S.VASUNDARA DEVI,COIMBATORE vs. JCIT, COIMBATORE

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ITA 1520/CHNY/2015Status: DisposedITAT Chennai23 June 2016AY 2009-104 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a transaction between a husband and wife, who are considered one entity under common law, cannot be construed as a violation of statutory provisions for the purpose of levying penalty under Section 271D. The object of Section 271D is to penalize genuine transactions between two different parties.

What were the facts?

The assessee, a member of an HUF, received a loan of Rs. 6,50,000 in cash from the HUF, which was formed by her husband, son, and herself. The Assessing Officer levied a penalty under Section 271D for accepting the loan in cash.

What were the issues?

Whether a loan received in cash from an HUF by its member, where the member's husband is also a member, attracts penalty under Section 271D. Whether the transaction between husband and wife can be treated as a violation of Section 269SS for penalty purposes.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS,Section 271(1)(c)

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Income Tax Appellate Tribunal, ‘ D’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY]

For Respondent: Shri Lakshminarayanan, JCIT

आदेश / O R D E R

PER N.R.S.GANESAN, JUDICIAL MEMBER

1.

This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-2, Coimbatore, dated 7.5.2015 and pertains to assessment year 2009-10.

Shri A.S Sriraman, ld. Counsel for the assessee submitted 2. that the assessee is a Member of M. Subramaniam(HUF). The other Members of the HUF are her husband Shri M. Subramaniam and her son. The HUF sold a property. The assessee has received a loan of `

ITA No. 1520/15 :- 2 -:

6,50,000/- from HUF in cash. The Assessing Officer levied penalty u/s 271D of the Act for receiving loan in cash. Placing reliance on the judgment of the Madras High Court in the case of M. Yesodha, 351 ITR 265, the ld. Counsel submitted that when the transaction was between husband and wife, the provisions of sec. 271D may not be applicable.

The ld. Counsel further submitted that the genuineness of the transaction between husband and wife cannot be a cause for levy of penalty. The ld. Counsel has placed his reliance on the decision of this Tribunal in the assessee’s own case in I.T.A.No. 707/Mds/2015 for assessment year 2009-10 dated 28.10.2015.

On the contrary, Shri Lakshminarayanan, ld. Departmental 3.

Representative submitted that the assessee claimed before the Assessing Officer that loan was borrowed from M. SubramaniamIHUF).

Under the provisions of the Income-tax Act, 1961, HUF is a separate and independent unit for assessment. The assessee is assessable separately as individual. When there was a transaction between HUF and assessee, it has to be treated differently and the money so received in cash is in contravention of the provisions of sec. 269SS of the Act. Therefore, the assessee is definitely liable to pay penalty u/s 271D of the Act.

ITA No. 1520/15 :- 3 -:

4.

We have considered the rival submissions on either side and also perused the material available on record. The assessee claims that she borrowed a loan of ` 6,50,000/- from HUF. The HUF consists of the assessee, her husband and her son. It is also not in dispute that the assessee is also one of the Member of the HUF. When the assessee forms part of the HUF, receiving a loan of ` 6,50,000/- from her husband cannot be construed as violation of any statutory provision. This Tribunal is of the considered opinion that the object of levy of penalty u/s 271D may not be extended to the transaction between the husband and wife. Under the common law, husband and wife are one and the same. Therefore, the transaction between them cannot be treated as separately for the purpose of levy of penalty u/s 271D of the Act. If the transaction was between the assessee and a third party, the matter would stand in a different footing and the genuineness of the transaction cannot be a reason for not levy of penalty. This Tribunal is of the considered opinion that penalty u/s 271D has to be levied only on the genuine transaction between two different parties. If the transaction was bogus and it was not a genuine transaction, sec. 271D is not applicable at all. In that case, penalty is to be levied u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income or concealing any part of the income. In view of the above discussion, this Tribunal is of the considered opinion that ITA No. 1520/15 :- 4 -:

the transaction between the husband and wife cannot be a cause for levy of penalty u/s 271D of the Act. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer to delete the penalty levied u/s 271D of the Act.

In the result, the appeal of the assessee is allowed. 5.

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