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2024 (6) TMI 813 - AT - Income TaxIssues Involved: 1. Validity of the notice initiating penalty u/s. 271DA instead of u/s. 271D. 2. Applicability of penalty u/s. 271D for cash transactions exceeding Rs. 20,000. 3. Consideration of penalty on advances received in cash. Summary: Issue 1: Validity of the Notice Initiating Penalty u/s. 271DA Instead of u/s. 271D The assessee contended that the notice initiating penalty was issued u/s. 271DA instead of u/s. 271D, which rendered the penalty invalid. The Tribunal found that the JCIT initiated penalty proceedings u/s. 271DA and only corrected it to u/s. 271D at the last moment, which was deemed a non-application of mind and a violation of natural justice. The Tribunal held that the notice initiating penalty was invalid, and therefore, the penalty levied was unsustainable in law. Issue 2: Applicability of Penalty u/s. 271D for Cash Transactions Exceeding Rs. 20,000 The Tribunal noted that the assessee's explanation that there were no cash transactions or deposits in the relevant year (AY 2017-18) was not addressed by the JCIT. The assessee asserted that the cash transactions occurred in an earlier year (AY 2014-15) and were adjusted in the relevant year. The Tribunal found that the JCIT did not find this explanation false and noted that the term "any specified sum" was only inserted in Sec. 269SS by the Finance Act, 2015, w.e.f. 01.06.2015. Therefore, no penalty could have been levied for the advance taken in AY 2014-15. Issue 3: Consideration of Penalty on Advances Received in Cash The Tribunal agreed with the assessee that even if the penalty were to be levied, it should only be on the advances of Rs. 4.20 lakhs received in cash, not the entire sale consideration of Rs. 1.14 crores. The Tribunal referenced the case of ITO v. R. Dhinagharan (HUF), where the penalty was deleted under similar circumstances. The Tribunal concluded that the penalty notice was invalid, and consequently, the penalty levied deserved to be deleted. Conclusion: The appeal filed by the assessee was allowed, and the penalty levied u/s. 271D was deleted due to the invalidity of the notice initiating penalty and the non-application of mind by the JCIT. The Tribunal emphasized the importance of strict compliance with penal provisions and the necessity of providing adequate opportunity and fair hearing to the assessee.
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