SIPPY DUBEY,BHAGALPUR vs. JCIT, RANGE-1, BHAGALPUR, BHAGALPUR

ITA 501/PAT/2024Status: HeardITAT Patna24 September 2026AY 2015-166 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal of the assessee. The Tribunal noted that the assessee, engaged in share trading, had taken a cash loan of Rs. 20,50,000/- from her husband. The AO referred the matter for penalty imposition under Section 271D for contravention of Section 269SS. The Tribunal observed that the assessee was unable to substantiate a reasonable cause for taking the unsecured loan in cash. It was highlighted that both husband and wife maintained bank accounts, questioning the necessity of taking cash. Furthermore, the husband had provided a significant loan of Rs. 30,00,000/- by cheque in the same assessment year, and the reason for the cash loan remained unexplained. The Tribunal rejected the argument of a family arrangement, stating that each assessee is independent under the Income Tax Act. The argument that the loan was repaid by cheque and lacked mala fide intention was also dismissed, as Section 269SS applies at the time of taking/accepting the loan or deposit, irrespective of subsequent repayment. Therefore, considering the totality of facts and circumstances, the appeal was dismissed.

What were the facts?

The assessee, Sippy Dubey, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Patna Bench, against the order of the National Faceless Appeal Centre, Delhi (CIT(A)). The appeal arose from a penalty order passed by the Assessing Officer (AO) under Section 271D of the Income Tax Act, 1961. The assessment year in question is 2015-2016. The AO initiated penalty proceedings after observing cash deposits totaling Rs. 20,50,000/- in the assessee's bank accounts, which were identified as unsecured loans taken from her husband in cash. The AO found this to be a contravention of Section 269SS of the Act. The JCIT imposed a penalty of Rs. 20,50,000/- under Section 271D. The CIT(A) confirmed this penalty. The assessee's appeal to the ITAT challenges the confirmation of this penalty.

What were the issues?

1. Whether the learned Commissioner of Income Tax (Appeal) erred in confirming the penalty of Rs. 20,50,000/- without appreciating the intent behind the introduction of the penalty under Section 271D, considering the transaction was between husband and wife who generally constitute a single family for financial purposes. 2. Whether the learned Commissioner of Income Tax (Appeal) erred in confirming the penalty of Rs. 20,50,000/- without appreciating that the transaction under Section 269SS was a technical breach without mala fide intention and resulted in no loss of revenue. 3. Whether the learned Commissioner of Income Tax (Appeal) erred in confirming the penalty of Rs. 20,50,000/- without appreciating that the assessee had a reasonable cause under Section 273B for the transaction. Assessee's Contentions: - There was no violation of Section 269SS as the loan was taken in cash from her husband, with whom she resides. The loan has been repaid, and there was no undue benefit. It was a friendly arrangement. - The provisions of Section 269SS and 271D allow for penalty imposition only if there is no reasonable cause and there is mala fide intention. The transactions were recorded, and the loan was repaid by cheque. The husband's support for the business constitutes a reasonable cause. Revenue's Contentions: - The assessee failed to substantiate that her case falls under Section 273B. - Both husband and wife maintain bank accounts. It would have been easier to transfer money by cheque rather than withdrawing cash and depositing it. - Every assessee is liable for income tax independently, irrespective of living in a joint family. Provisions of the Income Tax Act must be followed. - The husband also provided an unsecured loan of Rs. 30,00,000/- by cheque in the same assessment year, and the reason for taking cash loan was not explained. - The assessee failed to substantiate her case during penalty proceedings, and the counsel could not rebut the findings of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS,Section 273B,Section 143(3),Section 139(1),Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA BENCH, PATNA

Before: SHRI GEORGE MATHAN & SHRI LAXMI PRASAD SAHU

For Appellant: Shri Abhi Sarkar, Advocate
For Respondent: Shri Ravi Kant Chowdhary, Sr. DR
Hearing: 21.09.2026Pronounced: 24.09.2026

PER LAXMI PRASAD SAHU, AM: This appeal is filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘the ld. CIT(A)’], dated 25.06.2024 arising out of penalty order passed by the Assessing Officer (In short, ‘the AO’) u/s 271D of the Act, dated 12.02.2018 on the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal) erred in Confirming the penalty of Rs.20,50,000/- without appreciating the intent behind introduction of the penalty under Section 271D.

The order continues below.

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