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TMI Blog2024 (10) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... on was already recorded in the abovesaid sale deed. Assessing Officer accepted the above transaction in the regular assessment, however observed that assessee has received the abovesaid sale consideration in cash. Accordingly, he initiated proceedings under section 271D of the Income-tax Act, 1961 (for short 'the Act') and in penalty proceedings, after considering the submissions of the assessee, levied the penalty of Rs. 24,50,000/- u/s 271D as it contravenes the provisions of section 269SS of the Act (amended provisions w.e.f. 01.06.2016). 3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) sustained the penalty after considering the submissions of the assessee. 4. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- "1. That in facts and circumstances of the case, the penalty order passed by the JCIT, Range-1(1), Dehra dun vide order dated 28.032019 in barred by limitation, henceforth requested to please delete the penalty as imposed by the JCIT. 2. That in facts and circumstances of the case, the appellant is an employee, as lower division clerk in Uttarakhand State Women Commission, Dehradun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (Rs.2,50,000/- as advance in April 2015) and balance before of Registered Sale Deed executed and submitted before the Competed Authority in the Court of law on 10th June 2015 in favour of buyer Shri Tej Veer Singh son of Shri Mohan Singh resident of 6/2 Kanwali Road Shivaji Marg Dehradun holding PAN no. BCCPS3263C and the copy of the Sale Deed is enclosed at Page no. 27-41 of the paper book. He further submitted that the income tax return for the year under consideration was duly filed and all relevant details of income and sales of property relating to the year under consideration were declared in the return of income and before the lower authorities, copy of Sale deed was also filed. He further submitted that the AO in the course of assessment proceedings initiated u/s 143(2) of the Act. The assessment for the year under consideration was also made by the AO u/s 143(3) accepting the income declared by the assessee vide order dated 26.12.2018 in which entire sales consideration of sale of land of Rs. 27,00,000/- was shown as capital receipts, under the head long term capital gain and out of sale proceeds, an amount was deposited in the bank account. He submitted that it is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that it was bonafide belief of the assessee that he is selling his land and buyer wanted to give the money in cash the relation between two were of seller & buyer can accept the payment in cash for sale of his house property. He accepted the payment in cash and as he was not aware about the newly inserted amendment with section 269SS of the Act. It was belief of the assessee that he shall not be avoiding taxes if situation arises. He was having bank account with him but he accepted the payment in cash under a bonafide belief that he is not making or thinking to avoid taxes and he felt no difference in cash as well as bank. He accepted the payment in cash as buyer wanted to make the part payment in cash. Absolutely he was not known to the law. it was bonafide belief of the assessee that cash shall be consumed in purchasing land to build a house, for the welfare of the family as usually sale purchase of lands were made in cash at that time. Whether payment was .in cash or though banking channel registry was not denied by the registrar. Even Registrar was not known to the law when he made Registry of the assessee. 9. As regards sale deed, it is not doubted by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that at this stage, it would be appropriate to refer certain important judgments delivered by the apex court as well as high courts. He submitted that the first important decision would be the decision of Hon'ble Supreme court in the case of Motilal Padampat Sugar Mills Ltd. vs. State of Uttar Pradesh (1979) 210 SC wherein it has been observed as follows:- "There is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement; there is no such maxim known to the law. It is therefore not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of the law." 12. Ld. AR for the assessee submitted that similar view has been taken by the Hon'ble apex court in the case of Hindustan Steels Ltd. vs. State of Orissa 83 ITR 26 SC by holding that penalty cannot be levied for mere failure to carry out a legal obligation. Penalty provisions, being quasi criminal proceedings, cannot be invoked unless the party acted deliberately in defiance of law or acted in conscious disregard of its obligation. Hence, penalty cannot be levied on mere b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or considering the scope of reasonable cause. He submitted that the decisions of the Hon'ble Apex Court, mentioned earlier, clearly hold that that levy of penalty u/ s 271D is not automatic simply on the basis that the assessee had accepted the sale consideration partly in cash and partly by cheques. He submitted that Hon'ble Apex Court has clearly held that no penalty u/s 271D or 271E should be imposed merely because that an assessee had accepted or paid cash in contravention of the provisions of sections 269SS or 269T of the Act unless there is an attempt on the part of the assessee to evade the tax due. The fact that the income tax return filed by the assessee had been accepted by the AO u/s 143(3) itself shows that there was no attempt on the part of the appellant to evade the tax due from him. Ld. AR for the assessee further relied on the following case laws :- (i) ITAT, Delhi in the case of Pratibha Bisht vs. ITO ITA No.2318/Del/2023 order dated November 16, 2023; (ii) Hon'ble Supreme court in ADI vs. Kumari A.B. Shanthi 255 ITR 258 (SC); (iii) ITAT, Ahmedabad in Narendra Kumar vs. JCIT in ITA No.195/Ahd./2022 order dated May 17, 2023; (iv) ITAT, Visakhapatnam in Nymi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout making any addition. Since assessee has accepted cash of Rs. 24,50,000/- in the form of cash, Assessing Officer initiated the penalty proceedings u/s 271D for the reason that assessee has violated the provisions of section 269SS of the Act. Before us, the 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. Further, it was submitted that assessee has already demonstrated the genuineness of the transaction and reasonable cause u/s 273B, why penalty proceedings cannot be initiated u/s 271D. After considering the detailed submissions, 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. In the similar transactions, we observed that ITAT, Chennai in the case of Shri R. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions contained in section 269T of the Income-tax Act provide 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 section if the amount of loan or deposit is twenty thousand rupees or more. In order to curb generation of black money by way of dealings in cash in immovable property transactions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017-18 with a view to 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction in immovable property. This was explained by Hon'ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 269SS i.e., 'sum specified' means only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of 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." 19. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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