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TMI Blog2024 (6) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Without prejudice, penalty would have been levied only on advances of Rs. 4.20 lakhs received by the assessee in cash on the facts and circumstances of this case. 2. The brief facts of the case are that the AO noted in the assessment order that he had issued notice u/s. 142(1) of the Act on 13.03.2018 for AY 2017-18; and pursuant to it, the assessee filed his return of income on 12.12.2019 admitting an income of Rs. 10,03,290/- + Rs. 1,00,000/- (agricultural), wherein, he admitted income from house property and capital gains. The AO after verification of the details filed by the assessee, took note of the fact that there was no cash deposits in the bank account even during demonetization period. However, he noted that the assessee has deposited cash of Rs. 7,68,910/- and Rs. 2,52,180/- in two different jewel loan account on 08.11.2016 for the release of jewellery, for which, source of the same was explained to his satisfaction. Therefore, the AO completed the assessment u/s. 144 of the Act by accepting the income viz., assessed income Rs. 4,76,901/- + Rs. 5,26,386/- (LTCG) + Rs. 1,00,000/- (agricultural) by assessment order dated 25.12.2019 and also initiated penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It was pointed out to JCIT that as per condition stated in the aforesaid sale agreement was that in the event any of the buyers backed out of the agreement for any reason, then, advance paid of Rs. 2.5 Crs would be forfeited; and it was also stated in the sale-agreement that possession of immovable property would be given only on payment of balance Rs. 50 lakhs. 5. Thereafter, in this relevant AY, i.e. on 06.10.2016, the aforesaid sale-agreement was cancelled vide registered Document No.12555 of 2016. And then assessee registered another sale agreement on 06.10.2016 of the same immovable property stated (supra) and got it registered as Document Nos.12559, 12561, 12562, 12565 & 12567 of 2016 with the relatives of R.Sakthivel (viz. four relatives of Shri R.Sakthivel); and thereafter, the Sale-Deed was executed on 07.10.2016 wherein, the sale consideration agreed upon was Rs. 29,55,000/- from each of four parties. The assessee received Rs. 1,05,000/- each on 06.10.2016 at the time of sale-agreement from four buyers totaling Rs. 4,20,000/- in cash on that date; and the balance was purported to be paid on 07.10.2016 when the Sale Deed was executed of Rs. 28,50,000/- each (Rs. 1,14,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty could be levied. Further, he contented that initiation of penalty by JCIT by issuing notice dated 17.01.2022 itself was bad, since the notice was issued u/s. 271DA of the Act, which was meant for violating the provisions of Sec. 269ST of the Act, whereas, the ultimate penalty levied on assessee was u/s. 271D which was for violation of different provision/Section i.e, Sec 269SS of the Act. Therefore, according to Ld.AR, the very initiation of penalty was bad in law; and the non-application of mind of the JCIT imposing penalty was evident because he after considering the assessment records of assessee had issued/initiated the penalty for violating Sec. 269ST [by issuing notice u/s. 271DA], and realizing his erroneous action, he ultimately imposed penalty u/s. 271D for violation of Section.269SS, which according to Ld.AR is incurable defect and goes to the root of the penalty imposed; and to buttress his case, he drew our attention to Para No.4 of the penalty order which has been reproduced (supra) from which, it is discerned that Range Head/JCIT initiated penalty proceedings u/s. 271DA [though stated therein as 271D which will be dealt infra] of the Act dated 17.01.2022; and admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) JCIT has stated to have initiated penalty u/s. 271D, but it is noted that it is an incorrect assertion of JCIT, because, DIN mentioned therein itself clearly shows that it was initiated u/s. 271DA and not u/s. 271D of the Act. Moreover, in the next notice dated 24.01.2022, the JCIT refers to the earlier notice dated 07.01.2022 initiated u/s. 271DA of the Act and all the notices issued by JCIT (except on 19.07.2022) have mentioned about imposition of proposed penalty u/s. 271DA & not u/s. 271D. Therefore, we find that JCIT has initiated penalty u/s. 271DA of the Act on 07.01.2022 and not u/s. 271D of the Act; and having noted so, we find that only on 18th /19th July, 2022 i.e. just before 13 days before levy of penalty, assessee was put to notice of proposed penalty s.271D of the Act, instead of u/s. 271DA of the Act. It needs to be noted s.271DA of the Act, is a penalty levied for failure to comply with the provisions of Sec. 269ST of the Act, whereas penalty u/s. 271D of the Act, is levied for failure to comply with Sec. 269SS of the Act, and both are distinct provisions; and Sec. 269ST was inserted only by Finance Act, 2017, w.e.f. 01.04.2017, violation of which entail p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in case of Dilip N. Shroff v. Jaint CIT [2007] 291 ITR 519 (SC) on the issue of non-application of mind. vi) Babbuji Jacob v. ITO [2021] 430 ITR 259 (Mad) vii) CIT D. Anita Kumaran (Smt.) [2018] 11 ITR-OL 221 (Mad) (para 36) viii) CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) (para 36) ix) CIT D. Gem Granites (Karnataka) [2014] 42 taxmann.com 493 (para 29) x) CIT v. Manjunatha Cotton and Ginning Factory [2013] 359 ITR 565 (Karn) (para 14) xi) CIT v. Original Kerala Jewellers (T. C. A. No. 717 of 2018 dated 18- 12-2018) (para 14) xii) CIT v. Paripushpam (S. I.) [2001] 249 ITR 550 (Mad) (para 38) xiii) CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) (paras 3, 36) xiv) CIT D. SSA Emerald Meadows [2016] 73 taxmann.com 241 (Karn) (para 14) xv) Madhusudhanan (K. P.) ข. CIT [2001] 251 ITR 99 (SC) (para 29) xvi) Mak Data (P.) Ltd. v. CIT [2013] 358 ITR 593 (SC) (paras 28, 29) xvii) National Textiles v. CIT [2001] 249 ITR 125 (Guj) (para 37) xviii) Sundaram Finance Ltd. v. Asst. CIT [2018] 403 ITR 407 (Mad) (para 16) 11. Moreover, we note from the totality of the facts of this case, that it is not a fit case for levy of penalty, bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash. The assessee has not received any advance but entire sale consideration were received at the time of registration of sale deeds in cash and non transaction was done through banking channels. Accordingly, the A.O referred the matter to the JCIT for levy of penalty u/s. 271D of the Act for violation of the provisions of Section 269SS of the Act and the JCIT, Kanchipuram Range, Kanchipuram levied penalty u/s. 271D of the Act vide order dated 12.06.2019 for an equivalent amount of cash received of sales transaction for a total consideration of Rs. 3,03,46,301/-. Aggrieved, the assessee preferred appeal before CIT(A). 8. The CIT(A) after going through the facts of the case and familiar circumstances, deleted the penalty by observing in para 5 as under: "5.1 The only grievance of the appellant is the levy of penalty under section 271D imposed by the JCIT, Kancheepuram Range 7, vide order dated 12.06.2019 of sum of Rs. 3,03,46,301/-. The JCIT in his order has stated that in the appellant's case sale consideration of immovable property in the form of plots of land was received in cash in excess of Rs. 20,000/- thereby contravening the provisions of section 269SS of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act by highlighting the issue of "bona fide" belief coupled with the genuineness of transactions. Reliance was placed on the case of Saini Medical Stores decided by Hon'ble Punjab and Haryana High Court and reported in 277 ITR 420 (2005) where this judicial premise has been pronounced. The gist of the High Court decision is mentioned in the 4 para on Page 5 of this order where bona fide belief and genuineness of the transactions form the bed rock of "reasonable cause" u/s 273B of the Act. It may also be noted that the persons, who have invested in the lands, are people of meagre means, who are living in a small villages in Kancheepuram district. Appellant submitted the list of such persons and it is noted that the payments are ranging between Rs. 2,97,000/- to Rs. 6,04,800/-. I have gone through the list submitted, comprising 82 persons, the plot number, area, and amounts against each name. The sums invested by the persons involved are not very large amounts. Hence looking into the entire background of the facts of this case the "reasonable cause" propounded section 273 B of the Income Tax Act is found to be applicable to the appellant. It is also important to mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has gone through the list of 82 persons, the plot number, area and the amounts involving in such transactions. (v) There has not been any loss to the revenue since the appellant has disclosed the entire sales amount in the return of income. 9.1 The Ld. CIT-DR stated that the decision taken by the CIT(A) is not acceptable for the following reasons: (i) From plain reading of Sec. 269SS, penalty is imposable for violation of Sec. 269SS either for accepting cash over Rs. 20,000/- in the form of loan or deposit or for receiving cash in excess of Rs. 20,000/- in respect of sale of immovable property(ies.). The only exemption given vis-a-vis this penal provision is in terms of proviso 2 to Sec. 269SS. The said proviso takes transaction involving loan or deposit or specified sum between persons having agricultural income outside the ambit of this penalty. The case under dispute does not fall under these categories. (ii) The CIT(A) has mentioned about no loss of revenue as a ground for his decision. However, loss of revenue can never be a ground for consideration of this penalty u/s. 271D. 9.2 The Ld. CIT-DR stated that the reliance of the following case laws by the CIT(A) are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the beach flows form a bonafide belief that the offender is not liable to act in the manner prescribed by the statute". It may be mentioned that the quasi-criminal angle is not present in Sec. 271D of the Act. In fact, Sec. 271DD providing for imprisonment for a maximum of two years for violation of provisions of Sec. 269SS has been omitted w.e.f.1.4.1989. Therefore, this ruling of the Hon'ble Supreme Court in the context of a different taxing statute, which is not a central act, is not applicable in the current case. (iii) In the case of Coastal Tea Pvt. Ltd., the Hon'ble ITAT, Vishakhapatnam has given a ruling in favour of the assessee in specific facts of the case while the transaction was between sister concern of Directors closely related to the assessee, apart from the fact that the transaction was genuine. The closeness of relation between the parties has not been related in this case and is ostensively not present in this case of transaction between seller and purchaser. Therefore, this case law is not applicable in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for sale rather, he only directly registered the documents with the Sub Registrar and accepted cash at the time of registration of sale deed for sale of plots. For this, he produced few of documents for verification which was not denied i.e., neither by the A.O nor by CIT(A) and even now by Ld. CIT-DR. 11. In reply, the Ld. CIT-DR stated that the whole consideration was received in cash at the time of registration of sale deed, that this also is hit by the provisions of Section 269SS of the Act in relation to acceptance of specified transaction of 'specified sum' of money i.e., whether as advance or otherwise, which means even the sale consideration received at the time of registration of sale deed is hit by this provision and hence, the CIT(A) should not have deleted the penalty. He requested that the order of JCIT may be affirmed. 12. We have heard the rival contentions, and gone through the facts and circumstances of the case. We find that the Revenue has challenged the correctness of the decision rendered by the CIT(A) vide order dated 30.09.2019 in deleting the penalty levied u/s 271D of the Act vide penalty order dated 12.06.2019. The CIT(A) had deleted the penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any 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 or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place. It is further proposed to make consequential amendments in section 271D and section 271E to provide penalty for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and the relevant circular reads as under:- Departmental Circular No.19 of 2015, dated 27-11-2015:- 54. Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances. 54.1 Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions were provided in the section. 54.2 Similarly, the provisions contained in section 269T of the Income tax Act, before amendment by the Act, provided that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 in the present case in the given facts and circumstances of the case and hence, penalty is not exigible in this case. Hence, we confirm the order of CIT(A) deleting the penalty but on entirely different ground i.e., on jurisdictional issue only. Accordingly, the appeal of the Revenue is dismissed. 13. In the result, the appeal filed by the Revenue is dismissed. 12. In view of the aforesaid discussion, we find force in the contentions of the assessee that in the facts and circumstances of the case discussed (supra) and in the light of the Tribunal ratio in ITO v. R. Dhinagharan (HUF) (supra), we agree that even if the penalty would have been levied, it would have been only of Rs. 4.20 lakhs and not Rs. 1.14 Crs. However, as noted (supra), we have found that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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