ITAT Bangalore in the case of Savita S. Gangadshetti v. Joint CIT held that the violation of section 269SS & 269T is not attracted where cash loans are taken from close relatives and therefore, no penalty is leviable under section 271D/271E.
Case Details:-
| Case Description | Savita S. Gangadshetti v. Joint CIT |
| Court | ITAT, Bangalore Bench |
| Appeal Number | ITA No. 116/Bang/2019 |
| Citation | (Bang-Trib) 2020 ITL 640 |
| Date of Order | 20-01-2020 |
| Decision in favour of | Assessee |
| Sections Covered | 271D, 271E, 269SS, 269T, 273B |
Facts of the case:
The assessee has taken money from her husband & husband's HUF for an amount of Rs. 12.50 Lakhs as follows:-
| Date | Amount in Rs. |
| 31-08-2013 | 5,00,000.00 |
| 02-09-2013 | 1,00,000.00 |
| 04-09-2013 | 1,50,000.00 |
| 15-09-2013 | 5,00,000.00 |
| Total | 12,50,000.00 |
The JCIT initiated penalty proceedings under section 271D and 271E of the Income Tax Act respectively for accepting and for repaying the above amount by way of cash in violation of the provisions of section 269SS & 269T of the Act. The assessee submitted before the learned JCIT that she has received the above said amounts as gift from her husband in his individual as well as HUF capacity. However, the learned JCIT rejected the contention of the assessee and levied the penalty under section 271D & 271E of the Act. The learned CIT (A) agreed with the view of learned JCIT that these are loan transactions only. The learned CIT (A) deleted the penalty levied under section 271D of the Act. With regard to the penalty levied under section 271E of the Act for repayment of loan by way of cash, the learned CIT (A) took the view that the assessee has failed to show any reasonable cause. Accordingly, he confirmed the penalty of Rs. 12.50 Lakhs levied by the A.O. under section 271E of the Act.
Aggrieved by the order of CIT (A), the assessee filed an appeal before ITAT.
Submission of the assessee:
The learned A/R submitted that the transactions entered by the assessee with her husband (both in the individual capacity and HUF) are gift transactions only. He further submitted that the tax authorities are not justified in treating these transactions as loan transactions. He further submitted that, even if it is considered as loan transactions, the penalty under section 271E should not have been levied as the transactions entered between close relatives are considered to fall under reasonable cause. He also placed reliance on decision of Tribunal in the case of Deepika v. ACIT in ITA No. 561/Bang/2017 dated 13-10-2017.
Submission of the department:
The learned D/R supported the order passed by the learned CIT (A).
Decision of Tribunal:
- We noticed that the learned CIT (A) has deleted the penalty levied under section 271D of the Act but confirmed the penalty levied under section 271E of the Act. It is the case of the assessee that, even if it is considered as loan transactions, the penalty is not leviable, since the loan transactions between close relatives are considered to constitute reasonable cause in terms of section 273B of the Act.
- Further, the following judgements were relied by ITAT as below:-
- ACIT v. Vardaan Fashion (2015) 60 Taxmann.com 407 (Delhi-Trib.)
- ITO v. Tarlochan Singh (2003) 128 Taxman 20 (Mag) (Amritsar-Trib.)
- CIT v. Sunil Kumar Goel (2009) 315 ITR 163 (P&H)
- M. Yeshodha (2013) 351 ITR 265 (Mad)
- Accordingly, we are of the view that the penalty levied under section 271E of the Act is not sustainable. Accordingly, we set aside the order passed by the learned CIT (A) and direct the assessing officer to delete the penalty.
