MADHU DEVI,VIJAYAWADA vs. INCOME TAX OFFICER, WARD-2(1), VIJAYAWADA

2. Since the issue raised by the assessees for both the appeals are identical in nature, these appeals are clubbed and a consolidated order being passed. We now take up the appeal in A.Y.2017-18 as a lead appeal.

This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1067152186(1) dated 30.07.2024 for the A.Y.2017-18 arising out of the penalty order passed under section 271D of Income Tax Act, 1961 (in short ‘Act’).

I.T.A.No.361/VIZ/2024 Madhu Devi I.T.A.No. 362/VIZ/2024 Rakesh Kumar Jain 4. Brief facts of the case are that, assessee being an individual filed her return of income admitting a total income of Rs. 4,99,990/- on 24.08.2017 for the A.Y. 2017-18. The return was subsequently summarily processed under section 143(1) of the Act. Thereafter, the case was selected for limited scrutiny for the purpose of verifying the “cash deposits and transaction in property” and “Capital gains / loss on sale of property”. Ld. Assessing Officer [hereinafter in short “Ld. AO"] during the course of assessment proceedings after examining the information called for, accepted the return of income filed by the assessee. However, Ld. AO failed to record any satisfaction regarding imposing of the penalty in the assessment order. Subsequently, penalty proceedings under section 271D of the Act was initiated, on obtaining permission from JCIT, for violating the provisions of section 269SS of the Act. It was observed that assessee has received Rs.46,54,622/- (being 19.23% of her share of total consideration of Rs.2,45,05,000/-) in cash towards sale consideration of immovable property vide sale deed No. 3155/2016 dated 20.10.2016. Ld. AO observed that assessee has contravened the provisions of section 269SS of the Act and issued show-cause notice dated 23.03.2021. In response, assessee filed her reply. After perusing the reply of the assessee, Ld. AO being not convinced with her submissions proceeded to levy the penalty of Rs.46,54,622/- for contravening the provisions of section 269SS of the Act, under 271D of the Act.

Being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: -

The Ld. CIT(A) NFAC and the Assessing Officer (AO) failed to recognize that there was a reasonable cause and the lower authorities neglected to consider the levy of penalty from the perspective of section 273B of the IT Act.

For these and other reasons that are to be urged at the time of hearing the appellant prays that the penalty imposed is liable to be deleted.”

The subject order levying penalty u/s 271D of the IT Act is barred by limitation, as per the provisions of section 275(1)(c) of the IT Act. Therefore, the impugned order lacks legal validity and should be quashed.”

At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that the penalty order under section 271D of the Act is barred by limitation as per provisions of section 275(1)(c) of the Act. On this issue, he provided a copy of the CBDT notification dated 25th June, 2021 and submitted that the end date to which the completion of action was extended to 30th September, 2021, he therefore pleaded that penalty order of the Ld. AO is void ab-initio and is liable to be dismissed.

On the contrary, Ld. Departmental Representative [hereinafter in short “Ld. DR”] submitted that the CBDT vide Notification No. 17th September, 2021, the period of limitation has been extended to 31stMarch, 2022 and hence the additional legal ground raised by the assessee is not sustainable.

We have heard both the sides and perused the notifications. As submitted by the Ld. DR, the period of limitation is extended up to Page No. 5

Now we proceed to discuss the issue on merits.

On merits, Ld.AR submitted that the cash was directly deposited by the buyer into the assessee’s account. Further, he submitted that the assessee has disclosed while filing return of income and computed capital gains accordingly. He also submitted that the assessee being a Senior Citizen was not aware of the amendment made to provisions of section 269SS of the Act. The Ld.AR on this issue relied on the following case laws: -

Ld.AR also further relied on the decision of the Hon’ble Supreme Court of India on the ratio laid down in the case of CIT v. Jai Laxmi Rice Mills [379 ITR 0521 (SC)]. Ld.AR submitted that the Ld. AO has not recorded any satisfaction in the assessment order and hence decision of the Hon’ble Supreme

Per contra, Ld. DR heavily relied on the orders of the Revenue Authorities.

We have heard both the sides and perused the material available on record. Admittedly facts are that, the assessee has received cash for the sale of property against her share and has deposited into the bank account of the assessee. Section 269SS of the Act was amended by Finance Act, 2015 w.e.f 01.06.2015 which stipulates that no person shall take or accept from any other person, 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. The term “specified sum” has been defined in section 269SS of the Act as follows:

From the plain reading of the above section, which bars any person from receiving any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. However, the Memorandum explaining the provisions of Finance Bill, 2015 with respect to amendment proposed w.e.f 01.06.2015 in section 269SS is reproduced below: Page No. 7

It can be observed that the primary objective of the amendment proposed in 269SS of the Act is to curb generation of black money. However, in the instant case the fact is that cash is received by the assessee which has been recorded in the sale deed and partly deposited by the assessee into the bank account, goes to the root of the matter that there is no suppression of cash receipts by the assessee. Further Ld.AR also submitted that assessee has offered the same as capital gains to tax. We therefore are of the considered view that in the instant case it does not attract the provisions of section 269SS of the Act.

From the submissions of the Ld.AR, we noticed that assessee is a Senior Citizen and was not aware of the amendment made to provisions of section 269SS of the Act. Further, it was submitted by the Ld.AR that the assessee has disclosed the capital gains including the cash receipts while filing the return of income. Even though the ignorance of law may or may not constitute reasonable excuse, if it is merely technical or venial breach, no penalty can be levied because levy of penalty would necessarily imply

Further, it is also noticed that the Ld. AO has not recorded satisfaction regarding initiation of penalty proceedings in the assessment order. The ratio laid down in the case CIT v Jai Laxmi Rice Mills (supra), relied on by the Ld.AR, the Hon’ble Supreme Court has observed as follows:

Therefore, on this count also in the instant case, by respectfully following the ratio laid down by Hon’ble Supreme Court, we are of the Page No. 9

In the result, appeal of the assessee is partly allowed.

Coming to appeal relating to since the issue is exactly similar and grounds as well as the facts are also identical. Therefore, the decision taken in . Accordingly, appeal filed by the assessee is partly allowed.

To sum-up, appeals filed by both the assessees are partly allowed.