PER S. RIFAUR RAHMAN, A.M.
1. This is an appeal filed by the assessee. The relevant assessment year is2014-15. The appeal is directed against the order of the Commissioner of IncomeTax (Appeals)-36, Mumbai [in short ‘CIT(A)’] and arises out of the penalty leviedu/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’).
2. The brief facts of the case are, assessee filed e-return of income on16.03.2016 for assessment year 2014-15 declaring total income atRs.3,50,730/–. The case was selected for scrutiny under CASS – limited criteria,accordingly statutory notices under section 143 (2) and 142 (1) of the Income Tax Act, 1961 (in short Act). In response, A.R. of the assessee attended and filedrelevant information as called for. During assessment proceedings, AOobserved that assessee has taken loan from the following persons and theamount involved:
Table:-
Based on the above observation, AO initiated the proceedings undersection 269SS against the assessee for accepting loans/specified some ofRs.6,50,000 in cash. Accordingly show cause notice under section 271D of theact was issued and served on the assessee. Based on the submissions of theassessee, the amount received from grandmother Ms. Padmanabha was deletedand for the remaining loan amount of Rs.5,50,000/–, the penalty under section271D was levied. Aggrieved with the above order, assessee filed an appealbefore Ld. CIT(A), after considering the submissions of the assessee, Ld. CIT(A)sustained the penalty levied under section 271D of thewith the observationthat the loans are taken in cash, the provisions of section 269SS are attractedand as a consequence of penal provisions of section 271D are attracted.
3. Aggrieved with the above order, assessee preferred an appeal before us raising following ground of appeal :
“The Joint Commissioner of Income Tax-24(3) has erred in levying penaltyRs.5,50,000/- u/s 271D of the Income Tax Act, 1961 as the assessee failed to complywith the provisions of section 269SS of the. The assessee appeals that the JointCommissioner may be directed to withdraw the above penalty of Rs.5,50,000/- u/s271D of the Income Tax Act, 1961.”
At the time of hearing it is brought to our notice by the A.R. of the assesseethat the assessee has taken loan from her relatives i.e. her sister (Prajakta AnilKhor), uncle (Arun Bapusaheb Khot) and auntie (Nandini Kempwade) for herhigher education during this year. Along with the above submission, Ld. ARbrought to our notice the confirmation letters from all the above parties andfiled the same before us. On the other hand, the Ld. AR relied on orders passedby lower authorities.
4. Considered the rival submissions and material on record. We notice thatassessee has taken loan from her relatives in various dates in cash in order tomeet her higher education expenses. We notice thatall these loans were takenfrom close relatives for the purpose of higher education. As held by the Hon’bleMadras High Court in CIT versus Balaji Traders that when there is an immediateneed of money theperson cannot get it immediately from a nationalized bank.To satisfy such immediate requirement of money a person normallyapproaches the moneylender or a friend or relative who could lendmoneyimmediately. In those circumstances it cannot be said that the assessee has entered into a transaction to avoid the payment of tax or to defraud the revenue. Even in this case, the assessee has taken loans from relatives to financeher higher education. We do not see any reason to impose a penalty in thecircumstances of this case where the assessee has taken loan from her relativeswithout approaching any banking institution. Accordingly, the penalty imposedby the revenue authorities are deleted.
5. In the net result, appeal filed by the assessee is allowed.
Order pronounced in the open Court on 02/06/2021.
