The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the cash loan received from the parents and brother of the assessee for the purchase of the house for the whole family cannot be penalized under Section 271D of the Income Tax Act.
The assessee is an individual deriving income from salary and other sources. The Assessing Officer completed the assessment determining the total income at Rs.34,12,062/- wherein he disallowed an apart of the long-term capital gain claimed by the assessee u/s 54F of the Income Tax Act apart from making the addition of Rs.57,538/- on account of interest and Rs.8,160/- under the head ‘Salary.’ The officer further levied penalty under section 271D on the ground that the assessee had taken cash loan of Rs.1,25,000/- from Shri Darshan Singh Gujral, Rs.1,00,000/- from Smt. Joginder Kaur and Rs1 lakh from Shri Gurdeep Singh Gujral and, therefore, she has violated the provisions of section 269SS.
The tribunal accepted the contentions of the assessee and held that the transaction took place between the assessee and her parents and brother. Their creditworthiness is not in dispute.
The Tribunal further noticed the decision of the Punjab & Haryana High Court in the case of CIT vs. Sunil Kumar Goel wherein it was held that ‘a family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established ‘reasonable cause’ under section 273 B of the Act’ and, therefore, the provisions of section 271D are not applicable.
“Various other decisions relied on by the assessee in the synopsis also supports her case wherein under identical circumstances where the assessees had received loans in cash from close family relations, the penalty levied u/s 271D was deleted. Since the assessee, in the instant case, has received cash loan from her parents and brother to meet the stamp duty cost for purchase of a house property for her own living, therefore, I am of the considered opinion that it is not a fit case for levy of penalty u/s 271D of the Act and the provisions of section 273B will come to the rescue of the assessee as a reasonable cause,” the Tribunal said.
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