Loading judgment…
Facts
The assessee received sale consideration of Rs. 12 lakh in cash for a land sale, while the fair market value was Rs. 15,71,500. The Assessing Officer imposed a penalty under Section 271D of the Income-tax Act for contravening Section 269SS.
Held
The Tribunal noted that the impugned transaction occurred before the statutory amendment effective from 01/06/2015, which prohibited such cash transactions. Therefore, the penalty levied was deemed bad-in-law.
Key Issues
Whether the penalty levied under Section 271D for accepting cash payment for property sale is justified when the transaction predates the statutory prohibition.
Sections Cited
271D, 269SS
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 21/01/2025 Date of Order – 23/01/2025
O R D E R PER V. DURGA RAO, J.M.
Captioned appeal by the assessee is against the impugned order dated 03/07/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2017–18.
In its appeal, the assessee has raised following grounds:–
“1. Whether on the facts and in law, the order passed by learned CIT(A) u/s 271D of the Act is bad in law. 2. Whether on the facts and in law, the learned CIT(A) erred in upholding the action of learned AO in making an addition of Rs. 12,00,000/- u/s 271D of the Act to income of the assessee, ignoring the facts of the case as well as submissions and documentary evidence filed by the assessee.
2 Gitanjali Chaitanya Guram ITA no.522/Nag./2024
Whether on the facts and in law, the learned CIT(A) erred in not condoning the delay in filing the appeal.
The Assessee craves to add, alter, vary, omit, amend or delete one or more of the above grounds of appeal before, or at the time of, hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to the law.”
During the course of hearing, the Registry has pointed out a delay of 25 days in filing the present appeal before the Tribunal. While going through the record available before us, we find that the assessee has furnished a sworn affidavit–cum–application dated 18/01/2025, requesting the Bench for condoning the delay in filing the present appeal. The reason for the delay is explained the said Affidavit which is available on record.
After considering the submissions of the learned Authorised Representative and averments made in the affidavit, we are of the opinion that the assessee is prevented in filing the appeal belatedly and we are satisfied that the delay in filing the appeal is due to reasonable cause. Consequently, we condone the delay of 25 days in filing the present appeal and admit the same for adjudication on merit.
While going through the impugned order passed by the learned CIT(A), we find that there was a delay in filing the first appellate appeal before the learned CIT(A) and the assessee has explained the said delay. By considering over all circumstances of the case, we are of the opinion that thought the learned CIT(A) has passed an ex–parte order, however, in the interest of justice, we proceed to dispose off the said appeal by passing orders on merits.
3 Gitanjali Chaitanya Guram ITA no.522/Nag./2024
Facts in Brief:– The assessee is an individual filed her return of income for the year under consideration on 27/01/2018, declaring total income of ` 4,46,510. During the year, the assessee sold a piece of land against the sale consideration of ` 12 lakh and received the same in cash and the same was offered to tax, whereas the fair market value of the property was ` 15,71,500. The Assessing Officer, however, observed that the assessee had accepted cash of ` 12 lakh, which is above ` 20,000, is in contravention of provisions under section 269SS of the Act, and accordingly proceeded to levy penalty under section 271D of the Act.
On appeal, before the learned CIT(A) the assessee filed detailed submissions which was considered by the learned CIT(A), however, the same was not found tenable on account of the following:–
“The assessee's claim that the amount of sale consideration to the tune of Rs. 12 lakhs was received in the abovementioned manner but the same is not verifiable with the registered deed of the property in respect of which such sale consideration was received. The registered sale deed has the only thing mentioned about payment of sale consideration is that the total amount of sale consideration to the tune of Rs 12 Lakh has been received in cash by the seller (Assessee), 6 months prior to date of registry. Further, the registered deed finds no mention of any agreement between the assessee and the purchaser whose copy has been produced by the assessee while furnishing her submission. In the absence of the same, the terms and conditions mentioned therein the alleged agreement and the claim of the assessee regarding above mentioned schedule of cash receipts on account of sale consideration remains unsubstantiated and unverified. As per section, 271D(1) If a person takes or accepts any loan or deposit or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted.”
The learned CIT(A) confirmed the order passed by the Assessing Officer while observing as under:–
4 Gitanjali Chaitanya Guram ITA no.522/Nag./2024 “In view of the facts discussed above, I am of the opinion that the assessee has contravened the provisions of section 269SS of the IT Act while accepting specified sum of Rs. 12,00,000/- in respect of sale of immovable property, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed]. Accordingly, she is in default and as such she is liable for penalty u/s 271D of the Income-tax Act, 1961. Therefore, a sum of Rs. 12,00,000/- is being levied as penalty u/s 271D of the Income-tax Act, 1961.”
The assessee being aggrieved is in further appeal before the Tribunal.
We have given a thoughtful consideration to the arguments made by the rival parties and perused the material available on record. The impugned transaction have been executed on 24/05/2016, on account of payment of cash towards advance for transfer of immovable, which was prohibited by statute w.e.f. 01/06/2015. Since in the present case, the transaction has taken place before 01/06/2015, hence, levy of penalty is bad–in–law and not justified. Even otherwise also, there is nothing on record which suggest that the transaction is not genuine. Consequently, we set aside the impugned order passed by the learned CIT(A) and quash the penalty levied under section 271D of the Act. The grounds raised by the assessee are allowed.
In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 23/01/2025
Sd/- Sd/- K.M. ROY V. DURGA RAO ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 23/01/2025
5 Gitanjali Chaitanya Guram ITA no.522/Nag./2024