Commissioner Of Income Tax – I,Trichirapalli v. Https://Hcservices.ecourts.gov.in/Hcservices

In the High Court of Judicature at Madras Dated: 05.02.2013 Coram The Honourable Mrs.JUSTICE R.BANUMATHIandThe Honourable Mr.JUSTICE K.RAVICHANDRA BAABU Tax Case (Appeal) No.320 of 2010 Commissioner of Income Tax – I,Trichirapalli Vs. Smt.M.YesodhaNo.24, Akila Nagar, I Street,T.V.Koil, Trichy – 620 005. .... Appellant.... Respondent APPEAL under Section 260 A of the Income Tax Act, 1961 againstthe order dated 04.09.2009 made in I.T.A.No.479/Mds/2009 on the fileof the Income Tax Appellate Tribunal Chennai 'D' Bench for theassessment year 2005-06 against the order of the commissioner ofIncome Tax (Appeals),Tiruchirappalli dated 25.03.2009 and made in ITANo.63/08-09 for the Assessment year 2005-06. against the order of theAdditional Commissioner of Income _Tax, Range-I,Tiruchirapalli dated27.06.2008 and made in C.R.No.15/RI/TRY/08-09. For Appellant : Mr.J.NarayanasamyStanding CounselFor Respondent: Mr.R.Sivaraman The Revenue has come forward with this appeal and the same wasadmitted on the following substantial question of law:"Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal was right indeleting the penalty of Rs.20,99,393/- levied under Section271D of the Income Tax Act for violation of Section 269SSon the ground that the assessee had taken the loan onlyfrom her father-in-law and the transaction was genuine?" https://hcservices.ecourts.gov.in/hcservices/ 2. The assessee, for the assessment year 2005-2006, claimed loanof Rs.20,99,393/- taken from her father-in-law for purchasing theproperty. The Assessing Officer initiated penalty proceedings underSection 271D of the Income Tax Act, 1961 on the ground that theassessee had obtained a loan of Rs.20,99,393/- in cash from herfather-in-law, which is in contravention of the provision of Section269SS of the Income Tax Act. During the penalty proceedings, theassessee claimed that the amount received in cash from her father-in-law - M.Kathirvel, was a gift and not a loan. The Assessing Officerheld that the assessee received the amount as a loan and not as agift, because the same was shown as a loan in the balance sheet ofthe assessee, which was filed along with the return of income.Hence,the Assessing Officer levied penalty of Rs.20,99,393/-. 3. The assessee challenged the penalty levied by the AssessingOfficer before the Commissioner of Income Tax (Appeals). TheCommissioner of Income Tax (Appeals) dismissed the appeal holdingthat the Assessing Officer has rightly levied penalty under Section271D of the Income Tax Act after giving opportunity to the assesseeand on being fully satisfied that the amount in cash taken by theassessee from her father-in-law was not a gift but only a loan. 4. In the appeal preferred before the Tribunal by the assessee,the Tribunal referred to the decision of the Tribunal in the case ofShri.M.Raju V. The Additional Commissioner of Income Tax, Chennai inI.T.A.No.899/Mds/2006 and the decision of the Tribunal, Pune Bench inthe case of Income Tax Officer V. Sunil M.Kasliwal reported in (2005)94 ITD 281 (Pune)(TM). The Tribunal also referred to the judgment ofthis Court reported in (2008) 303 ITR 99 (Mad) (Commissioner ofIncome Tax V. Lakshmi Trust Company) and held that in the facts andcircumstances of the case, levy of penalty is not warranted. TheTribunal further held that the transaction of receiving amount ofRs.20,99,393/- is between the father-in-law and daughter-in-law andthe genuineness of the transaction is not disputed, in which, theamount has been paid by the father-in-law for the purchase ofproperty. On those findings, the Tribunal allowed the appeal. 5. Mr.J.Narayanasamy, learned standing counsel appearing for theRevenue submitted that the Tribunal has not appreciated the nature oftransaction and that the assessee had taken only loan ofRs.20,99,393/- from her father-in-law. He further submitted that theassessee had no where pleaded any 'reasonable cause' as contemplatedunder Section 273B of the Income Tax Act and while so, the Tribunalwas not right in saying that the genuineness of the transaction isnot disputed. He also submitted that the Tribunal was not right inre-appreciating the factual findings recorded by the AssessingOfficer and the Commissioner of Income Tax (Appeals) that the cashtaken by the assessee from her father-in-law was only a loantransaction. 6. Per contra, learned counsel appearing for the assesseesubmitted that as evident from the stand of the assessee before theAssessing Officer, the amount taken by the assessee from her father-in-law was a cash gift and no loan was taken by the assessee. 7. We have carefully considered the submissions of learnedstanding counsel appearing for the appellant and the learned counselappearing for the assessee. 8. Under Section 273B of the Income Tax Act, on 'reasonablecause' being shown, no penalty shall be imposable. As rightlypointed out by the learned counsel appearing for the assessee, in thereply furnished before the Assessing Officer, the assessee clearlymentioned that her father-in-law - M.Kathirvel sent the amount ofRs.20,99,393/- directly to the seller of the house bought in the nameof the assessee at Chennai and that necessary funds were provided bythe assessee's father-in-law as a cash gift and the said cash giftwas taken urgently by the assessee to get the purchase deed executedand no loan was taken from her father-in-law. Even though theassessee had not taken a specific plea of reasonable cause, it mustbe considered as applied to human action. Where the transactions arebonafide, penalty cannot be imposed. 9. To substantiate the plea that her father-in-law had advancedthe amount as cash gift, the assessee's father-in-law had filed anaffidavit before the Commissioner of Income Tax (Appeals). Regardingthe affidavit, remand report was called for from the AssessingOfficer. In the remand report, the Assessing Officer has doubted thenature of transaction. In our considered view, in the light of therelationship between the assessee and her father-in-law, the Tribunalhas rightly held that the genuineness of the transaction is notdisputed, in which, the amount has been paid by the father-in-law forpurchase of property and the source had also been disclosed duringthe assessment proceedings. If there was a genuine and bonafidetransaction and the tax payer could not get a loan or deposit byaccount payee cheque or demand draft for some bona fide reason, theauthority vested with the power to impose penalty has a discretionnot to levy penalty. 10. The contention of the Revenue is that the amount received bythe assessee from her father-in- has to be treated only as a loan andif is a loan, then the assessee is liable to pay penalty underSection 271D of the Income Tax Act. Whether it is a loan or othertransaction, still the other provision, namely, Section 273B of theIncome Tax Act, comes to the rescue of the assessee, if she ables toshow reasonable cause for avoiding penalty under Section 271D of theIncome Tax Act. The Tribunal has rightly found that the transactionbetween the daughter-in-law and father-in-law is a reasonabletransaction and a genuine one owing to the urgent necessity of money to be paid to the seller. We find that this would amount toreasonable cause shown by the assessee to avoid penalty under Section271D of the Income Tax Act. to be paid to the seller. We find that this would amount toreasonable cause shown by the assessee to avoid penalty under Section271D of the Income Tax Act. 11. Referring to the decision reported in [2006] 283 ITR 329(Mad) (CIT V. Kundrathur Finance and Chit Co.), this Court in thedecision reported in [2008] 303 itr 99 (Mad) (Commissioner of IncomeTax V. Lakshmi Trust Company), held as follows: "In the instant case, the Commissioner of Income-tax (Appeals) and the Appellate Tribunal found on thefacts that the transactions were genuine and theidentity of the lenders was also satisfied. TheAppellate Tribunal also upheld the order of theCommissioner of Income-tax (Appeals) that there was nointention on the part of the assessee to evade the tax. Once the said finding as to the genuineness of thetransactions is arrived at by the Tribunal on the facts,following the decision of this Court in CIT v. RatnaAgencies [2006] 284 ITR 609, wherein it was held thatthe finding recorded by the Tribunal in this regard is afinding of fact and no question of law much less asubstantial question of law would arise, we do not haveany hesitation to hold that it may not be proper forthis court to interfere with such a finding of fact." 12. The Tribunal, referring to the decision of this Courtreported in [2008] 303 ITR 99 (Mad) (Commissioner of Income Tax V.Lakshmi Trust Company), has rightly allowed the appeal. We do notfind any error or infirmity in the order of the Tribunal to warrantinterference. Accordingly, the substantial question of law isanswered in favour of the assessee and this Tax Case (Appeal) standsdismissed. No costs. slTo 1. The Income Tax Appellate Tribunal Chennai 'D' Bench. 2. The Commissioner of Income Tax (Appeals), Tiruchirappalli 3. The Additional Commissioner of Income Tax, Range-I, Tiruchirappalli. Tiruchirappalli. 1 cc To Mr.J.Narayanasamy Advocate Sr .7144 1 cc To Mr.R.Sivaraman, Advocate Sr 7053. https://hcservices.ecourts.gov.in/hcservices/