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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri P. M. Jagtap, AM & Shri A. T. Varkey, JM]
ORDER Per Shri A.T.Varkey, JM This is an appeal filed by the assessee against the order of Ld. CIT(A)-6, Kolkata dated 29.01.2015 for AY 2009-10.
The main grievance of the assessee is against the action of the Ld. CIT(A) upholding the decision of the JCIT, Range-2, Kolkata in imposing penalty of Rs.7.80 lacs u/s. 271D read with section 269SS of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
At the outset itself, the Ld. Counsel for the assessee Shri Somnath Ghosh stated that the penalty u/s. 271D read with section 269SS of the Act is not applicable to the facts of the case because the assessee accepted an amount of Rs. 7.80 lacs on account of temporary financial accommodation from his mother Smt. Alpana Saha. According to him, taking cash from mother/parent out of business expediency cannot attract penalty u/s. 271D r.w.s. 269SS of the Act. Ld. Counsel drew our attention to the Coordinate bench decision in Swapan Dutta Vs. JCIT, Range-2, Hooghly, reported in 2010 Tax L. R. 166, wherein it was held as under:
“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.”
Since the facts of the case of the assessee is similar to that of the case of Swapan Dutta (supra) and the Ld. DR could not point out any change in the facts or in law, we are inclined to follow the decision of the Coordinate bench in the case of Swapan Dutta, supra and cancel the penalty levied u/s. 271D of the Act. Therefore, the appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 24.05.2017.