Income Tax Appellate Tribunal - Indore
Mohan Karkare vs Deputy Commissioner Of Income-Tax on 28 November, 1994
Equivalent citations: [1995]52ITD236(INDORE)
ORDER
O.P. Jain, Judicial Member
1. This appeal is directed against the order of CIT(A) dated 7-5-1993, whether he has upheld the levy of penalty under Section 271D of the Income-tax Act.
2. On 10th January, 1989, the assessee had obtained a sum of Rs. 40,000 from his father, Shri Chintaman Karkare. Another sum of Rs. 30,000 was taken by him from his father on 11-1-1989. Both these amounts were received in cash. The amount received by the assessee from his father was utilized for the purchase of a Matador from Bajaj Tempo Limited, Poona. In the assessment proceedings, the transaction was accepted as genuine by the Income-tax Officer. However, he opined that provisions of Section 269 SS have been violated and, therefore, he initiated proceedings for levying penalty under Section 271D of the Act.
3. In the penalty proceedings, it was pleaded, inter alia, that he amount was received in cash on account of exigencies, because the last date for concession on purchase of Matador in the Gwalior Fair was 14th January, 1989, and the assessee wanted to avail that benefit. The assessee had also filed an affidavit of his father stating that the amount was given by him to his son, that is, the assessee, the purchasing the Matador and the amount was directly deposited by him in the Bank for the purchase of the Matador and the amount was not handed over to the assessee. The Assessing Officer did not accept the assessee's explanation that there was reasonable cause for receiving the money in cash. He had observed that the amounts were received by the assessee on 10th and 11th January, 1989, whereas the last date for the concession at Gwalior Fair was 14th January, 1989. He, therefore, observed that the amounts could have been received through account payee cheques. Dissatisfied with the assessee's explanation, he levied the penalty of Rs. 70,000.
3A. The assessee appealed before the CIT(A) and remained unsuccessful. In that appeal, it was argued, inter alia, that the amount invested by the father of the assessee was his own contribution for the purchase of the Matador and as such no penalty is leviable. The CIT(A) did not accept this explanation of the assessee. He observed that since the assessee is the owner of the vehicle, the part contribution by the father without any consideration should be considered as deemed gift. The father of the assessee did not file any gift-tax return showing the amount of Rs. 70,000 as gift and, therefore, the payment of that amount is to be considered as cash deposit/loan. He, therefore, confirmed the levy of penalty.
3B. Assailing the findings of the Revenue Authorities, the learned counsel for the assessee has submitted that the amount given by the father to the assessee was the father's contribution for the purchase of the vehicle and as such no penalty is leviable under Section 271D. He has also submitted that for the purpose of availing the concession at Gwalior Fair, the amount was given in cash and for that reason also no penalty is leviable. The learned counsel for the assessee has also submitted that the assessee was a young man of 21 years and was unemployed. His father had retired as a Sub-engineer and had received retirement benefits. The father and the son were living together. Since the assessee was unemployed, he purchased a Matador for Rs. 1,30,658 on 11th January, 1989, and for the purchase of a vehicle his father contributed Rs. 70,000. For this contribution the father of the assessee had to encash the F.D. receipt prematurely. On the other hand, the learned Departmental Representative has supported the levy of penalty. According to him, no reasonable cause has been established for receiving the amounts in cash and as such the provisions of Section 269SS were violated by him and the penalty has been rightly levied.
4. I have considered the rival submissions. Section 269SS provides that no person after 30th day of June, 1984, take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee draft, if the amount of such loan or deposit is Rs. 20,000 or more. Prior to amendment inserted w.e.f. 1st April, 1989, the figure of Rs. 20,000 was Rs. 10,000.
5. Section 27lD provides that if a person takes or accepts any loan or deposit in contravention of Section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of loan or deposit so taken or accepted.
6. A reading of the abovementioned provisions would go to show that there would be violation of Section 269SS, if an amount of Rs. 10,000 or more (now Rs. 20,000) is received by an assessee in cash, by way of loan or deposit. Penalty under Section 271D is leviable only if the amount received in cash by an assessee was by way of loan or deposit. In case the amount received by an assessee does not amount to a loan or deposit, then in my opinion, no penalty would be leviable. In the instant case, the assessee was a young unemployed person. He wanted to purchase a Matador vehicle with a view to have some earnings. It appears that his father had assisted him by providing Rs. 70,000, so that his son may settle in life. There is no material on record to suggest that the assessee was under an obligation to return the said amount. Unless the assessee was obliged to return the said amount, the amount received by him cannot be treated neither a loan nor a deposit. In the given situation, I am of the opinion that provisions of Section 269SS and 27lD of the Act are not at all attracted. That apart Section 273B provides that no penalty shall be imposable on the person or the assessee, for any failure referred to in the provisions mentioned in the section, which includes Section 27lD, if he proves that there was reasonable cause for the said failure. In the instant case, it is undisputed that the concession on the purchase of Matador vehicle was available at Gwalior Fair only upto 14th January, 1989. In order to avail that concession, the assessee had to go out and the money was needed for the purpose. The money was paid to him by his father on 10th & 11th January, 1989. Had the assessee been paid through an account payee cheque, some time would be needed for encashment. Taking these facts into consideration, I am of the opinion that the assessee has succeeded in establishing a reasonable cause for receiving the money in cash. For this reason also, I am of the view that penalty under Section 271D is not leviable.
7. In view of the foregoing discussions, penalty levied under Section 271D is hereby cancelled. Consequently the appeal stands allowed.