2024 (5) TMI 1365 - AT - Income Tax

Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property by the assessee attracting the provisions of section 269SS - case was selected for scrutiny under CASS for the reason whether the cash deposits have been made from disclosed sources - HELD THAT - The admitted facts are that the assessee has received cash for the sale of immovable property from the buyer to the extent of 15,41,000/-. Section 269SS of the Act as amended by Finance Act, 2015 w.e.f. 1/6/2015 stipulates that no person shall take or accept from any other person, any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. From the plain reading of the above section, it is noted that any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. On this aspect the Memorandum explaining the provisions of Finance Bill 2015 with respect to amendment proposed w.e.f 1/6/2015 in section 269SS. 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. The explanation given by the assessee for receipt of sale consideration 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. 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. Assessee appeal allowed.

Summary

Issues involved: Appeal against penalty order u/s. 271D of the Income Tax Act, 1961 for AY 2016-17 due to receipt of cash in relation to transfer of immovable property.

Delay Condonation:
The appellant filed an appeal with a delay of 53 days due to a reasonable cause of suffering from a Fibula Fracture, which prevented timely filing. The Tribunal condoned the delay and proceeded to adjudicate the appeal on merits.

Background and Assessment:
The assessee declared income for AY 2016-17 and during scrutiny, explained cash deposits from the sale of immovable property. The AO initiated penalty proceedings u/s. 271D for receiving cash exceeding Rs. 15,41,000, violating section 269SS. The assessee's submissions were not considered, leading to the penalty order.

Grounds of Appeal:
The assessee challenged the penalty, citing contrary facts and laws, lack of justification by the CIT(A), and invoking section 273B. An additional ground questioned the validity of the penalty order due to lack of satisfaction recorded by the AO in the assessment order.

Arguments and Case Laws:
The assessee argued the genuineness of the transaction, capital gains computation, and cited various case laws to support the appeal. The Departmental Representative supported the Revenue Authorities' decision.

Core Issue and Analysis:
The key issue was the validity of penalty u/s. 271D for cash receipt related to property transfer, violating section 269SS. The Tribunal analyzed the provisions and noted the objective to curb black money. As the cash was deposited, capital gains were declared, and a reasonable cause was established, the penalty was deemed unsustainable.

Judgment:
The Tribunal set aside the penalty, ruling in favor of the assessee, as the cash receipt was deposited, taxes paid, and a reasonable cause existed. The appeal was allowed, and the penalty was deleted. The decision was pronounced on 28th May, 2024.