S. 269SS not violated if Assessee borrows in cash from Relatives to meet urgent needs

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HIGH COURT OF MADRAS

Commissioner of Income-tax – I

v.

Smt. M.Yesodha

TAX CASE (APPEAL) NO. 320 OF 2010

Date of pronouncement – 05.02.2013

 

In our considered view, in the light of the relationship between the assessee and her father-in-law, the Tribunal has rightly held that the genuineness of the transaction is not disputed, in which, the amount has been paid by the father-in-law for purchase of property and the source had also been disclosed during the assessment proceedings. If there was a genuine and bonafide transaction and the tax payer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty.

The contention of the Revenue is that the amount received by the assessee from her father-in- has to be treated only as a loan and if is a loan, then the assessee is liable to pay penalty under Section 271D of the Income Tax Act. Whether it is a loan or other transaction, still the other provision, namely, Section 273B of the Income Tax Act, comes to the rescue of the assessee, if she ables to show reasonable cause for avoiding penalty under Section 271D of the Income Tax Act. The Tribunal has rightly found that the transaction between the daughter-in-law and father-in-law is a reasonable transaction and a genuine one owing to the urgent necessity of money to be paid to the seller. We find that this would amount to reasonable cause shown by the assessee to avoid penalty under Section 271D of the Income Tax Act.

The Tribunal, referring to the decision of this Court reported in Lakshmi Trust Co. (supra), has rightly allowed the appeal.