2024 (6) TMI 406 - AT - Income Tax

Levying penalty u/s 271D - sale transactions were the amounts are received in cash - addition of cash loans below Rs. 20,000/- made as unexplained cash deposits u/sec 68 - HELD THAT - Addition in the assessment order U/sec. 143(3) r.w.s.147 of the Act has made addition of cash loans below Rs. 20,000/-each aggregating to Rs. 6,00,000/- as unexplained cash deposits u/sec 68 of Rs. 4,75,000/- and also initiated penalty U/sec. 271(1)(c) of the Act, and again invoked the penalty provisions of section 271D of the Act is not acceptable. Sale consideration received by the assessee, we find the revenue has not disputed the genuiness of purchase and sale of the flat by the assessee. Whereas the assessee has entered into agreement for purchase of under construction flat and since the deal could not go through due to non compliance of financial transactions and subsequently the agreement of sale was registered in the name of Mr. Kishore M Patel which is not disputed and the assessee has received the sale consideration in lieu of agreement of sale as per the confirmation dealt in the above paragraphs and found the submissions made by the AR are realistic. We set-aside the order of the CIT(A) and direct the AO to delete the penalty and allow the grounds of appeal in favour of the assessee.

Summary

Issues involved:
The judgment involves issues related to penalty levied under section 271D and section 250 of the Income Tax Act.

Issue 1: Penalty u/s 271D
The appeal was filed against the penalty levied u/s 271D amounting to Rupees 24,50,000. The Appellant argued that no penalty should be levied as the loans received were genuine and each loan was less than Rs. 20,000. The Joint CIT and CIT(A) were criticized for their stand contrary to the findings in the Assessment order passed u/s 143(3) read with section 147.

Issue 2: Dismissal of appeal by CIT(A)
The CIT(A) was accused of dismissing the appeal without considering the request for adjournment, not providing proper opportunities, and overlooking the findings in the assessment order. The Appellant requested the penalty of Rs. 24,50,000 u/s 271D to be deleted.

Summary of Judgment:
The assessee, an individual deriving income from various sources, filed a return of income for A.Y 2007-08. The Assessing Officer (AO) found discrepancies in cash deposits and issued a notice u/s 148. The AO made additions to unexplained cash deposits u/s 68 of the Act and passed an order u/s 143(3) r.w.s 147. Subsequently, penalty proceedings were initiated u/s 271D as the assessee obtained cash deposits and loans. The AO levied a penalty of Rs. 24,50,000, which was confirmed by the CIT(A).

During the appeal, the Appellant argued that the penalty was unjust as the loans received were genuine and the sale consideration for a flat was received in cash and through banking channels. The Appellant provided evidence to support their claims, including agreements and payment details. The Tribunal found the explanations provided by the assessee to be reasonable and set aside the order of the CIT(A), directing the Assessing Officer to delete the penalty.

In conclusion, the appeal filed by the assessee was allowed, and the penalty u/s 271D was directed to be deleted. The judgment was pronounced in the open court on 17.01.2024.