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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI MAHAVIR SINGH, VP & SHRI M.BALAGANESH, AM Shri
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-2, Pune in appeal No.THN/CIT(A)-2/JCIT Rg-1/KYN/693/2015-16 dated 10/04/2018 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271D of the Income Tax Act, 1961.
At the outset, we find that there is an affidavit on 12/09/2018 filed by the assessee stating that there is a delay in filing of appeal by him. But we find that in the instant case, the order of the ld. CIT(A) was passed on 10/04/2018 which was stated to be received by the assessee on 09/06/2018 and we find that appeal has been filed on 19/07/2018. Hence, in our considered opinion, there is no delay in filing of appeal by the assessee before us.
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the levy of penalty u/s.271D of the Act in the facts and circumstances of the instant case.
We have heard rival submissions and perused the materials available on record. We find that assessee is an individual engaged in the business of retail trading of tyres of M/s. J.K. Tyres and Industries under the name and style of M/s. Gajanan Tyre Services. The assessee filed his return of income for the A.Y.2012-13 on 30/09/2012 declaring total income of Rs.8,02,810/-. The assessment was completed by the ld. AO u/s.143(3) of the Act on 12/03/2015 determining total income of Rs.15,19,810/- after making an addition of Rs.7,17,000/- towards unexplained cash credit in respect of loan received by the assessee from his father in cash. Parallelly, the ld. AO had also initiated the penalty proceedings u/s.271D of the Act for violation of provisions of Section 269SS of the Act. We find that the quantum appeal had travelled up to this Tribunal at the behest of the assessee and this Tribunal in dated 09/08/2018 had accepted the loan received by the assessee from his father in the sum of Rs.7,17,000/- in cash as a genuine loan specifying all the three necessary ingredients of Section 58 of the Act and accordingly, deleted the addition made thereon.
4.1. We find that the ld. JCIT, Range-1, Kalyan had proceeded to levy penalty u/s.271D of the Act in respect of cash loan received by the assessee in the sum of Rs.7,17,000/- from his father. This penalty was upheld by the ld. CIT(A). We find that there is no dispute that assessee during the year had indeed received cash loan in the sum of Rs.7,17,000/- from his father. We find that this Tribunal vide its order dated 09/08/2018 in the quantum appeal had accepted the genuineness of the said transaction and had given a categorical finding that father who is in the business of retail outlet of petroleum products (i.e. petrol pump) had sufficient credit worthiness to advance cash loan to the assessee and this Tribunal had also given a finding that the identity of loan creditor i.e. father of assessee and the genuineness of the transaction have been proved beyond doubt in the instant case. Hence, it could be safely concluded that the genuineness of the entire loan transaction is not in dispute before us. We find that assessee’s line of business of retail trading of tyres is carried on credit basis. We find that the assessee had given an explanation that due to paucity of working capital funds available with the assessee, the assessee was forced to borrow cash loan from his father who carries on business of doing sales on cash basis. Hence, to meet out the urgent funding requirement to clear the cheques, the assessee was forced to receive cash loan from his father in the sum of Rs.7,17,000/- for meeting his business exigencies. This, in our considered opinion, is a reasonable cause adduced by the assessee within the meaning of Section 273B of the Act and hence, assessee would be entitled for immunity for levy of penalty.
4.2. We find that the Hon’ble Madras High Court in the case of CIT vs. M. Yesodha reported in 351 ITR 265 had held that the cash loan transaction between father-in-law and daughter-in-law cannot be subject matter of levy of penalty u/s.271D of the Act as long as the sources for the same are established. In the instant case, there is absolutely no dispute that the father of the assessee had sufficient sources to advance cash loan to the assessee in the sum of Rs.7,17,000/-. We also find that the Hon’ble Rajasthan High Court in the case of CIT vs. Manoj Lalwani reported in 260 ITR 590 had held that when the cash loan has been taken in view of the urgent need connected with export, no penalty u/s.271D of the Act could be levied on the same. In the instant case before us, there is no dispute that the cash loan was received by the assessee from his father for meeting his urgent business exigencies. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hereby direct the ld. AO to delete the penalty u/s.271D of the Act in the facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 19/11/2020.