.O. has added ₹ 3,00,000/- as undisclosed income since the source is not verified and balance of ₹ 5,00,000/- is considered by the JCIT, even after the transactions are found genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,00,000/- For establishment of school 6. Sasanka Sekhar Sahu 3,00,000/- -do- 7. Nrusingh Charan Nayak 3,00,000/- From father Total: 14,00,000/- In response to the Assessing Officer s requisition as to why penalty u/s.271D of the Act should not be imposed, ld A.R. of the assessee submitted that neither any of the transactions were doubtful nor any transaction was made to evade tax and such no penalty is leviable. It was also submitted that the receipts of cash by the assessee were neither loan or deposit. Ld A.R. also explained the circumstances under which the sums received by different persons. However, the Assessing Officer did not accept the explanation of the assessee and observed that the assessee has received the sums in contravention of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the facts of his statement, ld A.R. submitted that from agreement of Association of Persons (AOP) placed at pages 63 64 of the assessee s paper book dated 1.4.2012, it is clear that four persons entered into an agreement creating an AOP for the purpose of running a school in the slum area for the education of children of the downtrodden people. Ld A.R. further submitted that as it was agreed between the persons constituting an AOP that the bank account will be opened in any Nationalized Bank in the name of the school. Meanwhile, until opening a bank account in the name of the school, the amount of contribution from the persons of AOP will be kept with Shri G.C.Nayak, i.e. assessee and the same was deposited to his bank account. Ld counsel strenuously contended that in view of factual position supported by documentary evidence, these amounts received by the assessee on behalf of AOP i.e. Manoj Kumar Biswal, Sasanka Sekhar Sahu cannot be treated as loan or deposit or specified sum in contravention of provisions of section 269SS of the Act. 9. Ld A.R. submitted that for invoking and levying penalty u/s.271D of the Act, it is the duty of the AO to establish that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 13. Placing reliance on the decision of Hon ble P H High Court in the case of CIT vs. Sunil Kumar Goel in ITA No.777 of 2008 and ITA No.778 of 2008 order dated 3.3.2009, ld A.R. submitted that where there is reasonable cause shown by the assessee and no prejudice has been caused to the revenue and the transactions are between the family members due to medical emergency and exigency, then such transaction falls within the section 273B of the Act and thus, immunity of levy of penalty u/s.271D should be allowed to the assessee. 14. Placing reliance on the decision of Jodhpur Bench of the Tribunal in the case of Ridhi Sidhi Infraprojects Pvt Ltd vs JCIT in ITA No.49/Ju/2013 for A.Y. 2009-2010 order dated 18.3.2013, ld A.R. submitted that when the assessee has taken cash amount under bonafide belief that a transaction with its AOP is outside purview of penalty provisions being a transaction between two sister concerns and if it is properly explained, then penalty u/s.271D of the Act cannot be imposed on such transaction. Ld A.R. submitted that the rational behind the provisions of section 269SS has been explained by the CBDT vide circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be confirmed. 18. Placing rejoinder to above, ld A.R. submitted that the amount returned by the father of the assessee, which was given by the assessee to his father for purchase of land and on the event of cancellation of land deal, same was returned to the assessee and this explanation also gets support from the copy of bank account of the assessee placed at page 65 of assessee s paper book. Ld A.R. submitted that undisputedly, the assessee is a heart patient who undertook open heart surgery and the amount received from his brother -in-law, Khirod Kumar Swain, nephew, Jyoti Prakash Nayak, son-in-law, Shri Arjeet Mohapatra and brother in law, Nihar Ranjan Rout under medical emergency cannot be treated as loan or advance in contravention of section 269SS of the Act. He submitted that medical emergency is itself a reasonable cause from receiving cash from the relatives and family members out of love and affection as a support during tough time and due to this bonafide and reasonable cause, immunity u/s.273B of the Act should be granted to the assessee on these four transactions. Ld A.R, further submitted that the cash received by the assessee from the members of AOP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .271D cannot be imposed on this count. 21. I further analysed the amount received from four relatives i.e. from Shri Khirod Kumar Swain(brother-in-law -sister husband), Shri Jyoti Prakash nayak(nephew), Shri Arjeet Mohapatra (son-in-law), Shri Nihar Ranjan Rout (brother -in-law wife s brother) for medical emergency. I am of the view that undisputedly, the assessee is a senior citizen having heart ailment, who also underwent open-heart surgery. The assessee submitted confirmations from these relatives alongwith their address and PAN nos., wherein, it was stated by them that they have the impugned amounts to the assessee for his treatment under medical emergency, then such transaction cannot be held as transaction of loan or advance. 22. The object of introducing section 269SS of the Act was to ensure that a tax payer was not allowed to give false explanation for his unaccounted money or if the tax payer made some false entries, he would not escape by giving false explanation for the same. It was noticed by the tax authorities that during the search and seizure operation unaccounted money was found and the taxpayer usually gave an explanation that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e four transactions. 25. So far as penalty imposed by the AO and confirmed by the CIT(A) on account of cash amount received from the members of AOP i.e. from Shri Manoj Kumar Biswal, Shri Sasanka Sekhar Sahu is concerned, from the copy of the agreement duly created by AOP dated 1.4.2012, as per subclause (5) of the agreement, I clearly observe that there are four members of AOP including the assessee Shri Gourang Chandra Nayak and Shri Sasanka Sekhar Sahu alongwith Shri Manoj Kumar Biwal, wherein, it was agreed between the members of AOP that the contributory amount will be kept with the assessee until a bank account is opened in the name of school. Therefore, the said amount cannot be alleged as transaction of loan or deposit in contravention of section 269SS of the Act. In this situation, the assessee is only a trustee of money till bank account in the name of school is opened and thus, such transaction cannot be named as transactions as loan or advance in cash which attracts penalty \u./s.271D of the Act. In the totality of facts and circumstances of the case and as reveals from the agreement of AOP and this fact being consistently submitted by the assessee befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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