VIVEKANAND SADANAND GAVHANE,SOLAPUR vs. JOINT COMMISSIONER OF INCOME-TAX, RANGE - 2, SOLAPUR

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ITA 1214/PUN/2018Status: DisposedITAT Pune27 July 2022AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that cash loans from family members to meet business exigencies are not sustainable penalties under Section 271D. They found the facts of the case to be overwhelmingly genuine.

What were the facts?

The assessee received loans in cash from his mother, violating Section 269SS of the Income Tax Act. This led to a penalty imposed by the lower authorities.

What were the issues?

Whether a penalty under Section 271D is leviable for receiving cash loans from a mother, and if such transactions are considered violations of Section 269SS.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘A’ BENCH, PUNE

For Appellant: Shri Pratik Sandbhor
For Respondent: Shri S.P. Walimbe

ORDER

PER S.S. GODARA, JM :

1.

This assessee's appeal for A.Y. 2013-14 is against the CIT(A)- 7, Pune’s order dated 13-04-2018 passed in case No. PN/CIT(A)-7/R-2/10625/2016-17 involving proceedings u/s 271D of the Income-tax Act, 1961, in short “the Act”.

Heard both the department. Case file perused.

2.

It emerges at the outset that the assessee’s sole substantive grievance raised in the instant appeal seeks to reverse both the lower authorities’ action imposing u/s 271D penalty of Rs. 2,55,000/- for having received loans in cash from his mother Smt. Kumudini Gavhane thereby violating section 269SS of the Act.

3.

Both the learned lower authorities vehemently reiterated their respective stands against and in support of the impugned penalty. The Revenue more particularly contended that the Assessing Officer and the CIT(A) hold the assessee to have failed in giving justifiable explanation for having violated the relevant statutory provision involving the receipt of cash loan u/s 269SS of the Act. Mr. Walimbe further sought to highlight the fact that the assessee and his mother maintained their respective bank accounts in the same bank’s branch only which duly support’s learned lower authorities’ stand.

Vivekanand S. Gavhane A.Y. 2013-14 4. We have given thoughtful consideration to foregoing rival contentions and find merit in assessee’s stand. It is made clear that there is no dispute about the impugned cash loans having obtained from assessee’s mother only. That being the case, various judicial precedents (2022) 137 taxmann.com 395 (Del), Baloo Vs. Dy. CIT (2011) 16 taxmann.com 35 (Cal), CIT vs. Baloj Truees (2008) 167 taxman 27 (Mad) C.I.T. Vs. Laxmi Trust Co. 303 ITR 99 (Mad) held that such a penalty involving cash loans from family members to meet with business exigencies is not sustainable as it should not be held that the same violated the basic tenor of sec. 269SS of the Act. Faced with this situation, we delete the impugned penalty on account of overwhelming genuineness involving facts of the instant case. The assessee succeeds in his instant sole grievance.

5.

The assessee’s appeal is allowed.

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