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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 ..... 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 furnished the requisite details. 2.1 The Assessing Officer observed that during the course of search operation in the residence of the appellant, certain loose sheets were found and seized. As per the page no., 4 of Annexure A/NRR/01, cash of Rs. 2,00,00,000/- was noted to have been received by Sri J. Sampath Rao on 25-07-2018 on behalf of 5 sellers of an immovable property located at Bondugula Village. The assessee is one of the 5 sellers mentioned therein. A Sworn statement of Sri J. Sampath Rao was recorded during the course of search and he had stated to have received cash of Rs. on 2,00,00,000/- on behalf of 5 sellers including the assessee. Subsequently, the assessee agreed to have received cash of Rs. 40,00,000/- as his share with respect to sale of immovable property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 order, it was held that the said amount of Rs. 40,00,000/- was not undisclosed money and it was in fact the consideration received in connection with the sale of immovable property by the appellant. Therefore nexus has been clearly established between the cash received and the sale of immovable property. Thus the appellant had received Rs. 40.00.000/- in cash as part o! consideration towards sale of immovable property. Hence, in view of the above discussion, the provisions of Section 2693S are attracted straight forward in the case of the appellant and therefore liable to penalty u/s. 271D of the Act. The relevant extract of section 269SS and 271D are reproduced below: "269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king 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 shall come to a grinding halt if ignorance is accepted as a defense. Also it can also lead to mishandling of law on the part of law breakers and this can never be the intention of the legislature to enrich the law breakers by providing a shield of ignorance. Hon'ble Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Modi Food Products Ltd., held that every individual is deemed to know the law of the land. The courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore the argument that the appellant did not know the true legal position is not one that can be accepted in law. Hence, in view of the same, explanation of the appellant is not accepted. It will also not be out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 ever-changing law and that there is high probability for knowing a provision fully well by an average tax payer till a transaction or two covered by a section are undertaken. 5. For the grounds pleaded above or for such other additional grounds that may be pleaded at the time hearing the appellant prays for the deletion of the said penalty amount levied under section 271D or to grant such other relied as the Hon'ble Bench may deem fit and proper under the facts and circumstances of the case. " 5. The assessee has also raised an additional ground which reads as under: "1. The levy of penalty u/s 271D of the I.T. Act, 1961 at Rs. 40,00,000 is wholly unsustainable based on the facts and in law as the Assessing Officer has not recorded his satisfaction about initiation of penalty pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore, the argument of the learned Counsel for the assessee cannot be accepted. So far as the merit of the case is concerned, he submitted that the learned CIT (A) has given exhaustive reasons while sustaining the penalty. Therefore, the same should be upheld and the ground raised by the assessee should be dismissed. 12. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case levied penalty of Rs. 40.00 lakhs u/s 271D of the I.T. Act on the ground that the assessee has violated the provisions of section 269SS by accepting cash of Rs. 40.00 lakhs being his share for sale of the immovable property. We find the learned CIT (A) confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the Act, attracting penalty under Section 271D of the Act. 17. Before we advert to the reply submitted by the petitioner, we may mention that under Section 269SS of the Act, no person shall take or accept from any other person (referred to as a depositor) any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if the amount of such loan or deposit or specified sum is twenty thousand rupees or more. However, as per the first proviso, the rigor of Section 269SS is not applicable to the Government, banking company, post office savings bank or cooperative bank etc. As per the second proviso, this provision would also not be applicable where both the depositor and the receiver are havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 advance referred to in Section 269T of the Act 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. Sub-section (2) clarifies that any penalty imposable under subsection (1) shall be imposed by the Joint Commissioner. 22. From an analysis of Sections 271D and 271E of the Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attracted on a person accepting loan or deposit or specified sum in contravention of Section 269SS of the Act, penalty under Section 271E of the Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T. Therefore, in a way, the two provisions are complimentary to each other. 23. In Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 officer has to satisfy himself as to whether penalty proceedings should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No.1 imposed the penalty under Section 271D of the Act. 25. We are afraid respondent No.1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). In the said decision as extracted above, Supreme Court had concurred with the view taken by the High Court holding that satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden (2013) 352 ITR 1. duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxpayer 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 ever-changing law and that there is high probability for knowing a provision fully well by an average taxpayer till a transaction or two covered by a section are undertaken. 5. For the grounds pleaded above or for such other additional grounds that may be pleaded at the time hearing the appellant prays for the deletion of the said penalty amount levied under section 271D or to grant such other relied as the Hon'ble Bench may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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