2023 (4) TMI 892 - AT - Income Tax

Levy of penalty u/s 271D - assessee has violated the provisions of section 269SS - assessee has received cash on different dates from two people regarding sale of immovable property - case was selected for limited scrutiny under CASS for examination of cash deposited during the demonetization period - HELD THAT - As during the year, there is no sale of property as is discernible from the assessment order and the assessment order refers to the deposit of cash during demonetization period which was accepted by the Assessing Officer himself being out of sale of immovable property on 20.01.2016 in cash. Therefore, provisions of section 269SS, if any, has been violated in the assessment year 2016-17 and not in A.Y 2017-8. Therefore, the very initiation of penalty proceedings u/s 271D for the A.Y 2017-18 is void abinitio and therefore, the order of the CIT (A) NFAC confirming the penalty u/s 271D of the Act has no legs to stand. We, therefore, set aside the order of the CIT (A) NFAC and direct the Assessing Officer to cancel the penalty. The grounds raised by the assessee are accordingly allowed.

Summary

Issues:
The judgment involves issues related to the levy of penalty under section 271D of the Income Tax Act for the assessment year 2017-18.

Facts of the Case:
The individual assessee, a retired officer from NMDC, filed a return of income for A.Y. 2017-18 admitting taxable income. The case was selected for scrutiny to examine cash deposits during demonetization. The assessee explained a cash deposit as proceeds from a property sale, kept for reinvestment. The Assessing Officer accepted the explanation and completed assessment. Subsequently, penalty proceedings were initiated under section 271D for violating section 269SS by receiving cash in excess of Rs. 20,000.

Decision on Penalty Proceedings:
The CIT (A) NFAC upheld the penalty, citing the violation of section 269SS and disregarding the appellant's genuine belief that declaring capital gains sufficed for compliance. The appellant's reliance on court judgments was dismissed, and the penalty was confirmed.

Appellate Tribunal's Decision:
The Tribunal found that the penalty was incorrectly initiated for A.Y. 2017-18 when the violation occurred in A.Y. 2016-17. As the penalty notice was void ab initio, the Tribunal directed the cancellation of the penalty, allowing the appeal filed by the assessee.

Conclusion:
The Appellate Tribunal set aside the CIT (A) NFAC's decision and directed the Assessing Officer to cancel the penalty, as the penalty proceedings were initiated for the wrong assessment year. The grounds raised by the assessee were allowed, and the appeal was deemed successful.