RAMAN KUMAR MALHOTRA,KOLKATA vs. ITO, WARD-36(1), KOLKATA, KOLKATA

During the year, assessee has shown repayment of loan of ₹6.50 lakh in cash to his wife Smt. Vimmi Malhotra. As per the AO the repayment of loan in cash is prohibited u/s 269T of the Act. Therefore, AO called upon the assessee for levying the penalty u/s 271E of the Act. In compliance thereto, assessee submitted that the loan was repaid to his wife in cash as she was in an urgent need of money for the repair of house. The assessee further submitted that the impugned repayment of loan is representing the transactions between husband-and-wife and therefore the penalty cannot be levied on account of technical default u/s 269T of the Act. However, AO has disregarded the contention of assessee by observing as under:- A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 3 a) No documentary evidence has been filed by assessee to substantiate the claim that the money was required for the purpose of repairing of assessee’s wife house; b) The assessee and his wife were maintaining bank account in same branch of Jammu and Kashmir bank. Therefore, the amount would have been easily repaid by the assessee through banking channel that there was no reason which prevented the assessee to make the payment other than banking channel. In view of above, AO was of the view that the provision of Section 269T of the Act has been violated and accordingly the AO levied the penalty u/s. 271E of the Act for ₹6.50 lacs.

Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the order of AO by observing as under:- “… .. After going through the fact and circumstances of the case I find that the fact remains that Smt Vimmi Malhotra gave the said amount of Rs.6,50,000/- in cash to the appellant. The appellant kept this money in his personal account and the same was shown in the personal balance sheet as liability. The appellant could not give any supporting evidence with regard to residential flat gifted by his father-in-law which needed renovation/repairing. It is not understood as to why the amount was repaid in cash whereas both husband and wife were having their bank account I the same branch. In view of the fact discussed above and in absence of supporting documents/details filed by the appellant for consideration to substantiate his claim, I do not find any infirmity in the AO's order. Therefore, the appeal filed is dismissed.” Aggrieved by this, the assessee has come up in appeal before us.

Ld. AR before us submitted that none of the Authorities Below has doubted the genuineness of the transactions. The amount of loan was duly reflected in the books of account of assessee. All the necessary disclosures were made in the return filed by assessee as well as by his wife which were scrutinized u/s 143(3) of the Act. Ld. AR further submitted that the penalty u/s 271E cannot be levied as the amount of loan transactions was genuine and in support of assessee’s claim he relied on the judgment of Hon'ble High Court A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 4 of Jharkhand in the case of Omec Engineers vs. CIT reported in 217 CTR 144 (Jar) where the Hon'ble High Court has held that:- “There being no finding of AO, CIT(A) or Tribunal that the transactions in violation of s. 269SSs were not genuine, assessee’s return having been accepted under s. 143(3) after scrutiny, the being also no finding that transactions were mala fide aimed at disclosing concealed money, imposition of penalty under s. 271D merely for technical mistake could not be sustained” Ld. AR also relied on the judgment of Hon'ble High Court of Punjab & Haryana in the case of CIT Sunil Kumar Goel reported in 315 ITR 163 (P&H) where the Hon'ble Court held as under:- “A family transaction between two independent assessees based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts and which has no tax effect establishes 'reasonable cause' under section 273B. Since the assessee had satisfactorily established 'reasonable cause' under section 273B, he must be deemed to have established sufficient cause for not invoking the penal provisions of sections 271D and 271E against him. [Paras 13, 14] Hence, there was no merit in the appeal filed by the revenue and the same deserved to be dismissed.”

We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. In the case before us penalty was levied by Authorities Below on account of repayment of loan in cash which is prohibited u/s 269T of the Act.