TMI Blog2020 (1) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER D.S. SUNDER SINGH, A.M: 1. These two appeals filed by the assessee are directed against the common order of the Commissioner of Income Tax (Appeals), Hubballi (hereafter referred as CIT(A) ) in ITA Nos.CIT(A), Hubli/10065 10064/2018-19 dated 07.12.2018 for the Assessment Year (AY) 2014-15. since, the issues involved in both the appeals are identical, these appeals are clubbed, heard together and disposed off by a common order as under: 2. The brief facts of the case are that the assessee filed E-return of income declaring total income of ₹ 3,45,800/- for the Assessment year 2014-15 and the same was processed u/s. 143(1) of the Income Tax Act, 1961 ( the Act ) and the case was selected for scrutiny. During the course of assessment proceedings the Assessing Officer(AO) noticed that the Assessee had accepted the loans otherwise than account payee cheque of ₹ 50,000/- (bearer cheque) on 13/03/2013 and a sum of ₹ 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 ₹ 50000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the assessee. The AR further submitted that in petroleum dealership business there is a heavy inflow of cash to the extent of ₹ 5 to 6 lakhs daily. Therefore, as and when it was necessary, the assessee was taking the loans from his father to meet the exigencies of the business. Except the couple of occasions all the transactions were made through banking channels. The assessee has received a bearer cheque of ₹ 50,000/- on 15.6.2013 from his father from the account of IPF, Dharwad in the name of Mr. Hussian R. Dargad, the Manager of Jabbar Petroleum and the same was withdrawn from the bank account and deposited in the assessee s cash book. The amount was required for urgent business needs of the assessee to make the payment to BPCL for purchase of petroleum products therefore, submitted that the transaction was between the father and the son and the amount was received through bearer cheques to meet the urgent needs therefore, 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 ₹ 4 lakhs into IPF Bank account and he has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 primarily for the benefit of a borrower although the person who lends the money may also 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 credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 keeping in view the intention of the Legislature in enacting the provisions of section 269SS, it was to be held that the assessee was prevented by suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Assessee is allowed. 7. Since, the facts are identical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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