BHARAT BHUSHAN YADAV,GURGAON, HARYANA vs. ACIT/DCIT/JCIT, GURGAON, HARYANA

THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH “H” NEWDELHI

BEFORE SHRI SUDHIR KUMAR, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER

ITA No.8237/Del/2025 Assessment Year: 2020-21

Bharat Bhushan Yadav Vs. ITO Ward-1(3) Gurgaon-122016 Kothi No.1 S.R.Enclave Chandan Nagar Road Sector -15 Part-II Gurgaon-122001 PAN No.AGGPB7580A

(Appellant) (Respondent)

Appellant by Sh. I. P. Bansal, Adv. Sh. Vivek Bansal, Adv.

Respondent by Sh. Sandeep Tripathi, Sr. DR

Date of hearing 22.06.2026 Date of pronouncement 10.07.2026

ORDER PER SUDHIR KUMAR JM:

The assessee preferred the appeal, challenging the order dated

27-11-2025 passed by The National Faceless Appeal Centre Delhi (in

short Ld. NFAC) passed by Assessment Unit dated 25-07-2025 for

A.Y. 2020-21 under the section 271E of the Income Tax Act, 1961(In

short “the Act”).

jurisdiction, void ab initio and passed in violation of mandatory

statutory requirements and is liable to be quashed.

mechanical and does not specify the precise limb of section 169T

alleged to be violated rendering the penalty void.

approval of the Joint Commissioner as mandate u/s 271E and therefore

penalty is illegal and void.

submissions facts documents or judicial precedents and is therefore

invalid.

between husband and wife is not a loan repayment in commercial sense

and is outside the mischief of section 269T supported by binding

judicial precedents.

6.That the authorities erred in ignoring the bonafide family transaction

and complete disclosure on record constituting reasonable cause under

section 273B which specifically bars penalty.

funds during assessment u/s 147/143(3) the penalty was unwarranted

and contrary to law.

No. 345 and legislative intent that the provision is meant to curb black

money and unaccounted transactions which is absent here.

failing to exercise appellate jurisdiction and not dealing with the

appellant’s detailed written submissions.

consideration without adequate opportunity and in violation of

principles of natural justice.

deleted.

submissions of the appellant documents placed on record and the applicable legal position. Accordingly, the contention of the appellant has not been found acceptable. The contention -wise adjudication is discussed as under:- 1. Legislative Intent Clearly Supports the Penalty: As per CBDT Circular No. 345 (extracted by the appellant) the purpose of Section 169SS-269T was to counter tax evasion, prevent the use of unaccounted cash under the guise of loan/ repayments. The appellant’s repayment in cash of Rs.4,00,000/- is exactly the type of transaction the law seeks to prohibit, because the cash movement cannot be independently verified, if defeats the very purpose of traceability, it compromises the audit trail of loan/repayments. Hence invoking penalty here directly supports legislative intent. The appellant further contended that the penalty provisions meant only for black money/ evasion. However, the appellant failed to appreciate the legislative intent behind section 269SS/269T is create a transparent banking trail, not merely to prosecute evasion. Even genuine transactions must comply with the prescribed mode of repayment when exceeding Rs.20,000/-. Cash payments defeat audit trail and are exactly what the section seeks to prevent. Hence, law applies even to genuine family transactions if they are loans repaid in cash. 1. Penalty u/s 271E is Mandatory Once Default is Established: section 271 E mandates that penalty equals the amount repaid. Once contravention of section 269T is proved, penalty is compulsory unless reasonable cause is demonstrated, which has not been done. Further,

there is no revenue neutrality defense under 269T /271E of the Act. The existence of “no tax evasion: does not exonerate the default (SC in Hindustan Steel Ltd. applies only to technical defects, not to statutory contraventions involving large cash transactions. 1. Order is not Non-speaking: The appellant claims absence of reasoning. However, the penalty order reproduces relevant facts, Specifies the repayment of Rs. 4,00,000/- in cash, identifies the statutory provisions contravened, mentions application of amended 269T, discusses the appellant’s explanation and rejects it. Hence the order is valid, reasoned and in accordance with law. 1. There is no revenue loss: The appellant ‘s claim that no loss has been caused to the revenue is legally irrelevant and legally untenable. Penalty u/s 271E is not contingent on tax loss, but on the mode of repayment of loan in contravention of section 269T of the Act. The provision seeks to ensure banking transparency and prevent circulation of unaccounted cash, regardless of whether the underlying transaction is taxable or revenue neutral. Courts have consistently held that even genuine transactions attract penalty if statutory mode is violated. Accordingly, the contention of the appellant of “no revenue loss” has no merits and hence stands rejected. 1. Repayment is proved and genuine: The appellant’s contention that the repayment is proved and genuine does not negate the violation of Section 269T of the Act. Penalty under Section 271E is not concerned with the genuineness of the transaction but with the manner of repayment. Even a genuine and fully explained loan must be repaid

only through an account -payee cheque, draft, or electronic clearing system when the amount exceeds Rs.20,000/-. The appellant admittedly repaid Rs.40,00,000/- in cash and therefore, the genuineness cannot cure a clear statutory contravention. Therefore, the plea of genuineness is irrelevant and does not absolve the assessee from penalty. 8. In view of the above findings and considering the totality of facts and the legal position, the penalty of Rs.4,00,000/- levied under Section 271E of the Act for violation of Section 269T is hereby confirmed. 9. In the result, the appeal is dismissed. 5. Aggrieved the order of the Ld. NFAC, the assessee is in appeal before the tribunal. 6. The Ld. AR of the assessee submitted that the assessee had taken cash loan from his wife and repaid Rs. 4,00,000/- in cash to his wife. He submitted that the provisions of section 269SS do not bar genuine cash transaction of loan but bar only those transactions which are entered with the intention to evade taxes. These provisions are made to counteract evasion to tax but not to bar cash transaction between close relations. He also submitted that loan amount was fully explained before the AO and no additions were made during the assessment proceedings. Reliance is placed on the following decisions: (i) Commissioner of Income -tax, Faridabad v. Sunil Kumar Goel [2009]183 Taxman 53 Hon’ble High Court (Punjab & Haryana) (ii) Commissioner of Income-tax-1 v. Smt. M. Yesodha [2013] 31 taxmann.com 153 (Madras) Hon’ble High Court of Madras

(iii)Shri Sunil Kumar Sood v. The JCIT Range 24, New Delhi ITA No. 1831/Del/2026 (A.Y. 20027-08) (iv) Savita S. v. Gangadshetti vs. The Joint Commissioner of Income Tax, Vijayapur Range ITA No. 116 (Bang) /2019 (v) Balwan Singh v. Assistant Commissioner of Income-tax [2022]137 taxmann.com 395(Delhi-Trib) order dated -4-04-2022 7. Ld. DR submitted that the assessee repaid the Rs.4,00,000/- in cash in the statutory contravention. He further submitted that section 269T does not provide any exemption for husband-wife or relatives. The loan taken by the wife had not paid through banking channel, the penalty was rightly levied. He relied the orders of the lower authorities. 8. We have heard the parties and gone through the material available on record. In the case of Shri Sunil Kumar Sood vs. The JCIT Range 24 New Delhi the Co-ordinate bench held as under: 9.1 Even otherwise also, the transaction is between husband and wife. Various benches of the Tribunal are holding that transaction of loan between husband and wife does not attract the provisions of section 269SS of the Act. The Kolkata Bench of the Tribunal in the case of Tuhinara Begum Hoogly Vs. JCIT Range 2, Hoogly ITA No. 2256/Kol/2014 order dated 04.10.2017 under somewhat similar circumstances cancelled the penalty levied u/s 271D of the Act by observing as under: “6. We have heard the rival submissions and we are of the view that the facts of the present case and the facts of the case referred to ITAT Kolkata in the case of Dr.B.G.Panda are identical. The Tribunal in the aforesaid case held as follows :- "Section 269SS is applicable to the deposits or loan. It is true that both in the case of a loan and in the case of a deposit, there is a relationship of debtor or creditor between the party giving money and the party receiving money. In the

case of deposit. the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money and the benefit normally being the earning of interest from the party who customarily accepts deposit. In the case of loan it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of a borrower although the person who lends the money may also stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest ITA N0.2256/Kol/2014-Tuhinara Begum A.Y.2010-11 3 was involved. This was neither a loan nor a deposit. At the same time. the words 'any other person' are obviously a reference to the depositor as per the intention of the Legislature. The communication/transaction between the husband and wife are protected from the legislation as long as they are not for commercial use. Otherwise, there would be a powerful tendency to disturb the peace of families. to promote domestic broils, and to weaken or to destroy the feeling of mutual confidence which is the most enduring solace of married life. In the instant case, the wife gave money to husband for construction of a house which was naturally a joint venture for the property of the family only. This transaction was not for commercial use. The amount directly received by the husband. i.e .. the assessee. was to the extent of Rs. 17.000 only and the balance amount of Rs. 26.000 was given by payment directly to the supplier of the material required for the construction 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 27 3B. Therefore. the penalty should be deleted. 7. The ratio laid down in the aforesaid decision is clearly applicable to the facts and circumstances of the present case as the transaction in the present case was also between husband and wife. As laid down in the aforesaid decision, penalty in the facts and circumstances of the case ought not to Page have levied u/s 271D of the Act and penalty levied u/s 271D of the Act is directed to be cancelled and the appeal of the assessee is allowed. 8. In the result the appeal of the assessee is allowed.” 10. 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 penalty levied u/s 271D of the Act in the instant case is not justified. We, therefore, set aside the order of the ld. CIT(A) and direct the Assessing Officer to cancel the penalty so levied. Grounds raised by the assessee are allowed. 11. In the result, the appeal filed by the assessee is allowed. 9. In the instant case the no addition was made on the basis of the cash deposit of Rs. 50,72,000/- in the bank account during the A.Y. 2019- 20. The assessee stated that he had taken the loan in cash from his wife for Rs. 18,25,000/- for the benefit of the family, which was fully explained by the assessee. Since the assessee had taken the loan from his wife in cash, which was fully explained by the assessee and the part payment of Rs.4,00,000/- was made to his wife for the benefit of the whole family, therefore, respectfully following the judgment of the Co-ordinate bench, we hold that penalty levied u/s 271E of the Act in the instant case is not justified. We, therefore, set aside the order of the

Ld. NFAC and direct the Assessing Officer to delete the penalty so levied. Grounds raised by the assessee are allowed. 10. In the result the appeal of the assessee is allowed. Order pronounced in the open court on 10/07/2026.

Sd/- Sd/-

(MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIALMEMBER Dated: 10/07/2026

“SR BHATNAGGAR” Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Delhi