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TMI Blog2019 (10) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... he lower authorities and delete the penalty. - Decided in favour of assessee. - I.T.A.No.169/Viz/2019 - - - Dated:- 25-9-2019 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Shri G.V.N.Hari, AR For the Respondent : Smt.Suman Malik, DR ORDER PER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Rajamahendravaram in I.T.A.No.10089/2015-16/CIT(A)/RJY dated 15.02.2019 for the Assessment Year (A.Y.) 2011-12. 2. In this case, the Joint Commissioner of Income Tax ( JCIT in short), Range-2, Rajahmundry has received information from ITO, Ward-2, Amalapuram {Assessing Officer (AO)} that the assessee had received a sum of ₹ 15.00 lakhs as loan otherwise than account payee cheque in violation of provisions of section 269SS of the Income Tax (in short Act ). Therefore, the JCIT, has initiated penalty proceedings u/s 271D of the Act and accordingly issued show cause notice calling for the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be taken in the facts and circumstances of the case. Accordingly, requested to set aside the orders of the lower authorities and allow the appeal of the assessee. 5. We have heard both the parties and perused the material placed on record. In this case, the assessee is carrying on business of purchase and sale of liquor and hiring of excavators. For the purpose of purchase of machinery, the assessee has taken loan from his wife Smt.Mallidi Radha on 23.02.2011 for business purposes. There is no dispute that the source was explained in the hands of his wife. The AO did not doubt the genuineness of the loan as well as the sources of the loan. The transactions of gifts between the close relatives are exempt from the tax u/s 56(2) of the Act. The sums received exceeding twenty-five thousand rupees without consideration by an individual are exempt from taxing it from other sources as provided in the proviso to section 56(2)(v) of the Act which shows that in case of genuine and bonafide transaction between close relatives required to be taken a lenient view. In the instant case, the wife has given a loan to the assessee (husband) who is carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l grandfather, who appears to have either no knowledge or semi knowledge of the provisions of the Act relating to transactions involving acceptance and repayment of loans and deposits in cash exceeding the prescribed limit of ₹ 20,000/-. No doubt, such grand father of the appellant along with other members of his family including the appellant were not the first time assessees but had been enrolled as assessees from the earlier years, and, perhaps, might have obtained the services of any tax practitioner in filing their past returns. But then sometimes, it so happens that the assessees tend to undertake transactions in certain situations with their limited knowledge of the legal provisions and procedure, without, realizing that their misplaced action could be leading to defaults, thereby attracting penal provisions. In the instant case, it appears to be such a case of miscalculated adventure resulting in default under section 269SS of the Act on the part of the appellant. Since there is no doubt about the fact that the appellant himself, on account of his pursuance of studies outside his native place, had no direct role to play in the met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the orders of the lower authorities the judgments referred to, we find that the assessee has taken a loan without interest from his father and his wife when he was burdened with the obligation of borrowed funds of the outsiders. In the case of CIT Vs. Sunil Kumar Goel (supra) the Lordship of Punjab Haryana High Court has held that family transactions between two independent assessees based on an act of casualness, especially in a case where the disclosure thereof is contained in the compilation of accounts, and which has no tax effect, establishes reasonable cause u/s 273B for not invoking the penal provisions of section 271D and 271E. The relevant observations of the Punjab Haryana High Courts are extracted hereunder for the sake of reference: The Tribunal was right in recording its conclusion that a reasonable cause had been shown by the assessee. The Tribunal relied on the fact that the assessee had produced his cash books, depicting loans taken by him unilaterally before the Revenue in the instant action of the assessee in as much as the assessee did not attempt by the impugned act to avoid any tax liability. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. In the result, the appeal of the assessee is allowed . 7. Since the Tribunal has taken a particular view in a similar set of facts we find no reason to take a contrary view in this appeal. We therefore following the aforesaid order of the Tribunal hold that under the given circumstances penalty in the instant case is not sustainable in the eyes of law. We therefore set aside the order of CIT(A) and delete the penalty. 12. In the case of Dr. Dutta Siva Sankara Rao (supra) the coordinate bench of the tribunal has held as under:- 3. Having heard the rival submissions and from a careful perusal of record we find that the assessee has taken a loan in cash but it was from his close relatives. Similar is the positions with regard to its payment. Now the question posed before under section is; whether it was done under a bonafide belief? And if it is done under a bonafide belief, whether assessee is entitled for benefits of section 273B of the I.T. Act, according to which no penalty shall be imposable on the assessees as the case may be for any failure referred to the different provisions mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, we are of the view that the transactions being genuine and the assessee having offered reasonable explanation justifying these cash transactions, the impugned penalty u/s 271D is not leviable. Our view is fortified by the judgement of Hon'ble Jurisdictional High Court in the case of Raj Kumar Sharma (supra) and the judgement of Hon'ble Punjab Haryana High Court in the case of Saini Medical Store (supra) which is followed by Hon'ble P H High Court in the case of Sunil Kumar Goel (supra). Thus in view of the facts and circumstances of the case and the decisions relied on above, the penalty is deleted. 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 (supra) 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. 7. In the result, appeal of the assessee is allowed. Order pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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