The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the cash loan between agriculturalists will not attract the provisions of section 269SS of the Income Tax Act, 1961 and therefore, penalty cannot be imposed.
The assesse, Mr. Raman Chaudhary is an agriculturist. For purchasing some agricultural land jointly, the assessee has availed cash loan from other agriculturists. It is a fact on record that major part of the loan availed by the assessee has been accepted by the departmental authorities.
The question before the bench comprising Shri Saktijit Dey, Judicial Member and Dr. B.R.R. Kumar, Accountant Member was whether there is violation of section 269SS of the Act while availing cash loan. On a reading of second proviso to section 269SS of the Act, it is very much clear that it excludes cash loan availed by a person, if the person borrowing and person lending, both are having agricultural income and do not have any other income chargeable to tax under the Act.
The division bench held that both the assessee and the lenders are having agricultural income. In fact, the departmental authorities have also accepted this factual position.
“The second condition of the second proviso to section 269SS which requires to be fulfilled is, both the assesse and lenders should not have any other income chargeable to tax under the Act. Assessee’s contention, in this regard, have been rejected by the Assessing Officer and learned Commissioner (Appeals) on the ground that the assessee had business income. However, the moot question which arises is, whether the assessee had any income chargeable to tax under the Act. The quantum of other income offered by the assessee is an amount of Rs.1,54,000/-. There is no dispute that the quantum of other income is below the taxable income limit. Therefore, on a plain interpretation of the expression “chargeable to tax under this Act”, it can be said that the assessee had no other income which is chargeable to tax under the Act. Assessee’s claim that the lenders did not have any income chargeable to tax has not been rebutted by the Revenue,” the Tribunal said.
Holding that the assessee’s case would be covered under the exceptions provided in the second proviso to section 269SS, the Tribunal held that “Hence, the provision of section 269SS would not be applicable. In view of the aforesaid, we hold that the penalty imposed under section 271D of the Act is unsustainable. Accordingly, we delete it.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
