2024 (3) TMI 948 - AT - Income Tax

Penalty u/s 271D - violation of the provisions under section 269SS - Assessee sold the property for a consideration received in cash - meaning of the term specified sum - assessee pleaded that the cash of Rs. 9.38 lakhs was received from the purchaser on the day of registration and before the Jt. Sub Registrar only, since the purchaser did not have sufficient bank balance and hence had to pay such sum in cash, which was accepted by the assessee to avoid inconvenience to the purchase - HELD THAT - The meaning of the specified sum has dealt in the case of ITO vs. Shri. R. Dhinagharan (HUF), 2024 (1) TMI 61 - ITAT CHENNAI wherein as 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 payment at the time of registration of sale deed and payment takes place before sub-registrar for registration of property. In the present case before us, it is an admitted fact that the assessee received the amount of cash not as advance, but as the final payment in front of the Sub-Registrar at the time of registration for sale of property - 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. Grounds raised by the assessee allowed,

Summary

Issues:
The judgment addresses the issue of penalty levied under section 271D of the Income Tax Act, 1961 for receiving cash in a property sale transaction, specifically examining the applicability of section 269SS of the Act.

Summary:
The appellant, a Book Maker of Hyderabad Race Club, sold a property for Rs. 39,38,000, receiving Rs. 9,38,000 in cash at the time of registration. The Assessing Officer imposed a penalty under section 271D for this cash receipt. The CIT(A) upheld the penalty, citing violation of section 269SS, despite the appellant's explanation of the cash payment being due to the purchaser's lack of sufficient bank balance. The appellant contended that the provision of 'specified sum' introduced in 2015 does not apply as the cash was received at the time of registration, not as an advance. The Tribunal referred to a previous case where it was held that the 'specified sum' provision is for advance receivable, not final payments made at registration. Consequently, the Tribunal ruled in favor of the appellant, stating no violation of section 269SS and thus no penalty under section 271D is applicable.

Therefore, the Tribunal allowed the appellant's appeal, emphasizing that the cash received at registration did not contravene section 269SS, leading to the penalty being deemed not leviable.