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Facts
The assessee sold an immovable property for ₹45 lakhs, receiving ₹10 lakhs in cash and the rest through banking channels. The Income Tax Department initiated penalty proceedings under Section 271D of the Income Tax Act for alleged contravention of Section 269SS.
Held
The Tribunal held that Section 269SS of the Income Tax Act, as amended, is applicable to advances and not to the full sale consideration paid at the time of registration. Therefore, there was no violation of Section 269SS.
Key Issues
Whether penalty under Section 271D is leviable for receiving part sale consideration in cash at the time of sale deed registration.
Sections Cited
271D, 269SS, 273B
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 14.08.2025 for the Assessment Year (hereinafter referred to as "AY”) 2018-19.
The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the penalty levied u/s.271D of the Income Tax Act, 1961 (hereinafter referred to as "the Act”).
The brief facts of the case as noted in the penalty order are that the Income Tax Authorities received information pursuant to a survey conducted on Sub Registrar Office (SRO), Mayiladuthurai that in AY 2018- 19, the assessee had sold immovable property for a total consideration of ₹45 lakhs vide Sale Deed No.730/217 executed on 08.05.2017 by the SRO, Mayiladuthurai and that the assessee neither disclosed the fact about the aforesaid transaction nor offered capital gain/loss from it. It was further noted from the registered Sale Deed dated 08.05.2017 that the assessee had accepted as part consideration cash of ₹10 lakhs from the purchaser which according to the Income Tax Authorities was in contravention and violation of Section 269SS of the Act and therefore, he issued show cause notice dated 24.01.2023 calling upon the assessee ‘as to why’ penalty u/s.271D of the Act shouldn’t be levied. Pursuant thereto the assessee, inter-alia, pleaded not to levy penalty on the ground that the assessee didn’t derive any gain from the sale of immovable property, rather she suffered capital loss of Rs 6Lakhs on the transaction because it was a distress sale; and explained that she sold the property for the same consideration on which she purchased the property in the year 2014. The assessee explained that due to medical emergency, she had to raise money for which she had no other alternative but to sell the property in question without any gain (distress sale). And accordingly, the assessee received ₹10 lakhs in cash from the buyer party on the date of (AY 2018-19) Smt. Thilagavathi Sivaprakas :: 3 ::
registration of Sale-Deed as is evident from the said Sale-Deed which fact is acknowledged by the Income Tax Authority (refer para 7 of the penalty order, though not numbered). Thus, the assessee pleaded that since genuineness of the transaction being not doubted, and the amount in question has been paid at the time of execution of sale-deed and considering the fact of distress sale due to medical exigency, pleaded that there was reasonable cause for non-levy of penalty u/s.273B of the Act.
However, the Income Tax Authority didn’t accept the explanation given by the assessee and was pleased to levy penalty of ₹10 lakhs on the assessee.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), wherein assessee inter-alia pleaded that the penalty u/s.271D of the Act is not attracted by relying on the decision of the Tribunal in the case of ITO v. R. Dhinagharan (HUF) in for AY 2016-17 order dated 29.12.2023 wherein the Tribunal had to decide the appeal filed by the Revenue against action of the Ld.CIT(A) deleting the penalty u/s.271D of the Act. In that case also, the assessee had pleaded that since the sale consideration was received in cash at the time of execution of multiple Sale Deeds from different persons [for the sale of plots] and there were no advance received by the assessee, it was held that Section 269SS of the Act will not apply to the transaction and the Tribunal upheld the action of the Ld.CIT(A) and dismissed the Revenue appeal. However, (AY 2018-19) Smt. Thilagavathi Sivaprakas the Ld CIT(A) is noted to have not accepted the various plea of assessee, and was pleased to confirm the penalty. Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. The assessee is noted to have filed ITR-I on 06.07.2018 for AY 2018-19. The relevant facts which led to levy of penalty is that on 05.09.2014, the assessee & her husband purchased the immovable property in question from Smt. R. Umamaheswari for a sale consideration of ₹45 lakhs (through registered Sale Deed D.No.1770/2014). But due to medical exigency/ailments of a member of the family, the assessee had to take loan/borrow money from money lenders, and had to repay the loan.
And in order to repay the loan, assessee had no other alternative but to sell her property for Rs 45 lakhs without any gain. Since it was a distress sale, none offered her more consideration and had to be satisfied with the sale price and had to square-up with the money-lenders. And thus the assessee sold her property to the present buyer at ₹45 lakhs and thereby suffered long term loss of ₹6 lakhs. Since there was no gain from the transaction, the assessee was of the bona-fide belief that there was no necessity to file different form of ITR. The Income Tax Authorities received information from a survey [conducted in the case of the SRO, Mayiladuthurai that in AY 2018-19] that the assessee had sold immovable property for a total consideration of ₹45 lakhs vide Sale Deed No.730/217 (AY 2018-19) Smt. Thilagavathi Sivaprakas executed on 08.05.2017, which fact and that she didn’t disclose. On appeal, the Ld.CIT(A) confirmed the action of the Income Tax Authority levying penalty. Before us, the assessee has pleaded for cancellation of the penalty on two ground i.e. there was reasonable cause for non-levy of penalty u/s.273B of the Act because she was in dire necessity of money, which rose due to medical exigency which led her to borrow money from money-lenders, who had lend her money for making payment to Hospital.
Due to such circumstances, the assessee was forced to sell her immovable property for the same price for which she purchased i.e. ₹45 lakhs and it was nothing but a distress sale; & the second ground is that penalty is not leviable u/s.271D of the Act since section 269SS of the Act is not applicable in the facts of the present case, since payment of ₹10 lakhs along with ₹35 lakhs through banking channel was at the time of execution of the Sale Deed and therefore it will not attract penalty. For such a contention, the assessee drew our attention to the decision of the Tribunal in a similar case of ITO v. R. Dhinagharan (HUF) [supra] wherein the Tribunal had to decide the appeal filed by the Revenue against action of the Ld.CIT(A) deleting the penalty u/s.271D of the Act.
In that case also, the assessee had pleaded that since the sale consideration was received in cash at the time of execution of multiple Sale Deeds from different persons for the sale of plots and there were no advance received by the assessee, it was held that Section 269SS of the (AY 2018-19) Smt. Thilagavathi Sivaprakas :: 6 ::
Act will not apply to the transaction and the Tribunal upheld the action of the Ld.CIT(A) and dismissed the Revenue appeal by holding as under:
12.1 In the present case, the sale consideration was received in cash at the time of execution of sale deeds from buyer for the sale of immovable property and accepted as genuine which fact is implied since the AO dropped the assessment proceedings after issuing notice u/s.148A of the Act on 12.01.2023 [refer Page No.53 of Paper Book] and admittedly there was no advance received by the assessee/seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as ‘specified sum’ and on such presumption the Faceless Unit levied penalty u/s 271D of the Act. The legislative intent for bringing in amendment is clear from the text of Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017-18 with a view to cover all situations of cash transaction Rs. 2 Lakhs or over other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT Circular No.19 of 2015, dated 27.11.2015 and the relevant circular reads as under:-
Departmental Circular No.19 of 2015, dated 27-11-2015:-
Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances.
54.1 Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions were provided in the section.
54.2 Similarly, the provisions contained in section 269T of the Incometax Act, before amendment by the Act, provided that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more.
54.3 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 brining 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. 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.
In the result, the appeal filed by the Revenue is dismissed.
We note that facts are similar to that of the case [ITO v. R.
Dhinagharan (HUF) [supra], and note that in the present case, ₹10 lakhs was given to assessee while executing the Sale Deed which fact is acknowledged in the Sale Deed as well as by the Faceless Assessment Unit (FAU) by observing as under:
The copy of registered sale deed dated 05/05/2017 [which is issued by the Registering Authority of State Government of Tamilnadu] furnished by the assessee has also been examined carefully and found that during the year (AY 2018-19) Smt. Thilagavathi Sivaprakas under consideration; the assessee has sold an immovable property for total sale consideration of Rs. 45, 00,000/-; out of which a sum of Rs. 35,00,000/- has been received through Bank DD and the balance amount of Rs. 10,00,000/- has been received by her in cash. Thus; it is crystal clear that the assessee has received part sale consideration of Rs. 10,00,000/- in cash from the buyer party; on the date of registration of sale deed; as is evident from the said sale deed.[emphasis given]
It is noted that the assessee has received ₹10 lakhs in cash from the buyer party on the date of registration of Sale Deed as evident from the Sale Deed itself as noted in the penalty order vide order dated 28.07.2023. So we confirm the fact finding given by the Faceless Unit that on the date of registration of Sale Deed, assessee received ₹10 lakhs in cash. Hence, we find that there was no advance payment made to the assessee by the buyer for purchase of immovable property in question.
Amount of ₹10 lakhs has been paid at the time of registration of property along with ₹35 lakhs through banking channel. Respectfully following the ratio of the aforesaid decision of the Tribunal in ITO v. R. Dhinagharan (HUF) [supra], we are of the view that there is no violation of provisions of Sec.269SS of the Act in the present case as discussed; and hence, penalty is not exigible and therefore, penalty need to be deleted.
Moreover, the assessee has brought to our notice the factual circumstances which led to distress sale of land. Considering the same and in the light of material placed before us, we find that there is nothing to doubt the genuineness of the transaction in question; and due to medical exigency, the assessee had to sell the property without any gain, and was not in a position to insist on payment of sale-consideration in full (AY 2018-19) Smt. Thilagavathi Sivaprakas in cheque. Be that as it may be, since we have directed deletion of the penalty on the ratio given in ITO v. R. Dhinagharan (HUF) [supra], we decline to look into the reasonable cause canvassed by the assessee and leave it open.
In the result, appeal filed by the assessee is allowed.