DHARA TAMBOLI,VADODARA vs. INCOME TAX OFFICER, WARD 1(2)(1), VADODARA

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ITA 672/AHD/2026Status: DisposedITAT Ahmedabad27 October 2026AY 2021-225 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271D for misreporting of income is not sustainable. The Tribunal noted that both parties fairly submitted that the issue was covered by a previous order of the Tribunal in the case of a co-owner, Ashok Ramanlal Tamboli (ITA No.344/Ahd/2026 dated 03.08.2026). In that order, the Tribunal had deleted the penalty under Section 271D in identical facts and circumstances, considering the urgent need for funds, the purchaser's insistence on cash payment, the disclosure of the cash amount in the updated return, and the fact that penalty proceedings were dropped for a co-sharer. The Tribunal found no contrary decision or distinguishing facts in the present case. Therefore, the penalty levied by the AO and confirmed by the CIT(A) was deleted. The issue regarding the opportunity of hearing was not explicitly decided but was subsumed within the overall allowance of the appeal based on the merits of the penalty deletion.

What were the facts?

The assessee, Dhara Tamboli, an individual, sold an ancestral property with her family members for a total consideration of ₹27,90,00,000/- for Assessment Year 2021-2022. Her share was ₹51,66,667/-. Following a search in the Darshanam Vihav Group, the assessee disclosed cash receipts of ₹14,20,361/- in an updated return and paid tax. The Assessing Officer (AO) accepted the returned income under Section 143(3) without variation. Subsequently, the AO initiated penalty proceedings under Section 271D for alleged violation of Section 269SS concerning cash received for the property transfer. The assessee contended urgent financial necessity, purchaser's insistence, genuine transaction, disclosure of cash receipts, and reasonable cause under Section 273B. The Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (CIT(A)) confirmed the penalty.

What were the issues?

1. Whether the CIT(A) erred in passing an order without providing an opportunity for virtual hearing when specifically requested by the assessee? 2. Whether the CIT(A) erred in confirming the initiation of penalty proceedings under Section 271D of the Act? 3. Whether the CIT(A) erred in confirming the levy of penalty of ₹10,49,842/- under Section 271D of the Act? Assessee's contentions: - The CIT(A) failed to provide a virtual hearing despite a specific request. - The penalty under Section 271D should be dropped because the cash received was offered to tax in the return of income even before any proceedings were initiated. - The updated return was accepted under Section 143(3) without adverse findings. - There was an urgent financial necessity and cash was accepted on the purchaser's insistence, constituting a reasonable cause under Section 273B. - In the case of a co-owner, the penalty was dropped on identical facts. - The AO passed the penalty order without considering an adjournment request for personal hearing via virtual mode. Revenue's contentions: - The judgment records no specific contentions for the revenue, but it implies the revenue supported the CIT(A)'s order confirming the penalty.

Which sections of the Income-tax Act were involved?

Section 250,Section 271D,Section 269SS,Section 273B,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri Hardik Vora, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 21.10.2026Pronounced: 27.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT ITA No. 672/AHD/2026 (Assessment Year: 2021-22)

Dhara Tamboli, Vs. The Income Tax Officer, 19-A, First Floor, Ward-1(2)(1), Amin Park, Ahmedabad. Near Avdhut Society, Manjalpur, Vadodara-390011. [PAN : BCTPT6816 R] (Appellant) .. (Respondent) Appellant represented by : Shri Hardik Vora, AR Respondent represented by: Shri Kalpesh Rupavatia, Sr. DR Date of Hearing 21.10.2026 Date of Pronouncement 27.10.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the Assessee against the order dated 13.02.2026 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2021- 2022.

ITA No.672/AHD/2026, AY-2021-22 Dhara Tamboli - 2– 2. The Assessee has raised the following grounds of Appeal:-

1.

On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in passing order without providing an opportunity of hearing through virtual conferencing mode even when the same was specifically requested by assessee. 2. On the facts and circumstances of the case as well as law on the 2 subject, Ld. CIT(A) has erred in confirming initiation of penalty proceedings u/s 271D of the Act. 3. On the facts and circumstances of the case as well as law on the 3 subject, Ld. CIT(A) has erred in confirming levy of penalty of Rs. 10,49,842/- u/s 271D of the Act. 4. On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in confirming levy of penalty of Rs. 10,49,842/- u/s 271D of the Act without considering that amount received in cash by assessee has been duly offered to tax in the return of income even before any proceedings were initiated by the Assessing Officer. 5. On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in confirming levy of penalty of 5 Rs. 10,49,842/- u/s 271D of the Act without considering that updated return was accepted u/s 143(3) without any adverse finding. 6. On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in confirming levy of penalty of Rs. 10,49,842/- u/s 271D of the Act without considering that assessee had urgent financial necessity and cash had to be accepted on insistence of the purchaser which constitute reasonable cause u/s 273B. 7. On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in confirming levy of penalty of Rs. 10,49,842/- u/s 271D of the Act without considering that in the case of the co-owner, penalty was dropped on identical facts. 8. On the facts and circumstances of the case as well as law on the subject, Ld. CIT(A) has erred in confirming levy of penalty of Rs. 10,49,842/- u/s 271D of the Act without considering that Assessing Officer had passed an order levying penalty without considering adjournment request with respect the personal hearing through virtual mode.

ITA No.672/AHD/2026, AY-2021-22 Dhara Tamboli - 3– 3. The assessee, an individual, filed her return of income for A.Y. 2021-22 on 28.08.2021, declaring total income of ₹23,68,940/-. During the year under consideration, the assessee, along with her family members, sold an inherited ancestral property situated at Bhayali, Vadodara, to Shiv Construction for a total consideration of ₹27,90,00,000/-, out of which the assessee's share was ₹51,66,667/-. Subsequently, following a search in the Darshanam Vihav Group, the assessee disclosed cash receipts of ₹14,20,361/- in her updated return of income and paid additional tax thereon. The Assessing Officer accepted the returned income without making any variation vide assessment order dated 01.03.2024 passed under section 143(3) of the Income-tax Act, 1961. Thereafter, the Assessing Officer initiated penalty proceedings under section 271D for alleged violation of section 269SS of the Act in respect of the cash received against the transfer of immovable property. In response to the show-cause notice, the assessee contended that the property was sold due to the family's urgent need for funds and that the transaction was agreed upon partly in cash and partly through banking channels at the insistence of the purchasers. The assessee further submitted that the transaction was genuine, the cash receipts had been disclosed for taxation, and reasonable cause existed for the alleged default. Accordingly, the assessee requested that the penalty under section 271D be dropped.

4.

At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeal stands covered by the order of the Tribunal in the case of another joint owner namely Ashok Ramanlal Tamboli Vs Income Tax Officer Vs. ITO for A.Y 2021-22 in ITA

ITA No.672/AHD/2026, AY-2021-22 Dhara Tamboli - 4– No.344/Ahd/2026 dated 03.08.2026. For the sake of ready reference, the operative portion of said order is reproduced as under:

“…Before us, at the outset, Ld. Counsel for the assessee submitted that it was duly explained before the lower authorities that the assessee and his family members were agriculturist and were not aware of the relevant provisions of the Act prohibiting acceptance of sale consideration in cash. It was further explained that the assessee and his family members were in dire need of funds, therefore, they collectively decided to sell their ancestral property. The purchasers were willing to purchase the property only if, the assessee and his family members would accept partial amount in cheque and partial amount in cash. Since, the assessee and his family members had no choice, but to accept the partial amount in cash in lieu of sale of the property because they were in dire need of funds, therefore, they acceded to the condition of the purchasers to accept partial amount in cash. That the assessees were not aware that the same would be in any manner a violation of Income Tax Provisions. Ld. AR of the assessee has further submitted that when the assessee and his family members came to know that they were supposed to disclose the entire sale consideration including the amount received in cash, they immediately filed revised return of income, even prior to issue of notice u/s 147 of the Act. The Ld. AR has submitted that the assessee and his family members were under bonafide belief that they have not committed any violation of law in accepting the partial amount in cash out of sale consideration. The Ld. Counsel for the assessee has further brought our attention to the order passed in case of co-sharer, namely, Jayaben Ramanlal Tamboli, PAN No. AFCPT8501L, order dated 25.09.2024, wherein, in identical facts and circumstances, in relation to same transaction of sale of land, penalty proceedings u/s 271D of the Act were initiated by the AO, however, after considering the submissions made by the said co-sharer who had sold the property in question alongwith the assessee, the AO accepted the explanation and no adverse inference was drawn against the said assessee and the penalty proceedings u/s 271D of the Act were dropped. Since, the said case is relating to the same transaction of the sale of the property and since, in the case of co-sharer, the AO has dropped the penalty proceedings u/s 271D of the Act, hence, the case of the assessee being on equal footing and the assessee having explained the reasons for acceptance of small amount in cash out of total sale consideration and duly offered the said sale consideration for taxation, the impugned penalty in the case of the assessee is ordered to be deleted.…” 5. In reference to the aforesaid decision of the Co-ordinate Bench, and in the absence of any contrary decision or distinguishing facts, it is hereby held that the penalty levied under Section 271D for misreporting

ITA No.672/AHD/2026, AY-2021-22 Dhara Tamboli - 5– of income is not sustainable. Accordingly, the penalty levied by the Assessing Officer and confirmed by the Ld. CIT(A) is hereby deleted.

6.

In the result, the appeal filed by the assessee is allowed.

The order pronounced in the open Court on 27.10.2026. Sd/- Sd/- Sd/- Sd/- (RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 27.10.2026 JEETENDR Digitally signed by MV JEETENDRA DEVENDRABHAI UPADHYAY A DN: c=IN, o=PERSONAL, title=6087, 2.5.4.20=7e5568a89b633f17 DEVENDR 4b28a80f5e63c638da40b731 आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 3fb47ebaefda841cf59d1703, postalCode=380059, ABHAI 1. अपीलाथ�/ The Appellant st=Gujarat, serialNumber=816dc56e896 2. ��थ�/ The Respondent. 211a1a21ccc4abc94ddc9445 UPADHY 8f4a1b37be8e1854e9399295 3. संबंिधतआयकरआयु�/ Concerned CIT 106d4, cn=JEETENDRA DEVENDRABHAI UPADHYAY AY 4. आयकरआयु�(अपील) /The CIT(A)- Date: 2026.10.30 16:09:39 +05'30' 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER,

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