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Income Tax Appellate Tribunal, DELHI BENCHES : C : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI VIMAL KUMAR
ORDER PER VIMAL KUMAR, JM:
The appeal filed by the assessee is against the order dated 29.06.2024 of the ld. Commissioner of Income-tax (Appeals), NFAC [hereinafter referred to as the Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the penalty order dated 09.09.2021 of the ld. AO/National Faceless Assessment Centre, Delhi (hereinafter referred to as ‘the ld. AO’) u/s 271D of the Act in pursuance of assessment order dated 26.11.2019 for Assessment Year 2017-18.
Brief facts of the case are that the assessment order u/s 143(3) of the Act dated 26.11.2019 was passed by the ld. AO. During the assessment proceedings, the ld. AO found the assessee to have made cash deposits of Rs.10,58,000/- during demonetization period. As per the assessee, cash deposit of Rs.9,80,000/- belonged to the amount of sale consideration of immovable property as on 06.11.2016 in old currency. As the assessee accepted cash above Rs.20,000/- in violation of section 269SS of the Act, the case was referred to Jt. Commissioner of Income-tax for appropriate action. On the basis of concrete information available with the Department, the JCIT, Range-1(1), Muzaffarnagar, issued penalty notice u/s 271D of the Act on 02.03.2021. The assessee filed reply online on the portal. The assessee was served with show cause notice dated 15.07.2021. The assessee filed reply dated 18.07.2021. On completion of penalty proceedings, the ld. AO passed penalty order dated 26.11.2019.
Against the order dated 26.11.2019 of the ld. AO, the appellant-assessee preferred appeal before the ld.CIT(A) which was dismissed, vide order dated 29.06.2024.
Being aggrieved, the appellant-assessee preferred the present appeal with the following grounds:-
“1. Under the facts and circumstances of the case, Ld. CIT(A) grossly erred on facts as well as in law in not annulling the penalty order passed by the Ld. AO u/s 271DA of the IT Act, 1961 which is ex-facie, illegal, perverse and bad in law.
2. The Ld. CIT(A) grossly erred on facts as well as in law in confirming the penalty of Rs. 9,80,000/- u/s 271DA of the IT Act, 1961 without appreciating the facts of the case in proper perspective.
3. The Ld. CIT(A) grossly erred on facts as well as in law in confirming the penalty of Rs.9,80,000/- u/s 271DA of the IT Act, 1961 by holding that the appellant has received consideration of Rs.9,80,000/- in cash without any reasonable cause without appreciating the fact that the appellant had duly explained the reason for receiving the consideration in cash.”
The ld. AR for the appellant assessee submitted that the assessee is a senior citizen of 70 years. The assessee had purchased a flat before allotment which was a one room dwelling unit at sector 63, Chandigarh through general power of attorney on 10.05.2010 from Shri Varinder Singh for a consideration of Rs.6,76,000/-. The flat was sold for Rs.9,80,000/- the consideration for which was received in cash which was deposited in the bank account. The appellant purchased the flat before allotment and as it was not allowed to transfer the flat before allotment, the sale deed could not be executed, so, the assessee had purchased the flat through general power of attorney. The assessee, under financial need, wanted to sell the flat. Shri Varinder Singh, the original allotee of the flat had to execute the sale deed with him on receipt of sale consideration in his bank account. The agreement to sell dated 05.11.2016 mentions the receipt of cash payment. The cash was deposited in the bank and offered to tax at the time of filing the ITR. The transaction was genuine and bona fide. The ld. AO, 3 in assessment order dated 26.11.2019 mentioned no adverse inference in respect of source or genuineness of the transaction.
5.1 The Hon'ble Supreme Court in the case of PCIT vs. Shree Madhi Surali Vibhag Nagarik Sahakari Dhiran Mandali Ltd. [2024] 167 taxmann.com 471 (SC) dismissed the SLP against the decision of Gujrat High Court [2024] 167 taxmann.com 470 (Gujarat)] wherein it was decided that where Assessing Officer had accepted deposits as genuine, with no additions made under section 68 of the Act as creditors' authenticity was not questioned, in such circumstances, penalties under sections 271D and 271E could not be levied on the assessee.
5.2 Reliance was also placed on Smt. Vijapurapu Sudha Rao vs ITO [2023] 157 taxmann.com 669 (Visakhapatnam - Trib.) wherein it is held that where assessee received payment in cash for sale of immovable property, since cash received by assessee had been deposited by assessee into bank account and assessee had also offered capital gains to tax, penalty imposed under section 271D was unsustainable in law.
The ld. DR relied on the impugned orders.
From examination of record in the light of the rival contentions, it is crystal clear that the assessee through agreement to sell dated 05.11.2016 received cash payment which was deposited in the bank. The ld. AO in assessment order dated 26.11.2019 did not doubt the source or genuineness of the transaction. The Hon’ble Supreme Court in PCIT vs. Shree Madhi Surali Vibhag Nagarik Sahakari Dhiran Mandali Ltd. (supra), in para No.14 has held as under:- “14. The Tribunal also arrived at a finding of fact that the Assessing Officer also accepted deposits made by the assessee as genuine and the breach of sections 269SS and 269T occurred due to the bona fide belief of the assessee as the Assessing Officer has also not made any addition on account of the impugned deposits in the assessment order as the veracity of the creditors was not doubted. The Tribunal, therefore, arrived at the conclusion that if the veracity of deposit was doubted, then addition would have been made under section 68 of the Act, 1961 ……therefore, provisions of sections 269SS and 269T of the Act, 1961 are not applicable in the facts of the present case and consequently, penalty u/s. 271D and 271E of the Act cannot be levied.”
In view of the above material facts and legal principle, it is held that the passing of the penalty order dated 09.09.2021 being not just, fair, reasonable, legal is set aside. The grounds of appeal
No.1 to 3 are allowed.