NIRAV MAHENDRABHAI TAMBOLI,VADODARA vs. ITO, WARD 3(1)(4), VADODARA

The assessee has challenged the appellate order in the following ground: (1) NFAC has erred in confirming the levy of penalty of Rs.15,97,906/- u/s 271D of the Act.

Brief facts of the case are as under: The assessee and other several other persons including person from his family had sold the property to M/s. Shiv Construction for total consideration of Rs.27,90,00,000/-. The assessee had 1/48th share in the said property and the assessee’s share of the sale consideration was reported as Rs.58,12,500/- based on which the assessee computed Long Term Capital Gain of Rs.11,13,515/- in its return of income for Asst. Year 2021-22. Later, there was a search on Darshnam-Vihar group and the post search investigation revealed that the property was sold for a total consideration of Rs.35,56,99,500/- as against the amount of Rs.27,90,00,000/- noted in the sale deed. The differential amount of Rs.7,66,99,500/- was taken in cash and the assessee’s share to that Rs.15,97,906/-.

The assessee filed an updated return u/s. 139(8A) of the Act and disclosed the total receipt of Rs.74,10,410/- and accordingly declared taxable income of Rs.29,81,120/- as against the total taxable income of Rs.13,83,210/- shown in the return filed u/s. 139(1) of the Act.

In the assessment order, the assessing officer accepted the income as disclosed in the updated return but initiated penalty proceedings u/s. 271D for the reason that the assessee had accepted cash of Rs.15,97,906/-. Subsequently, in the order passed u/s. 271D of the Act, the assessee’s submissions were considered and it was held that having accepted cash the assessee had violated provisions of Section 269SS and was not prevented by sufficient cause within the meaning of Section 273B. It was thus held to be a fit case for levy of penalty of Section 271D and penalty of Rs.15,97,906/- was levied on the assessee. This levy was confirmed by the Ld. CIT(A),NFAC.

In the impugned appellate order, we notice that the Ld. CIT(A), while describing the facts, has wrongly picked up another assessee Shri Jagdish C. Tamboli and narrated the facts related to his case. However, subsequently, the Ld. CIT(A) in the appellate order has reproduced the contentions of the assessee in the present appeal and the confirmed the levy of penalty of Rs.15,97,906/-.

The Ld. A.R. Shri Mehul K. Patel summarized the contentions raised by the assessee before the lower authorities which are as under; “1. Fragmented Family: The joint owners of the land were part of the family which consisted of descendants of six brothers, most of whom were adults and had their individual family interests in mind. 2. The education of the assessee family: From the chart, you will appreciate that largely the family members had a very minimal education. 3. Health of the assessee: A large number of family members were ageing and were ill with serious illnesses requiring medical support. 4. No choice of the assessee; No buyers were found for a very long period and the buyers dictated terms which had to be agreed to fetch the kind of price which was offered to them. The family was in a hurry to encash the only large piece of land which was inherited and there was a lot of dissatisfaction and disharmony amongst the family members.

The assessee had also contended that in case its prayer for deletion of penalty is not accepted on the ground of reasonable cause as demonstrated in the submissions, the penalty should be restricted only to the amount received during the previous year relevant to Asst. Year 2021-22, which was Rs.2,55,823/-. The assessee had also submitted that in the case of one of the co- owner Shri Jagdish Tamboli, the assessing officer had levied a penalty for only Rs.6,56,052/- received in cash during the relevant Financial Year while his share of the consideration received in cash was Rs.42,61,089/-. The Ld. A.R. has filed before us a decision of the ITAT Bench ‘B’ in ITA No. 344/Ahd/2026 in the case of Ashok Ramanlal Tamboli for the Asst. Year 2021-22. The assessee in the said appeal is also part of the persons which were sellers in the transaction under consideration in the present appeal.

In that case, the Ld. Counsel for the assessee had made similar submissions and pleaded that the circumstances were such that the receipt of part of the consideration in cash could be taken as exceptional and reasonable circumstances. The lack of awareness of statutory provisions, on the consequence of receipt of part of the sale consideration in cash, caused the assessee to accept the cash. In any case they had modified the return and included, the amount shown in the sale deed and the consideration received in cash, in the returns filed u/s. 139(8A) even before any action was initiated by the Department u/s. 147. The Counsel in that case had also pointed out that in the case of another co-owner, namely Jayaben Ramanlal Tamboli, the A.O. had accepted the explanations offered by the assessee and drop the penalty proceedings u/s. 271D of the Act.

In reply, Ld. Sr. D.R. Smt. Deeba Farhat defended the levy of penalty on the ground that receipt of cash beyond the limit prescribed was a clear violation of Section 269SS of the Act and therefore the penalty u/s. 271D was rightly imposed. She also stated that the conclusion drawn by one assessing officer in the case of one family member would not be binding on another assessing officer and therefore the dropping of penalty in the case of Jayaben Ramanlal Tamboli need not have been followed by the assessing officer in the present case.

After perusal of the facts and circumstances of the case and arguments of the Ld. A.R. and Ld. Sr. D.R., we find that this case is squarely covered by the decision of the Co-ordinate Bench in the case of Ashok Ramanlal Tamboli. The relevant portion of the decision in ITA No. 344/Ahd/2026 is reproduced below: “3. The brief facts of the case are that the assessee along with other co-owners sold a property at a consideration of Rs.27,90,00,000/-. The assessee received his share of the sale consideration at Rs.1,16,25,000/- as per the sale deed. Apart from this amount, the assessee also received Rs.31,95,813/- as sale proceeds in cash. Though, the assessee, as advised, declared his share of sale consideration as per the sale deed in the return of income, however, did not disclose the amount of sale consideration received in cash. However, the assessee filed a revised return and declared the said cash amount of sale consideration therein. The AO accepted the revised return, however, levied penalty u/s 271D of the Act for receiving the sale consideration of Rs.31,95,813/- in cash in violation of provision of Section 269SS of the Act. The Ld. CIT(A) confirmed the penalty so levied by the AO.

Since the facts of the case before us is identical to the case reproduced above, respectfully following the decision of the Co- ordinate Bench, the impugned penalty in the case of the assessee in the present appeal is deleted.

In the result, the appeal of the assessee is stands allowed.