2023 (12) TMI 211 - AT - Income Tax

Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property - Violation of proviants of section 269SS - assessee sold an immovable property out of which the assessee received an advance partly through cheque and the remaining amount by cash - HELD THAT - Any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee. The assessee has also offered the capital gains to tax. Further, the explanation given by the assessee for receipt of sale consideration of Rs. 29,65,000/- constitutes a reasonable cause as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circumstances as explained by the Ld. AR in his arguments and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the capital gain tax thereon. We are of the considered view that the penalty levied by the Ld. AO-NFAC U/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law - Decided in favour of assessee.

Summary

Issues involved:
The case involves an appeal against the penalty imposed under section 271D of the Income Tax Act, 1961, concerning the receipt of cash in violation of section 269SS of the Act during the transfer of an immovable property for the assessment year 2017-18.

Summary:
The appellant, an individual, filed a revised return of income for the AY 2017-18, declaring total income that included capital gains from the sale of a vacant site. The Assessing Officer initiated penalty proceedings under section 271D of the Act due to the receipt of cash during the property transfer, which was deemed a violation of section 269SS. The appellant's explanations were not accepted, leading to the imposition of a penalty. The appeal before the Ld. CIT(A)-NFAC was dismissed, prompting the appellant to challenge the decision.

The core issue revolved around the validity of the penalty under section 271D for receiving cash in connection with the property transfer, contravening section 269SS. The appellant argued that the cash received was deposited in the bank, showing the genuineness of the transaction. The appellant also contended that the receipt of cash was due to unavoidable circumstances, constituting a reasonable cause under section 273B. Relying on case laws, the appellant sought the deletion of the penalty.

After considering the arguments and relevant provisions, the Tribunal found that the cash received was deposited in the bank, indicating no suppression of cash receipts. The Tribunal noted that the appellant had offered the capital gains for taxation and that the explanation provided constituted a reasonable cause. Consequently, the penalty imposed by the Assessing Officer and upheld by the CIT(A)-NFAC was deemed unsustainable in law. Therefore, the Tribunal set aside the orders and deleted the penalty, allowing the appellant's appeal.

The decision was pronounced in open court on 29th November 2023.