Monday, 15 January 2018

A financial transaction within the family members is not covered by provisions of Sec 269SS: ITAT

The issue is - Whether a financial transaction within the family members is covered by the provisions of Sec 269SS. NO is the answer.   

Facts of the case
The present appeal was filed by the assessee, an individual, who received an amount of loan, in cash, from his son. The amount of such cash loaned was held to be in excess of the limit specified u/s 269SS. The AO also observed that the amount repaid by the assessee was in contravention of the limits provided in Section 269T. Therefore, the AO initiated proceedings u/s 271D & 271E, for contravention of Sections 269SS & 269T. Hence, two amounts of penalty were imposed on the assessee u/s 271D & 271E.
On appeal, the CIT(A) reiterated the stand taken by the AO and confirmed the penalties. Thereby, in this appeal, the issue arose as to whether accepting and repayment of loan amounts in cash, of quantum higher than prescribed u/s 269SS & 269T respectively, will attract penalties u/s 271D & 271E, where such loan is given and repaid between son & father or husband & wife, and so whether in such circumstances, penalties u/s 271D & 271E are imposable, where the cash loans allegedly contravening provisions of Section 269SS & 269T, were given between family members for meeting daily living expenses & as financial support.

Held that,
++ the assessee had accepted the loan in cash of Rs.4,00,000/- from Shri Mithun Banik Mazumder, (son of the assessee) and repaid Rs. 1,50,000/-. The assessee repaid loan to his another son Sri Indranil Banik Mazumder at Rs. 2,25,098/- and also repaid loan to his wife Smt. Sandhya Banik Mazumder at Rs.54,928/. All these transactions are between husband and wife, and between father and son, being close relative of one family. We also note that assessee is a salaried employee and not a businessman. Therefore, based on the facts narrated, these transactions do not fall within the ambit of sections 269SS and 269T of the Act and for that we rely of the judgment of coordinate Bench in the case of Anant Himatsingka and Manisha Prakash Amin;

++ to support the family members, the money has been given by the assessee to his son/wife. This is simply a transfer of money from one family member to another family member to support day to day expenses, educational expenses and other family expenses. Going through the facts of th case, we are of the view that the transaction between son and father and wife and husband, for giving a support and help, in law, is not a loan or deposit in stricter sense of section 269SS of the Act and it is only a financial support, therefore, penalty imposed by the AO and confirmed by the CIT(A) needs to be deleted, and accordingly we quash both the penalty orders, i.e, under section 269SS and 269T of the Income Tax Act.

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