| The Tax Publishers2019 TaxPub(DT) 8442 (Rkt-Trib) INCOME TAX ACT, 1961
Section 271D
Provision of section 269SS was brought under the statute to discourage the assessee to justify their unaccounted money. Thus, the cash transaction which was genuine could not be brought under the net of tax under the provision of section 269SS. Moreover, transactions between the relatives and sister concern were not subject to the provisions of section 269SS. Therefore, the penalty levied under section 271D was not sustainable.
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Penalty under section 271D - Contravention of provision of section 269SS - Accepting loans or deposits in cash - Transactions with the close relatives of assessee
Assessee was engaged in Civil Construction business. He had received cash loan. Thus, AO had initiated the penalty proceedings under section 271D by holding that the unsecured cash loan received by assessee was in contravention of section 269SS. However, assessee contended that he had taken cash loan from his close relatives for the purpose of purchasing the residential property that were duly recorded in books of account. He further contended that the object of section 269SS was to discourage the assessee to justify their unaccounted money by taking cash entries from different persons. But, as in the instant case, the genuineness of the transaction was not doubted by the Revenue and as the transaction was made among the family members, the penalty could not be levied under section 271D. Held: Provision of section 269SS was brought under the statute to discourage the assessee to justify their unaccounted money. However, in the instant case, there was no allegation that assessee had introduced unaccounted money in his business. Thus, keeping in view the object of the provision of section 269SS the cash transaction which was genuine could not be brought under the net of tax under the provision of section 269SS. Moreover, transactions between the relatives and sister concern were not subject to the provisions of section 269SS. Therefore, as the genuineness of cash transaction had not been doubted, the penalty levied under section 271D was not sustainable.
Relied:G.D. Subraya Sheregar v. ITO, Ward 2, Udupi (2006) 10 SOT 378 (Bang) : 2006 TaxPub(DT) 1568 (Bang-Trib). Distinguished:Mahak Singh v. CIT & Anr. (2013) 37 taxmann.com 390 (All).
REFERRED : Asstt. Director of Inspection (Investigation) v. DCIT & Anr. (2002) 255 ITR 258 (SC) : 2002 TaxPub(DT) 1375 (SC) and CIT v. Madho Pd. Jatia (1976) 105 ITR 179 (SC) : 1976 TaxPub(DT) 0828 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2010-11
IN THE ITAT, RAJKOT BENCH
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