Cash Loan from Wife for purchase of House for the benefit of Family won’t attract Penalty u/s 271D: ITAT [Read Order]

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The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently held that cash loan from the wife for the purchase of the house which is for the benefit of the whole family cannot be a ground for imposing the penalty under section 271D of the Income Tax Act.

Assessee an individual has received a cash loan of Rs. 1 lakh and 3 lakhs from his wife. The Assessing Officer has imposed a penalty under section 271D of the Income Tax Act. According to the assessee, the transactions were between family members for acquiring a house for their living and all had pooled their resources which were genuine transactions for acquiring the property for the mutual benefit of the family and the intention was not to evade taxes.

Before the Tribunal, the assessee submitted that the provisions of section 269SS do not bar genuine cash transactions of the loan but bar only those transactions which are entered with the intention to evade taxes. These provisions are made to counteract evasion of tax but not to bar cash transactions between close relations. It was further submitted that in the instant case, it is not a case where unaccounted cash was found in the course of search and seizure operations. The assessee was helped by his wife for acquiring two properties out of which one was for the residence of family members and the other property was for office purposes.

While deleting the penalty order, the Tribunal noted that even otherwise also, the transaction is between husband and wife. Various benches of the Tribunal held that transaction of the loan between husband and wife does not attract the provisions of section 269SS of the Act.

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