2024 (1) TMI 61 - AT - Income Tax

Penalty u/s. 271D - cash received of sales transaction of immovable property - allegation of violation of provisions of Sec.269SS in relation to acceptance of specified sum of money in relation to transfer of immovable properties - CIT(A) had deleted the penalty on two counts namely on the non-applicability of the provisions of Section 269SS of the Act to the facts of the present case and on the ground of reasonable cause within the scope of Section 273B - HELD THAT - The intention of the amendment is very clear right from the Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017-18 with a view to cover all situations of cash transaction Rs. 2 Lakhs or over other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT Circular No.19 of 2015, dated 27.11.2015 Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of sum specified brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this provision was to curb the generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs. 20,000/- or more for any transaction in immovable property. This was explained by Hon ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 269SS i.e., sum specified means only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the subregistrar at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS of the Act in the present case hence, penalty is not exigible - Appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Jurisdictional Issue regarding the recording of satisfaction by the Assessing Officer (A.O).
2. Deletion of penalty under Section 271D of the Income Tax Act for violation of Section 269SS.

Summary:

Jurisdictional Issue:
The assessee's counsel raised a jurisdictional issue under Rule 27 of the Appellate Tribunal Rules, 1963, arguing that the penalty order under Section 271D dated 12.06.2019 was invalid due to the absence of recorded satisfaction by the A.O in the assessment order dated 23.05.2018. The Tribunal noted that Rule 27 allows a respondent to support the order on grounds decided against him only if those grounds were raised at some stage of the proceedings. Since the assessee did not raise this issue before the CIT(A) or the adjudicating authority, the Tribunal rejected the petition under Rule 27.

Deletion of Penalty under Section 271D:
The Revenue's appeal contested the CIT(A)'s deletion of the penalty levied by the JCIT under Section 271D for accepting cash in excess of Rs. 20,000 in violation of Section 269SS. The CIT(A) had deleted the penalty, observing that the entire cash amount was disclosed in the assessee's Trading, Profit and Loss Account, and thus there was no loss of revenue. The CIT(A) also considered the "reasonable cause" under Section 273B, noting that the transactions involved people of meagre means from small villages.

The Tribunal upheld the CIT(A)'s decision, emphasizing that the amendment to Section 269SS effective from 01.06.2015 aimed to curb black money by prohibiting cash advances in immovable property transactions. However, it did not apply to cash received as sale consideration at the time of registration of sale deeds. The Tribunal concluded that the assessee's transactions did not violate Section 269SS, as the cash was received at the time of registration, not as an advance. Therefore, the penalty under Section 271D was not applicable, and the appeal by the Revenue was dismissed.