GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 242 - ITAT HYDERABAD

2016 (3) TMI 242 - ITAT HYDERABAD - TMI - Penalty under S.271D - Appellant made cash borrowings from near relatives who are staying in village, having agricultural incomes and not having bank accounts - Held that:- Turning to the circumstances under which loans had to be obtained in cash, we find that as far as Shri Kondiah and Smt.Venkata Subbamma are concerned, in the absence of any evidence brought on record to controvert the claim of the assessee that they are agriculturists living in a vill .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act, but penalty leviable under S.271D of the Act, in relation to the loans/deposits accepted by the assessee in violation of the provisions of S.269SS of the Act. Penalty, being punitive in nature, warrants a liberal approach, while examining the existence or otherwise of a reasonable cause for the borrowals made in cash. Moreover as seen from the assessment order AO accepted borrowal at ₹ 9,60,000 only. The balance of the amount was considered for estimation of income. How the amount co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

best, assessee liability can only be half the amount. This aspect was also ignored by Revenue. Considering the totality of facts and circumstances of the case, and also the fact that the issue involved in these proceedings is not of a quantum but of a penalty, we are of the considered opinion that it is not a fit case for the imposition of penalty under S.271D - Decided in favour of assessee - ITA No.1697/Hyd/13 - Dated:- 27-1-2016 - SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUN .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n construction materials, filed his return of income for the assessment year 2007-08 admitting total income of ₹ 1,04,895. The Assessing Officer completed the assessment under S.143(3) of the Act on 15.12.2009 on a total income of ₹ 3,83,834. During the course of the said assessment proceedings, the Assessing Officer noticed the deposits into the bank account of the assessee to an extent of ₹ 33,33,450. Assessee explained that an amount of ₹ 9,60,000 was borrowed for purc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with S.274 of the Act. On appeal before the CIT(A), assessee filed certain evidence to explain the circumstances under which the amounts in question were received in cash in violation of provision of S.269SS of the Act, and pleaded for the cancellation of the penalty as there was reasonable cause justifying the receipt of the amounts in cash. The CIT(A), however, did not admit the said evidence on the ground that it constituted additional evidence, which was filed for the first time before him, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of the provisions of S.269SS in the following manner- i) Appellant made cash borrowings from near relatives who are staying in village, having agricultural incomes and not having bank accounts; ii) Appellant purchased a house property, jointly with his brother for a total consideration of ₹ 10,01,000 for which cash loans were obtained under pressure from the vendor to complete the registration in time, failing which the advance of ₹ 1,50,000 would be forfeited. The CIT(A) noted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ved that the explanations offered by the assessee for obtaining ash loans in excess of ₹ 20,000 in violation ofS.269SS are not acceptable. The reasons of the Assessing Officer for such conclusion, as recorded by the CIT(A) in para 4.2 of the impugned order, are as follows i. The agreement for sale is between the vendor and the appellant and his brother, where as the entire loan was obtained in the name of the appellant alone. Agreement for sale was not signed by the vendees. ii. The assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Assessing Officer, and after considering the objections of the assessee in response thereto proceeded to dispose of the appeal before him by the impugned order, confirming the penalty imposed by the Assessing Officer under S.271D, for the reasons discussed in paras 4.3 onwards, on pages 6 to 9 of the impugned order, which read as under - 4.3 Perused the observations of the A.O in the assessment order as well as the Remand Report as regard to the additional Information brought on record, f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g only agricultural incomes, which is an exception to Sec. 269 SS, is concerned, the nature of activities carried and the only source of income to Mr.M.V.kondaiah and Mrs.B.Venkata Subbamma, are proved to be agriculture and it was not the case of the A.O. to prove that they have taxable income from other sources and are having bank accounts. There is no dispute on this issue. As regard to the loan of ₹ 3,60,000 obtained from Mr.K.Nageswara Rao, there is no proof that the lender is having o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eme of exception to Sec. 26955, since the appellant himself has known sources of taxable income in the form of business income, for which the return of income was filed for the year under reference. Further, one of the lender proved to be non-agriculturist. Thus, the exception given to a situation where both the loan/deposit lender and lendee are agriculturist and neither of them have any income that is chargeable to tax, is not applicable to the facts of this case. The appellant fails to explai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ome and neither of them has any income chargeable to tax under this Act." As per the bare reading of the provisions, the appellant is covered by the proviso to Sec. 269SS and accordingly liable to penalty u/s. 271D. 4.4 Regarding the other reasonable cause of borrowing in cash for the purpose of purchase of house property, due to the pressure of the vendor, it may be reasonable to hold that, where the appellant got an extra time for registration of property on mutual understanding of both v .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

so be not out of context to observe that an amount of loan of ₹ 10,10,000/- was borrowed for the purpose of acquiring a property worth ₹ 10,01,000/- without much of investment of appellant applied in the process and this itself shows the truth behind the transactions of cash loans and the explanations offered by appellant with the help of certain piecemeal information during the assessment proceedings, as well as the appellate proceedings and it surely indicate the afterthought on th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

support the view taken by the A.O, wherein it was held that "the loan may be genuine and in a particular case reasonable hardship might be created to the borrower by such provision, but the ultimate aim of the section is to prevent evasion of tax.. . Further, in this case, as emanated through the facts as illustrated in this order, there is no reasonable cause for the appellant to explain that, the provisions of Sec. 269SS are not applicable to appellant for the following reasons: i) The ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as stipulated in the agreement for sale, was genuine and compelling. Under the circumstances, I am of the considered opinion that there is violation of provisions of S.269SS, by the appellant in borrowing the amounts of ₹ 10,10,000/- in cash, without establishing the reasonable cause, as such the penalty u/s.271D for ₹ 10,10,000/- levied by the A.O. stands sustained. 4. Aggrieved, assessee is in appeal before us. 5. We have heard the parties and perused the material on record, includ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ferent dates between 9.8.2006 and 17.8.2006, whereas registration of the relevant property in favour of the assessee has taken place on 19.8.2006. Out of the above, as noted the CIT(A) in the impugned order, as far as Shri Kondaiah and Smt. Venkata Subbamma are concerned, the activities carried on by them and the income earned by them are proved to be agriculture and the Assessing Officer has not brought anything on record to prove that they have taxable income from other sources or that they ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come. We are not convinced with the approach of the Revenue authorities, while rejecting the explanation offered by the assessee and justifying the impugned penalty. Assessee has shown a cause for acceptance of the loans in cash, viz. to complete the transaction of purchase of property in time, so as to save the advance of ₹ 1,50,000 paid earlier which would stand forfeited in terms of the sale agreement if the balance amount is not paid in time. This, being a plausible explanation, eviden .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version