SRI HIRANMOY GON,KOLKATA vs. JCIT, RANGE - 9, KOLKATA , KOLKATA

The captioned appeal filed by the assessee, pertaining to assessment year 2010­11, is directed against the order dated 28­11­2017 passed by the Commissioner of Income Tax, Appeals­3, Kolkata in Appeal No. 1979/CIT(A)­ 3/Range­9/Kol/14­15, which in turn arises out of a penalty order passed by the Assessing Officer (JCIT,Range­9, Kolkata) u/s. 271D of the Income­tax Act, 1961 ( in short the ‘Act’) dated 29­08­2014.

Brief facts qua the issue are that during the scrutiny proceedings, the AO noticed that the assessee received a sum of Rs 9,65,208 on various dates in the Financial Year 2009­10 from his wife Smt. Sudipa Gon. The transaction has been explained by the assessee before the AO, as an "accommodation advance" for reason of urgent business commitments and the same was duly reflected in the Cash Account of the assessee and copies of the same was furnished in the course of the scrutiny assessment proceedings as well as penalty proceeding. The assessee submitted before AO that the said cash transactions were strictly within the family and are due, to business exigency. It was argued by assessee during the penalty proceedings that a family transaction between two independent assesse’s based on an act of casualness, especially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established "reasonable cause" under section 273B of the Act and therefore the penalty should not be levied.

Aggrieved by the order of the AO, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the penalty imposed u/s. 271D of the Act. Aggrieved by the impugned order of the ld. CIT(A), the assessee is in appeal before us.

The ld. Counsel for the assessee at the outset itself submitted before the bench that these transactions between husband and wife are in order to meet the business exigency. The Counsel also submitted that the issue under consideration is squarely covered by the various judgments of this Tribunal.

The ld. Departmental Representative for the revenue relied on the impugned order of the ld. CIT(A).

We have heard both the parties and perused the material available on record. We note that AO has imposed penalty u/s. 271D of the Act on account of contravention of provisions of section 269SS of the Act. The assessee has received Rs. 9,65,208/­ from his wife in cash. We note that loan was taken from a family member. The Ld. Counsel submitted before us that the said loan was taken on account of business exigency and there is complete disclosure in the books of accounts. We note that the said loan was repaid by the end of the year as the account was squared up., therefore, no entry with respect to the loan was there in the balance sheet of the assessee. We note that there was sudden and urgent requirement of funds therefore the assessee received the amount from his wife to meet the business exigency. We note that it is a well settled position of law, as have been held in Commissioner of Income­tax v, Sunil Kumar Goel (2009 315 ITR 0163­P&H) that if the cash transactions were strictly within the family and due to business exigency, the penalty u/s. 271D would not be levied. A family transaction between two independent assesses based on an act of casualness, specially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established "reasonable cause" under section 273B of the Act. The same view was upheld by the Hon`ble Madras High Court in the case of Commissioner of Income­tax v. Deccan Designs (India) P, Ltd. [2012] 347 ITR 0580­( Mad).

On the identical facts, the other Hon’ble High Courts have held as follows:

In the result, the appeal of the assessee is allowed.