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Income Tax Appellate Tribunal, [ DELHI BENCH “F” : DELHI ]
Before: SHRI CHALLA NAGENDRA PRASADSHRI PRADIP KUMAR KEDIA
आदेश / O R D E R PER C. N. PRASAD, J. M. :
This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [NFAC] [hereinafter referred to CIT (Appeals)] New Delhi, dated 22.12.2021 for assessment year 2016-17. 1
The assessee has raised the following substantive grounds of appeal:-
“1. That in the impugned assessment order, Ld. Assessing Officer has not recorded any satisfaction regarding penalty proceedings u/s 271D of the Act, moreover while framing the assessment order Ld. AD has not given any finding/observation that the appellant has contravened the provisions of Section 269SS of the Act thereby whole proceedings are void ab initio and order passed is illegal and not tenable in law. Hence Ld. CIT(A) has erred in upholding the order of imposition of penalty of Rs, 90000/- under section 271D which is void, illegal, bad and untenable ab initio.
2. That Ld. CIT(A) has not followed the mandatory procedure as prescribed in notification No. 76/2020 issued by CBDT dated 25-09-2020 which stipulates that Appeal Unit shall prepare an order after taking into account all material on record including the response filed by the appellant but Ld CIT(A) did not considered the reply filed by the appellant hence order in violation of above notification is bad and untenable.
3. That Ld. CIT(A) did not consider the submissions filed by the appellant on the Income Tax Portal (National Faceless Appeal Centre) and no reasonable opportunity of being heard was provided to the appellant violating the principle of natural justice hence order is bad, arbitrary and untenable.
4. That Ld. CIT(A) has erred on facts and in law by ignoring the ground of reasonable cause for such failure and transaction exigency denying the relief u/s 273B while imposing the penalty u/s 271D of the Act.
5. That Ld. CIT(A) has erred on facts and in law by upholding the penalty order without appreciating the fact that cash accepted was only Rs.40,000/- whereas penalty imposed of Rs.90000/-.
It is therefore prayed that order of Ld. CIT(A) be kindly set aside and the penalty imposed of Rs.90,000 be directed to be deleted.” 2
Briefly stated the facts are that the assessee sold industrial plot in Jalor, Rajasthan and received cash of Rs.40,000/- as advance. Penalty proceedings under section 271D of the Income Tax Act, 1961 (the Act) were initiated and an order was passed by the Jt. Commissioner of Income Tax, Range-3, Gurgaon, on 30.12.2019 under section 271D of the Act imposing penalty of Rs.90,000/- for the contravention of provisions of section 269SS of the Act. The Jt. Commissioner of Income Tax (JCIT) observed that the finding of the Assessing Officer in the assessment order is that the assessee had sold industrial plot in Jalor, Rajasthan and received cash of Rs.50,000/- and Rs.40,000/- and violated the provisions of section 269SS of the Act. The JCIT invoking the provisions of section 271D of the Act imposed penalty of Rs.90,000/- for receiving cash of Rs.90,000/- stating that the assessee has violated the provisions of section 269SS of the Act.
On appeal the ld. CIT (Appeals) sustained the penalty observing that the assessee failed to provide any reasonabnle cause for accepting cash of Rs.90,000/- towards sale consideration.
5.1 Before us the ld. Counsel for the assessee submitted that the assessee is a widow lady, aged about 42 years wholly dependent on the income from inherited House Property and she has 3 children to take care. During the Financial year 2015-16 the assessee being the owner in possession of agricultural land bearing Khasra no. 918/592 area measuring 0.0176 hectare and Khasra No. 920/592 area measuring 0.5424 hectare (Total Land Sold 0.56 Hectare) situated at village Dhanpur, Bhagli Sindhlan, Tehsil Jalor District, Rajasthan has sold the said land to Sri Subhash Chandra Agarwal and Sri Bajrang Prasad Agarwal for a total consideration of Rs.48,90,000. However, assessee did not offer to tax the said amount of Rs.48,90,000/- under the head capital gain on the sale of property in her income tax return for the reason that the said lands do not fall within the purview of capital asset u/s 2(14), being an agriculture land and the assessee showed it as agricultural income in the return filed.
5.2 Ld. Counsel submits that that the land is stiauted at Village Dhanpur, Jalore (Rajasthan) and assessee went to Jalore to have a meeting at Jalore. In consequence the deal got finalised and buyer handed over Bayana (token money) of Rs.40,000/- to assessee as a customary practice to get assurance that both the parties are agreed on terms of discussion and will execute the deal later. As the buyer was not carrying the cheque book they have handed over the cash to the assessee. The assessee was not aware about the provisions of law and there was no intention to contravene the law. The transaction was genuine, bonafide and there was reasonable cause to accept the money in cash as the buyer of the property wanted assurance for the deal.
5.3 Ld. Counsel submits that an ex-parte Assessment has been done and assesee is in appeal against the assessment order. Further, JCIT has issued penalty notices on 04-06-2019 and 12-12-2019 but were never received by the assessee. Final show cause notice was issued by the JCIT as on 20-12- 2019 asking the assessee to appear on 26-12-2019 which notice has been received by the assessee on the date of hearing itself i.e., in the morning of 26-12-2019 and assessee 4 was not able to attend the proceedings due to short notice. Assessee has approached her counsel immediately to attend the matter but counsel was not available in the city and could not attend the proceedings on such short notice. In consequence ex-parte order has been passed on 30-12-2019 imposing penalty. Aggrieved by the order assessee filed the appeal before the CIT (Appeals) and the Ld. CIT (Appeals) also passed an ex-parte order without considering the submission and replies filed by the assessee and without giving reasonable opportunity of being heard to the assessee.
The ld. Counsel for the assessee submitted that there is reasonable cause in accepting token amount of advance in cash from the purchaser as the assessee and the purchaser wanted to assure the deal. The ld. Counsel submits that it is a customary practice to give ‘Bayana’ (token money) to get assurance that both the parties are agreed on terms of discussion for execution of deal at a later point of time.
The ld. Counsel for the assessee further submits that the Assessing Officer has not recorded any satisfaction regarding initiation of penalty proceedings under section 271D of the Act while framing the assessment order. The Assessing Officer has not given any finding/observation that the payment has contravened the provisions of section 269SS of the Act thereby whole proceedings are void ab initio and penalty order passed is illegal and not tenable in law. The ld. Counsel placed reliance on the decision of the Hon’ble Apex court in the case of CIT Vs. Jai Laxmi Rice Mills [379 ITR 521 (SC)]. The ld. Counsel also placed reliance on the following decisions in support of the above contentions:-
(i) T. Shiju, Chennai Vs. JCIT Non Corporate Range 7 dated 7 June, 2019 in ITA. No. 2829/Chny/2018;
(ii) ACIT Vs. M/s. Narsi Iron & Steel Pvt. Ltd. I.T. Appeal No. 2866/Del/2013 (Delhi – Trib.);
(iii) Prithvi Singh Poonia Vs. JCIT I.T. Appeal No. 3108/Ahd. – Trib.);
(iv) Shri Vikram Sood, manali Vs. Addl. CIT I.T. Appeal No. 1487/Chd./2017.
The ld. Counsel further referring to the Agreement of Sale, which is placed at Page 50 of the Paper book submits that the assessee has accepted token advance of Rs.40,000/- only and whereas the penalty was levied at Rs.90,000/-, on the assumption that the assessee has accepted Rs.90,000/- (Rs.50,000 + Rs.40,000) which is not at all justified as it is contrary to record. Assuming there is contravention of the provisions of section 269SS of the Act the penalty that could be levied is only Rs.40,000/- and not Rs.90,000/-.
The ld. DR strongly placed reliance on the orders of the authorities below.
Heard rival submissions perused the orders of the authorities below. We find considerable force in the contention of the assessee that the penalty order passed under section 271D of the Act is void ab initio and bad in law as there was no satisfaction recorded by the Assessing 6 Officer as to the contravention of provisions of section 269SS while framing the assessment order under section 143(3) of the Act. On perusal of the assessment order the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act and there is no satisfaction recorded for initiation of proceedings under section 271D of the Act nor given any finding that there is any contravention of provisions of section 269SS of the Act.
The Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (supra) affirming the decision of the Hon’ble Punjab & Haryana High Court held that there was no satisfaction recorded on the penalty proceedings under section 271E of the Act though in the assessment order the Assessing Officer wanted penalty proceedings to be initiated under section 271(1)(c) of the Act and thus in so far as penalty under section 271E of the Act is concerned it was without any satisfaction and, therefore, no such penalty could be levied. Following the decision of the Hon’ble Supreme Court and various Tribunals held that in the absence of recording of satisfaction in the assessment order for initiation of penalty proceedings under section 271D/271E of the Act, the penalty order is bad in law. Respectfully following the decision of the Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (supra) we hold that the penalty order passed under section 271D of the Act is bad in law and accordingly the same is quashed. Ground No. 1 of the grounds of appeal of the assessee is allowed.
12. As we have decided ground No. 1 in favour of the assessee by quashing the penalty order as bad in law, we are not inclined to go into the other grounds on merits as it is only academic at this stage.
In the result, appeal of the assessee is allowed as indicated above. 7
Order pronounced in the open court on : 24/11/2022.