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Judgment
PER S.RIFAUR RAHMAN,AM:
This appeal is filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 09.05.2026 affirming the penalty order passed under section 271D of the Income-tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are, during assessment proceedings, it is observed that assessee has taken cash of Rs.1,80,000/- from his father, Rs.1,48,000/- from his mother and Rs.1,50,000/- from his wife to purchase an immovable property. In this regard, assessee has submitted in his affidavit, in which it was mentioned that his mother is a pensioner, father is a farmer, earns income from dairy products and his wife is a housewife. Based on the above submissions, the assessment was completed by accepting the source of income towards purchase of property. However, proceedings under section 271D of the Act was initiated and penalty of Rs.4,78,000/- was levied.
Aggrieved with the above order, assessee preferred an appeal before ld CIT(A) and ld CIT(A) sustained the penalty levied.
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal:-
“1.That Ld. CIT(A) erred in law and on facts in confirming penalty u/s 271 D by wrongly invoking the provisions of section 269SS, without appreciating that the sums aggregating to Rs.4,78,000/- received from the appellant father, mother and wife were genuine family gifts received out of natural love and affection to meet urgent financial requirements and did not partake the character of any loan, deposit OR specified sum within the meaning of section 269SS.
2.That the learned CIT(A) failed to appreciate that no addition whatsoever was made in the reassessment order on the issue for which reassessment proceedings were initiated, thereby demonstrating complete absence of escapement of income on the recorded reasons.”
At the time of hearing, heard both the counsels, their detailed submissions and after considering the same, we proceeded to adjudicate the issue as under.
After considering the detailed facts on record, we observed that assessee has not considered the above transaction as loans or advances. He submitted that he has taken the above said cash from his father, mother and wife to complete the transaction which was accepted by the assessing officer. However, Assessing Officer presumed that the above said receipt of cash as loans and advances. During assessment and appellate proceedings, the assessee has submitted that the above said cash was received from his close relatives as gift. Since the assessee has received cash from his close relatives, as gift, the Assessing Officer cannot presume the receipt of cash as loans and advances. Once, it is established that it is not falling under loans or advances, the provisions of section 271D has no application. Therefore, we are inclined to delete the penalty levied under section 271D of the act.
In the result, appeal filed by the assessee is allowed.