MR. NANDAGOPAL,PONDICHERRY vs. JCIT, PUDUCHERRY

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ITA 1789/CHNY/2024Status: DisposedITAT Chennai20 November 2024AY 2016-17Bench: Shri S.S. Viswanethra Ravi (Judicial Member), Shri S.R. Raghunatha (Accountant Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that there was a reasonable cause for accepting a small part of the sale consideration in cash due to the urgent medical needs and limited time. The receipt of ₹.5,00,000/- at the time of sale deed execution was also found not to attract Section 269SS.

What were the facts?

The assessee, a NRI, accepted cash of ₹.8,85,000/- and ₹.5,00,000/- from a buyer towards the sale of immovable property. This was done to meet urgent medical expenses for IVF treatment. The assessee argued there was no sufficient time to arrange for non-cash payment due to his short stay in India.

What were the issues?

Whether a reasonable cause existed for accepting cash payment for property sale, and if the penalty under Section 271D was justified.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS

AI-generated summary — verify with the full judgment below

Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha

Hearing: 12.11.2024Pronounced: 20.11.2024

Year: 2016-17 Mr. Nandagopal, Vs. The Joint Commissioner of Door No. 17, 3rd Cross Street, Income Tax, Gnanaprakasam Nagar, Saram, Puducherry. Pondicherry 605 008. [PAN:AUYPN5080H] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri N. Viswanathan, Advocate ��थ� की ओर से/Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई की तारीख/ Date of hearing : 12.11.2024 घोषणा की तारीख /Date of Pronouncement : 20.11.2024 आदेश /O R D E R

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

1.

This appeal filed by the assessee is directed against the order dated 26.04.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17.

2.

The assessee raised 6 grounds of appeal challenging the action of the ld. CIT(A) in confirming the penalty imposed under section 271D of the Income Tax Act, 1961 [“Act” in short].

3. We note that the JCIT proceeded to impose the penalty of ₹.13,85,000/- under section 271D of the Act by holding that the assessee accepted cash of ₹.8,85,000/- and ₹.5,00,000/- from the buyer towards sale of immovable property. The ld. CIT(A) confirmed the same.

4. Before us, the ld. AR Shri N. Viswanathan, Advocate submits that the assessee is a NRI, working in Dubai for more than 20 years. The assessee and his wife are under medical treatment for IVF method for having a child. The concerned hospital advised the assessee to have cash to the tune of ₹.30.00 lakhs for treatment. The assessee, in order to have the said ₹.30.00 lakhs, sold his immovable property in Bangalore and utilized the said amount for hospitalization of himself and his wife. For executing the sale deed, the assessee arrived on 14.10.2015 in Chennai and proceeded to Bangalore on 15.10.2015 to execute sale deed. The ld. AR drew our attention to page 8 and page 25 of the paper book and argued that the assessee has no time in advising the vendee to give sale consideration in other than cash mode. Further, he argued that the assessee immediately left Chennai on 16.10.2015 after completing medical related works and execution of sale deed to his work place in Dubai. The ld. AR argued that there is reasonable cause for accepting a small part of sale consideration in cash as there was no sufficient time for the assessee. The ld. AR further argued that the assessee paid tax on capital gain and he prayed to cancel the penalty of ₹.13,85,000/-.

5.

The ld. DR Ms. Gowthami Manivasagam, JCIT relied on the order of the ld. CIT(A).

6.

After hearing both the parties, we note that the assessee arrived at Chennai on 14.10.2015 and left India on 16.10.2015, which clearly supports the arguments of the ld. AR that there was no sufficient time to organize his affairs in executing sale deed. The ld. AR contended that the assessee, having no option at the time of execution of sale deed, accepted a small part of sale consideration in cash. The ld. AR relied on the decision of this Tribunal in the case of ITO v. Shri R. Dhinagharan (HUF) in dated 29.12.2023, placed at pages 36- 53 of the paper book, which clearly held that the provision under section 269SS of the Act would get attracted to the sum received as cash advance of immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of registered sale deed. Therefore, the receipt of ₹.5.00 lakhs at the time of execution of sale deed does not fall under the provisions of section 269SS of the Act and thus, imposing penalty on receipt of ₹.5.00 lakhs is deleted.

7.

We note that the assessee filed medical records for treatment of IVF at Vellore at page 9 to 32 of paper book, wherein, it is clearly supports the arguments of the ld. AR that the assessee and his wife are in constant IVF treatment on different occasions. Therefore, we find reasonable cause made out by the assessee in accepting the receipt of small part of sale consideration as advance of ₹.8,85,000/- in cash to meet incidental medical expenses of IVF treatment. Therefore, the penalty of ₹.13,85,000/- as confirmed by the ld. CIT(A) is not justified and it is cancelled.

8.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 20th November, 2024 at Chennai.

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