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Facts
The assessee filed a return of income for AY 2017-18, declaring income and a capital loss. The Assessing Officer (AO) noticed that the assessee sold an immovable property for Rs. 8,20,000/- cash through a General Power of Attorney (GPA). The AO initiated penalty proceedings under Section 271D of the Income Tax Act, 1961.
Held
The Tribunal held that the penalty proceedings under Section 271D, read with Section 269SS, were wrongly invoked by the AO and upheld by the CIT(A). The Tribunal observed that Section 269SS deals with loans or deposits and not the receipt of sale consideration in cash for immovable property.
Key Issues
Whether penalty under Section 271D is leviable for receiving sale consideration of immovable property in cash when the transaction is completed before the Sub-Registrar and Section 269SS is not attracted.
Sections Cited
271D, 269SS, 274, 269T, 271E
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL
Date of hearing: 18/02/2026 Date of Pronouncement: 18/03/2026 ORDER
PER SUDHIR KUMAR, JM:
This appeal by the assessee is directed against the order of National Faceless Appeal Centre Delhi, [hereinafter referred to as “NFAC”], vide order dated 21.08.2025 pertaining to A.Y. 2017-18 and arises out of the penalty order dated 23-11-2019 passed by the Assessing Officer under Section 271D of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].
The assessee has raised the following grounds of appeal:
1. That the penalty order passed by the Assessing officer u/s 271D of the I. Tax Act, 1961 as upheld by the Ld. CIT(A), was perverse to the law and to the facts of the case therefore not tenable, as not in consonance of the provisions of law contained u/s 269SS Explanation –(iv) of the Income Tax Act,1961. 2.That the penalty order passed as has been upheld by the Ld. CIT(A), was further incorrect under the law and to the facts of the case, because no satisfaction if any has ever been recorded by the Assessing Officer prior to recommend the case to the Addl. CIT for the levy of penalty u/s 271D of the Income Tax Act,1961 vide letter dated 26-04-2019. 3.That the penalty order passed by the Assessing officer u/s 271D of the I. Tax Act, 1961 on 23-11-2019, as upheld by the Ld. CIT(A), was further incorrect under the law and to the facts of the case because in the hands of other co- owner Mohd. Adil, who has jointly sold the property along with the appellant no penalty if any has ever been initiated or imposed on the identical facts.
That the penalty order passed by the Assessing officer u/s 271D of the I. Tax Act, 1961 as upheld by the Ld. CIT(A), was further incorrect under the law and to the facts of the case, as the appellant was prevented by reasonable and sufficient cause to sell the said property owned jointly immediately at that time due to requirement of find for medical emergencies.
5. That the penalty order passed by the Assessing officer u/s 271D of the I. Tax Act, 1961 as upheld by the Ld. CIT(A), are further against the principals of law and natural justice, as such not tenable.
6. That the appellant assails his right to amend, alter or change any grounds of appeal
at any time even during the course of hearing of this instant appeal.
3. The brief facts of the case are that the assessee had filed his return of income for A.Y.2017-18 declaring total income of Rs. 8,63,710/-. The assessee also declared Long Term Capital Loss of Rs.4,90,146/-against total sale consideration of Rs.11,50,000/- from other sources. However, the Assessing Officer has noticed that assessee had sold an immovable property in Sadar Bazar Delhi to Shri Ajay Kumar for sale consideration of Rs.8,20,000/- which was received in cash. Accordingly, penalty proceedings was initiated by issuing notice u/s 274 read with section 271D of the Act on 01-05-2019. The Assessing officer levied the penalty of Rs.4,10,000/-u/s 271D of the Act. According to AO the assessee had executed the sale deed through GPA which was executed about five years back from the execution of the sale deed. The sale deed was executed through GPA to save the stamp duty. Aggrieved by the order of the AO the assessee filed the appeal before the NFAC, who vide his order dated 21-08-2025 dismissed the appeal against which the assessee is in appeal before the Tribunal.
4. The Ld. AR has submitted that the penalty order passed by AO is bad in law because the assessee was not the owner of the aforesaid immovable property. The sale deed was executed by the assessee through General Power Attorney Holder. The General Power Attorney was never cancelled before the execution of the sale deed. It was further stated that the sale can be made through GPA before the cancellation of the GPA. Reliance is placed on the following decisions: (i) In the case of Aggarwal Construction Company vs. DCIT, Circle -1 Bathinda the co-ordinate Amritsar bench held: “9.2 At this stage we also refer to the decision of the ITAT Chennai Bench , ( relied upon by the assessee ) , in the case of R. Dhinagharan ( HUF )
CHNY/ 2019 dated 29/12/2023 , where the Hon’ble Bench, in an almost identical set of facts , has discussed the Memorandum explaining the intention of amendment by Finance Bill 2015 , including the definition of “ sum specified ”as per explanation to section 269SS of the Act 61.
Relevant portion of the said observation is reproduced below for ready reference: “In order to curb generation of black money by way of dealings in cash in immovable property transactions, section 269SS of the Income- tax Act has been amended to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property (specified sum) otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. 54.4 Section 269T of the Income-tax Act has also been amended to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an :- advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place. 54.5 Consequential amendments in section 271D and section 271E, to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively, have also been made. 54.6 Applicability: These amendments have taken effect from 1st day of June, 2015. 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 269SS 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 269SS i.e., '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- registrar 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.”
Respectfully, following the observation of the Chennai Bench, in the case of R. Dhinagharan (HUF) (supra), we are also of the opinion that when cash is being received in one lump sum, against sale of immovable property, before the Government Registration authority, the sale deed being duly registered before him under his stamp and signature, there appears to be no violation of section 269SS of the Act 61, on the part of the assessee for the year under appeal.” (ii)In the case of Wahid Ali vs. Jt. CIT Range-48 New Delhi , the Co-ordinate bench held as under: “5. We have heard the parties and perused the materials on record. The penalty order u/s 271D r.w.s. 269SS of the Act has been passed by the Assessing Officer on the ground that the assessee has received sale consideration of Rs.28,13,000/- in cash. For the purpose deciding the legality or otherwise of invoking section 271D r.w.s. 269SS of the Act, the provisions of sections are reproduced for ready reference: 6. The plain reading of the provisions of section 269Ss of the Act mandates that , no person shall take or accept from any other person any loan or deposit otherwise then an account payee cheque or account payee bank draft if…………(a) (b) Thus as per section 269SS of the Act, there is a specific bar to receive a sum more than 20,000/- from any other persons by way of loan or deposit. The section 269SS of the Act does not deals with the receipt of ‘sale consideration of immovable property’ in cash in other words, the section 269SS only deals with loan or deposit and not the sale consideration of immovable property. The Authorities below have wrongly interpreted the provisions of Section 269SS of the Act while invoking the penalty in the present case wherein the subject matter was receipt of sale consideration in cash in respect of selling the immovable properties. In our consideration view, considering the facts and circumstances of the case, the Ld. Assessing Officer has committed error in invoking the provisions of section 269SSr.w.s.271 D of the Act and imposing the penalty. Accordingly, we delete the penalty imposed by the Assessing Officer which has been confirmed by the Ld.CIT(A). In the result appeal of the Assessee is allowed.
The Ld. Sr. DR relied the orders of the lower authorities. He submitted that half of the consideration amount of Rs.8,20,000/- has been received by the General Power holder at the time of sale of property, in cash by the assessee. He further submitted that penalty was rightly imposed by the AO.
We have heard the revival contentions of the parties and gone through the material available on record. In the present case the assessee had transferred the immovable property through GPA. The assessing officer had doubted the genuineness of the transaction on the basis that the sale deed was executed through GPA which was executed five years back from the execution of the sale deed. The view taken by the AO was not correct because the sale deed can be executed through GPA before its cancellation. In this case, there is not the case of the AO that the GPA had been cancelled before the execution of the sale deed. Therefore, in our view the Ld. Assessing Officer has committed error in invoking the provisions of section 269SS r.w.s 271D of the Act. The case of the assessee is squarely covered from the decision of aforesaid. Respectfully following the decisions of the co-ordinate bench the penalty levied by the Ld. Assessing officer and Confirmed by the Ld.NFAC is liable to be deleted. Therefore, we hold that penalty imposed, is hereby deleted.