Yes, the provision u/s 269SS certainly applies in all cases where loans are received exceeding Rs 20,000. However, penalty u/s 271D may not be imposed by the Authority , if authority finds that the receipt of cash exceeding Rs 20,000 was because of certain circumstances and the intention was not to conceal the income or evade tax.
Section 273B of the I T Act provides that "no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure."
For example, suppose , there is an accident with any relative of your husband , and husband needs money instantly. You go to ATM in the dead night and withdrew Rs 50,000 and gives it to husband who rushes to help the relatives. At the end of year, in your and your husbands balance sheet , the accountant treat the amount given by you to your husband as loan. When the A.O finds this cash loan in your husbands case and recommends action u/s 269SS , the penalty may not be imposed if the facts and circumstances are brought on record satisfactorily.
There are a number of case laws on this . some of them are as under:
(i) ITO v. Rajendra Trading Co. [1994] 48 ITD 210 (Chd.) (SMC).
(ii) Muthoot M. George Bankers v. Asstt. CIT [1993] 46 ITD 10 (Coch.).
(iii) Jay Builders v. Asstt. CIT [2000] 111 Taxman 211 (Mum. - Trib.).
(iv) Shreenath Builders v. Dy. CIT [2000] 111 Taxman 142 (Ahd. - Trib.).
(v) Mrs Rupali R. Desai vs Add.CIT 88 itd 76 (mum.) [tm]
Why Loan why not Gift?
If a husband wants money from wife or wife wants money from husband, he/she can always take as gift. The only thing which may happen is that if any income is generated out of such gift from spouse , that income shall be taxable in the hand of donor spouse.
But there is no reason for any anxiety about penalty u/s 271D or 271 E because section 269SS and 269T are applicable only when loan or deposit is taken or repaid.
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