TMI Blog2019 (1) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... Addl. CIT ORDER PER SHRI JASON P BOAZ, A.M. : This appeal by the assessee is directed against the order of CIT(A), Davangere dated 08.12.2016, confirming the levy of penalty u/s 271D of the Income Tax Act, 1961 (in short the Act ) for Assessment Year 2008-09. 2. Briefly stated, the facts of the case are as under: 2.1 The assessee, an individual, engaged in business as a transporter, operating passenger buses in the name and style of M/s. Mahadevi Transport, filed his return of income for Assessment Year 2009-10 on 30.09.2009 declaring total income of ₹ 2,45,350/-. In the course of assessment proceedings, the Assessing Officer ( AO ) noticed that the assessee had taken cash loans of ₹ 3,20,000/- from his father-in-law on various dates in the year under consideration in contravention of the provisions of section 269SS of the Act. 2.2 As per the provisions of section 269SS of the Act, no person shall accept loan above ₹ 20,000/- in cash. Under section 271D of the Act, any person who takes or accepts any loan or deposit in contravention of the provisions of section 269SS, shall be liable to pay by way of penalty, a sum equal to the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case. 3. The levy of penalty u/s. 271D of the Act is bad in law as much as the Appellant has not committed any default actionable u/s. 269SS of the Act and consequently, the impugned order passed deserves to be cancelled. 4. The learned Commissioner of Income-tax (Appeals) failed to appreciate that order of penalty passed by the learned Joint Commissioner without fulfilling Ike mandatory conditions for invoking the provisions of section 271D of the Act t bad in law on the facts and circumstances of the case. 5. Without Prejudice to the above, the learned Joint Commissioner ought to appreciated that the Appellant was prevented by reasonable cause and that there was no animus to defy the statutory provisions of the Act and therefore, ought not to have imposed the penalty. 6. The Commissioner of Income Tax (Appeals) failed to appreciate that the imposition of penalty under section 271D of the Act is not automatic and the teamed assessing officer ought to have considered the explanations filed by the appellant as reasonable and ought to have deleted the penalty levied, by considering the provisions of section 273B of the Act under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal in the case of Smt. Deepika (supra), following the decision of the ITAT, Kolkata in the case of Dr. B. G. Panda (2000) 111 Taxman 86 (Cal) and other judicial pronouncements referred to therein held as under at paras 7 to 14 thereof: 7. We have considered the rival submissions. The facts as decided by ITAT Kolkata in the case of Dr.B.G.Panda were that loan transactions were carried out in cash in violation of the provisions of Sec.269SS of the 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 primar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alize, assessee refunded said amount through cheque to his wife. On the question whether acceptance of cash by husband from his wife would amount to taking of loan or advance in strict sense of section 269SS , the tribunal held that it cannot be construed as loan attracting provisions of Sec.269SS of the Act and therefore no penalty under section 271D could be levied. 9. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established 'reasonable cause' under section 273B of the Act. Since the assessee had satisfactorily established 'reasonable cause' under section 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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