SHAIK JAFAR,KURNOOL vs. ITO., WARD-2, KURNOOL
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Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad
Before: Shri Manjunatha, G. & Shri K. Narasimha Chary
Per Manjunatha, G. A.M This appeal filed by the assessee is directed against the order dated 15/03/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2017-18.
The brief facts of the case are that the assessee is an individual filed its return of income for the A.Y 2017-18 declaring total income of Rs.3,60,000/-. During the course of assessement proceedings, the Assessing Officer noticed that the assessee has
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not admitted Long-Term Capital Gain at Rs.3,93,769/-. The working of Long-Term Capital Gain is verified and the Assessing Officer completed the assessment after making addition of Rs.3,93,769/-. Thereafter, notice u/s 274 r.w.s. 271D of the I.T. Act, 1961 dated 31.3.2021 was issued and called upon the assessee to explain as to why the penalty u/s 269SS of the I.T. Act, 1961 for accepting the sale consideration in cash amounting to Rs.16,20,000/- cannot be levied. The assessee neither appeared nor filed any details. Therefore, the Assessing Officer passed an order imposing penalty u/s 271D of the Act for Rs.16,20,000/- towards consideration received in cash, in contravention of section 269SS of the I.T. Act, 1961.
Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the assessee submitted that the consideration received in cash for sale of property cannot be treated as specified sum referred to u/s 269SS of the I.T. Act, 1961. The learned CIT (A) after considering the relevant submission of the assessee and after taken note of certain judicial precedents, rejected the explanation furnished by the assessee and upheld the penalty levied by the Assessing Officer u/s 271D of the I.T. Act, 1961 for contravention of the provisions of section 269SS of the I.T. Act, 1961.
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Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee submitted that the Assessing Officer erred in levying penalty without recording satisfaction as required under law and in this regard, he relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Jayalakshmi Rice Mills (P) Ltd (2015) 64 Taxmann.75. The learned Counsel for the assessee further submitted that the penalty u/s 271D is not applicable where consideration received in cash for sale of property and in this regard, he relied upon the decision of the ITAT Hyderabad Bench in the case of Katasani Thirupal Reddy in ITA No.372/Hyd/2023.
The learned DR, on the other hand, supporting the order of the learned CIT (A) submitted that the law does not provide for satisfaction from the Assessing Officer during the course of assessement proceedings, because the authority imposing the penalty u/s 271D is different from the Assessing Officer who completes the assessment.. The learned DR further submitted that the consideration received in cash for transfer of property is falls under the ambit of ‘specified sum’ referred to u/s 269SS of the I.T. Act, 1961 and for any violation, the penalty u/s 271D can be levied. The Assessing Officer after considering the relevant facts has rightly levied the penalty for accepting the sale
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consideration in cash in contravention of provisions of section 269SS of the I.T. Act, 1961.
We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The Assessing Officer levied the penalty u/s 271D of the I.T. Act, 1961 for violation referred to u/s 269SS of the Act in respect of sale consideration received in cash for transfer of immovable property. The Assessing Officer invoked clause (iv) of section 269SS of the Act, which deals with ‘specified sum’ and as per the said explanation, the ‘specified sum’ is any sum of money receivable whether as advance or otherwise in relation to transfer of immovable property, whether or not the transfer takes place. The memorandum explaining the amendment to Finance Bill 2015 for insertion of clause (iv) explained the intention of bringing the said provision to section 269SS of the I.T. Act, 1961. As per said explanation, in order to curb cash transaction in immovable property transaction, an explanation has been inserted to section 269SS by way of clause (iv) which deals with the specified sum. Further, the specified sum has been extended to include any sum of money receivable whether as advance or otherwise. Going by the intention of the Legislature to expand the scope of 269SS of the I.T. Act, 1961 to cash transaction in immovable property, in our considered opinion, it does not intend to cover the consideration received for transfer of property at the time of registration, but only limited to advances received in relation to
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any transaction of immovable properties. Therefore, at any stretch of imagination the definition of ‘specified sum’ cannot be extended to a consideration received in cash at the time of registration of the property as per registered sale deed and offered to tax. Therefore, in our view this is against the spirit of intention of the legislature and this view is further supported by the decision of the Coordinate Bench of the Hyderabad Tribunal in the case of Katasani Thirupal Reddy vs. Income Tax Officer in ITA No.372/Hyd/2023 dated 5/7/2024 where the Tribunal by following the decision of the Coordinate Bench of ITAT Chennai in the case of Income Tax Officer vs. Shri. R. Dhinagharan (HUF), ITA No. 3329/Chny/2019, dated 28/12/2023 held as under: 6.“We have gone through the record in the light of the submissions made on either side. Case of the assessee is that in the transaction in question he received the sale consideration of Rs. 21.42 Lacs in cash in view of the pressing need of health care of his mother and since the amendment has come into force only a month earlier, he was not properly advised as to the bar of receiving cash under the amendment act. Admittedly the sale took place on 3/7/2015 whereas the amendment in question has come into force w.e.f. 1/6/2015. Assessee suffered loss in this transaction and such a position is not disputed by the Department. In the circumstances, the assessee not receiving proper advice as to the non-desirability of receiving the sale consideration in cash and his explanation cannot be brushed aside. 7. Apart from this, the relevant word “specified sum” has been defined under explanation (iv) to section 269SS, which is reproduced as under : “(iv) “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.” 8. The meaning of the “specified sum” has also been dealt with by a Co- ordinate Bench of the Tribunal in the case of ITO vs. Shri. R. Dhinagharan (HUF), ITA No. 3329/Chny/2019, dated 28/12/2023, wherein the ITAT took the view that the ‘ sum specified’ as per Explanation to Section 269SS of the Act, only applicable for advance receivable, namely, ‘as advance or otherwise’ means advance can be in any manner, and therefore, this provision will not apply to the transaction that happens when the final
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payment at the time of registration of sale deed and payment takes place before sub-registrar for registration of property. Relevant part of para- No.12.1 of the decision of the ITAT is as under : “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 bringing 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 present case before us, it is an admitted fact that the assessee received the amount of cash of Rs.9,38,000/- not as advance, but as the final payment in front of the Sub-Registrar at the time of registration for sale of property. While respectfully following the view taken by the Co-ordinate Bench of the Tribunal in the case of R. Dhinagharan(HUF) (supra), we hold that there is no violation of provisions of section 269SS of the Act in the present case in the given facts and circumstances and hence, penalty under section 271D of the Act is not leviable. Hence, we allow the grounds raised by the assessee. “
In this view of the matter and considering the facts and circumstances of the case and also by following the decision of the Coordinate Bench of the Hyderabad Tribunal in the case of Katasani Thirupal Reddy vs. Income Tax Officer (Supra), we direct the Assessing Officer to delete the penalty levied u/s 271D of the I.T. Act, 1961.
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In the result, appeal filed by the assessee is allowed.
Order pronounced in the Open Court on 16th July, 2024. Sd/- Sd/- (K. NARASIMHA CHARY) (MANJUNATHA, G.) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 16th July, 2024 Vinodan/sps Copy to: S.No Addresses 1 Shri Shaik jafar, 85/68 Shareen Nagar, Kurnool A.P 2 Income Tax Officer Ward -2 Kurnool 3 Pr. CIT - Kurnool 4 DR, ITAT Hyderabad Benches 5 Guard File By Order
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