2024 (8) TMI 1097 - AT - Income Tax

Penalty u/s 271D - property sold in cash - assessee pleaded that the cash was received from the purchaser on the day of registration and before the Jt. Sub Registrar only, due to pressing medical need 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 - HELD THAT - 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. 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) 2024 (1) TMI 61 - ITAT CHENNAI , wherein the ITAT took the view that the sum specified as per Explanation to Section 269SS 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 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. Thus, 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.

Summary

Issues:
Violation of provisions under section 269SS of the Income Tax Act, 1961 regarding acceptance of specified sum of money in relation to transfer of immovable property.

Detailed Analysis:
The judgment involves an appeal by the assessee against a penalty imposed under section 271D of the Income Tax Act, 1961 for receiving the entire sale consideration in cash while selling a property. The assessee contended that the cash was received at the time of registration due to a pressing medical need, and not as an advance. The Commissioner of Income Tax (Appeals) dismissed the appeal, upholding the penalty. The assessee argued that the amendment to section 269SS, effective from 01/06/2015, does not apply to the transaction as the sale took place on 3/7/2015, shortly after the amendment. The assessee also highlighted the introduction of section 269ST and section 271DA by the Finance Act, 2017, which covers purchase of property exceeding two lakhs. The Assessing Officer did not deny the production of the registered sale deed as evidence.

The Department, represented by the learned DR, supported the lower authorities' orders, claiming that even the sale consideration received at the time of registration falls under the provisions of section 269SS. However, it was acknowledged that the cash transaction occurred in the presence of the Sub-Registrar. The Tribunal considered the circumstances, noting that the amendment came into force a month before the sale, and the assessee was not properly advised on the prohibition of receiving cash. The Tribunal also referred to the definition of "specified sum" under explanation (iv) to section 269SS, which was further discussed in a previous case by a Co-ordinate Bench of the Tribunal.

The Co-ordinate Bench's decision emphasized that the provision of "specified sum" under section 269SS applies to advance receivable, not final payments made at the time of registration. The Tribunal, following this precedent, concluded that the cash received by the assessee was not an advance but the final payment made in front of the Sub-Registrar at the time of registration. Therefore, there was no violation of section 269SS, and the penalty under section 271D was deemed not applicable. The Tribunal allowed the appeal raised by the assessee, ruling in favor of the assessee and dismissing the appeal of the Revenue.

In conclusion, the Tribunal allowed the appeal of the assessee, stating that there was no violation of section 269SS in the given facts and circumstances, and therefore, the penalty under section 271D was not leviable. The judgment was pronounced on 5th July 2024.