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TMI Blog2020 (1) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer(AO) noticed that the Assessee had accepted the loans otherwise than account payee cheque of Rs. 50,000/- (bearer cheque) on 13/03/2013 and a sum of Rs. 4,00,000/- was repaid in cash on 13/04/2013. The Additional Commissioner of Income Tax,Range-2,Hubbali had issued the notice u/s.271D of the act for accepting the loan of Rs. 50000/- initiating penalty for violating the provisions of section 269SS of the Act and called for explanation from the assessee. In response to the notice, the assessee submitted the explanation stating that the loan was accepted by the bearer cheques due to exceptional circumstances for making the payment to Bharat Petroleum Corporation Ltd. (BPCL). Not being convinced with the explanation of the assessee, the AO levied the penalty of Rs. 50000/- under section 271D of the Act. 2.1. Similarly, the assessee made repayment of the loans in cash on 13.4.2013 for a sum of Rs. 4,00,000/- to Industrial Protection Force (IPF) in violation of the provisions of section 269T of the act. The payment of Rs. 4.00.000/- was made directly in the bank account of IPF. The Addl CIT initiated the penalty u/s 271E of the act and called for explanation of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requested to drop the penalty. Similarly, in the case of repayment of the loan the assessee stated that out of daily collection on 13.4.2013 the assessee has directly deposited the cash of Rs. 4 lakhs into IPF Bank account and he has not made cash payment directly to his father. The ld. AR further submitted that all the transactions were duly accounted in the books of accounts of both the assessees. The AR argued that since the transactions were between father and son, there is no case for penalty u/s 271D/271E. The Ld.AR relied on the decision of this Tribunal in the case of Smt. Deepika vs. ACIT in ITA No.561/Bang/2017 dated 13.10.2017. 5. On the other hand, the LD. DR vehemently opposed and argued that the transactions were between two independent business concerns therefore, argued that there is no case for dropping the penalty and hence requested to uphold the order of Ld. CIT(A). 6. We have heard the rival contentions and perused the material placed on record. Though the transactions were between two entities both the entities are proprietary concerns of father and son. This fact was not disputed by the department. The assessee has accepted the loan through bearer cheque a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest was involved. This was neither a loan nor a deposit. 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 .. the assessee. was to the extent of Rs. 17.000 only and the balance amount of Rs. 26.000 was given by payment directly to the supplier of the material required for the construction of the house. Though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was prevented by sufficient cause from receiving the money by an account payee cheque or account payee bank draft. In the instant case, 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. Thus, there was a reasonable cause and no penalty should have been levied. From the above, it would be clear that the assessee had taken plea that firstly there was no violation of the provisions of section 269SS. Secondly, there was a reasonable cause. Thirdly, the assessee was under the bona fide belief that he was not required to receive the amount otherwise than by an account payee cheque or account payee draft. As an alternative submission, it was contended that the default could be considered either technical or venial breach of the provisions of law and, therefore, no penalty under section 271D was leviable. In view of the above discussion, no penalty under section 271D was leviable. It is well-settled that penalty provision should be interpreted as it stands and, in case of doubt, in a manner favourable to the taxpayer. If the court finds that the language is ambiguous or capable of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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