2024 (10) TMI 359 - AT - Income Tax

Penalty u/s 271D - Violation of provisions of sec. 269SS - HELD THAT - The provisions of section 271 D of the Act have been perused which shows that the section has a specific bar to receive a sum more than 20,000/- from any other persons by way of loan or deposit. The provisions of the said Section does not deal with the receipt of sale consideration of immovable property in cash, but only deals with loan or deposit. Therefore, the provisions of section 269-SS of the Act was wrongly interpreted by the authorities below, while imposing the penalty in the matter at hand, wherein the subject matter was receipt of sale consideration in cash in respect of selling the immovable properties. Consequently, we hold that AO had committed an error in invoking provisions of section 269-SS r/w section 271-D of the Act and imposing of the penalty. Accordingly, the penalty imposed by the Assessing Officer, confirmed by the CIT(A) is hereby quashed. Appeal filed by the assessee is allowed.

Summary

Issues:
Levy of penalty under Section 271-D of the Income Tax Act, 1961 for violation of provisions of Section 269-SS of the Act.

Detailed Analysis:
The appellant challenged the order imposing a penalty of Rs. 6,51,000 under Section 271-D of the Income Tax Act, 1961, for allegedly violating the provisions of Section 269-SS of the Act. The appellant contended that the transaction involved the sale of agricultural land between agriculturists and hence was beyond the scope of Section 269-SS. The appellant argued that the sale consideration was Rs. 20 lakh, and both parties had no income exceeding taxable limits. The appellant further claimed that the entire payment for the land was made through non-cash means from the buyer's bank account and relatives. The appellant emphasized that the penalty was levied without recording satisfaction during the assessment proceedings, rendering it invalid and illegal. The appellant cited relevant case laws to support their arguments.

The Departmental Representative supported the lower authorities' order imposing the penalty.

Upon careful consideration of the arguments and perusal of the relevant provisions of the Act, the Tribunal observed that Section 269-SS pertains to loans or deposits and does not encompass the receipt of sale consideration for immovable property in cash. The Tribunal concluded that the authorities erred in applying Section 269-SS in a case involving the receipt of sale consideration for immovable property in cash. Consequently, the Tribunal held that the penalty imposed by the Assessing Officer, upheld by the CIT(A), was unwarranted and quashed it.

Therefore, the Tribunal allowed the appeal filed by the assessee, setting aside the penalty imposed under Section 271-D of the Act.

This judgment highlights the importance of correctly interpreting and applying statutory provisions while imposing penalties under the Income Tax Act. The case underscores the need for a thorough analysis of the facts and legal framework to ensure the proper application of tax laws.