NYMISH KUNDUM,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-1(1), RAJAMAHENDRAVARAM

आयकर अपील सं./ (निर्धारण वर्ा / Assessment Year : 2016-17) Nymisha Kundum, Vs. Income Tax Officer, Narsipatnam. Ward-1(1), PAN: AYZPD 6914 B Rajahmundry. (अपीलधर्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधर्थी की ओर से/ Assessee by : Sri GVN Hari, AR प्रत्यधर्थी की ओर से / Revenue by : Dr. Aparna Villuri, Sr. AR सुिवधई की तधरीख / Date of Hearing : 09/05/2024 घोर्णध की तधरीख/Date of : 28/05/2024 Pronouncement O R D E R PER S. BALAKRISHNAN, Accountant Member :

This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2022-23/1043662684(1), dated 29/06/2022 2 arising out of the order passed U/s. 271D of the Income Tax Act, 1961 [“the Act”] for the AY 2016-17.

2. At the outset, it is noticed from the appeal record that there is a delay of 53 days in filing the appeal before the Tribunal. Explaining the reasons for belated filing of the appeal, the assessee filed an affidavit along with a petition seeking condonation of delay and the contents of the said affidavit are as under: “1 .…..

3 4. Briefly stated the facts of the case are that the assessee, an individual, filed her return of income on 18/11/2016 for the AY 2016-17 declaring total income of Rs. 5,39,580/-. Later on, the case was selected for scrutiny under CASS for the reason “whether the cash deposits have been made from disclosed sources”. During the course of assessment proceedings, the assessee was asked to furnish the sources of cash deposits. In response, the assessee furnished the information as called and for and explained that there were cash deposits of Rs. 13,57,600/- in the bank account and the source for the same was the sale of immovable property on 19/08/2015 vide Document No. 3631/2015 and 3632/2015. The assessee also paid capital gains on the sale consideration of the said property. Accordingly, the Ld. AO completed the assessment U/s. 143(3) of the Act on 24/11/2018 and determined the total income at Rs. 5,78,580/-. Thereafter, by observing that on sale of the immovable property, the assessee has received full value of consideration in cash of Rs. 15,41,000/-, which is in violation of the provisions of section 269SS of the Act, penalty proceedings U/s. 271D of the Act was initiated by the Ld. AO and issued notices to the assessee. In response, the assessee made written submissions and explained the reasons for accepting the sale consideration in cash. The explanation given by the assessee was 4 extracted in the order passed U/s. 271D of the Act, dated 05/02/2022. The assessee also relied on the decision of the ITAT in the case of Venkata Narayana Raju Pasuparthy vs. Addl. CIT (ITA No. 229 of 2019). However, the Ld. AO did not consider the submissions of the assesseee as well as the explanation given by the assessee and passed the penalty order by concluding that since the assessee has received sale consideration of Rs. 15,41,000/- violating the provisions of section 269SS of the Act, penalty of Rs.15,41,000/- was levied on the assessee U/s. 271D of the Act. Aggrieved by the penalty order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC.

1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in sustaining the penalty of Rs. 15,41,000/- levied by the Ld. AO U/s. 271D of the Act. 3. The Ld. CIT(A) ought to have held that the case of the appellant falls within the scope of reasonable cause as specified in section 273B of the Act. 4. Any other ground that may be urged at the time of appeal hearing.

5 Further, the assessee has also raised an additional ground which reads as under:

The penalty order U/s. 271D of the Act passed on 5/2/2022 is liable to be quashed as invalid in the absence of any satisfaction recorded by the AO in the assessment order dated 24/11/2018 U/s. 143(3) of the Act.

In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as 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 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.

8 10. The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee. The assessee has also offered the capital gains to tax. Further, the explanation given by the assessee for receipt of sale consideration of Rs. 15,41,000/- constitutes a “reasonable cause” as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circumstances as explained by the Ld. AR in his arguments and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the tax on capital gains thereon. Under these circumstances, we are of the considered view that the penalty levied by the Ld. AO-NFAC U/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law and accordingly the orders of the Ld. AO-NFAC and Ld. CIT(A)- NFAC are set aside and thereby we delete the penalty. It is ordered accordingly.