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TMI Blog2002 (10) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... to the show-cause notice, the assessee submitted that the amounts given by Smt. Sneh Rani and Shri Anil Kumar were contribution and not a loan or deposit and the same was not returnable to the assessee. In support of the above contention, the assessee had submitted affidavits of both the parties confirming that the amount in question was not the loan and was a contribution towards the purchase of house. The AO rejected the above contention of the assessee and imposed the penalty of Rs. 1 lakh, i.e., @ 100 per cent of the amount given in cash and in contravention of the provisions of s. 269SS of the IT Act, 1961. 3. Being aggrieved, the assessee appealed to the CIT(A). Before the CIT(A), the assessee filed written submissions, which read as under: "1. The levy of penalty for alleged violation of provisions of s. 269SS is not justified as the assessee has not committed any offence by accepting contribution from his wife and son for purchase of residential house in cash. It is not uncommon that family members pool their resources to purchase a property. The contributions so made by the family members are contributions/gifts and not loans. The provisions of s. 269SS are, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the affidavit by merely stating that the allegations were untrue. 5. The penalty order is also not sustainable as it is a non-speaking order. The only reason given for holding the amounts in question as loans/deposits is that the property has been purchased in the individual name and not in the name of HUF. The appellant submits that the mere fact that the property has been purchased in individual name and not in the name of HUF cannot lead to the conclusion that the contributions are deposits/loans and not the contributions/gifts. The other reason given by the learned Jt. CIT that the appellant is not maintaining books of account is also not relevant to hold that the said contribution is loan/deposits moreso when it is admitted that the wife and the son have made the contributions. The another reason given by the learned Jt. CIT to hold the contributions as loan/deposit is that the amounts were advanced in cash though both the parties were maintaining bank accounts. In this respect it is submitted that the question posed by the learned Jt. CIT may be relevant to decide the genuineness of the cash credit but when the amounts in question have been accepted genuine and it is ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that there was a reasonable cause within the meaning of s. 273B of the IT Act, 1961. Accordingly, it was submitted that no penalty should be levied for violation of the provisions of s. 269SS of the Act. He further submitted that the transaction, in question, was a genuine transaction and there was no scope for suspicion. It was also submitted that the assessee has entretained a bona fide belief that he had received contribution from his family members and, therefore, there was no violation of the provisions of s. 269SS of the Act. In support of the above contention, the learned counsel for the assessee relied on the following decisions: (1) Harpal Singh Jaswant Singh vs. ITO (1995) 51 TTJ (Asr) 383. (2) Dr. B.G. Panda vs. Dy. CIT (2000) 111 Taxman 86 (Cal)(Mag) [ITA No. 2742/Cal/1993, dt. 10th March, 1998]. 6. Shri Kuljit Singh, the learned Departmental Representative, supported the orders of the authorities below. He further submitted that the assessee had purchased the house in his individual capacity. According to the learned Departmental Representative, had the assessee taken the amount of Rs. 50,000 each from his wife and son as contribution, the above property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier of the material required for the construction of the house. Though the expenditure was apparently incurred by the husband being the Karta/head of the family, it could not be said that the wife could not have any interest of her own in this house being constructed. The transaction was neither loan nor any gift as no 'interest' element was involved and there was no promise to return the amount with or without interest. It was clear that the money given by the wife was a joint venture of the family. Taking into consideration overall facts and circumstances of the case, it could be said that the aforesaid piece of legislation was not applicable in the instant case. By taking the liberal view and applying the golden rule of interpretation, the assessee had a reasonable cause within the meaning of s. 273B. Therefore, the penalty should be deleted." The facts of the present case are also similar to the facts of Dr. B.G. Panda vs. Dy. CIT. In the same set of facts, the Hon'ble Bench of the Tribunal observed that there was a reasonable cause within the meaning of s. 273B of the Act, i.e., in the instant case also, both the persons have earlier filed their affidavits wherein they stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f house. According to the learned counsel for the assessee, for the sake of argument that if it is assumed that there was a default, the default can be considered as venial breach of law. The Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) has held that when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In the instant case, the assessee entertained a belief which was bona fide that the amounts received from wife and son were contributions and not loan or deposit within the meaning of s. 269SS of the Act. The assessee was of the opinion that the amount, in question, did not require to be received by an account payee cheque or account payee draft. In our view, there was a reasonable cause and no penalty should have been levied. The learned CIT(A) has referred to the observations made in the assessment order wherein it was stated that the assessee had later on sold the said property in his own name as the exclusive owner of the property and the whole sale proceeds have been credited in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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