INCOME TAX OFFICER EXEMPTION WARD, TIRUPATI vs. SREE SSV GATE SOCIETY, TIRUPATI
ITA No 1214 of 2024 SREE SSV Gate Society
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आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘ SM-A ‘ Bench, Hyderabad
Before Shri Vijay Pal Rao, Vice-President
A N D
Shri Madhusudan Sawdia, Accountant Member
आ.अपी.सं /ITA No.1214/Hyd/2024
(िनधाŊरण वषŊ/Assessment Year: 2016-17)
PAN:AAGTS4803D
(Appellant)
(Respondent)
C.O No.1/Hyd/2025
आ.अपी.सं /ITA No.1214/Hyd/2024
(िनधाŊरण वषŊ/Assessment Year: 2016-17)
Sree SSV Gate Society
Tirupati
PAN:AAGTS4803D
Vs.
Income Tax Officer
Exemption Ward
Tirupati
(Appellant)
(Respondent)
िनधाŊįरती Ȫारा/Assessee by:
Shri K.A. Sai Prasad, CA
राज̾ व Ȫारा/Revenue by::
Shri Srinath Sadanala, DR
सुनवाई की तारीख/Date of hearing:
05/03/2025
घोषणा की तारीख/Pronouncement: 07/03/2025
आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal filed by the Revenue and Cross Objection by the assessee are directed against the order dated 30/09/2024
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of the learned CIT (A)-NFAC Delhi, arising from the penalty order passed u/s 271D of the I.T. Act, 1961 for the A.Y.2016-17. 2. The Revenue has raised the follow:
The assessee has raised the following cross objections:
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In the Cross Objection, the assessee has raised the issue of applicability of provisions of section 269SS on the transaction, in question. Therefore, the issue raised by the assessee in the C.O goes to the root of the matter and is taken up for hearing and adjudication prior to the issue raised by the Revenue in the appeal.
The learned AR of the assessee has submitted that the amount, in question, was received by the assessee by way of refund of advance amount on cancellation of agreement. Therefore, this amount was received as the advance earlier given by the assessee and therefore, does not partake the character of loan or deposit or any specified sum received by the assessee as provided u/s 269SS of the I.T. Act, 1961. The learned AR has submitted that though the amount was received in cash but this was only an advance earlier given by the assessee being received back on cancellation of the agreement. He has referred to the provisions of section 269SS of the Act and submitted that the said provision is attracted only in respect of the transactions in the nature of any loan or deposit or specified sum received by the assessee other than by an account payee cheque or draft or use of electronic clearing system. Hence, the learned AR has submitted that once the transaction does not fall in the ambit of provisions of section 269SS, then the question of levy of penalty u/s 271D does not arise.
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On the other hand, the learned DR has submitted that there is no dispute about the receipt of an amount of Rs.87,09,680/- in cash by the assessee, though in pursuant to cancellation of the agreement, however, when the cash was received in violation of the provisions of section 269SS of the Act, then the penalty u/s 271D is leviable. He has relied upon the orders of the authorities below.
We have considered the rival submissions as well as the relevant material available on record. The Assessing Officer has given description of background facts and the proceedings leading to initiation of penalty u/s 271D of the Act in para 1 of the order passed u/s 271D as under: “1. Description of back-ground facts and proceedings leading to initiation of penalty:
The assessee had received an amount of Rs.87,09,680/- by way of cash towards advance amount got on cancellation of agreements. As per provisions of section 269SS of the I.T.
Act no persons shall take or accept any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. In view of this, the assessee has contravened the provision of section 269SS of the I.T. Act and warranting penalty u/s 271D of the I.T.
Act.”
The Assessing Officer has again repeated this fact in para No.3 while giving description of issue as under:
“3. Analysis of issues involved (issue wise):
Description of issue:
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The assessee had received an amount of Rs.87.09,680/- by way of cash towards advance amount got on cancellation of agreements. As per provisions of section 269SS of the I.T.
Act no persons shall take or accept any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. In view of this, the assessee has contravened the provision of section 269ss of the I.T. Act and warranting penalty u/s 271D of the I.T. Act.
Hence, The Joint Commissioner of Income Tax (Exemption),
Vijayawada has issued a notice u/s 274 read with section 271D of the I.T. Act, 1961. Thereafter, the case was transferred to Faceless Assessment Scheme, 2019 and your case was assigned to this Assessment Unit.”
Thus, there is no dispute regarding the fact that this amount was received by the assessee as a refund of advances given by the assessee under the agreement which were subsequently cancelled. The provisions of section 269SS of the Act provides mode of taking or accepting certain loans or deposits and specified sums only by way of account payee cheque or account payee bank draft or use of electronic mode. For ready reference, section 269SS of the I.T. Act, 1961 is quoted as under: “269SS. [ Mode of taking or accepting certain loans, deposits and specified sum. [Substituted by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.]
- No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,
-(a)the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b)on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is ITA No 1214 of 2024 SREE SSV Gate Society
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remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c)the amount or the aggregate amount referred to in clause
(a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more:
Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,
-(a)the Government;
(b)any banking company, post office savings bank or co- operative bank;
(c)any corporation established by a Central, State or Provincial Act;
(d)any Government company as defined in clause (45) of section 2 of the Companies Act, 2013, (18 of 2013);
(e)such other institution, association or body or class of institutions, associations or bodies which the Central
Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:
Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act.
Explanation. - For the purposes of this section, -
(i)"banking company" means a company to which the provisions of the Banking Regulation Act, 1949, (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;
(ii)"co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949,
(10 of 1949);
(iii)"loan or deposit" means loan or deposit of money;
(iv)"specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an ITA No 1214 of 2024 SREE SSV Gate Society
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immovable property, whether or not the transfer takes place.]”
Therefore, this provision is attracted in respect of the transactions of acceptance of loan or deposits or any specified sum of Rs.20,000/- or more. Since in the case in hand, the assessee received this amount as refund of advance paid by the assessee for purchase of some property and therefore, the same does not fall in the category of loan of deposit as provided u/s 269SS of the Act. As regards the specified sum, the same is defined in clause (iv) of Explanation to section 269SS of the Act reproduced herein above which means any sum of money receivable whether as an advance or otherwise in relation towards transfer of an immovable property whether or not the transfer takes place. Therefore, the specified sum must be receivable either as an advance or otherwise for transfer of an immovable property. In the case in hand, the amount was not received against the transfer of immovable property but it was received by the assessee as a refund of advance earlier paid for purchase of property. Thus, this transaction even does not fall in the term “specified sum”. We further note that to check such transactions of receipt other than by an account payee cheque, account payee draft or use of electronic clearing system, the provision has been made by way of insertion of section 269ST vide Finance Act, 2027 w.e.f. 1/4/2017 which reads as under: “269ST. No person shall receive an amount of two lakh rupees or more-
(a) in aggregate from a person in a day; or ITA No 1214 of 2024 SREE SSV Gate Society
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(b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise, than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed.
Provided that the provisions of this section shall not apply to-
(i) any receipt by-
(a) Government
(b) any banking company, post office savings bank or cooperative bank
(ii) transactions of the nature referred to in section 269SS
(iii) such other persons or class of persons or receipts, which the Central Govt. may by notification in the official gazette, specify”.
Therefore, the provisions of section 269SS of the I.T. Act, 1961 are not applicable on the transaction in case of the assessee when the same is not in the nature of loan or deposit or any specified sum received by the assessee. Once this transaction does not fall in the ambit of provisions of section 269SS, then the question of levy of penalty u/s 271D does not arise. Accordingly, we hold that the penalty levied by the Assessing Officer u/s 271D of the Act is not sustainable on this ground itself. Hence, in view of the above finding, we do not find any reason to interfere with the order of the learned CIT (A) deleting the penalty levied u/s 271D of the Act.
Once the assessee succeeded in the Cross Objection, we do not propose to take up and adjudicate the issue raised by the Revenue in the appeal. Accordingly, the appeal of the Revenue
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is dismissed and the Cross Objection filed by the assessee is allowed.
In the result, appeal of the Revenue is dismissed and C.O of the assessee is allowed.
Order pronounced in the Open Court on 07th March, 2025. (MADHUSUDAN SAWDIA)
ACCOUNTANT MEMBER
(VIJAY PAL RAO)
VICE-PRESIDENT
Hyderabad, dated 07th March, 2025
Vinodan/sps
Copy to:
S.No Addresses
1
Income Tax Officer (Exemption) Dr. Ram Chandra Reddy Apartments,
Ground Floor, New D No.3-13 M20-13 Reservoir Road, Sarojini Devi
Nagar, Tirupati
2
Sree SSV Gate Society, 1-5-587, 1-5-587 Balaji Colony Tirupati
517502
3
Pr. CIT -Tirupati
4
DR, ITAT Hyderabad Benches
5
Guard File
By Order