2024 (10) TMI 1088 - AT - Income Tax

Penalty u/s 271D - assessee has received the abovesaid sale consideration in cash - assessee has violated the provisions of section 269SS - HELD THAT - As observed that assessee has sold a property and received cash after due registration of the property. The same was deposited in his bank account and further utilised to buy another property. AO in regular assessment proceeding accepted the above transaction and completed the assessment without making any addition. Assessee has brought to our notice sale agreement wherein the abovesaid amount was clearly mentioned as settlement amount at the time of registration, speech of Finance Minister for amending the provisions of section 269SS wherein certain provisions were modified to curb the black money circulation in real estate transaction and relevant CBDT circulars. We are of the view that the assessee has received cash after duly transferring the property after registration and money involved in this transaction is duly recorded in the sale deed. The Assessing Officer also has accepted the transaction as genuine as per the Act. As decided in Shri R. Dhinagharan (HUF) 2024 (1) TMI 61 - ITAT CHENNAI it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the sub- registrar 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 -Appeal filed by the assessee is allowed.

Issues Involved:

1. Limitation of the penalty order.
2. Knowledge and awareness of the assessee regarding the provisions of the Income Tax Act.
3. The role of the assessee's counsel in the proceedings.
4. Justification and validity of the penalty imposed under section 271D.
5. The bona fide nature of the transactions.
6. Compliance with section 269SS of the Income Tax Act.
7. Consideration of reasonable cause under section 273B.
8. Timing of the transaction concerning the amendment in the Act.
9. Applicability of section 269SS to the transaction in question.
10. Request for deletion of the penalty imposed.

Detailed Analysis:

1. Limitation of the Penalty Order:
The assessee contended that the penalty order dated 28.03.2019 was barred by limitation. The argument was based on the timeline of the proceedings, suggesting that the order was not issued within the statutory period, thus warranting the deletion of the penalty.

2. Knowledge and Awareness of the Assessee:
The assessee, employed as a lower division clerk, claimed ignorance of the complex provisions of the Income Tax Act. He relied on his advocate for compliance, indicating a lack of personal knowledge about the legal requirements, particularly concerning section 269SS and 271D.

3. Role of the Assessee's Counsel:
The assessee argued that the failure of his counsel to appear before the JCIT was due to the advocate's misconduct. He asserted that he should not be penalized for the counsel's actions, as he was dependent on professional advice for tax matters.

4. Justification and Validity of the Penalty:
The assessee challenged the imposition of the penalty as unwarranted. He argued that the transactions were bona fide and not disputed at any stage, suggesting that the penalty was invalid. The penalty was seen as uncalled for, given that the income from the transaction was declared and accepted by the authorities.

5. Bona Fide Nature of the Transactions:
The assessee maintained that the transactions were genuine, with no intent to evade taxes. The sale consideration was declared in the income tax return, and the capital gains were offered for taxation. The authorities had accepted the transaction as genuine during the assessment proceedings.

6. Compliance with Section 269SS:
The assessee contended that the transaction did not breach section 269SS, as it was not a loan or deposit but a sale consideration. He argued that the amendment introducing "specified sum" was not applicable retroactively to his transaction, which occurred shortly after the amendment.

7. Consideration of Reasonable Cause:
The assessee invoked section 273B, arguing that there was a reasonable cause for the non-compliance with section 269SS. He cited his ignorance of the new provisions and the genuine nature of the transaction as reasons why the penalty should not be imposed.

8. Timing of the Transaction:
The transaction occurred within a month of the amendment to section 269SS. The assessee claimed unawareness of the new provision due to the short time frame, arguing that neither he nor his advocate was informed of the change in law.

9. Applicability of Section 269SS:
The assessee argued that section 269SS was not applicable to his transaction, as it was not intended to curb black money in bona fide property sales. He cited judicial precedents to support the view that penalties should not be imposed in the absence of black money involvement.

10. Request for Deletion of the Penalty:
The assessee requested the deletion of the penalty, arguing that the transaction was genuine, and there was no attempt to evade taxes. He cited various case laws to support his position that penalties should not be levied for technical breaches without malicious intent.

Conclusion:

The tribunal, after considering the submissions and material on record, concluded that the transaction was genuine and duly recorded in the sale deed. The assessee had demonstrated reasonable cause under section 273B, and the penalty under section 271D was not justified. The tribunal directed the deletion of the penalty, aligning with similar decisions in comparable cases. The appeal filed by the assessee was allowed, and the penalty imposed was ordered to be deleted.

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