2022 (9) TMI 764 - AT - Income Tax

Penalty imposed u/s 271D - violation of provisions of section 269SS - Information was received by the A.O. from JDIT (I CI) with regard to the above receipt of cash by the assessee along with the sale deeds provided or not? - proof of reasonable cause as mandated u/s 273B - Whether assessee has not made out a case of reasonable cause as mandated u/s 273B for waiver of penalty? - HELD THAT - The disposal of the property was also challenging due to the slump in the real estate market pursuant to the introduction of RERA and other factors. When the assessee s father found a buyer, the assessee decided to fly down to Bangalore to complete the formalities. On the date of execution of sale deed, the cash was paid. Considering the age of father, the assessee accepted the cash and closed the deal once and for all. The intention of the assessee was not to defraud the revenue by violating the provisions of the Act or by evading taxes. The same is evident from the fact that the cash receipts have been duly disclosed in the sale deed as well as the income tax returns. The copies of the sale deeds are enclosed in the paper book filed by the assessee. As mentioned earlier, due to paucity of time, the urgency and considering various factors that go into finalizing the transaction, the assessee was forced to accept cash to go ahead with the execution of the sale deed. The above facts clearly stipulated a 'reasonable cause as mandated u/s 273B for violation of the provisions of section 269SS. There is 'reasonable cause as mandated u/s 273B on facts of the instant case. Hon ble Jharkhand High Court in the case of OMEC Engineers 2007 (9) TMI 27 - HIGH COURT , JHARKHAND had deleted the penalty by considering the urgency of the assessee to make payment, who had borrowed money in violation of provisions of section 269SS - Appeal of assessee allowed.

Summary

Issues:
- Justification of confirming penalty u/s 271D of the I.T. Act by CIT(A)

Analysis:
The case involved the imposition of a penalty under section 271D of the I.T. Act on an assessee, a non-resident individual, for accepting part sale consideration in cash for two immovable properties during the relevant assessment year. The Assessing Officer (A.O.) initiated the penalty based on information received regarding the cash receipts by the assessee, which violated the provisions of section 269SS of the I.T. Act. The A.O. imposed a penalty of Rs. 12,37,000 due to the lack of a satisfactory explanation from the assessee despite notices issued. The CIT(A) upheld the penalty, stating that the assessee had violated the provisions of the Act by accepting cash instead of banking transactions only, as required by law.

The assessee contended that there was a reasonable cause for accepting cash, citing the circumstances of the transactions during the demonetization period and the urgency to complete the deals due to various factors affecting the real estate market. The assessee's father, aged 87, played a crucial role in the negotiations and the sale of the properties. The Tribunal noted that the assessee had disclosed the cash receipts in both the sale deeds and the income tax returns, indicating no intention to defraud or evade taxes. The Tribunal considered the peculiar facts of the case, including the NRI status of the assessee and the urgency to finalize the transactions, as constituting a 'reasonable cause' under section 273B of the I.T. Act, thereby justifying the acceptance of cash.

Moreover, the Tribunal distinguished the case from precedent relied upon by the Departmental Representative, emphasizing that the assessee's situation warranted leniency due to factors beyond her control. Citing judicial pronouncements, including decisions by various High Courts, the Tribunal concluded that the penalty imposed under section 271D was unwarranted in this case. Relying on the principles of 'reasonable cause' and considering the facts and circumstances presented, the Tribunal allowed the appeal filed by the assessee and deleted the penalty imposed under section 271D of the I.T. Act.

In conclusion, the Tribunal's decision highlighted the importance of assessing each case on its individual merits, considering the specific circumstances and justifications presented by the assessee. The ruling emphasized the application of legal principles such as 'reasonable cause' and precedent from judicial pronouncements to determine the appropriateness of penalties under tax laws, ultimately leading to the deletion of the penalty in this particular case.