SAJIDA NAJMA,BENGALURU vs. INCOME TAX OFFICER, WARD - 6(3)(1), BENGALURU

The assessee in the appeal has raised as many as 10 interconnected grounds, and the effective issue is that the learned CIT(A) erred in not condoning the delay and thereby confirming a penalty under section 271D of the Act, which is without jurisdiction. 3. The necessary facts are that the assessee sold an immovable property through a sale deed dated 3rd September 2015 for a consideration of Rs. 2,78,58,000/-. The assessee received the impugned consideration in 5 instalments, including cash receipts of Rs. 25 Lakh, Rs. 90 Lakh, and Rs. 35,79,420/- on 2nd August 2014, 13th July 2015, and 17th August 2015. The AO was of the view that cash received by the assessee was in contravention of section 269SS of the Act. Therefore, the AO issued notice under section 271D of the Act proposing to levy a penalty. 3.1 In response, the assessee submitted that the penalty under section 271D of the Act shall not be levied for violation of section 269SS if the transactions are genuine and there is reasonable cause. The assessee, in contending so, referred to several decisions of different benches of the Tribunal and the Hon’ble High Courts. The assessee further contended that the sale consideration received on transfer of property was duly offered to tax under the head capital gain in the return filed for the year under consideration (A.Y. 2016-17). All relevant details regarding receipt of consideration through cash and bank were disclosed. She also explained that she maintains a certain cash balance to meet uncertain expenditures, such as medical expenses, and to make payments to local labourers who accept payment only in cash. Accordingly, she accepted part of the sales consideration in cash. 3.2 However, the AO was not satisfied with the assessee’s explanation. According to the AO, the assessee failed to establish any urgency or immediate necessity for accepting such substantial amounts in cash. The amounts could have been received through cheque, demand draft, RTGS or other banking channels. The AO further observed that merely disclosing the sale transactions and offering the resultant capital gains to tax would not provide immunity from the provisions of section 269SS of the Act. 3.3 The AO also held that the assessee was not covered by any of the exceptions provided u/s 269SS of the Act and had failed to establish any reasonable cause within the meaning of section 273B of the Act. Accordingly, the AO held that there was a violation of section 269SS of the Act and imposed penalty of Rs. 1,25,79,420/- (Rs. 90 Lakh + Rs. 35,79,420) u/s 271D of the Act, being the amount accepted in cash during the relevant financial year. 4. The aggrieved assessee preferred an appeal before the learned CIT(A). The appeal filed before the learned CIT(A) was delayed by almost a year. In the delay condonation application, the assessee submitted that she did not receive the penalty order by post or email. She is a senior citizen not familiar with the technical aspect and did not check the order served on the e-portal. She became aware of the penalty order only after receiving the CPC intimation on 11th July 2024 and, after consulting a tax professional, filed the appeal on 27th August 2024. 4.1 However, the learned CIT(A) did not condone the delay. The learned CIT(A) found that the order u/s 271D was passed as on 31st August 2023. During the proceedings, notices and show-cause notices were issued, and the assessee filed a reply on 4th July 2023. Hence, the assessee was fully aware of the proceedings carried out under section 271D of the Act. Therefore, the assessee's claim that she was not aware of the order passed under section 271D of the Act dated 31st August 2023 is not acceptable. 5. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 6. The learned AR before us filed a paper book running from pages 1 to 157 comprising copies of notices issued by the department and the assessee's reply during the assessment proceeding, penalty proceeding and appellate proceeding before the learned CIT(A). In addition, the learned AR filed copies of decisions of different benches of the tribunal favouring the assessee on the issue of penalty under section 271D of the Act, on account of receipt of cash on transfer of immovable property, involving assessment years 2016-17 and 2017-18. 6.1 The Ld. AR submitted that the delay in filing the appeal before the Ld. CIT(A) was neither intentional nor deliberate. The assessee is a senior citizen and was not familiar with the e-filing portal. She did not receive the penalty order by post or email and became aware of the same only on receipt of CPC intimation dated 11.07.2024. Thereafter, she consulted a tax professional and filed the appeal on 27.08.2024. It was further submitted that the assessee has a strong case on merits, supported by several decisions of different Benches of the Tribunal in similar cases involving penalty u/s 271D of the Act for receipt of sale consideration of immovable property in cash. Accordingly, the Ld. AR prayed that the delay be condoned, and the matter be decided on merits. 6.2 On the merits, the Ld. AR submitted that the penalty u/s 271D of the Act was not justified. The cash was received as part of genuine sale transactions of immovable properties and the transactions were duly disclosed by the assessee. The sale consideration as well as the capital gains arising therefrom were disclosed in the return of income and the genuineness of the transactions was never doubted by the Department. It was submitted that there was no intention to introduce unaccounted money or evade tax. The assessee had accepted the cash due to the circumstances prevailing at the relevant time and, therefore, there existed a reasonable cause within the meaning of section 273B of the Act. The learned AR further contended that the amendment covering specified sums under section 269SS and 271D of the Act brought vide Finance Act 2015 and made applicable w.e.f. 1st June 2015 and the assessee, being unaware, received part of the sales consideration in cash. Accordingly, the Ld. AR prayed that the penalty imposed u/s 271D of the Act be deleted. 7. Per contra, the learned DR supported the order of the Ld. CIT(A) and submitted that the assessee was aware of the penalty proceedings and had also filed a reply during such proceedings. Therefore, there was no sufficient cause for the delay in filing the appeal before the Ld. CIT(A), and the order should be upheld. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The primary issue before us is whether the Ld. CIT(A) was justified in refusing to condone the delay of about one year in filing the appeal and, consequently, in not examining the assessee’s challenge to the penalty of Rs. 1,25,79,420/- levied u/s 271D of the Act. 8.1 The penalty is arising from receipt of part of the consideration for sale of immovable property in cash. The property was sold for a total consideration of Rs. 2,78,58,000/- and certain amounts were received in cash. The AO treated the cash receipts falling in the relevant financial year as being in violation of section 269SS of the Act and levied penalty of Rs. 1,25,79,420/- u/s 271D of the Act. The assessee, however, had disclosed the sale transaction and offered the resultant capital gain to tax. Her case before the Assessing Officer was that the transaction was genuine and that reasonable cause existed for accepting part of the consideration in cash.

In the result, the appeal of the assessee is partly allowed for statistical purposes Order pronounced in the open court on 21st August, 2026