Tribunal cancels penalty for cash loan, ruling transactions as adjustments, not loans.

The Tribunal allowed the appellant's appeal against a penalty of Rs. 10,000 imposed under section 271D for accepting a cash loan exceeding Rs. 20,000 in violation of section 269SS of the Income Tax Act. The Tribunal held that the transactions between the Hindu Undivided Family (HUF) and its Karta were temporary adjustments, not loans or deposits, and therefore did not attract section 269SS. Consequently, the penalty was canceled as the journal entry for gift expenses was not considered a loan or deposit.

---

---

Issues involved: Appeal against penalty u/s 271D for violation of s. 269SS of the IT Act for accepting cash loan exceeding Rs. 20,000.

Summary:
The appellant appealed against a penalty of Rs. 10,000 imposed u/s 271D for violating s. 269SS by accepting a cash loan exceeding Rs. 20,000. The appellant contended that the transaction was a temporary adjustment/accommodation between the Hindu Undivided Family (HUF) and its Karta, not a loan. The CIT(A) upheld the penalty, leading to the appeal before the Tribunal.

During the appeal, the Authorized Representative argued that the transaction did not fall under s. 269SS as it was not a loan or deposit but a temporary adjustment. The Departmental Representative supported the lower authorities' decisions.

The Tribunal noted that the transactions between the HUF and its Karta were temporary adjustments with no cash loan or deposit involved. Citing precedents, the Tribunal held that such transactions did not attract s. 269SS. Notably, no interest was paid or received. Therefore, the penalty was canceled as the journal entry for gift expenses did not constitute a loan or deposit under s. 269SS.

As a result, the appellant's appeal was allowed, and the penalty of Rs. 10,000 was revoked.

---