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Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ORDER PER N.V.VASUDEVAN, JM:
This is an appeal by the Assessee against the order dated 24.09.2014 of CIT(A)-XXXVI, Kolkata relating to A.Y.2010-11.
In this appeal the assessee has challenged the order of CIT(A) whereby CIT(A) confirmed the order of AO imposing penalty on the assessee u/s 271D of the Income Tax Act, 1961 (Act). Penalty u/s 271D of the Act is imposed in a case where there is acceptance of loan or deposit in contravention of section 269SS of the Act which lays down that no loan or deposit can be taken in cash, where the loan or deposit is in excess of Rs.20,000/- or more.
The admitted factual position is that the assessee is the wife of Fafiqul Hassan, sole proprietor of ‘Techno Industry’. The assessee is also carrying on business under the name and style ‘Tuhinara Enterprise’. The assessee’s husband wanted to purchase a property in the name of the assessee and he deposited in the savings bank account of the assessee a total sum of Rs.34,00,000/- on various dates in cash and each deposit was in excess of Rs.20,000/-. The negotiations for purchase of the property did not materialise and therefore moneys were transferred back by cheque to the assessee’s ITA N0.2256/Kol/2014-Tuhinara Begum A.Y.2010-11 2 husband cash credit account. After transferring of the money by the assessee to her husband’s account still the balance amount of Rs.14,50,000/- remained in the assessee’s bank account. The assessee had returned a sum of Rs.19,50,000/- and this was treated as repayment of loan which was received in cash attracting the provision of section 269SS of the act and consequent penalty u/s 271D of the Act . The AO and CIT(A) were of the view that there was no reasonable cause for acceptance of loan in cash contrary to the mandate u/s 269SS of the Act and therefore the assessee was liable to pay penalty equal to the amount of loan accepted in violation of the provision of section 269SS of the Act.
Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.
The ld. Counsel for the assessee submitted that if at all it can be said that the assessee received a loan from her husband. It was submitted by him that the transaction of loan between husband and wife does not attract the provision of section 269SS of the Act and in this regard placed reliance on the decision of ITAT, Kolkata in the case of Dr.B.G.Panda vs DCIT [2000] 111 Taxman 86 (Cal)(MAG). The ld. DR relied on the order of the AO.
We have heard the rival submissions and we are of the view that the facts of the present case and the facts of the case referred to ITAT Kolkata in the case of Dr.B.G.Panda are identical . The Tribunal in the aforesaid case held as follows :- “Section 269SS is applicable to the deposits or loan. It is true that both in the case of a loan and in the case of a deposit, there is a relationship of debtor or creditor between the party giving money and the party receiving money. In the case of deposit. the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money and the benefit normally being the earning of interest from the party who customarily accepts deposit. In the case of loan it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of a borrower although the person who lends the money may also stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest ITA N0.2256/Kol/2014-Tuhinara Begum A.Y.2010-11 3
was involved. This was neither a loan nor a deposit. At the same time. the words 'any other person' are obviously a reference to the depositor as per the intention of the Legislature. The communication/transaction between the husband and wife are protected from the legislation as long as they are not for commercial use. Otherwise, there would be a powerful tendency to disturb the peace of families. to promote domestic broils, and to weaken or to destroy the feeling of mutual confidence which is the most enduring solace of married life.
In the instant case, the wife gave money to husband for construction of a house which was naturally a joint venture for the property of the family only. This transaction was not for commercial use. The amount directly received by the husband. i.e .. the assessee. was to the extent of Rs. 17.000 only and the balance amount of Rs. 26.000 was given by payment directly to the supplier of the material required for the construction of the house. Though the expenditure was apparently incurred by the husband being the karta/head of the family, it could not be said that the wife could not have any interest of her own in this house being constructed. The transaction was neither loan nor any gift as no 'interest' element was involved and there was no promise to return the amount with or without interest. It was clear that the money given by the wife was a joint venture of the family. Taking into consideration overall facts and circumstances of the case, it could be said that the aforesaid piece of legislation was not applicable in the instant case. By taking the liberal view and applying the golden rule of interpretation, the assessee had a reasonable cause within the meaning of section 27 3B. Therefore. the penalty should be deleted.
The ratio laid down in the aforesaid decision is clearly applicable to the facts and circumstances of the present case as the transaction in the present case was also between husband and wife. As laid down in the aforesaid decision, penalty in the facts and circumstances of the case ought not to have levied u/s 271D of the Act and penalty levied u/s 271D of the Act is directed to be cancelled and the appeal of the assessee is allowed.
In the result the appeal of the assessee is allowed. Order pronounced in the Court on 04.10.2017.