In a recent order of the Income Tax Appellate Tribunal, Cuttack held that the transaction between the relatives of family members for giving support and help does not amount to loan or deposit under section 269SS of the Income Tax Act.
The dispute arose during the assessment processes under the Income Tax Act. The accessing officer noticed that the assessee has accepted cash amounts totalling to Rs.14,00,000/- in contravention of the provisions of section 269SS of the Act. Dissatisfied with the explanation of the assessee the assessing officer observed that the assessee has received the sums in contravention of section 269SS of the Act and liable to pay penalty under section 271 D of the Act. This was upheld by the Commissioner of Tax (Appellate).
Section 269 SS of the Act requires that no person shall take or accept any loan or deposit, above Rs. 20,000/- in cash. Further Section 271D provides that a person who takes or accepts any loan or deposit in contravention of the provisions of section 269SS of the Act, would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted.
The tribunal while considering the appeal stated that, “The object of introducing section 269SS of the Act was to ensure that a taxpayer was not allowed to give a false explanation for his unaccounted money or if the taxpayer made some false entries, he would not escape by giving a false explanation for the same”. The tribunal further pointed out that section 273B of the Act was introduced to provide exceptions to the genuine and bonafide transaction, despite the transaction not being through an account payee cheque or demand draft transaction. The tribunal reasserted that such transactions must be for some bonafide reason and the authority in the peculiar circumstances had a discretion not to levy the penalty.
The tribunal has further categorically stated that simple transaction of transfer of money from one family members to another family members to support him during the medical emergency period cannot be treated as loan or advance and transaction falling under the ambit of section 269SS of the Act. Further, the tribunal also observed that in case of acting as a trustee of money, till it is deposited in bank account in the name of the trust, the transactions cannot be termed as loan or advance in cash which attracts penalty \u./s.271D of the Act.
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