INCOME TAX ACT, 1961

Section 271D

Penalty under section 271D - Contravention of section 269SS - Assessee taken loan from his son and used the same for his business -

Penalty was imposed by JCIT under section 271D for violation of section 269SS. JCIT noticed that assessee had appeared before him and submitted that the loan was taken from his son who earned income from truck plying and had given the money to the assessee being his father who in turn used the same for his business and had shown it as loan from his son. No supporting evidence could be produced by assessee for substantiating his claim. Since assessee failed to offer any cogent ground or any exigency to accept cash loan from his son, he imposed penalty under section 271D for violation of the provisions of section 269SS and accordingly, imposed penalty under section 271D. Held: The explanation of assessee was that his son who earned income from truck plying had given the money for safe keeping with him and when there was an urgent necessity to pay the creditors to run his proprietorship business, assessee had used this money and reflected it as loan from his son. When the father needed money or son needed money, the money given between the family members could not be termed as loan or advances even though for purpose of accounting it was shown as loan. Since JCIT had noted from the ledger account of the son that the money was given by son to the father and that have been used by the father for tiding over urgent business requirement cannot be termed as loan/advance, so it cannot attract the penalty under section 271D.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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