The Chennai Bench of Income Tax Appellate Tribunal (ITAT) held that the donor has amply expressed the intention that the advances were given merely as gifts since the inception thus upheld the order of Commissioner of Income Tax (appeals) [CIT(A)] in deleting penalty under Section 271D of Income Tax Act.
The assessee Dr. M.N. Kumaresan being a practicing Doctor in Plastic Surgery was assessed under Section 143(3) of the Income Tax Act. The assessee’s income was assessed at Rs.31.58 Lacs as against returned income of Rs.14.41 Lakhs. It transpired that the assessee made cash deposits in the bank account.
While explaining the source of cash deposit amounting to Rs.1,50,61,250/-, the assessee submitted confirmation letter from his aunt Smt. M.K. Pattammal (assessee’s mother’s sister) wherein she had stated that she had given interest free advance to that extent to the assessee.
The Assessing Officer (AO) is that the same was in the nature of advance and categorizing the same as gift was mere after thought to avoid levy of impugned penalty. The AO held that since the amount paid in cash was in contravention of provisions of Section 269SS, penal provisions under Section 271D of the Income Tax Act would get attracted. Accordingly, AO levied impugned penalty of Rs.1,50,61,250/- under Section 271D of the Income Tax Act.
Aggrieved by the order the assessee filed an appeal before the CIT(A), which deleted the impugned penalty imposed by AO.
Revenue being aggrieved by such order filed an appeal before the Tribunal.
The Departmental Representative (DR) D. Hema Bhupal, submitted that the assessee received loan from his aunt but later categorized the same as gift which was nothing but mere after-thought of the assessee to avoid the impugned penalty.
The Authorised Representative of the assessee S. Sridhar, drew attention to the affidavit and other documents to support the submission that the amount received by the assessee was nothing but a gift and therefore prayed that the findings rendered in the impugned order may not be disturbed,
The Bench comprising of V. Durga rao, Judicial Member and Manoj Kumar Aggrawal, Accountant Member observed that this transaction was recorded by the assessee in the accounts as “gift” which was evident from assessee’s capital account as furnished along with return of income. To support the same, the assessee has obtained confirmation letter from his aunt and furnished it before the AO. The assessee always considered the transaction as gift and never changed his stand at any point of time. It was only the donor who had given the confirmation letter and submitted the affidavit clarifying the transaction in the course of assessment proceedings.
Thus, the donor has amply expressed the intention that the advances were given merely as gifts since the inception. This being the case, the impugned penalty has rightly been deleted by CIT(A). Therefore, the Tribunal did not find any reason to interfere in the same.
Thus the appeal of the Revenue was dismissed.
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