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TMI Blog2020 (1) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned transactions are loan transactions. The assessee was constrained to offer explanations relating to business exigencies only for the reason that the tax authorities have considered these transactions as loan transactions. CIT(A) has accepted the explanation of business exigency and accordingly deleted the penalty u/s 271D of the Act. Since the transactions have been entered between assessee and her husband, we are of the view that the decision rendered by Hon ble Madras High Court in the case of M Yeshodha(supra) may be conveniently applied here.- Decided in favour of assessee. - ITA No.116(Bang)/2019 - - - Dated:- 20-1-2020 - Shri B.R. Baskaran, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri B.S.Balachandran, Advocate For the Revenue : Shri M. Vijaykumar, Addl.CIT ORDER PER SHRI B.R.BASKARAN, ACCOUNTANT MEMBER : The appeal filed by the assessee is directed against the order dated 01-11-2018 passed by the CIT(A), Belagavi confirming the penalty of ₹ 12.50 lakhs levied by the AO u/s 271E of the IT Act, 1961 for violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, he took the view that these transactions entered in violation of provisions of sec.269SS 269T shall attract penalty provisions of sec. 271D 271E of the Act. Accordingly, he levied penalty of ₹ 12.50 lakhs each both u/s 271D u/s 271E of the IT Act, 1961. 3. The ld.CIT(A) agreed with the view of Ld JCIT that these are loan transactions only. The Ld CIT(A) deleted the penalty levied u/s 271D of the Act. With regard to the penalty levied u/s 271E of the Act for repayment of loan by way of cash, the Ld CIT(A) took the view that the assessee has failed to show any reasonable cause. Accordingly, he confirmed the penalty of ₹ 12.50 lakhs levied by the AO u/s 271E of the IT Act, 1961. 4. The ld.AR submitted that the impugned transactions entered by the assessee with her husband (both in the individual capacity and HUF) are gift transactions only. The assessee had received gift from her husband and the same was credited to her husband account. The repayment was debited to the capital account of the assessee. He further submitted that the tax authorities are not justified in treating these transactions as loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act between husband and wife. On the question of levy of penalty u/s.271D of the Act, the Tribunal held as follows :- Section 269SS is applicable to the deposits or loan. It is true that both in the case of a loan and in the case of a deposit, there is a relationship of debtor or creditor between the party giving money and the party receiving money. In the case of deposit, the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money and the benefit normally being the earning of interest from the party who customarily accepts deposit. In the case of loan it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of a borrower although the person who lends the money may also stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest was involved. This was neither a loan nor a deposit. At the same time. the words 'any other person' are obviously a reference to the depositor as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Appellate Tribunal, Amritsar Bench, in the case of ITO v. Tarlochan Singh [2003] 128 Taxman 20 (Mag) was concerned with a case where the husband had taken the cash of ₹ 70,000 from his wife for the purpose of investment in the acquisition of immovable property. The Assessing Officer had levied the penalty under section 271D which was cancelled by the Income-tax Appellate Tribunal holding as under : Even keeping in view the contents of the Departmental Circular No. 387 [1985] 152 ITR (St.) 1), it was never the intention of the Legislature to punish a party involved in a genuine transaction. Therefore, by taking a liberal view in the instant case, the assessee had a reasonable cause within the meaning of section 273D. Thus, keeping in view the entire facts of the instant case, and also keeping in view the intention of the Legislature in enacting the provisions of section 269SS, it was to be held that the assessee was prevented by sufficient cause from receiving the money by an account payee cheque or account payee bank draft. In the instant case, the assessee was of the opinion that the amount in question did not require to be received by an acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 273B of the Act, he must be deemed to have established sufficient cause for not invoking the penal provisions of sections 271D and 271E of the Act against him. The deletion of penalty by the Tribunal was valid. 12. That the ratio of the above decision of the hon'ble Punjab and Haryana High Court would also be squarely applicable in respect of cash transaction between the assessee and his near relatives. 13. In the case of M.Yeshodha 351 ITR 265(Mad), the Hon ble Madras High Court held that transaction of loan between father in law and daughter in law in cash cannot be subject matter of levy of penalty u/s.271D of the Act. 14. In the light of the aforesaid judicial pronouncements, we are of the view that imposition of penalty u/s.271D of the Act cannot be sustained. The same is directed to be deleted. The appeal of the Assessee is allowed. 8. In the case of M. Yeshodha (supra), the Hon ble Madras HighCourt has taken the view that the transaction of loan between father-in-law and daughter-in-law cannot be subject matter of penalty u/s 271D of the Act. In the instant case, the claim of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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