INCOME TAX ACT, 1961

Section 271D

Penalty under section 271D - Validity - Allegation that assessee received amounts in cash as loan from HUF - HUF deposited amounts with assessee company for redemption of jewellery purchased under gold savings scheme

Penalty under section 271D was imposed on allegation that assessee received the amounts in cash as loan from HUF. Case of assessee was that transactions between assessee company and HUF were trade transactions and the same could not be held as loan between the assessee and HUF. Held: It was undisputed fact that HUF was undertaking gold savings scheme and was collecting the subscriptions from subscribers and advancing amount to the company for jewellery redemption purchases made by scheme subscribers. Though it was placed under the unsecured loans, prima facie, it was business transaction since, HUF deposited amounts with assessee company for redemption of jewellery purchases under the scheme. Therefore, though assessee placed the same as unsecured loans, the cash receipts were trade transactions. Revenue did not bring on record to show that the cash receipts accepted by the company did not represent the scheme subscriptions for redemption of the jewellery as stated by the assessee. All the deposits were settled with sale of jewellery or the account transfers and thus proved to be trade transactions. The department also did not bring any material to show that the cash received by the company was subsequent to the revival of the bank account in the case of HUF and the transactions were not the trade transactions. There could not be any better reason for receipt of cash deposits than the death of Karta or Managing Director of the company. It was also not disputed that all cash receipts were duly accounted in the books of the assessee as well as the HUF. Therefore, there was a sufficient and reasonable cause for accepting the cash deposits.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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