OMPRAKASH,KOTA vs. ITO WD-2(1), KOTA

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.439/JPR/2026 (Assessment Year:2019-20)

Omprakash Vs. ITO Saloniya, Mamore Ward 2(1) Kanwas, Kota Kota �थायीलेखासं./जीआइआरसं./PAN/GIR No:ACRPO7881J Appellant .. Respondent Appellant by : Sh. Anoop Bhatia, CA & Ms. Apeksha Kalra, Adv. Respondent by : Ms. Aarti Rawat, Addl. CIT Date of Hearing 18.08.2026 Date of Pronouncement 06.11.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 13.01.2026 under Section 250of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The grounds raised by the assessee read as under:-

P a g e | 2 ITA No.439/JPR/2026 OmPrakash 1. Under the facts and in the circumstances of the case as well as in law, Id. CIT(A) has erred in upholding the action of the Ld. AO in invoking the provisions of section 271D of the Income-tax Act, 1961, for the alleged violation of section 269SS of the Act. Such initiation of penalty proceedings being erroneous, invalid in law, and without proper application of mind deserves to be quashed. 2. Under the facts and in the circumstances of the case as well as in law, Id. CIT(A) has erred in confirming the penalty of Rs. 11,00,000/- levied by the Ld. AO under section 271D of the Income-tax Act, 1961. Such impugned penalty order is unjustified, contrary to the provisions of law, and unsustainable on facts, and therefore, the penalty so levied deserves to be deleted. 3. Under the facts and in the circumstances of the case as well as in law, ld. CIT(A) failed to recognize that the appellant, being an illiterate farmer from a remote village, had 'reasonable cause' u/s 273B of the Act for the technical breach. The receipt was bona fide, and there was no intention to evade tax, as evidenced by the full disclosure of the sale value in the registered deed and therefore, the penalty so levied deserves to be deleted. 4. Under the facts and in the circumstances of the case as well as in law, ld. CIT(A) erred in confirming the penalty order dated 08.01.2025 that is barred by limitation u/s 275(1)(c) of the Act. The penalty proceedings were initiated via a SCN dated 12.02.2024, but the final order was only passed/singed on 08.01.2025 well beyond the six-month period from the end of the month of initiating and therefore, the penalty so levied deserves to be deleted. 5. Under the facts and in the circumstances of the case as well as in law, Id. CIT(A) failed to appreciate that the AO did not record satisfaction for penalty during the course of assessment proceedings, which is a gross violation of binding CBDT Circular No. 09/DV/2016 and therefore, the penalty so levied deserves to be deleted. 6. The appellant reserves the right to add/alter/amend/delete all or any of the grounds anytime before or during the appellate proceedings. 3. The solitary grievance of the assessee is in relation to the confirmation by the Ld. CIT(A) of the levy of penalty u/s 271D of the Act amounting to Rs.11,00,000/-. 4. The impugned penalty was levied for violation of the provisions of Section 269SS of the Act which prohibited receipt of money by way of advance or consideration in relation to saleof immoveable property in excess of Rs.20,000/-, and the assessee in the facts of the present case,

P a g e | 3 ITA No.439/JPR/2026 OmPrakash was noted to have received cash as advance against sale of immovable property amounting to Rs.11,00,000/-. The assessee had sold an immovable property i.e. House No.746, Santoshi Nagar, Kota, advance for a consideration of Rs.22,50,000/- and received Rs.11,00,000/- payment in cash from the purchaser party against the sale of the property, which was noted to be in violation of Section 269SS of the Act. Section 271D of the Act levies penalty of amount equal to the amount accepted in violation of Section 269SS of the Act. Accordingly, penalty of Rs.11,00,000/- was levied on the assessee u/s 271D of the Act, which was confirmed by the Ld. CIT(A). 5. We have heard both the parties. The contention of the ld. Counsel for the assessee before us was that, the assessee had adduced reasonable cause for the delay which was wrongly rejected by the Ld. CIT(A) as not constituting reasonable and sufficient cause. That therefore as per section 273B of the Act, which prohibited levy of penalty if reasonable cause was shown for the failure committed, no penalty was leviable in the present case. The Ld. DR opposed the contention of the ld. Counsel for the assessee and relied on the findings of the Ld. CIT(A). 6. The orders of the authorities below reveal that the assessee had contended that:-  He harbored a bona fide belief that he could accept cash,. His contention was that he lived in a remote village ,Saloniya, where even the posts sent by the Income Tax Department reached him very late which he stated may be verified from the proceedings u/s 148A of the

P a g e | 4 ITA No.439/JPR/2026 OmPrakash Act conducted on the assessee. That he was ignorant about the provisions of law prohibiting receipt of sale consideration on sale of immovable property in cash, which, in any case he contended, was relatively new provision inserted in the statute by Finance Act 2015, the impugned order before us is being Assessment Year 2019-20. That no one told him about the change of law, not the buyer, not the Registrar and not the document writer and there were many instances where cash was taken and given for sale and purchase of all the properties. That considering the circumstances of the assessee, he was completely ignorant and unaware of the provision of law, and accordingly harbored the belief that cash could be accepted in a transaction of sale of immovable property.  That there was never any intention to evade taxes, which was evident from the fact that the sale of the property was registered at a value which was more than its stamp duty value. That while the stamp duty value was Rs.8,20,300/- the agreement was executed for a consideration of Rs.22.50 lakhs. That if the intention of the assessee was to avoid taxes, the sale deed could have been easily registered at the stamp duty value alone. The assessee contended that clearly therefore there was no mala fide intention involved in the impugned transaction and the acceptance of cash was unintentional and was not with the intention to evade payment of taxes.  That the cash was accepted on account of the adamancy of the buyer who lived in the adjoining village and had recently sold his immovable

P a g e | 5 ITA No.439/JPR/2026 OmPrakash property of land and was in possession of cash and therefore interested in making payment in cash for purchasing the property of the assessee. His contention was that when the property was registered at the full value for which it was sold and part payment was accepted by the way of banking channels, the intention of the assessee was to be transparent and the assessee was ready to accept the part payment by way of demand draft but on the insistence of the buyer he had accepted cash for the transaction. That this proves the innocence of the assessee in accepting the payment in cash.  That there was no allegation on the assessee of any unaccounted money in the assessment made u/s 147 of the Act, when the transaction of sale of property undertaken by the assessee was scrutinized by the Department and no addition made on account of any unaccounted money. 7. The submissions of the assessee in this regard, are reproduced at page 4 to 6 of the assessment order as under:- ….. i. The notice being an agriculturist was a non filer of returns and unaware of the Income Tax provisions: a. The source of income of the assessee is agriculture as may be seen from the computation of income and the return of income filed in response to notice u/s 148. b. It may be verified from the Income Tax records that the assessee was never assessed to Income Tax before the year under consideration ii. The assessee had a bonafide belief that he can accept cash 1. No one told the assessee not to receive the payment in cash.

P a g e | 6 ITA No.439/JPR/2026 OmPrakash No one has told the assessee about the changes in law. Not the buyer, not the registrar and not the document writer who typed the registry who did many registrations of the lands on daily basis and monthly basis.

It may be considered that the assessee lives in a remote Village Saloniya where even the posts sent by the Income Tax Department reached him very late which may be verified from the proceedings u/s 148A

Earlier to this there are so many instances where cash was taken and given for sale and purchase of all the properties.

iii. Bonafide belief of the assessee

It was bonafide belief of the assessee that he is an agriculturist by birth and agriculturist can accept the payment in cash. He accepted the payment in cash and as he was not known to the newly inserted amendment with section 269SS of the Act. It was belief of the assessee that he shall not be avoiding taxes if situation arises. He was having bank account with him but he accepted the payment in cash under a bonafide belief that he is not making or thinking to avoid taxes and he felt no difference in cash as well as bank. He accepted the payment in cash as buyer wanted to make the part payment in cash. Absolutely he was not known to the law. It was bonafide belief of the assessee as usually sales-purchases of properties were made in cash in rural areas. Whether payment was in cash or though banking channel registry was not denied by the registrar. Even Registrar was not known to the law when he made Registry of the assessee.

iv. There was no intention to evade taxes

From the first page of the copy of the registered sale deed already submitted it may be verified that the Registrar valued the property for Stamp Duty purposes to be Rs.8,20,300 only while the agreement was on actual value of Rs.22.50 lakhs. If the intention would havebeen to avoid taxes the notice had all the scope to do so. He could have made the sale deed only for the amount received by demand draft as the value of sale consideration which is Rs.11.50 lakhs and could have accepted the balance Rs.11 lakhs without mentioning the same in the sale deed if there was any malafide intention involved. But the assessee had no

P a g e | 7 ITA No.439/JPR/2026 OmPrakash malafide intentions to avoid or evade taxes, which is why he mentioned the whole of the sale consideration truly in the sale deed amounting to Rs.22.50 lakhs. Thus, it can clearly be understood that the acceptance of cash was unintentional and was not with the intention to evade payment of taxes.

This proves the Innocence of the assessee in accepting the payment in cash. Hence your goodself is requested to not impose the penalty as it is harsh for an old, innocent, law abiding citizen and who never desired to conceal the transaction and evading taxes.

The buyer also was into agricultural activities and derived agriculture income as he was having agriculture land in the nearby village as the noticee which fact was known to the noticee. Thus, the noticee was of the considered view that the amount received from another agriculturist will not be in defiance of law in India. The buyer had sold agricultural land sometime back because of which he was adamant to make payment in cash. The buyer's case was also taken up for verification by the department in proceedings u/s 147 and since the source of his receipt of cash was mainly sale of agriculture land the same was also considered clean by the department. The assesseeseller was also required to reply to a notice u/s 133(6) during the course of his proceedings u/s 147. The notice received by the assessee is attached herewith for your goodself's kind verification.

The assessee was subjected to proceedings u/s 147. His submissions were accepted by the department to be true and correct and no addition was made on account of unaccounted money. The copy of the assessment order is herewith annexed. …… 8. It was these considerations put forth by the assessee, which the Ld. CIT(A) held were not sufficient to absolve the assessee from levy of penalty for having accepted payment in cash exceeding Rs.20,0000/- for

P a g e | 8 ITA No.439/JPR/2026 OmPrakash sale of land. The Ld. CIT(A) held that ignorance of law was not a valid defense and could not be regarded as reasonable cause u/s 273B of the Act. 9. We are not in agreement with the Ld. CIT(A). The factual contention of the assessee that he was a villager, an agriculturalist living in a remote village and non-filer of return of income and nothaving anything to do with the income tax proceedings in the past, has not been controverted by the Revenue. His plea of being ignorant about the provisions of law thereforecan be reasonably believed to be true. He has also made out a case of having acted bonafidely while carrying out the impugned transaction executing the sale agreement with the full value of the transaction including the amount taken in cash even when the stamp duty value of the property was far less than the actual consideration received. The fact that even the Department did not find the assessee to have earned any unaccounted money in the transaction adds strength to the contention of the assessee that never was it his intention to evade any taxesand thathe had truthfully revealed all the details of the transactions before the Income Tax Authorities to best of his knowledge. 10. The assessee has referred to the decision of the Hon’ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. Vs. State of UP (1979) 118 ITR 326 holding that there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law but that is not a correct statement. There is no such maxim known to law. The same applies to the present case also. The finding of

P a g e | 9 ITA No.439/JPR/2026 OmPrakash the Ld. CIT(A) therefore that ignorance of law cannot be a valid defense from the levy of penalty, we hold is incorrect. 11. It is not the case of the Ld. CIT(A) that the assessee’s contention of being ignorant of law is found to be false or untrue and the assessee, we find has made out a reasonable belief of having carried out the transaction in an honest and transparent manner and having violated the provisions of Section 269SS of the Act only on account of ignorance of law. The breach of the assessee therefore of the provisions of Section 269SS of the Act , we agree with the Ld. Counsel for the assessee can be reasonably said to flow from a bona fide belief that the assessee had not acted in any violation of law. And therefore we hold that the reasons adduced by the assessee for violating the provisions of Section 269SS of the Act constitute reasonable cause. The order of the Ld.CIT(A) finding to the contrary is set aside. No penalty, we hold , is leviable on the assessee u/s 271D of the Act and the penalty levied of Rs.11,00,000/- is directed to be deleted. 12. In effect, the appeal of the assessee stands allowed. Order pronounced in the Open Court on 06.11.2026

Sd/- Sd/- (Kuldip Singh) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 06.11.2026 Mittali, Sr. PS Copy forwarded to:

P a g e | 10 ITA No.439/JPR/2026 OmPrakash 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

By Order, Asst. Registrar/Sr. PS ITAT, Jaipur Mittali Digitally signed by: Mittali DN: CN = Mittali email = mittaligupta34671@gmail.com C = IN O = Personal Date: 2026.11.06 13:05:26 + 05'30'