The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that if cash was received from brother and father of the assessee to meet business exigencies, such transactions cannot be treated as the violation of section 269SS of the Income Tax Act, 1961. The bench comprising Rajpal Yadav (JM) and N K Billaiya (AM) clarified that in such cases, the penalty under sections 271D and 271E of the Income Tax Act cannot be levied.
In the instant case, the assessee, Girishkumar Popatlal Patel received Rs. 1.55 lacs from brother and father in cash and repaid the same in cash. The assessee contended that he is in the business of retailed trade and therefore whenever there is an urgent need for money, the same is taken from the brother and the father.
The counsel appeared on behalf of the assessee contended that the legislative intent in prohibiting the acceptance and repayment of money in cash over and above Rs. 20,000/- is to check the unaccounted money and not to hit the genuine business need.
After hearing both the sides, the bench noticed the decision of the Supreme Court in the case of Kum. A.B. Shanthi wherein it was clarified that “the object of introducing section 269SS is to ensure that a taxpayer is not allowed to give the false explanation for his unaccounted money, or I he has given some false entries in his accounts, he shall not escape by giving the false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relative or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main object of Section 269SS was to curb this menace. The object sought to be achieved was to eradicate the evil practice of making of false entries in the amount books and later giving the explanation for the same”.
While allowing the second appeal filed by the assessee on the basis of a plethora of decisions, the bench noted that Shri Bhupendrabhai Patel (Brother of Assessee) was also an employee of the assessee and his salary was also credited in the same account where the impugned acceptance/repayment of cash was found and is akin to current account.
“The amount of Shri Bhadresh Patel is also akin to the current account. Considering the nature of business of the assessee and its business exigencies, the immediate requirement of cash cannot be ruled out. Further, the relationship of the persons with the assessee also establishes the genuineness of the transaction. Considering the facts in totality, we do not find this to be a fit case for the levy of penalty u/s. 271D & 271E of the Act,” the bench said.
