Amit Singh Vs ACIT (ITAT Chandigarh)
ITAT Chandigarh: Cash Loans Between Agriculturists with No Taxable Income—Penalties u/s 271D ; 271E Quashed
The Income Tax Appellate Tribunal allowed the assessee’s appeals for AY 2010-11 and cancelled penalties levied under sections 271D and 271E for acceptance and repayment of loans in cash.
The Tribunal noted that although the assessee had accepted and repaid loans in cash from relatives and family friends, both the assessee and the lenders were agriculturists, and neither had income chargeable to tax under the Act. The assessee’s agricultural income of ₹14 lakh was accepted in assessment, and his taxable income was below the basic exemption limit. Accordingly, the case squarely fell within the second proviso to section 269SS, which excludes such transactions from the rigour of cash-loan restrictions.
The Tribunal further held that, even otherwise, the assessee was entitled to relief under section 273B as there existed reasonable cause. It was the first year of business, the loans were taken to start a construction activity, the lenders were agriculturists residing in rural areas, and the genuineness and source of funds were never in dispute. The provisions relating to penalty, therefore, were required to be applied liberally.
On these facts, the ITAT directed deletion of penalties u/s 271D and 271E in entirety, allowing both appeals of the assessee.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
