KANAKALATA MALLICK,B-FIFTY FIVE,SECTOR-EIGHT vs. JCIT, CUTTACK

The only issue in this appeal is in regard to the confirmation of penalty levied u/s.271DA of the Act for violation of the provisions of Section 269ST of the Act. Ld. JCIT has initiated the penalty proceedings u/s.271DA of the Act by issuing a show cause notice dated 01.10.2021 and thereafter levied the penalty of Rs.5,00,000/- vide impugned order dated 27.04.2022. In first appeal, the ld. CIT(A) has confirmed the said penalty, therefore, the assessee is before us in the present appeal.

During the course of arguments, ld. AR of the assessee submitted that the assessee had received more than 90% of the consideration through banking channel and only one occasion i.e. on 10.07.2017 the buyer approached the assessee with a sum of Rs.5 lakhs and it was stated by them that since they were coming from outstation and do not have the cheque book, therefore, they insisted for the part payment of Rs.5 lakhs in cash. Despite of request of the assessee to issue the cheques, they show their inability due to non-availability of the cheque book. However, the assessee on the very next day has deposited the said amount in which her bank account which is an admitted fact. The ld. AR submitted that there was no intention of the assessee to violate any provisions of law and there was a reasonable and sufficient casue in accepting the cash payment on 10.07.2017, therefore, he prayed for the deletion of the penalty so levied by the lower authorities.

Per Contra, ld. Sr. DR supports the order of the lower authorities and submits that the assessee has clearly violated the provisions of Section 269ST of the Act, therefore, is liable for penalty as per the provisions of Section 271DA of the Act.

We have considered the rival submissions. It is seen that since inception of the proceedings the assessee has made a clear statement that the cash was received in exception circumstances where the buyer approaches the assessee to keep the said cash of Rs.5 lakhs in her custody as they do not have the cheque book with them and since they (purchaser belonged to Berhampur) visited the place of the assessee at Cuttack, insisted for acceptance of cash for safe custody also. The assessee deposited the said cash in her bank account on the very next Act. The provisions of Section 271DA of the Act are as under :- 271DA. Penalty for failure to comply with provisions of section 269ST (1) If a person receives any sum in contravention of the provisions of section-269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt: Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention.

From the perusal of the proviso to Section 271DA(1) of the Act, it prescribes that if the assessee satisfied that there was good and sufficient reason for contravention of the provisions of Section 269ST, no penalty is leviable. From the facts and the circumstances of the case, we find that the assessee has been able to demonstrate that she has sufficient and reasonable reason for accepting the cash of Rs.5 lakhs. During the course of hearing, the ld.AR relied upon a judgment of the ITAT Vishakhapatnam Bench, in the case of Smt. Vijapurapu Sudha Rao Vs. ITO, passed in dated 29.11.2023, wherein the Tribunal under similar circumstances, deleted the penalty levied u/s.271D of the Act. The relevant observations are as under :- 4. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. The core issue involved in the grounds raised by the assessee is with respect to validity of levy of penalty U/s. 271D on account of receipt of cash in relation to transfer of immovable property by the assessee attracting the provisions of section 269SS of the Act. The admitted facts are that the assessee has received cash partly for the sale of immovable property from the buyer to the extent of 29,65,000/-. Section 269SS of the Act as amended by Finance Act, 2015 wef 1/6/2015 stipulates that no person shall take or accept from any other person, any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. The “specified sum” has been defined in the section 269SS of the Act as follows: “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.”

5. From the plain reading of the above section, it is noted that any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. The Memorandum explaining the provisions of Finance Bill 2015 with respect to amendment proposed w.e.f 1/6/2015 in section 269SS is reproduced below: “In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.”