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2019 (6) TMI 396

l issue in the case of Smt. Deepika vs. Addl CIT [2017 (10) TMI 1405 - ITAT BANGALORE] and held that the transactions between family members would not attract penalty u/s 271D In the instant case also, we have noticed that the assessee has taken loan from his father and paternal aunt, who are family members. We notice that the co-ordinate bench has followed the decision rendered in the case of Sunil Kumar Goel [2009 (3) TMI 131 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that the family transactions would fall within the meaning of “reasonable cause” u/s 273B of the Act. Hon’ble Madras High Court has cancelled the penalty in respect of loan transactions between father in law and daughter in law in the decisio .....

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n taken from family members and accordingly reliance was placed on the following decisions to contend that the loan transactions between family members would not attract provisions sec. 269SS:- (a) Mohan Karkare Vs. DCIT (1995)(127 Taxation 104) (b) CIT vs. T.S.Rengarajan (Order dated 24-02-2005) However, the Ld Addl. CIT was not convinced with the contentions of the assessee and accordingly levied penalty of ₹ 2,20,000/- u/s 271D of the Act. The Ld CIT(A) also confirmed the same. 4. Aggrieved, the assessee has filed this appeal before us. 5. We notice that the co-ordinate bench of Tribunal has considered an identical issue in the case of Smt. Deepika vs. Addl CIT (ITA No.561/Bang/2017 dated 13.10.2017) and held that the transactions .....

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sit. At the same time. the words 'any other person' are obviously a reference to the depositor as per the intention of the Legislature. The communication/transaction between the husband and wife are protected from the legislation as long as they are not for commercial use. Otherwise, there would be a powerful tendency to disturb the peace of families. to promote domestic broils, and to weaken or to destroy the feeling of mutual confidence which is the most enduring solace of married life. In the instant case, the wife gave money to husband for construction of a house which was naturally a joint venture for the property of the family only. This transaction was not for commercial use. The amount directly received by the husband. i.e.. .....

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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 .....

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n a manner favourable to the taxpayer. If the court finds that the language is ambiguous or capable of more meaning that the one, then the court has to adopt the provision which favours the assessee, more particularly where the provisions relate to the imposition of penalty. In view of the above, the penalty sustained by the Commissioner (Appeals) was cancelled." 10. The ratio of the above decision of the Income-tax Appellate Tribunal, Amritsar Bench, would be squarely applicable to the facts of the assessee's case. Here also, the daughter and member of the HUF have given money for certain specific purpose. The source and genuineness of the loan has been accepted by the AO. The cash loans in question therefore cannot be said fall w .....

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mposition 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. 6. In the instant case also, we have noticed that the assessee has taken loan from his father and paternal aunt, who are family members. We notice that the co-ordinate bench has followed the decision rendered by Hon ble Punjab & Haryana High Court in the case of Sunil Kumar Goel (supra), wherein it has been held that the family transactions would fall within the meaning of reasonable cause u/s 273B of the Act. Further the Hon ble Madras High Court has cancelled the penalty in respect of loan transactions between father in law and daughter in law in the decision of M.Yesodha (supra). The decision render .....

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