No penalty for sec. 269T or sec. 269SS violation if cash dealings were made amongst firms formed by family members

Where assessee-firm received a sum of Rs. 4.35 lakhs in cash from its sister concern and repaid a sum of Rs. one lakh in cash to sister concern, transfer of cash by one firm to another would operate as a reasonable cause and, therefore, levy of penalty under sections 271D and 271E upon assessee was not justified

 IN THE ITAT MUMBAI BENCH 'A'

K.K. Enterprises

v.

Joint Commissioner of Income-tax, Range-25(2)*

SANJAY ARORA, ACCOUNTANT MEMBER
AND Sanjay Garg, JUDICIAL MEMBER

IT APPEAL NOS. 4699 & 4700 (MUM.) OF 2012
[ASSESSMENT YEAR 2001-02]

OCTOBER  18, 2013 

Section 269SS, read with sections 269T, 271D, 271E and 273B, of the Income-tax Act, 1961 - Loan or deposits - Mode of accepting [Penalty] - Assessment year 2001-02 - Assessee, a partnership firm, was doing business as a builder and developer - During year, it received a sum of Rs. 4.35 lakhs in cash from its sister concern - It repaid a sum of Rs. one lakh in cash to sister concern - Both firms were in same business having their offices located in same premises with a common partner - Assessing Officer held that there was clear violation of provisions of sections 269SS and 269T by assessee - He, therefore, levied penalties under sections 271D and 271E upon assessee - Whether in terms of definition of 'loan or deposit' defined in section 269T, repayment of Rs. one lakh in cash by assessee to sister concern would not hit by section 269T and, therefore, penalty levied under section 271E was liable to be deleted - Held, yes - Whether since cash had been accepted by assessee-firm from another firm constituted by family members, transfer of cash by one firm to another would operate as a reasonable cause - Held, yes - Whether, therefore, penalty levied under section 271D was saved by section 273B and was liable to be deleted - Held, yes [Paras 3.3, 3.4 and 4] [In favour of assessee]

Refer:[2014] 41 taxmann.com 235 (Mumbai - Trib.)