Case Law Details
Hitesh Manshukhbahi Dave Vs JCIT (ITAT Rajkot)
Gujarat High Court in the case of Dr. Rajaram L. Akhaniv ITO [2017] 88 taxmann.com 693 (Gujarat) has held that where assessee had accepted a sum of Rs. 2 lakhs from his son to meet urgent requirement of depositing margin money in bank account for buying a vehicle for personal use, amount so received was neither a loan nor a deposit within meaning of section 269SS. The Delhi ITAT in the case of ACIT v Vardaan Fashion [2015] 60 taxmann.com 407 (Delhi – Trib.) held that acceptance of cash by husband from his wife cannot said to be taking of loan or advance in strict sense of section 269SS and therefore, no penalty under section 271D could be levied. In the case of Smt. Kusum Dhamani [2014] 47 taxmann.com 143 (Jaipur – Trib.), ITAT held that where assessee running a proprietorship concern, took cash loans from her husband carrying on another proprietorship business on account of business exigencies for making payments to labourers and lenders, there being no violation of provisions of section 269SS, impugned penalty order passed under section 27 1D was to be set aside. In the case of ITO v. Tarlochan Singh [2003] 128 taxman 20 (Asr.) (Mag.) penalty under section 27 1D was levied on ground that assessee had received loan of Rs. 70,000 in cash from his wife for investment in acquisition of immovable properties. Wife had given money to husband for prosperity of family only and there was no evidence that amount in question was taken for commercial use. Though revenue considered it loan, but there was no material on record to show that assessee had returned amount received from wife or paid interest thereupon. Assessee was also under bona fide belief that amount in question did not require to be received otherwise than by an account payee cheque or account payee bank draft. Whether considering above and also keeping in view that intention of Legislature was never to punish a party involved in genuine transactions, it had to be held that there was reasonable cause and no penalty was leviable. In the case of Smt. Meera Devi Kumawat v. JCIT [2021] 132 taxmann.com 21 (Jaipur – Trib.) where assessee received substantial amount of cash from her husband for purchase of plot and construction of residential house on it, since repayment of said amount was not mandatory and there was no element of interest, and pooling of family funds was done by assessee due to family requirement and as she did not have any known sources of funds, no penalty could be levied under section 271D for violation of section 269SS. In view of the decision of the jurisdictional Gujarat High Court in the case of Dr. Rajaram L. Akhani supra and Smt. Meera Devi Kumawat v. JCIT [2021] 132 taxmann.com 21 (Jaipur – Trib.) and other case laws cited above, as applicable to the facts of the case, in our view, receipt of ~ 5,21,300/- by the assessee from his mother and brother is concerned, in our view the provisions of section 269SS / 271D of the Act do not stand attracted. There is nothing on record to show that the amount was taken as a loan or deposit by the assessee from his mother/brother and also there is nothing on record to establish that the assessee was under an obligation to repay that the same (with our without interest) and therefore in view of the judicial precedents cited above, in our view provisions of section 269SS and 271D cannot be invoked for the amount of ~ 5,21,300/-. Accordingly, in the instant facts, penalty under section 271D is not liable to be levied.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
This assessee’s appeal for A.Y. 2015-16, arises from order of National Faceless Appeal (NFAC), Delhi dated 08-06-2022, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.
2. The assessee has taken the following grounds of appeal:-
“1) Ld. CIT(A) erred in law as well as in fact in confirming the penalty levied of Rs. 5,21,300/- u/s. 271D of the Act thereby clearly ignoring facts and evidences submitted during course of appellate proceedings.”
3. The brief facts of the case are that during the year under consideration, the assessee had taken loan from his brother (Shri Dineshbhai Dave for ~ 2,48,300) and his mother (Mrs. Ansuyaben Dave for ~ 2,73,000) in cash totaling to ~ 5,21,300/- for the purpose of purchase of residential property. The AO held that that there was contravention of provisions of section 269SS of the Act, and accordingly levied penalty under section 271D of the Act equal to the amount of loan or deposit so taken or accepted in cash.
4. In appeal, the assessee submitted that he had taken the aforesaid unsecured loans from his brother and mother to deposit cash in bank account for payment due for purchase of residential house. He enclosed copy of purchase deed in respect of residential plot number K/B/18/3, survey number 77, village Raiya, Rajkot dated 06-06-2014. He further enclosed bank statement reflecting deposit of cash of ~ 6 lakh and payment to Mr Ramesh Chandra Popat (Seller of residential plot) for purchase of residential house. The assessee submitted that the aforesaid amount was taken in cash only during emergency for payment due in respect of purchase of residential house and there was no intention to evade taxes as the assessee had duly declared all details of unsecured loan acceptance during the course of assessment proceedings. He accordingly pleaded that in the instant set of facts, provisions of section 269SS cannot be invoked and accordingly, penalty could not be levied under section 271D of the Act. The Ld. CIT(A) however rejected the Assessee’s contention and dismissed the assessee’s appeal with the following observation:
“Determination
4.1 The appellant has preferred one Ground of appeal challenging the imposition of penalty u/s 271 D.
4.2 I have considered the impugned penalty order u/s 271 D, Form 35 and the statements of facts given by the appellant. The appellant has contended that since cash loan of Rs. 2,73,000/- was taken from his mother and Rs. 2,48,300/- was taken from his brother for purchasing property, penalty u/s 271D should not be levied. The exceptions to section 269SS have been mentioned by appellant in all the written submissions furnished by him. However, it is clear from a simple perusal of the written submission that appellant is not covered by the exemptions cited by him. Rule 6DD is very specific regarding the exemption of applicability of section 269SS. Appellant is not covered by any of the exemptions to applicability of section 269SS.
4.3 The appellant has relied on numerous case laws in support of his ground of appeal. However, the specific facts of his case can be clearly distinguished from the facts of the cases cited by him. Taking into consideration the entire conspectus in the impugned appeal, this ground of appeal is dismissed.
5 In the end result, the appeal is dismissed. Order passed under section 250 read with section 251 of the Act.”
5. Before us, the Ld. counsel for the assessee submitted that it is settled law that no penalty u/s 271D of the Act can be delivered on a person if assessee proves that there was a “reasonable cause” for accepting amount in cash. In the instant case, the accepted facts are that assessee had to invest the amount so borrowed for purchasing residential house. The assessee was a salaried person and he took loan from his mother and brother only for the payment of residential house since he was in immediate need of cash and therefore accepted the amount in cash The assessee submitted that the Revenue has not pointed out any fault in the explanation offered by the assessee, genuineness of transactions has not been disputed by the Revenue and it is a matter of fact that assessee had acquired residential house out of the funds received from mother and brother. In view of the above facts, there was a reasonable cause for accepting the funds in cash and provisions of section 269SS and 271D of the Act are not attracted in the instant facts. The assessee placed reliance on several case laws in support of his contention that genuine transactions would not be hit by provisions of section 271D of the Act. The Ld. Departmental Representative relied upon the observations made by the Ld. CIT(A) and Ld. Assessing Officer in their respective orders.
6. We have heard the rival contentions and perusal the material on record. We note that the Gujarat High Court in the case of Dr. Rajaram L. Akhaniv ITO [2017] 88 taxmann.com 693 (Gujarat) has held that where assessee had accepted a sum of Rs. 2 lakhs from his son to meet urgent requirement of depositing margin money in bank account for buying a vehicle for personal use, amount so received was neither a loan nor a deposit within meaning of section 269SS. The Delhi ITAT in the case of ACIT v Vardaan Fashion [2015] 60 taxmann.com 407 (Delhi – Trib.) held that acceptance of cash by husband from his wife cannot said to be taking of loan or advance in strict sense of section 269SS and therefore, no penalty under section 271D could be levied. In the case of Smt. Kusum Dhamani [2014] 47 taxmann.com 143 (Jaipur – Trib.), ITAT held that where assessee running a proprietorship concern, took cash loans from her husband carrying on another proprietorship business on account of business exigencies for making payments to labourers and lenders, there being no violation of provisions of section 269SS, impugned penalty order passed under section 27 1D was to be set aside. In the case of ITO v. Tarlochan Singh [2003] 128 taxman 20 (Asr.) (Mag.) penalty under section 27 1D was levied on ground that assessee had received loan of Rs. 70,000 in cash from his wife for investment in acquisition of immovable properties. Wife had given money to husband for prosperity of family only and there was no evidence that amount in question was taken for commercial use. Though revenue considered it loan, but there was no material on record to show that assessee had returned amount received from wife or paid interest thereupon. Assessee was also under bona fide belief that amount in question did not require to be received otherwise than by an account payee cheque or account payee bank draft. Whether considering above and also keeping in view that intention of Legislature was never to punish a party involved in genuine transactions, it had to be held that there was reasonable cause and no penalty was leviable. In the case of Smt. Meera Devi Kumawat v. JCIT [2021] 132 taxmann.com 21 (Jaipur – Trib.) where assessee received substantial amount of cash from her husband for purchase of plot and construction of residential house on it, since repayment of said amount was not mandatory and there was no element of interest, and pooling of family funds was done by assessee due to family requirement and as she did not have any known sources of funds, no penalty could be levied under section 271D for violation of section 269SS. In view of the decision of the jurisdictional Gujarat High Court in the case of Dr. Rajaram L. Akhani supra and Smt. Meera Devi Kumawat v. JCIT [2021] 132 taxmann.com 21 (Jaipur – Trib.) and other case laws cited above, as applicable to the facts of the case, in our view, receipt of ~ 5,21,300/- by the assessee from his mother and brother is concerned, in our view the provisions of section 269SS / 271D of the Act do not stand attracted. There is nothing on record to show that the amount was taken as a loan or deposit by the assessee from his mother/brother and also there is nothing on record to establish that the assessee was under an obligation to repay that the same (with our without interest) and therefore in view of the judicial precedents cited above, in our view provisions of section 269SS and 271D cannot be invoked for the amount of ~ 5,21,300/-. Accordingly, in the instant facts, penalty under section 271D is not liable to be levied.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 29-11-2022
