Case Law Details
Facts of the Case
The assessee is an individual deriving income from house property and agriculture. The assessment was completed u/s 143(3) of the I.T. Act on 12.3.2013. During the course of the assessment proceedings, it was noticed that the assessee had received a loan of Rs.30.00 lakhs in cash on 10.05.2009 thereby violating the provisions of section 269S of the I.T. Act. Accordingly, penalty notice u/s 271D of the I.T. Act was issued to the assessee on 25.04.2013 which was duly served on the assessee.
Question of Law
Whether the ld. CIT(A) was justified in imposing the penalty in violation of section 269ss when there was a reasonable cause?
Contentions of the Assessee
The ld Counsel of the assessee submitted that assessee had entered into negotiations with the builder of the apartment on 10-5-2009 and during the course of the negotiations he realised that payment of a substantial advance to the builder immediately would ensure significant financial gain in terms of a discount and availability of a flat of his choice which might not be available at a later date and therefore. He felt a compelling need to mobilise cash for making payment to the builder. Accordingly, assessee raised a loan of Rs.30.00 lakhs which was obtained during the course of the day. It was argued that the assessee could not have waited for another day or for the next 3 days which would have been the normal time for encashment of a cheque. It was submitted that if the assessee had not given the payment immediately, the chosen flat could have been sold out or even if was not sold, it might not be available for purchase by the assessee at the amount negotiated on 10-5-2009. There existed a reasonable cause for obtaining the loan of Rs.30 lakhs in cash. It was argued that penalty u/s.271 D is governed by the provisions of section 273B and this section provides that penalty u/s.271 D cannot be levied if it is proved that the failure was occasioned by a reasonable cause. The transactions were genuine and the identity of lenders was established and there was no intention to avoid tax.
Contention of the Revenue
It was observed by the Add. CIT that the assessee has claimed that the loan in cash was taken to pay advance as the assessee had executed a sale deed dated 05.02.2010 for purchase of Flat and making advance payment to the builder by no stretch of imagination can be considered to be a reasonable cause for obtaining loan in cash. According to the Revenue, the assessee stated that the day 10.05.2009 happened to be a bank holiday being Sunday and the amount was required for immediate need to make payment for purchase of apartment. As the sale deed was executed on 05.02.2010 after a gap of nearly 8 months, the assessee could have very well waited for one more day to allow the banking operations to run and should have obtained the loan by means of an account payee cheque/ account payee bank draft, so as not to contravene the provisions of law. Hence, the claim of the assessee that he was prevented by sufficient reason in not complying with the provisions of section 269ss of the I.T. Act, cannot be accepted.
Held by the Tribunal
The Hon’ble Tribunal observed that there has been a long gap from the time of taking the cash loan i.e. 10.05.2009 and the Registration of the Sale Deed which was only on 5th day of February, 2010. The issue needed further verification by the AO as to whether the amount has been received by the parties with whom the Assessee had executed the sale deed and call for the production of receipt from the vendors. The AO was directed to examine the entire issue after giving reasonable opportunity to the assessee and decide the issue in accordance with law.
Accordingly, the matter was remanded.
