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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-II, Chennai, dated
2 I.T.A. No.326/Mds/15 20.10.2014 and pertains to assessment year 2009-10. The only
issue arises for consideration is with regard to levy of penalty under
Section 271D of the Income-tax Act, 1961 (in short 'the Act').
Shri J.C. Jacob, the Ld. representative for the assessee,
submitted that the assessee borrowed loan from LIC Housing
Finance Limited for purchase of house property. Since the
assessee could not repay the dues, the LIC Housing Finance Ltd.
initiated recovery proceedings before the Debt Recovery Tribunal.
The matter reached to the level of auctioning the property. At that
time, the assessee had no other way except to borrow funds from
close relatives like father, husband, cousin-brother and cousin-
sister. Due to urgency, the assessee could not go for financial
institutions to borrow money. Therefore, the money was borrowed
from close relatives and the same was repaid to LIC Housing
Finance Ltd. in order to save the house property from public
auction. Therefore, according to the Ld. representative, there was reasonable cause for receiving money in cash exceeding `20,000/-
within the meaning of Section 273B of the Act.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee borrowed `12,00,000/-
in cash from 11 individuals. The assessee claimed that they are her
3 I.T.A. No.326/Mds/15 close relatives. The fact remains that the assessee borrowed money exceeding `20,000/- in violation of Section 269SS of the Act.
The Ld. D.R. further pointed out that the assessee availed loans of `2,50,000/- in the year 1993 for purchase of Tondiarpet property
and `4,00,000/- in the year 1994 for purchase of Kattupakkam
property from LIC Housing Finance Ltd. The assessee willfully
failed to repay the amount along with interest even after 13 years. Therefore, the LIC Housing Finance Ltd. resorted to recovery proceedings. Consequently, the property was brought to sale.
According to the Ld. D.R., the assessee had enough time to anticipate the LIC recovery proceedings, before the property was brought to sale. Therefore, the assessee could have arranged funds through banking channels. However, the assessee chose to receive money in cash exceeding `20,000/-. Therefore, the
Assessing Officer rightly levied penalty under Section 271D of the Act.
We have considered the rival submissions on either side and
perused the relevant material on record. It is not in dispute that the assessee had borrowed loan from LIC Housing Finance Ltd. and purchased house property. The assessee also committed default in
payment of instalments. Consequently, the property was brought to
4 I.T.A. No.326/Mds/15 sale by public auction. The contention of the Ld. D.R. was that the
assessee could not repay the amount for 13 years, therefore, the
assessee could have made arrangement to save the property by
receiving money through banking channel. No doubt, the assessee
could have received through banking channel provided there was
enough time gap available. In this case, the assessee had to save
her property from public auction. The public auction could have
been proceeded had the money had not been paid immediately.
When a person is at distress, he has to collect money only from
close relatives. For going to the banking institutions or third parties
to borrow money, the assessee has to give security and undergo
other procedural formalities which would take considerable time.
However, the LIC Housing Finance Ltd. may not wait for the
assessee to raise money by going to the financial institutions.
Therefore, this Tribunal is of the considered opinion that the
assessee was compelled to take money from close relatives in cash exceeding `20,000/- in order to save the property from public
auction. In those circumstances, this Tribunal is of the considered
opinion that the assessee had reasonable cause in receiving the money by cash exceeding `20,000/-. Hence, this is not a fit case
for levy of penalty under Section 271D of the Act. Accordingly, the
5 I.T.A. No.326/Mds/15 orders of the lower authorities are set aside and the penalty is deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced on 22nd May, 2015 at Chennai.
sd/- sd/- (A. Mohan Alankamony) (N.R.S. Ganesan) (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member
चे�नई/Chennai, �दनांक/Dated, the 22nd May, 2015.
Kri.
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-II, Chennai 4. आयकर आयु�त/CIT-VII, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.