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2022 (6) TMI 593 - AT - Income TaxPenalty u/s. 271D - Loan accepted in cash in contravention of section 269SS - assessee had taken/accepted loans/deposits more than rupees twenty thousand in cash or otherwise than by account payee cheque/account payee draft from few person/party during the F.Y. 2014-15 relevant to A.Y. 2015-16 in contravention of the provisions of section 269SS - HELD THAT - Here it is not disputed by both the parties that the assessee is having sufficient agricultural land on its disposal as joint owner. It is also evident that on the seized material related to the land ownership document on the back side of that paper the assessee has written the date, amount and the name of the person from the money has been received. On the top of the seized material below the details of money received it is also mentioned that Ramgadh Jamin ke pete mean on account of Ramgadh land . There is no contrary finding that the version stated in the above seized documents are not correct and even the assessee has accepted the facts mentioned in that seized documents. The details are perfectly mentioned in that seized documents and the money so received is against the sale of agricultural land for which sale document or agreement to sale is not made on account prevailing dispute between the family members. Accordingly, the amount so received is the advance received against the sale of agricultural land owned by the assessee. During the course of the assessment proceeding the assessee contended that as regards the details of all six persons from whom such advance against sale of agricultural land was received, it is submitted that such advances were received through broker(s) in open market, which is a normal and prevailing practice. All the transactions have been entered through broker. The names of all theses persons have been given by the broker(s). At present, the brokers are not in touch with the assessee. This written submission of the assessee is in accordance with the seized material found during the course of search and assessee has accepted the facts stated in that paper and once the assessing officer has considered the holding of the land, details of the amount received as advance for the sale of agricultural land all the details and facts arising out of the seized documents support the contention raised by assessee and on the contrary department has not challenged this basic arguments of the assessee that he has received the money as on account of sale of agricultural land. Till the date of transaction of advance received by the assessee the money so received is also not coming under the purview of specified sum and the same has been introduced in the Act w.e.f. 01-06-2015. Thus, the said amendment does not affect the transaction of the year under consideration. It is submitted by the AR of the assessee that once the cash receipt on account of sale of agricultural land was not prohibited under the law the advance so received by the assessee can not be considered as cash loan once the nature of credit is evidently clear that the money so received is for sale of agricultural land on face of the document seized. Thus, we have gone through the submission of the assessee and material available on the records and on abutted reading of page 71A along with the page 71, it is clear beyond doubt that the transactions entered on the page are pertaining to the agricultural land of the assessee situated and the department has not raised any doubt about the adequacy of the land and the amount related to the said land received by the assessee. Thus, this indirect admission of the department strength the argument of the assessee. Addl. CIT while passing the order of levying penalty u/s. 271D has relied upon the finding of the order of the assessing officer in the quantum proceeding for A. Y. 2015-16 where in six issues has been pointed out the assessing officer in relation to the page under consideration, while levying the penalty order, except that point there is no separate finding or satisfaction of the Ld. Addl. CIT in this matter. The Ld. AR of the assessee has already filed the explanation stating that why the said finding of the AO is not correct and is also discussed in above paras. Thus, the order of levying penalty has no separate finding or observation as to why the penalty should sustain. Thus, the said order is considered in the light of the submission made by the Ld. AR of the assessee. We are of the view that while levying the penalty the Ld. Addl. CIT has not dealt so as to why and how the penalty is leviable considering the present set of facts available on record. Looking to the facts, evidences and written arguments placed before us we concur the finding given by the Ld. CIT(A) and thus, based on this finding the appeal of the department is dismissed as the impugned transaction listed on the back side of page 71 is the amount received on the proposed sale transaction of the agricultural land and thus the considering that aspect the assessee has not violated the provisions of section 269SS of the act and in turn he is not liable for the penalty u/s. 271D - Decided against revenue.
Issues Involved:
1. Legality of penalty imposed under Section 271D of the Income Tax Act, 1961. 2. Interpretation of Section 269SS of the Income Tax Act, 1961. 3. Validity of the transactions as loans or advances against the sale of agricultural land. 4. The role of seized documents in determining the nature of transactions. 5. The applicability of amendments to Section 269SS and 271D effective from 01-06-2015. 6. Authority of the Additional Commissioner of Income Tax to impose penalties. Issue-wise Detailed Analysis: 1. Legality of Penalty Imposed under Section 271D: The primary issue was whether the penalty of Rs. 2,75,00,000 imposed under Section 271D for violation of Section 269SS was justified. The Department argued that the assessee had accepted cash loans exceeding Rs. 20,000, which contravened Section 269SS. The assessee contended that the amounts were advances for the sale of agricultural land, not loans, and thus did not violate Section 269SS. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty, concluding that the transactions were advances for land sales and not loans, and hence Section 269SS did not apply. 2. Interpretation of Section 269SS: Section 269SS prohibits taking or accepting loans or deposits exceeding Rs. 20,000 in cash. The CIT(A) noted that the term "specified sum" was added to Section 269SS and 271D effective from 01-06-2015, which includes advances for the transfer of immovable property. Since the transactions occurred before this date, they did not fall under the amended provisions, and thus, Section 269SS was not applicable. 3. Validity of Transactions as Loans or Advances: The Department argued that the transactions were cash loans, while the assessee maintained they were advances for the sale of agricultural land. The CIT(A) and the Tribunal found that the seized documents indicated the amounts were received against the sale of agricultural land, supported by the fact that the details were recorded on the reverse side of a document listing land holdings. The Tribunal agreed with the CIT(A) that the transactions were advances for land sales, not loans. 4. Role of Seized Documents: Seized documents played a crucial role in determining the nature of the transactions. Page 71A of Exhibit AS-1, which recorded the transactions, was linked to land holdings listed on Page 71. The Tribunal noted that the Department did not challenge the authenticity of these documents, which corroborated the assessee's claim that the amounts were advances for land sales. 5. Applicability of Amendments to Section 269SS and 271D: The amendments to Section 269SS and 271D, effective from 01-06-2015, included advances for the transfer of immovable property under the term "specified sum." Since the transactions in question occurred before this date, they were not covered by the amended provisions. The Tribunal affirmed that the transactions did not fall under the amended Section 269SS, and thus, the penalty under Section 271D was not applicable. 6. Authority of the Additional Commissioner of Income Tax: The assessee argued that the Additional Commissioner of Income Tax (Addl. CIT) did not have the authority to impose the penalty, as the satisfaction for penalty imposition was based on the Assessing Officer's findings. The Tribunal did not specifically address this argument but focused on the nature of the transactions and the applicability of Section 269SS. The Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing that the transactions were advances for land sales and not loans, and thus, did not violate Section 269SS. Conclusion: The Tribunal dismissed the Department's appeal, affirming the CIT(A)'s decision to delete the penalty imposed under Section 271D. The Tribunal concluded that the transactions were advances for the sale of agricultural land, not loans, and thus, did not contravene Section 269SS. The amendments to Section 269SS and 271D effective from 01-06-2015 were not applicable to the transactions in question. The Tribunal also noted that the seized documents supported the assessee's claim, and the Department did not provide contrary evidence.
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