Dear Sir,

The assessee had purchased a car costing Rs. 5,00,000/- only.  He had taken a 
loan of Rs.2,00,000/- from bank, and the balance of Rs. 3,00,000/- was cash 
deposited into bank, which was raised out of past savings, and from family 
members and relatives.  It is a joint family consisting of 8 members.  The 
assessee, his wife and his daughter have a joint account.  The assessee, his 
wife and son are earning members, and filing their return.  Both son and 
daughter are unmarried, and living with their parents.  Daughter had deposited 
an amount of Rs. 50,000/- out of her coaching income into joint account.  The 
father & mother of the assessee are  Govt. pensioners, and living with the 
assessee.  The father of the assessee had sold his old car, and contributed Rs. 
60,000/- for purchase of new car.  The son had sold his old car, and 
contributed Rs. 80,000/- for purchase of new car.  The proofs of the sale of 
old cars have been given to the A.O.   Out of Rs. 3,00,000/- as mentioned 
above, Rs. 1,90,000/- had been contributed by three persons.  The balance was 
the contribution of the assessee, his wife, mother, and two other relatives.  

Now, A.O. says, why action u/s 269SS should not be intiated against the 
assessee, as there are three cash loans amounting to Rs. 1,90,000/- in total, 
and more than Rs. 20,000/- individually as prescribed u/s 269SS.  If he 
initiates action u/s 269SS, then it will attract penalty proceedings u/s 271D, 
where the penalty is equal to the amount of such loan.   

Pls suggest a suitable reply, supported by case laws / citations to get out of 
this situation.  Your prompt and urgent reply will be highly appreciated.  
Thanks in advance.

KUMAR (DELHI).



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