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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
ORDER
Per Shri A.T.Varkey, JM
This is an appeal filed by the assessee against the order of Ld. CIT(A)-14, Kolkata dated 31.08.2018 for AY 2012-13.
None appeared on behalf of the assessee. After hearing the Ld. DR, we dispose of this appeal on merit. The main grievance of the assessee is against the action of the Ld. CIT(A) upholding the decision of the JCIT, Range-46, Kolkata in imposing penalty of Rs.58,755/- u/s. 271D read with section 269SS of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). 3. Briefly stated facts are that the scrutiny assessment u/s. 143(3) of the Act was completed on 30.03.2015 determining the total income at Rs.6,39,430/- against the disclosed total income of Rs.4,78,280/-. Subsequently it came to the notice of the AO that the assessee during the FY 2011-12 relating to AY 2012-13 had taken unsecured loan amounting to Rs.10,58,755/- from one Sm. Uma Devi Bhuwalka. The AO further noticed from the assessment record that a part of the loan was received in cash viz., Raghubir Bhuwalka, AY 2012-13 Rs.15,000/- on 14.09.2011, Rs.17,000/- on 19.12.2011, Rs.15,755/- on 03.02.2012 and Rs.11,000/- on 15.03.2012. According to AO since such action was in violation of section 269SS of the Act, he forwarded a proposal to the Ld. JCIT, Range-46, Kolkata for initiation of penalty proceedings u/s. 271D of the Act. Accordingly, a notice u/s. 274 read with section 271D of the Act dated 26.02.2016 was issued and served upon the assessee. In the said notice the assessee was asked to show cause as to why a penalty u/s. 271D of the Act should not be imposed upon him. In reply the assessee stated that he had taken loan in cash from his mother Smt. Uma Devi Bhuwalka. According to assessee, his mother had cash kept with her and since the assessee was in urgent need of funds to over-come an unavoidable circumstance where money was required to be urgently infused for business, he took hand-loan from mother which was less than Rs 17000/- at a time. Therefore, the assessee requested not to impose penalty u/s. 271D of the Act on him. Being dissatisfied with the reply of the assessee, the JCIT decided to impose a penalty of Rs.58,755/- on the assessee u/s. 271D of the Act for violation of the provision of section 269SS of the Act accepting cash loan totaling to Rs.58,755/-. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) who confirmed the action of JCIT. Aggrieved, assessee is before us.
We have heard the submissions of Ld. DR and have perused the material available on record. After going through the facts and circumstances of the matter, we are of the considered opinion that the penalty u/s. 271D read with section 269SS of the Act is not warranted in the facts of the case because the assessee accepted an amount of Rs. 58,755/- on account of temporary financial accommodation as a hand loan from his mother Smt. Uma Devi Bhuwalka to tide over the business expediency. Before the lower authorities the assessee stated that taking cash from mother/parent out of business expediency cannot attract penalty u/s. 271D r.w.s. 269SS of the Act. However the contention of assessee was not appreciated. We note in a similar case, the contention of assessee was accepted by the Coordinate bench in the case of Swapan Dutta Vs. JCIT, Range-2, Hooghly, reported in 2010 Tax L. R. 166, wherein it was held as under:
Raghubir Bhuwalka, AY 2012-13 “5. After hearing both the parties and perusing the material available on record and the case laws cited by the assessee, we find that in this case, admittedly, the money has come from the parents of the assessee. Therefore, the ratio laid down in the case of G. D. Subraya Sheregar v. I. T.O. (2006) 10 378 by the Bangalore Bench of this Tribunal is squarely applicable to the facts of this case, wherein contravention of provision of S. 269-SS was held to be not applicable in a transaction between a father 'and son. We further find that the fact that the assessee was in need of funds and took this money from his parents whose business was conducted by him on their behalf has not been disputed by the revenue before us. In such circumstances, there is a reasonable cause for taking money in cash from his parents out of business expediency. This view of ours is supported by the decision of Rajasthan High Court in the case of CIT Vs. Manoj Lalwani (2003) 260 ITR 590; (2003) Tax LR 290) (raj), wherein it was held that when loan in cash has been taken in view of urgent need connected with export, Tribunal was justified in deleting the penalty u/s. 271D. We also find force in the argument taken by the learned counsel for the assessee that assessee being a layman was not aware of the provisions of the Act as such, the default, if any, was attributable to ignorance of statutory provisions of the act. The assessee’s case finds support from the decision of the Delhi Tribunal in the case of Farrukhabad Investment (I) Ltd. V. JCIT (2003) 85 ITR 230 (Del) where the professional auditors, experts in the field of taxation, did not point out any violation of S. 269 SS of the Act, it was held that it would be too much to expect from the assessee to know these provisions and as such the penalty imposed was deleted considering ignorance to be a “reasonable cause”. In the instant case also, the auditors did not point out any violation of S. 269 SS of the Act. In view of the above, we are of the considered opinion that this is not a fit case in which penalty u/s. 271D can be levied. The penalty so imposed by the Assessing Officer and sustained by the learned CIT(A) is hereby deleted. Therefore, the appeal of the assessee is allowed.”
We note that in the present case, the assessee had taken total loan of Rs.58,755/- on four occasions from his mother to tide over business expediency. The hand loan taken from the mother by a son to over-come business expediency constitutes reasonable cause within the meaning of sec. 273B of the Act and penalty u/s. 271B is not warranted. We also note that the facts of the case of the assessee is similar to that of the case of Swapan Dutta (supra) and so, we are inclined to cancel the penalty levied u/s. 271D of the Act. Therefore, the appeal of the assessee is allowed.