No penalty for wife receiving cash from husband for purchase of family property:

No penalty for wife receiving cash from husband for purchase of family property:

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No penalty for wife receiving cash from husband for purchase of family property:

 

There is a rule in Income Tax Act- 1961 which prohibits acceptance of loans or deposits in cash of an amount exceeding Rs. 20,000/- in cash.
Section 271D of the Income Tax Act lays down the penalty to be imposed on a taxpayer for accepting or taking any loans, deposits or other specified amounts in contravention of Section 269SS i.e. in cash or any mode not by way of a banking transaction.
There is no exception to the said rule and even loan transactions between father & son, husband and wife, brother and sister, husband and wife cannot be done in cash.
However, there is section 271BD which provides that no penalty can be imposed if there exists a reasonable cause.
The question before Meera Devi Kumawat Jaipur (ITA No. 1201/JP/2019) was whether penalty can be imposed for cash transaction exceeding Rs. 20,000/-.
In this case, a plot of land has been registered in the name of the asessee wife and source of such investment is money received from her husband. She had received Rs. 6,00,000/-from her husband by way of demand draft for payment towards purchase of plot no. 356 and remaining Rs. 3,00,000/- was received in cash.
The practice of registering the property in name of the wife was guided by various family and societal factors besides encouragement of the Government for such transactions entered into by female members in the family by way of reduced stamp duty.
The ITAT held as below:
We do not find any malafide in the explanation so submitted as everything is flowing from the registered sale deed where transactions have been duly documented including the payment through demand draft and cash which is from the known sources of funds contributed by the assessee’s husband.
We are of the considered view that the assessee doesn’t deserve to be punished by way of levy of penalty u/s 271D for receiving money from her husband for purchase of family property and hence, the same is directed to be deleted.
In short, in the present case, the penalty for cash transactions was deleted.

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