TaxTMI 
TaxTMI 
2021 (10) TMI 967
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....9-10 had come up for inquiry before ITO (Inv), Jaipur. In the inquiry before ITO (Inv), Jaipur, it has been submitted by Shri Babu Lal Kumawat that he has given loan of Rs. 9,00,000/- to his wife. Thereafter, ITO (Inv), Jaipur reported the matter to JCIT, Range 4, Jaipur and a notice u/s 274 r.w.s. 271D of Income Tax Act, 1961 was served on the assessee by JCIT, Range - 4, Jaipur on 15.03.2016. The assessee was asked to show cause as to why penalty u/s 271D should not be levied. In response to the show- cause notice, the assessee has submitted that she has received Rs. 6,00,000/- from her husband by way of demand draft for payment towards purchase of plot no. 356 and remaining Rs. 3,00,000/- was received in cash as the assessee is wife of Sh. Babu Lal Kumawat and cash of Sh. Babu Lal Kumawat remains in custody of the assessee and cannot be treated as loan. The assessee has also submitted that the cash of husband and wife cannot be separated as it is in joint custody therefore cannot be taken as loan. The assessee has also submitted that in the case of husband and wife, repayment is not mandatory and there is no interest burden therefore it is not justifiable to impose penalty u/s 2....
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.... one person. It was prosperity of family and transaction did not involve any interest element, and there was no promise to return amount with or without interest. Hence, the provisions of section 269SS would not apply and it can safely be held that there was a reasonable cause within the meaning of section 273B of the Income Tax Act, 1961. Accordingly, no penalty should be levied for violation of the provisions of section 269SS of the Act. It was further submitted that the transaction in question was a genuine transaction and there was no scope for suspicion. It was also submitted that the assessee has entertained a bona fide belief that she had received contribution from her family member and, therefore, there was no violation of the provisions of section 269SS of the Act. 7. It was submitted that the Hon'ble Rajasthan High Court in the case of CIT Vs Raj Kumar Sharma (2007) 294 ITR 131 (Raj) has held as under: "7. Section 271D of the Income-tax Act provides for penalty for failure to comply with the provisions of Section 269SS of the Income-tax Act. According to this provision, if a person, inter alia, accepts any loan in contravention of the provisions of Section 269....
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....of the Act against him. The deletion of penalty by the Tribunal was valid." 9. It was submitted that ITAT Jaipur Benches in the case of M/s Paras Buildhome P. Ltd (ITA No. 803/JP/2016) has held as under: "Therefore, considering the various case laws on this issue, no penalty should be imposed on the assessee for contravention of Section 271D of the Act. The above view also get supports from the various case laws relied by the ld AR of the assessee including decision of Hon'ble Rajasthan High Court in the case of CIT Vs. Raj Kumar Sharma (2007) 294 ITR 131 (Raj) and decision of ITAT, Jaipur Bench in the case of Smt. Kusum Dhamani Vs Addl. CIT in ITA No. 847/JP/2011. Therefore, by considering the totality of facts and circumstances of the case, I delete the penalty sustained by the ld. CIT(A)." 10. It was submitted that ITAT Jaipur Benches in the case of Smt Kusum Dhamani (ITA No. 847/JP/2011) has held that: "We have heard the rival submissions and perused the relevant material available on record. From the record there is no shred of doubt about the genuineness of the transactions and their disclosure in the books of account and returns of both the assess....
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....on of the house. Though the expenditure was apparently incurred by the husband being the karta/head of the family, it could not be said that the wife could not have any interest of her own in this house being constructed. The transaction was neither loan nor any gift as no 'interest' element was involved and there was no promise to return the amount with or without interest. It was clear that the money given by the wife was a joint venture of the family. Taking into consideration overall facts and circumstances of the case, it could be said that the aforesaid piece of legislation was not applicable in the instant case. By taking the liberal view and applying the golden rule of interpretation, the assessee had a reasonable cause within the meaning of section 273B. Therefore, the penalty should be deleted." 12. It was further submitted that ITAT Delhi Benches in the case of Shri Nabil Javed Vs ITO Ward 63(3) (ITA No. 3797 & 3798/Del/2018) held as under: "Since in the present case also the assessee had taken the loan from his wife for the purchase of house which is for the benefit of the whole family, therefore, following the decision cited [supra], we hold that pe....
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....cisions of Hon'ble High Courts and ITAT, it is clear that Section 269SS do not apply in the case of transaction between close relations. In our case also, amount in question is not a loan but a financial help as appellant is not required to pay back the amount. The assessee has taken the said amount of cash to purchase the property which is used for residence of family members and does not take any loan from husband. Since the amount has been used not for the purpose of business and only used such amount for the benefit of family members, hence the same does not come in the ambit of Sec 269SS of the Income Tax Act. It was accordingly requested to delete the penalty as the transaction was not done for evasion of tax. 15. Per contra, the ld. D/R submitted that the contention raised by the learned counsel that section 269SS is not applicable where the loans and deposit transactions are between Husband and wife cannot be accepted. A perusal of section 269SS reveals that it bars any 'person' from taking or accepting loan from any other 'person' otherwise than by account payee cheque or account payee bank draft on fulfillment of certain conditions. The reference in this section is to ....
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....se, where the family of the assessee is guided by its internal family requirement and also by such policy incentive by the Government and at the same time, pooling in the family funds especially where the assessee doesn't have any known sources of income, the explanation of the assessee deserve to be appreciated and the approach of the authorities needs to be flexible for appreciating the reasonability of the explanation so submitted by the assessee. On persual of the registered sale deed, we find that there is payment of consideration by way of demand draft for Rs. 6 lacs which has been paid in advance and remaining amount of Rs. 1 lacs which has been paid in cash at the time of registry and handing over of the possession. It has been stated at the Bar by the ld AR that the assessee had no option but to discharge the remaining consideration in cash at the time of registry as so insisted by the seller of the property and in absence thereof, the deal might have not fructified. We find the explanation so furnished as reasonable and plausible and donot find any malafide in the explanation so submitted as everything is flowing from the registered sale deed where transactions have been ....