SANDEEP KUMAR SETHIA,KOLKATA vs. ITO, WARD 44(2), , KOLKATA

ITA 584/KOL/2025Status: DisposedITAT Kolkata03 October 2025AY 2011-20129 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal first addressed the delay in filing the appeal. It condoned the 44-day delay, finding that the assessee had a reasonable and sufficient cause for being prevented from filing the appeal within the statutory time limit, citing the lack of intimation from the CIT(A) and the subsequent discovery of the dismissal through the AO's office. On the merits of the penalty, the Tribunal held that the provisions of Section 269SS were not attracted to the facts of the case. The Tribunal noted that while the assessee was not the owner of the land at the time of receiving the advance, agreements were filed showing the purchase of plots. It was also noted that the agreements were cancelled, and the money was refunded to the prospective buyers in the form of shares in M/s. Pushpanjali Pvt. Ltd. because the owner of the land could not fulfill the agreement. The Tribunal respectfully followed the findings in the case of Arati Sarraf and other decisions relied upon by the assessee. Therefore, the penalty levied by the AO and confirmed by the CIT(A) was cancelled. The ratio decidendi is that cash received as advance for sale of rights in a property, where the transaction ultimately does not materialize and the advance is refunded, does not constitute a violation of Section 269SS, especially when the relevant provisions were amended later to specifically include such advances. The appeal of the assessee was allowed, with the penalty being cancelled.

What were the facts?

The assessee, Sandeep Kumar Sethia, filed an appeal before the Income Tax Appellate Tribunal (ITAT) Kolkata 'D' Bench against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi. The appeal was for Assessment Year 2011-12 and challenged a penalty order passed under Section 271D of the Income Tax Act, 1961. The penalty order, dated 29.09.2014, was for an amount of Rs. 2,59,42,000/-. The assessee's appeal before the ITAT was filed with a delay of 44 days. The assessee contended that the delay was due to not receiving any alert about the appellate order from the CIT(A) and only becoming aware of the dismissal of the appeal when contacted by the Jurisdictional Assessing Officer's office for demand collection. The Assessing Officer had initiated penalty proceedings under Section 271D after noticing that the assessee had received cash totalling Rs. 2,59,42,000/- from 34 parties for brokering land/purchase deals, allegedly in violation of Section 269SS.

What were the issues?

1. Whether the appeal filed by the assessee is barred by limitation, and if so, whether the delay should be condoned? (Question of procedure, turning on the Tribunal's discretion and interpretation of 'reasonable cause'). 2. Whether the penalty levied under Section 271D of the Income Tax Act, 1961, for receiving cash amounting to Rs. 2,59,42,000/- is valid, considering the assessee's claim that the cash was received as advance for the sale of rights in a property and not as a loan or deposit? (Question of mixed law and fact, turning on the interpretation of Section 269SS and Section 271D). Assessee's Arguments: - The delay in filing the appeal was due to a lack of intimation from the CIT(A) and was not due to malafide intention or negligence. Reliance was placed on several judicial pronouncements for condonation. - The penalty under Section 271D is bad in law as the CIT(A) erred in not providing a reasonable opportunity to the appellant, violating principles of natural justice. - The penalty order was upheld despite an unreasonably short response time to the show cause notice. - The CIT(A) erred in upholding the penalty without appreciating that the Assessing Officer failed to provide a reasonable opportunity to demonstrate no violation of Section 269SS. - Section 269SS applies only to loans and deposits, not to advance payments for the purchase of plots. - The cash received represented consideration for the sale of rights in the land, and the provisions of Section 269SS were amended effective 01/06/2015 to include "any specified sum" which was not applicable to the impugned assessment year. - Reliance was placed on Arati Sarraf v JCIT, Range Rourkela, and other decisions. Revenue's Arguments: - The judgment records no specific arguments from the revenue regarding the delay or the merits of the penalty, other than what is reflected in the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 271D,Section 250,Section 269SS,Section 274(1),Section 274(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA D BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2011-12 dated 10.12.2024, which has been passed against the penalty order u/s 271D of the Act, dated 29.09.2014. I.T.A. No.: 584/KOL/2025

Assessment Year: 2011-12 Sandeep Kumar Sethia.

1.1.

The Registry has informed that the appeal filed by the assessee is barred by limitation by 24

The order continues below.

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