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Income Tax Appellate Tribunal, DEHRADUN CIRCUIT BENCH: DEHRADUN
This is an appeal against order dated 17.12.2021 passed by learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre [ hereinafter referred to as the learned CIT(A) NFAC] pertaining to assessment year 2016-17.
2. Though, the assessee has raised several grounds of appeal before us, the only effective issue to be decided in this appeal is as AY: 2016-17 to whether the learned CIT(A) NFACwas justified in confirming the levy of penalty under section 271D of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’)in respect of alleged violation of provisions of section 269SS of the Act.
We have heard the rival submissions and perused the materials available on record. The assessee is a partnership firm and is engaged in the business of buying the lands, developing the lands by making into small plots and selling to various parties. The return of income for the assessment year 2016-17 was filed by the assessee on 08.10.2016 declaring total income of Rs.46,02,250/-.
The assessee in the course of original assessments furnished the copies of all the purchase deeds and all the sale deeds executed by it in respect of purchase and sale of lands made by the firm. The assessee also furnished the mode of payments for purchase of lands and mode of receipts for sale of lands in respect of each of the purchase and sale transaction. The assessee had declared gross sale of land amounting to Rs.7,22,01,400/- after reducing the booking advance and amounts received through banking channel, AY: 2016-17 the assessee stated that it had received sale consideration in cash amounting to Rs.2,51,99,550/- from various parties on sale of plots. The assessee also submitted before the learned AO that this sale consideration received in cash in April and May 2015 had been duly incorporated in the books of account of the assessee as sales and disclosed in the return of income as sales made by the Assessee. This fact was accepted by learned AO in the assessment proceedings. The assessee also furnished the cash book before the learned Assessing Officer, which also proved the fact that the sale consideration amounting to Rs.2,51,99,550/- received in cash were received during April and May 2015. The assessee gave sample of sale deeds executed in favour of Smt. Manju Devi from whom sale consideration was received in cash amounting to Rs.1,94,000/-upto 31.05.2015 and Smt. JashodaRawat for receipt of sale consideration amounting to Rs.1,93,000/- in cash upto 31.05.2015 before learned AO. The Learned Joint Commissioner of Income Tax, Range-1(4), Rishikesh CIT (hereinafter referred to as ‘JCIT’) proceeded to levy of penalty under section 271D of the Act in the sum of Rs.2,48,12,550/- after reducing the aforesaid two sums of AY: 2016-17 Rs.3,87,000/- from the total sale consideration received in cash amounting to Rs.2,51,99,550/-. This penalty was levied under section 271D of the Act by learned JCIT for the alleged violation of provisions of section 269SS of the Act by the assessee on the ground that section 269SS of the Act had been amended w.e.f.
01.06.2015, wherein, the expression “specified sum” was introduced in the section in addition to loan or deposit. The expression “specified sum” is defined in explanation tosection 269SS as under:
“"specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.”
4. Based on this meaning of “specified sum” the learned AO wrote a letter on 22.04.2019 to learned JCIT to initiate the penalty proceedings under section 271D of the Act as the assessee has received sale consideration for transfer of immovable property in cash in excess of Rs.20,000/-, which is in violation of amended provision of section 269SS of the Act. Based on this trigger by learned AO, the learned JCIT proceeded to initiate penalty proceedings and consequently levied the penalty under section 271D in the sum of Rs.2,48,12,550/- vide order passed under 4 AY: 2016-17 section 271D of the Act and 28.11.2019. This action of the JCIT was upheld by learned CIT(A) NFAC.
5. We have gone through the quantum assessment order framed by learned AO under section 143(3) of the Act dated 28.12.2018, which is a part of the record before us. It is not in dispute that the assessee has taken into account the sale consideration received in cash on transfer of immovable property, amounting to Rs.2,51,99,550/- as sales made by it during the year. This figure of Rs.2,51,99,550/- is included in the overall revenue booked by the assessee in its books, amounting to Rs.7,02,70,600/-. In fact, we find that the learned AO in page 5 of the his quantum assessment order had even discussed this issue of accepting the entire sales made by the assessee as correct with a minor variation substituting the said sale consideration with the consideration determined in terms of section 43CA of the Act for the purpose of stamp duty, which worked out to Rs.7,16,84,200/-. Consequently, the learned AO had even made an addition to the sale consideration in terms of section 43CA of the Actamounting to Rs.14,13,600/- AY: 2016-17 (Rs.7,16,84,200 – Rs.7,02,70,600). This action of the learned AO goes clearly to prove that the sales reported by the assessee comprised of both cheque sales as well as cash sales were duly accepted by learned AO with minor variation of substitution of the consideration in terms of section 43CA of the Act. On perusal of the quantum assessment order, there is absolutely no whisper made by learned AO with regard to recording of satisfaction on the violation, if any, of the provisions of section 269SS in respect of sale consideration for transfer of plots received in cash. In other words, no satisfaction was indeed recorded by learned AO in the quantum assessment order for the violation of provisions of 269SS of the Act in respect of sale consideration received in cash by the assessee for sale of plots made during the year.
Now, the moot question that arises for consideration is as to whether the levy of penalty by learned JCIT would get vitiated in the absence of recording of satisfaction of the violation of provisions of section 269SS of the Act by learned AO in the quantum assessment order. We find that this issue is no longer res integra in view of the ITA No.7/DDN/2022 AY: 2016-17 decision of Hon’ble Apex Court in case of CIT Vs. Jai Laxmi Rice Mills, Ambala Cityreported in64 taxmann.com 75. For the sake of convenience, the entire order is reproduced hereunder: “1. In these appeals, we are concerned with the question as to whether penalty proceeding under Section 271D of the Income Tax Act (hereinafter referred to as "the Act") is independent of the assessment proceeding and this question arises for consideration in respect of Assessment Years 1991-1992 and 1992-1993 under the following circumstances: In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on the basis of CIB information informing the Department that the assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax. Ex-parte proceedings were initiated, which resulted in the aforesaid order, as per which net taxable income of the assessee was assessed at Rs. 18,34,584/-. While framing the assessment, the Assessing Officer also observed that the assessee had contravened the provisions of Section 269SS of the Act and because of this the Assessing Officer was satisfied that penalty proceedings under Section 271E of the Act were to be initiated.
2. The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee.
3. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive.
The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order.
As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated AY: 2016-17 under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed.”
Though the aforesaid decision of Hon’ble Supreme Court was rendered in the context of levy of penalty under section 271E of the Act, however, the ratio laid down therein will squarely apply to the present appeal as the provisions contained under section 271D and 271E are, more or less, parimateria.
Further, we find similar view was taken by the Coordinate Benches of various Tribunals as under:
Hyderabad in the case of Sri Raja Reddy NallaVs.
Additional CIT in dated
31.05.2023 for assessment year 2019-20.
Delhi Tribunal in case of RekhaVs. JCIT in ITA
No.815/Del/2022, dated 24.14.2022 for assessment year
2016-17.
In the instant case before us, the receipt of cash in the sum of Rs.2,51,99,550/- is only towards sale of plots and reflected as sales in the Income Tax Return of the assessee. On this fact, there is absolutely no dispute. The assessee though, had received the cash 8 AY: 2016-17 towards sale consideration prior to 01.06.2015, executed the sale deeds to all the parties from whom cash has been received during the year under consideration. This fact is also evident from the copy of sale deeds produced before the lower authorities. Hence, genuineness of the transaction of receipt of cash towards sale consideration of plots is not doubted by the Revenue in the instant case. The debate as to whether genuineness of the transaction is to be looked into for the purpose of penalty proceedings under section 271D and 271E of the Act need not be gone into in the instant case and that issue is left open.
In our considered opinion, it is an undisputed fact that the satisfaction per sewas not recorded by the learned AO in his quantum assessment order with regard to alleged violation of provisions of section 269SS of the Act in respect of sale consideration received in cash in excess of specified sum.
In view of the aforesaid observations and respectfully following the decision of Hon’ble Supreme Court and relying upon the ITA No.7/DDN/2022 AY: 2016-17 decisions of various Tribunals, we have no hesitation to cancel the levy of penalty under section 271D of the Act for want of recording of satisfaction by learned AO in the quantum assessment order.
Since, the penalty is cancelled on this limited ground, the various other arguments advanced by learned AR on limitation and non- applicability of amended provisions of section 269SS to the facts of the instant case need not be gone into and they are left upon.
Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in Open Court on 23rdJune, 2023