In a welcoming ruling favouring women in the country, the Income Tax Appellate Tribunal (ITAT), Jaipur has held that penalty under section 271D of the Income Tax Act, 1961 cannot levied on wife for receiving money from her husband for purchase of family property.
The Tribunal bench comprising Judicial Member Sandeep Gosain and Accountant Member Vikram Singh Yadav was considering an appeal filed by an individual against the penalty order passed by the income tax authorities which was later confirmed by the first appellate authority.
Section 271D of the Income Tax Act lays down the penalty to be imposed on a taxpayer for accepting or taking any loans, deposits or other specified amounts in contravention of Section 269SS.
The assessee submitted before the Tribunal that the cash of husband and wife cannot be separated as it is in joint custody therefore cannot be taken as loan. The assessee has also submitted that in the case of husband and wife, repayment is not mandatory and there is no interest burden therefore it is not justifiable to impose penalty u/s 271D.
The Tribunal bench held that there is a transaction of purchase of plot of land and construction thereon. The plot of land has been registered in the name of the assessee and source of such investment is money received from her husband.
“We find that such a practice of registering the property in name of the wife is guided by various family and societal factors besides encouragement of the Government for such transactions entered into by female members in the family by way of reduced stamp duty. In the present case, where the family of the assessee is guided by its internal family requirement and also by such policy incentive by the Government and at the same time, pooling in the family funds especially where the assessee doesn’t have any known sources of income, the explanation of the assessee deserve to be appreciated and the approach of the authorities needs to be flexible for appreciating the reasonability of the explanation so submitted by the assessee,” the Tribunal said
Deleting the penalty order, the Tribunal held that “we find the explanation so furnished as reasonable and plausible and donot find any malafide in the explanation so submitted as everything is flowing from the registered sale deed where transactions have been duly documented including the payment through demand draft and cash which is from the known sources of funds contributed by the assessee’s husband. Further, the assessee has explained the payment of construction expenses which are also required to be incurred in cash towards the purchase of construction material and payment to labourers. We therefore find that the assessee has offered reasonable explanation justifying the cash transactions and thus, in the entirety of facts and circumstances of the case and considering various decisions cited at the Bar which also support the case of the assessee especially the decision of the Coordinate Bench in case of Tuhinara Begum where there was a reverse situation where the wife gave money to husband for construction of house which was held not exigible for levy of penaty u/s 271D, we are of the considered view that the assessee doesn’t deserve to be punished by way of levy of penalty u/s 271D for receiving money from her husband for purchase of family property and hence, the same is directed to be deleted.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
