Section 269SS not applies to Cash Transaction between Close Family Members for giving support & help
Case Law Details
Sri Nikhil Banik Mazumder Vs. JCIT (ITAT Kolkata)
Assessee had accepted the loan in cash of Rs. 4,00,000/- from Shri Mithun Banik Mazumder, (son of the assessee) and repaid Rs. 1,50,000/-. Assessee repaid loan to his another son Sri Indranil Banik Mazumder at Rs. 2,25,098/- and also repaid loan to his wife Smt. Sandhya Banik Mazumder at Rs. 54,928/. All these transactions are between husband and wife, and between father and son, being close relative of one family.
We also note that assessee is a salaried employee and not a businessman. Therefore, based on the facts narrated above, these transactions do not fall within the ambit of sections 269SS and 269T of the Act and for that we rely of the judgment of coordinate Bench in the case of Anant Himatsingka and Manisha Prakash Amin (supra).
To support the family members, the money has been given by the assessee to his son/wife. This is simply a transfer of money from one family member to another family member to support day to day expenses, educational expenses and other family expenses. Going through the facts of case before us, we are of the view that the transaction between son and father and wife and husband, for giving a support and help, in law,is not a loan or deposit in stricter sense of section 269SS of the Act and it is only a financial support, therefore, penalty imposed by the Assessing Officer and confirmed by the ld CIT(A) needs to be deleted, and accordingly we quash both the penalty orders, i.e, under section 269SS and 269T of the Income Tax Act.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These captioned two appeals filed by the assessee, pertaining to Assessment Year 2010-11, are directed against the orders passed by the ld Commissioner of Income Tax (Appeals)-14, Kolkata, in Appeal No. 205& 206/CIT(A)-14/Wd-47(4)/2013-14, both dated 22.01.2016, which in turn arise out of penalty orders passed by the Assessing Officer under sections 271D and 271Eof the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), both dated 23.09.2013.
2. Since these two appeals relate to the same assessee, same assessment year, identical issues are involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The assessee’s appeal in ITA No. 453/Kol/2016, for A.Y. 2010-11, has taken as the lead case.
3. The assessee has raised the following grounds of appeal (in lead case in ITA No. 453/Kol/2016), as follows:
1. For that the ld. CIT(A) ought to have held that the order of penalty u/s 271D is bad in law and is liable to be quashed.
2. For that on the facts and in the circumstances of the case, the ld. CIT(A) was not justified in confirming the penalty u/s 271D amounting to Rs.4,00,000/-.
3. For that on the facts and in the circumstances of the case, the ld. CIT(A) ought to have considered that the transactions were between close relatives and were not in the nature of loan or deposit, and thus, the provision of sec 271D was not applicable.
4. For that the ld. CIT(A) ought to have considered that bona fide belief of the assessee that transactions between close relatives falls outside the ambit of section 269SS of the Act is a reasonable cause falling u/s 273B of the Act.
5. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal.
4. The brief facts qua the issue are that in the assessee`s case under consideration, the assessment u/s 143(3) of the I.T Act was completed by the AO on 31.12.2012 at a total income of Rs. 1,78,630/-. During the course of assessment proceedings, the AO observed that the assessee had accepted loan in cash of Rs. 4,00,000/- on an unspecified date from Shri MithunBanikMazumder, son, in contravention of section 269SS of the I.T. Act. The assessee repaid loans in cash to various family members in contravention of section 269T of the Act. Therefore, the AO initiated penalty proceedings u/s 271D and 271E of the Income Tax Act. The details of repayment of loan is give below:
| S. No. | Date of repayment made | Amount Repaid | Name of Creditor |
| 1 | Undated as evident from loan confirmation | 1,50,000 | Shri MithunBanikMazumder-Son of the assessee |
| 2 | Undated as evident from loan confirmation | 2,25,098 | Shri IndranilBanikMazumder–Son of the assessee |
| 3 | Undated as evident from loan confirmation | 54,928 | Sandhya BanikMazumder-Wife of the assessee |
| Total | 4,30,026 |
Therefore, the AO observed that, since the assessee has accepted the loan in cash and paid the loan in cash, therefore, it was a fit case to impose the penalty under sections 271D and 271E of the Income Tax Act, 1961. During the penalty proceedings, the assessee replied to the Assessing Officer that these loan transactions were mainly between son and father, wife and husband. The assessee submitted that the transactions between son and father and husband and wife are for mainly giving support and help to the family members. The assessee also submitted that the interest payment to the relatives is also not in the character of loan or deposit. Therefore, penalty under sections 271D and 271E do not attract. However, the Assessing Officer had rejected the contentions of the assessee and held that these were the transactions between son and father, husband and wife, therefore, assessee had contravened the provisions of section 269SS and 269T of the I.T. Act. Therefore, the AO imposed the penalty u/s 271D at Rs. 4,00,000/- and u/s 271E at Rs. 4,30,026/-.
5. Aggrieved by these penalty orders, the assessee filed an appeal before the ld. CIT(A), who has confirmed the penalty levied by the AO. The ld. CIT(A) reiterated the stand taken by the AO and confirmed the penalty imposed by the AO under sections 271D and 271E of the Act.
6. Not being satisfied with the order of the ld. CIT(A), the assessee is in appeal before us. The ld. Counsel for the assessee has submitted before us that theassessee is a salaried employee and is not doing any business. To support the family members, the money has been transferred by him (assessee) to his son and wife on various occasions. This is simply transfer of money from one family member to another family member to support the day to day expenses, educational expenses and other family expenses. The ld. Counsel pointed out that Sections 269SS and 269T did not apply to the transactions between son and father, between husband and wife and between close relatives. The Section 269SS states that “no Person shall, take or accept from any other person any loans or deposits …….. ”Therefore, section 269SS and 269T applicable only on commercial transactions, and business transactions. The husband, wife and son are not any other person, as mentioned above in the section 269SS of the Act. The term “any other person” applies to commercial transactions, and business transactions. In the assessee`s case under consideration the assessee is salaried employee and does not do any business therefore the transactions between him and his son/wife are not commercial/business transactions therefore the provisions of sections 269SS and 269T do not apply.They are relatives and transfer of money between them for family need is not a commercial transaction. Therefore, penalty under sections 269SS and 269T will not be applicable in respect of accepting money by the relatives and payment of money by the relatives.The ld. Counsel for the assessee has relied on the judgment of Honorable ITAT Kolkata in ITA Nos.331 & 332/Kol/2010 in the case of Anant Himatsingka Vs. ACIT, dated 25.11.2011 wherein it was held that the transaction between son-in law and father in law for giving a support and help as contended by Ld. counsel and not denied by revenue, in law was not a loan or deposit in stricter sense of section 269SS of the Act and it was only a financial support. The ld. Counsel for the assessee has further relied on the judgment of Honorable ITAT Kolkata in ITA No. 1839/Kol/2010, in the case of Manisha Prakash Amin Vs. JCIT dated 24.05.2011, for A.Y. 2006-07 wherein it has been held that the loans from relatives are in the nature of financial support within the family and this is a reasonable cause falling u/s.273B of the Act.
7. On the other hand, ld DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
8. We have given a careful consideration to the rival submissions, and perused the materials available on record, we note that assessee had accepted the loan in cash of Rs. 4,00,000/- from Shri Mithun Banik Mazumder, (son of the assessee) and repaid Rs. 1,50,000/-. Assessee repaid loan to his another son Sri Indranil Banik Mazumder at Rs. 2,25,098/- and also repaid loan to his wife Smt. Sandhya Banik Mazumder at Rs. 54,928/. All these transactions are between husband and wife, and between father and son, being close relative of one family. We also note that assessee is a salaried employee and not a businessman. Therefore, based on the facts narrated above, these transactions do not fall within the ambit of sections 269SS and 269T of the Act and for that we rely of the judgment of coordinate Bench in the case of Anant Himatsingka and Manisha Prakash Amin (supra). To support the family members, the money has been given by the assessee to his son/wife. This is simply a transfer of money from one family member to another family member to support day to day expenses, educational expenses and other family expenses. Going through the facts of case before us, we are of the view that the transaction between son and father and wife and husband, for giving a support and help, in law,is not a loan or deposit in stricter sense of section 269SS of the Act and it is only a financial support, therefore, penalty imposed by the Assessing Officer and confirmed by the ld CIT(A) needs to be deleted, and accordingly we quash both the penalty orders, i.e, under section 269SS and 269T of the Income Tax Act.
9. In the result, the appeal filed by the assessee (in ITA No. 453 &454/Kol/2016), are allowed.
Order pronounced in the open court on this 10/01/2018.
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