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TMI Blog2023 (5) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Revenue : Shri KPRR Murthy COT(DR) ORDER Per R.K. Panda, A.M The above two appeals filed by the respective assessees are directed against the separate orders dated 11.08.2022 of the learned CIT (A)-11, Hyderabad, relating to A.Y. 2019-20. Since identical grounds have been raised in these two appeals, therefore, for the sake of convenience, these appeals were heard together and are being disposed of by this common order. ITA No.520/Hyd/2022 0 Shri Raja Reddy Nalla 2. Facts of the case, in brief, are that the assessee is an individual and derives income from business or profession and income from other sources. A search seizure operation u/s 132 of the I.T. Act, 1961 was conducted along with the group cases of M/s. Moksha Infracon Pvt Ltd and M/s. Kaveri Infra Projects (P) Ltd on 9.8.2018. The assessee filed his return of income on for the A.Y under consideration on 14.02.2020 admitting total income of Rs. 1,46,37,210/- and agriculture income of Rs. 12,05,000/-. Statutory notices u/s 143(2) 142(1) of the I.T. Act were issued and served on the assessee to which the AR of the assessee appeared before the Assessing Officer from time to time and fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted in his return of income filed for AY 2019-20. As the cash received connection with sale of immovable property was more than the specified limit of Rs.20,000/- as per the Section 269SS of the IT Act, penally proceedings u/s 271 D of the Act were initiated for violating the provisions of Section 2699SS and penalty order u/s, 271D of the Ac was passed on 07.06.2022 by the Addl. CIT levying a penalty of Rs. 40,00,000/-. The appellant had agreed that he had received Rs. 40,00,000/-in cash as his share of advance towards sale of a land properly that was sold jointly by the appellant along with four others. The appellant had not disputed the receipt of cash of Rs. 40,00,000/- or the purpose for which such cash was received for. Further, It is also to noted that the said cash of Rs. 40,00,000/- was added to the returned income of the appellant as undisclosed money in the assessment order passed u/s. 143(3) dated 21.04.2021 and taxed as per the provisions of Section 115BBE of the IT Act. The appellant had preferred an appeal against the assessment order before the undersigned and the appellate order was passed on 04.05.2022 allowing the appeal of the appellant. In the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash of Rs. 40,00,000/- as advance towards sale of immovable property. Therefore it is a clear cut case for levy of penalty u/s. 271D of the IT Act for violating the provisions of Section 269SS of the Act and there are no exceptions to the said Section and the levy of penalty is mandatory. During the appellate proceedings, the appellant filed submissions, wherein the appellant claimed ignorance about the amended provisions of Section 269SS of the Income Tax Act, 1961 and in support of the claim, quoted various case laws for treating ignorance of the appellant as bonafide. It is a basic assumption that every person will be abide by the Law of the land and the principle is embodied in the well-known maxim Ignorantia juris neminem excusat , means ignorance of law is no excuse for breaking it'. This is one of the essential principles of jurisprudence. The rationale behind this principle is that if ignorance was an excuse, every person who is charged for any offence or involved in a crime would merely claim that he was unaware of the law in question in order to avoid liability, even though he was well aware of the consequences of breaking the law. The law enforcement machinery sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds: 1. The Commissioner of Income tax - Appeals -11, Hyderabad [ herein after denoted as Hon CIT -A] erred in confirming the penalty order of Additional Commissioner of Income Tax, Central Circle -1, Aayakar Bhavan Hyderabad [herein after termed as Ld. Add. CIT] of levy of penalty under section under section 271D of Income tax Act, 1961/ for short - the Act]. 2. The Hon.CIT-A had erred in summarily rejecting the judicial views submitted by the appellant. 3. The Hon. CIT -A had erred in opining that that the appellant had not disclosed the cash portion of the consideration. The learned CIT-A failed to appreciate the fact that the appellant had already disclosed Rs. 40.00 lakhs with the Department - which disclosure date was much before the date of registration of property. 4. The Ld.CIT-A had erred in forming an opinion that the tax payer ought to have full and complete knowledge of all provisions tax laws, which is contrary to the popular judicial views. The leaned CIT-A failed to appreciate basic practical premise that income tax law is a highly dynamic and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty proceedings u/s 271D of the I.T. Act. Referring to the decision of the Hon'ble jurisdictional High Court in the case of Srinivasa Reddy Reddeppagari vs. Jt. CIT vide writ petition No. 44285 of 2022 dated 26.12.2022, he submitted that the Hon'ble jurisdictional High Court relying on various decisions including the decision of the Hon'ble Supreme Court in the case of CIT vs. Jayalakshmi Rice Mills reported in (2015) 64 Taxmann.com 75 (S.C), has held that the provisions of section 271D and 271E are pari meteria and the satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings u/s 271D of the I.T. Act. Therefore, in view of the binding decision of the Hon'ble jurisdictional High Court, the penalty levied by the Assessing Officer u/s 271D and sustained by the learned CIT (A) is not sustainable in law since there is no satisfaction recorded by the Assessing Officer in the original assessment order. 11. The learned DR, on the other hand, heavily relied on the order of the learned CIT (A). He submitted that the decision of the Hon'ble Supreme Court is not penalty on u/s 271D but was on penalty u/s 271E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that provisions of section 271D and 271E are pari materia to each other and the recording of satisfaction is a must. The relevant observation of the Hon'ble High Court reads as under: 13. We have considered the rival submissions made at the bar. 14. Issue raised in the writ petition is whether without satisfaction being recorded in the assessment order, penalty Order dated 08.07.2015 passed by the Kerala High Court in ITA.Nos. 83 86 of 2014 can be levied by the Joint Commissioner under Section 271D of the Act ? 15. Insofar the present case is concerned, we find that in the assessment order dated 24.03.2022 passed under Section 153A of the Act, return of income filed by the petitioner was accepted by the assessing officer and accordingly, the total income was assessed. In the return of income, petitioner had admitted receiving total income of Rs.80,84,180.00 which was also accepted by the assessing officer. 16. Subsequently, respondent No.1 took the view that petitioner had sold immovable properties for a total sale consideration of Rs. 92,13,000.00 out of which he had accepted cash to the tune of Rs. 87,80,000.00 which was in violation of Section 269SS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who had made the loan or deposit or who had paid the specified advance or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if such an amount is twenty thousand rupees or more. As in the case of Section 269SS, Section 269T of the Act also does not apply to the Government, banking company, post office savings bank etc. Section 271E of the Act reads as under: Penalty for failure to comply with the provisions of section 269T. 271E. [(1)] If a person repays any [loan or] deposit [or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit [or specified advance] so repaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 21. Thus, sub-section (1) of Section 271E of the Act provides that if a person repays any loan or deposit or specified adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. 24. Reverting back to the facts of the present case, we find that petitioner had submitted reply to the show cause notice on 02.06.2022. In his reply, petitioner mentioned that no satisfaction was recorded by the assessing officer in the assessment order as to infraction of Section 269SS of the Act. Therefore, no penalty could be levied under Section 271D of the Act without recorded satisfaction. In this connection, reference was made to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act. However, this aspect of the matter was not considered by respondent No.1 while passing the impugned order. Respondent No.1 relying upon the Kerala High Court decision in Grihalaxmi Vision (2 supra) noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data Ltd. wherein it was observed that assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied by the Assessing Officer and sustained by the CIT (A) is liable to be quashed. We hold accordingly and direct the Assessing Officer to cancel the penalty levied u/s 271D of the I.T. Act, 1961. Since the assessee succeeds on this legal ground, the grounds challenging the levy of penalty of Rs. 40.00 lakhs u/s 271D on merit become academic in nature and therefore, not adjudicated. 15. In the result, appeal filed by the assessee is allowed. ITA No. 522/Hyd.2022 Sri Venkateshwar Reddy Pacchica (A.Y 2019-20) 16. The ground raised by the assessee are as under: 1. The Commissioner of Income tax - Appeals -11, Hyderabad [ herein after denoted as Hon CIT -A] erred in confirming the penalty order of Additional Commissioner of Income Tax, Central Circle -1, Aayakar Bhavan Hyderabad [herein after termed as Ld. Add. CIT] of levy of penalty under section under section 271D of Income tax Act, 1961/ for short - the Act]. 2. The Hon.CIT-A had erred in summarily rejecting the judicial views submitted by the appellant. 3. The Hon. CIT -A had erred in opining that that the appellant had not disclosed the cash portion of the consideration. The learned CIT-A failed to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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