SRINIVASA RAO PATTIPATI,HYDERABAD vs. ITO, WARD-15(2), HYDERABAD

ITA 1395/HYD/2026Status: DisposedITAT Hyderabad30 September 2026AY 2016-201731 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271D was not sustainable and liable to be deleted. The Tribunal noted that the assessee sold an immovable property for Rs. 19,50,500, of which Rs. 14,50,000 was received by cheque and Rs. 5,00,500 in cash. The penalty was levied by considering the entire receipt as cash, indicating a non-application of mind by the Assessing Officer and confirmed by the CIT(A). Crucially, the Tribunal found that there was no assessment order or any other proceedings in the assessee's case, and therefore, no satisfaction was recorded by the Assessing Officer for initiating penalty proceedings under Section 271D. Following the decision in Nithyananda Rao Volimineni vs. Income Tax Officer and the Supreme Court's ruling in Jai Laxmi Rice Mills Ambala City, which held that satisfaction must be recorded in the original assessment order for initiating penalty proceedings under Section 271E (in pari materia with Section 271D), the Tribunal concluded that the penalty was invalid without such satisfaction. The penalty was accordingly set aside.

What were the facts?

The assessee, Srinivasa Rao Pattipati, is appealing an order dated March 17, 2026, by the CIT(A)-NFAC, Delhi, which confirmed a penalty levied under Section 271D of the Income Tax Act, 1961, for the assessment year 2016-2017. The penalty was imposed for alleged violation of Section 269SS concerning the receipt of sale consideration for an immovable property. The total sale consideration was Rs. 19,50,500. The assessee claims Rs. 14,50,000 was received through banking channels (cheques) and Rs. 5,00,500 in cash. The Assessing Officer levied penalty on the entire amount. The assessee contends that the CIT(A) erred in confirming the penalty, misinterpreting facts, and ignoring documentary evidence like bank statements and sale deeds. The assessee also argued for a reasonable cause under Section 273B.

What were the issues?

1. Whether the penalty under Section 271D is leviable when a significant portion of the sale consideration for immovable property was received through banking channels, not cash, and documentary evidence supports this? (Section 271D read with Section 269SS) Assessee's Contentions: - The penalty was confirmed without appreciating that Rs. 14,50,000 was received through banking channels, not cash. - The CIT(A) incorrectly treated the entire Rs. 19,50,500 as cash receipt, ignoring bank statements and sale deeds. - Even if Rs. 5,00,500 was cash, the penalty should only apply to the cash component, not the entire amount. - The assessee had a reasonable cause under Section 273B. - Relied on CIT vs. Idhayam Publications Ltd. and CIT vs. Triumph International Finance. Revenue's Contentions: - When cash was received against the sale of property, it is a violation of Section 269SS, making the penalty under Section 271D leviable. - Relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO

Pronounced: 30.09.2026

This appeal by the Assessee is directed against the Order dated 17.03.2026 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi arising from penalty order passed u/sec.271D of the Income Tax Act [in short "the Act"], 1961, for the assessment year 2016-2017. 2. The assessee has raised the following grounds of appeal:

“The Appellant craves leave to add, alter, amend, or withdraw any ground(s) at the time of hearing.

1.

General Ground The order of the learned CIT(A) is erroneous both in

The order continues below.

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