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2016 (1) TMI 633 - ITAT CHENNAI

2016 (1) TMI 633 - ITAT CHENNAI - TMI - Penalty orders passed under section 271D and 271E - in genuine transactions - Held that:- It is not the case of the Revenue that assessee has introduced unaccounted money in the books of account as the very purpose of bringing in the provisions of section 269SS and 269T of the Act to curb the practice of introducing block money into books of account. The assessee has no intention to evade tax and did not make any attempt to make any liability. The transact .....

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COUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Appellant : Mr. A.S.Sriraman, Advocate For The Respondent : Mr. A.V.Sreekanth, JCIT ORDER Per Challa Nagendra Prasad, JM: These appeals are filed by two assessees namely Smt. S.Vasundara Devi and Mr. M.Subramaniam against the orders passed by the Commissioner of Income Tax (Appeals) -2, Coimbatore dated 19.01.2015 for the assessment year 2009-10 arising out of penalty orders passed under section 271D and 271E of the Act. As .....

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ssing Officer levied penalty under section 271D and 271E of the Act. The assessee contended before the Assessing Officer that he has not received any loan or deposit but it is only an accommodation transaction there is no revenue leakage or evasion of tax from accepting and repaying the amounts from HUF, therefore pleaded that no penalty to be levied. However, the Assessing Officer levied penalty for accepting and repaying the amounts exceeding ₹ 20,000/- in cash. On appeal, the Commission .....

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he amount exceeding ₹ 20,000/- from her father-in-law for purchase of property and in such circumstances it was held that no penalty is leviable under section 271D of the Act since the transaction is genuine and bonafide. Counsel for the assessee submits that both the assessees husband and wife who are members of M.Subramaniam (HUF) have taken cash loans exceeding ₹ 20,000/- for purchase of property jointly in their individual capacity. He submits that transactions are genuine and th .....

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t ₹ 43,00,000/-. 4. Departmental Representative vehemently supports the orders of lower authorities in levying penalty under section 271D and 271E of the Act. He further places reliance on the decisions of Madras High Court in the case of P.Baskar Vs. CIT (21 Taxmann.com 78) and Kasi Consultant Corporation Vs. DCIT (311 ITR 419). 5. Heard both sides. Perused orders of lower authorities and the decisions relied on. The Assessing Officer noticed that assessees have shown M.Subramaniam (HUF) .....

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s there is no tax evasion, no penalty is leviable. Before the Commissioner of Income Tax (Appeals), the assessee contended as under:- 1. The cash transaction entered into by the appellant is only between the family members i.e.. between members of family and HUF. The appellant is a member of M.Subrananiam (HUF). 2. The accommodation of cash transactions between. the family members did not result in any evasion of Tax 3. It is not the case of making any fictitious entries in the books of accounts .....

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another property in her 'individual name along with her husband Shri. M, Subramaniam and had advanced ₹ 27,00,000 /- to Mr. K.Ramesh, Coimbatore. 6. The above transactions between the family members are genuine and bonafide transactions. 7. The source of money had already been disclosed in the respective returns of income. 8. The Assessing Officer had passed order u/s. 143(3) for the assessment year 2009-10 accepting the returned income in the appellant s case. 9. the appellant had no .....

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ion 271D and 271E of the Act. Commissioner of Income Tax (Appeals) further stated that there is no element of reasonable cause in accepting the and repaying the cash loans exceeding ₹ 20,000/-. It is an undisputed fact that transactions are between the HUF and individuals. The HUF sold the property in Coimbatore for ₹ 43,00,000/- during this assessment year and advanced monies to M.Subramaniam and his wife Smt. Vasundara Devi for purchase of another property in their individual names .....

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d not make any attempt to make any liability. The transactions are between the HUF and individual. The individuals have accepted loans from HUF for purchase of property in their individual names and have reasonable cause for accepting such loans. 7. The Hon ble Madras High Court in the case of CIT Vs.Lakshmi Trust Co. (303 ITR 99) upheld the orders of Commissioner of Income Tax (Appeals) and the Tribunal who found on facts that transactions were genuine and identity of the lender was established .....

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tion and the tax payer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty. In the instant case, the Commissioner of Income-tax (Appeals) and the Appellate Tribunal found on the facts that the transactions were genuine and the identity of the lenders was also satisfied. The Appellate Tribunal also upheld the order of the Commissioner of Income-tax (Appeals) th .....

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for this court to interfere with such a finding of fact. 8. Further, almost identical situation came up for consideration before the Madras High Court in the case of M.Yesodha (351 ITR 265) wherein the assessee accepted loan amount of more than ₹ 20,000/- in cash from her fatherin- law for purchase of property and the High Court held that the Tribunal has rightly found that transaction between the daughter-in-law and father-in-law is a reasonable transaction and genuine one owing to urgent .....

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of ₹ 20,99,393 in cash from her father-in-law, which is in contravention of the provisions of section 269SS of the Income-tax Act. During the penalty proceedings, the assessee claimed that the amount received in cash from her father-in-law, M.Kathirvel, was a gift and not a loan. The Assessing Officer held that the assessee received the amount as a loan and not as a gift, because the same was shown as a loan in the balancesheet of the assessee, which was filed along with the return of inc .....

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ot a gift but only a loan. 4. In the appeal preferred before the Tribunal by the assessee, the Tribunal referred to the decision of the Tribunal in the case of M. Raju v. Addl. CIT in I. T. A. No. 899/Mds/2006 and the decision of the Tribunal, Pune Bench in the case of ITO v. Sunil M. Kasliwal reported in [2005] 94 ITD 281 (Pune)(TM). The Tribunal also referred to the judgment of this court CIT v. Lakshmi Trust Co. [2008] 303 ITR 99 (Mad) and held that, in the facts and circumstances of the case .....

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ed the nature of the transaction and that the assessee had taken only loan of ₹ 20,99,393 from her father-in-law. He further submitted that the assessee had no where pleaded any "reasonable cause" as contemplated under section 273B of the Income-tax Act and while so, the Tribunal was not right in saying that the genuineness of the transaction is not disputed. He also submitted that the Tribunal was not right in reappreciating the factual findings recorded by the Assessing Officer .....

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the learned counsel appearing for the assessee. 8. Under section 273B of the Income-tax Act, on "reasonable cause" being shown, no penalty shall be imposable. As rightly pointed out by the learned counsel appearing for the assessee, in the reply furnished before the Assessing Officer, the assessee clearly mentioned that her father-inlaw, M. Kathirvel, sent the amount of ₹ 20,99,393 directly to the seller of the house bought in the name of the assessee at Chennai and that necessa .....

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ssee's fatherin- law had filed an affidavit before the Commissioner of Income-tax (Appeals). Regarding the affidavit, remand report was called for from the Assessing Officer. In the remand report, the Assessing Officer has doubted the nature of the transaction. In our considered view, in the light of the relationship between the assessee and her father-in-law, the Tribunal has rightly held that the genuineness of the transaction is not disputed, in which, the amount has been paid by the fath .....

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and it is a loan, then the assessee is liable to pay penalty under section 271D of the Incometax Act. Whether it is a loan or other transaction, still the other provision, namely, section 273B of the Income-tax Act, comes to the rescueof the assessee, if she able to show reasonable cause for avoiding penalty under section 271D of the Income-tax Act. The Tribunal has rightly found that the transaction between the daughter-in-law and the father-in-law is a reasonable transaction and a genuine one .....

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