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Facts
The assessee, an illiterate Maistry, sold a property for Rs. 35,00,000/- and received Rs. 9,10,000/- in cash as final payment at the time of registration. The Assessing Officer invoked Section 269SS and levied penalty under Section 271D for accepting cash above Rs. 20,000/-.
Held
The Tribunal held that the cash received was the final payment at the time of registration and not an advance or loan. Relying on a coordinate bench decision, it was decided that Section 269SS does not apply to final payments made at the time of registration.
Key Issues
Whether acceptance of cash consideration for sale of property at the time of registration falls under the purview of Section 269SS, attracting penalty under Section 271D.
Sections Cited
269SS, 271D, 274
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Income Tax Appellate Tribunal, HYDERABAD “B” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
Date of Hearing : 07.05.2025 Date of Pronouncement : 07.05.2025 ORDER PER MANJUNATHA G. :
This appeal has been filed by the Assessee against the order dated 28.06.2024 of the learned CIT(A)- National Faceless Appeal Centre [in short the “NFAC”] Delhi, relating to the assessment year 2017-2018.
At the very outset, there is a delay of 121 days in filing the appeal before the Tribunal, for which, the assessee
2 ITA.No.1399/Hyd./2024 has filed an affidavit explaining the reasons for the delay that the assessee is not aware of the order of the learned CIT(A) and that the assessee being an illiterate could not comprehend the content of SMS. He further submitted that as soon as he received demand recovery notice, he immediately approached the Tax Professional and filed the present appeal with a delay of 125 days which is neither wilful nor wanton and, therefore, pleaded that the impugned delay of 125 days in filing the appeal before the Tribunal may please be condoned in the interest of justice, otherwise, the assessee would be put to irreparable loss and hardship.
We have heard the submissions of the Learned Counsel for the Assessee and carefully perused the affidavit filed by the assessee seeking for condonation of delay of 125 days in filing the appeal before the Tribunal. We find that the delay in filing the appeal before the Tribunal was 121 days. We are satisfied with the reasons explained by the assessee in his affidavit and, therefore, we condone the delay of 121 days in filing the appeal before the Tribunal and proceed for adjudication.
3 ITA.No.1399/Hyd./2024 4. Briefly stated facts of the case are that, the assessee is an individual and a small labour (Maistry), engaged in construction of small houses. Since from her childhood, the assessee used to work as a labour under Maistries engaged in construction work. After lapse of some time and acquiring some experience in construction, she became a Maistry and out of the experience, the assessee started construction of small independent houses. During the year under consideration, she has sold a small house plot at Meerpet (v) for Rs.35,00,000/-, out of which, she has received a sum of Rs.9,10,000/- in cash from Shri Pappula Praveen Kumar, who is the purchaser of the property in question at the time of registration instead of cheque or account payee bank draft or use of electronic clearing system through a bank account or any other electronic mode. Since the amount accepted by the assessee is more than Rs.20,000/-, the Assessing Officer invoked the provisions of sec.269SS of the Income Tax Act, 1961 [in short “the Act”] which attracts penalty u/sec.271D of the Act. Accordingly, the Assessing Officer issued notice
4 ITA.No.1399/Hyd./2024 u/sec.274 r.w.s.271D of the Act dated 24.09.2019 calling the assessee to furnish her explanation. In response, the assessee furnished her explanation contending, inter alia, that she is an illiterate Maistry and does not have knowledge of income tax rules and received cash of Rs.9,10,000/- from the sale deed executed on 09.05.2016. However, the Assessing Officer being not satisfied with the explanation furnished by the assessee, levied the penalty of Rs.9,10,000/- u/sec.271D of the Act vide order dated 19.02.2022.
On being aggrieved by the penalty order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A). Before the learned CIT(A), the assessee reiterated her submissions made before the Assessing Officer. However, the learned CIT(A) also being not satisfied with the explanation furnished by the assessee, confirmed the penalty levied by the Assessing Officer by observing that the contentions raised by the appellant claiming that she is poor and illiterate and, therefore, was not aware of the provisions of the Act cannot be accepted as 5 ITA.No.1399/Hyd./2024 a valid ground for not adhering to the stipulations and prohibitions provided in the Income Tax Act, 1961. When the provisions of the Act specifically provide for not undertaking transactions in cash the same has to be adhered to by one and all unless specifically exempted by the Act and Rules. No such exemption for the grounds claimed by the appellant have been provided in the Income Tax Act, 1961 and Income Tax Rules, 1962. Further, the transaction undertaken by appellant of receipt in cash exceeding Rs.20,000/- while selling its immovable property is specifically covered by the provisions of Section 269SS and that the appellant has received Rs.9,10,000/- in cash during the impugned assessment year 2017-2018, which attracts penalty u/sec.271D of the Act. The learned CIT(A), therefore, sustained the penalty of Rs.9,10,000/- levied by the Assessing Officer.
Shri P. Vinod, Advocate-Learned Counsel for the Assessee, submitted that, the learned CIT(A) was erred in sustaining the penalty levied by the Assessing Officer u/sec.271D of the Act for violation of provisions of 6 ITA.No.1399/Hyd./2024 sec.269SS of the Act, without appreciating the fact that consideration received for sale of property in cash cannot fall under the definition of “loans or deposit’ as defined u/sec.269SS of the Act. Further, the specified sum referred in sec.269SS of the Act cannot be stretched to the consideration received for transfer of property at the time of registration in the presence of witnesses. Therefore, he submitted that, although, the assessee has explained the reasons for accepting cash, the learned CIT(A) without appreciating the relevant facts, sustained the penalty levied by the Assessing Officer. In this regard, he relied upon the decision of ITAT, Hyderabad Bench in the case of Katasani Tirupal Reddy, Owk Mandal vs., ITO, Ward-1, Nandyal in ITA.No.372/Hyd./2023 dated 05.07.2024.
7. Shri D. Praveen, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, there is a clear violation of provisions of sec.269SS of the Act for accepting cash consideration towards transfer of property which falls under the purview of specified sum as defined under sec.269SS of the Act,
7 ITA.No.1399/Hyd./2024 which attracts provisions of sec.271D penalty. The Assessing Officer after considering the relevant facts has rightly levied penalty u/sec.271D of the Act. The learned CIT(A) after considering relevant facts has rightly sustained the penalty levied by the Assessing Officer. Therefore, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. The issue is no more res integra in light of Corodinate Bench decision of ITAT, Hyderabad in the case of Katasani Tirupal Reddy, Owk Mandal vs., ITO, Ward-1, Nandyal (supra), wherein the Tribunal has considered an identical issue and after considering the words “specified sum” defined under Explanation-4 to sec.269SS of the Act had deleted the penalty levied u/sec.271D of the Act for accepting cash towards sale consideration for transfer of property in contravention of provisions of sec.269SS of the Act. The relevant findings of the Tribunal are as under :
8 ITA.No.1399/Hyd./2024 “6. We have gone through the record in the light of the submissions made on either side. Case of the assessee is that in the transaction in question he received the sale consideration of Rs.21.42 Lacs in cash in view of the pressing need of health care of his mother and since the amendment has come into force only a month earlier, he was not properly advised as to the bar of receiving cash under the amendment act. Admittedly the sale took place on 3/7/2015 whereas the amendment in question has come into force w.e.f. 1/6/2015. Assessee suffered loss in this transaction and such a position is not disputed by the Department. In the circumstances, the assessee not receiving proper advice as to the non-desirability of receiving the sale consideration in cash and his explanation cannot be brushed aside.
Apart from this, the relevant word "specified sum" has been defined under explanation (iv) to section 26955, which is reproduced as under: "(iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place."
8. The meaning of the "specified sum" has also been dealt with by a Co-ordinate Bench of the Tribunal in the case of ITO vs. Shri. R. Dhinagharan (HUF), dated 28/12/2023, wherein the ITAT took the view that the sum specified' as per Explanation to Section 26955 of the Act, only applicable for advance receivable, namely, 'as advance or otherwise' means advance can be in any manner, and therefore, this provision will not apply to the transaction that happens when the final payment at the time of registration of sale deed and payment takes place before sub-registrar for registration of 9 ITA.No.1399/Hyd./2024 property. Relevant part of para-No.12.1 of the decision of the ITAT is as under :
From the above provisions, Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of 'sum specified brought in the Explanation to Section 26955 of the Act, it is clear that the intention for bringing this provision was to curb the generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs.20,000/- or more for any transaction in immovable property. This was explained by Hon'ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 26955 ie, 'sum specified means only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the sub-registror at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS of the Act in the present case in the given facts and circumstances of the case and hence, penalty is not exigible in this case. Hence, we confirm the order of CIT(A) deleting the penalty but on entirely different ground i.e, on jurisdictional issue only. Accordingly, the appeal of the Revenue is dismissed.
9. In the present case before us, it is an admitted fact that the assessee received the amount of cash of Rs.9,38,000/-not as advance, but as the final payment in front of the Sub-Registrar at the time of registration for sale of property. While respectfully following the view taken by the Co-ordinate Bench of the Tribunal in the case of R. Dhinagharan (HUF) (supra), we hold that there is no violation of provisions of section 26955 of the Act in the present case in the given facts and circumstances and hence, penalty under section 2710 of the Act is not leviable. Hence, we allow the grounds raised
by the assessee.
10. In the result, appeal of the assessee is allowed.”
10 ITA.No.1399/Hyd./2024 8.1. Respectfully following the above decision of ITAT, Hyderabad Bench in the case of Katasani Thirupal Reddy (supra), we set-aside the order of the learned CIT(A) and direct the Assessing Officer to delete the impugned penalty levied u/sec.271D of the Act.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 07.05.2025.