Woman’s cash loan to purchase a house for the benefit of the family will not attract the penalty u / s 271D: ITAT [Read Order]


The Delhi Bench of the Income Tax Appeal Tribunal (ITAT) recently ruled that the wife’s cash loan for the purchase of the house for the benefit of the whole family cannot be a motive to impose the penalty under Section 271D of the Income Tax Act.

Evaluate that an individual received a cash loan of Rs. 1 lakh and 3 lakhs from his wife. The assessor assessed a penalty under section 271D of the Income Tax Act. According to the appraised, the transactions were between the family members to acquire a house for their livelihood and all had pooled their resources which were real transactions to acquire the property for the mutual benefit of the family and the intention did not was not to escape tax.

Before the Court, the assessor argued that the provisions of section 269SS do not prohibit genuine cash transactions of the loan, but only prohibit transactions entered into with the intention of evading tax. These measures are taken to fight against tax evasion but not to prohibit cash transactions between relatives. It was further argued that this is not a case where unrecorded cash was found during search and seizure operations. The appraised was assisted by his wife in the acquisition of two properties, one of which was intended for the residence of family members and the other for office purposes.

While removing the penalty order, the court noted that even otherwise, the transaction is between husband and wife. Various benches of the Tribunal have ruled that the transaction of the loan between husband and wife does not attract the provisions of article 269SS of the Law.

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