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TMI Blog2024 (11) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfaction of violation of section 269SS and a reference for initiating penalty u/s 271D of the Act should be made and recorded by the AO in the body of the assessment order. The reliance in this regard is rightly placed by Ld. AR on the decision of Sri Raja Reddy Nalla, Warangal [ 2023 (5) TMI 1254 - ITAT HYDERABAD ]. Further, we are of the considered view that the interpretation given to words, specified sum by terming it as residuary term to encompass all other transactions done in cash beyond a specified sums is incorrect interpretation. See Shri R. Dhinagharan (HUF) [ 2024 (1) TMI 61 - ITAT CHENNAI ] wherein held sale consideration was received in cash at the time of execution of multiple sale deeds from different persons for the sale of plots and accepted as genuine in the assessment order completed on 23.05.2018 and admittedly there was no advance received by the seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as 'specified sum' and on such presumption the JCIT levied penalty u/s 271D of the Act. The intention of the amendment is very clear right from the Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash was received against sale of 32 sale deeds, there was high cash in hand. The AO had accepted the return of income of the capital gains of Rs. 1,84,69,469/-. Subsequently, the Ld. JCIT, vide order dated 24.05.2019, issued a notice on 06.12.2018 observing that all the sale deeds have been executed after 01.06.2015 and lands have been sold to 32 different buyers receiving a cash amount of Rs. 1,28,47,000/- which is in violation of section 269SS of the Act and for which penalty u/s 271B should be levied. The assessee had given a reply that the provisions of section 269SS of the Act are not applicable as the money received was not by way of advance, but, at the time of execution of sale deeds. However, the ld. JCIT was not satisfied and considered the provisions of section 269SS of the Act applicable on the premise that the phrase specified sums mentioned in section 269SS cover the amount received in cash. The ld. JCIT was of the view that specified sum means any sum receivable. The ld. CIT(A) has sustained the penalty and we consider it appropriate to reproduce the relevant part of the adjudication:- Ground No.1:- the appellant has contended that it did not violate the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the contention that the appellant did not receive any loan or deposit from the buyer of the land is not correct and is liable to be rejected. The appellant has produced the wrong interpretation of the section including the interpretation of the definition of Specified Sum . The application of section 269SS of the Act to the facts of the case of the appellant by the AO and imposition of consequent penalty u/s 271D of the Act is within the precincts of the then relevant provisions of Income Tax Act. In view of above, the ground No. 1 of appeal is hereby dismissed. Ground No.2: the appellant is taken the ground that the cash transactions of the sale of more than Rs. 2,00,000/- are to be brought to tax as per new section 269ST introduced w.e.f. 01.04.2017. It is pertinent to mention from the facts of the case of the appellant pertain to assessment year 2016-17 corresponding to F.Y. 2015-16. Hence, section 269ST was not in existence at the material time. Further, it lends more credence to the action of the AO to initiate penalty for violation of section 269SS of the Act which was the relevant Section during the A.Y. 2016-17. Hence, the AO was correct to bracket the appellants cash tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the issue of application of section 269SS of the Act was examined during the assessment proceedings. 4.1 As we go through the order of Ld. JCIT dated 24.05.2019, we find that it is mentioned that AO had submitted a proposal for initiation of penalty u/s 271D for contravention of section 269SS of the Act. We fail to reconcile between the assessment order and the penalty order as to if the AO had in any way shown any indulgence during the assessment proceedings about the contravention of section 269SS of the Act. We are of the considered view that even if it is assumed that subsequent to the assessment order dated 26.11.2018 the AO had submitted a proposal for initiation of penalty u/s 271D, then, the particulars of that communication should have been part of the impugned penalty order. In any case, if after conclusion of the assessment order any proposal was forwarded by the AO that does not fulfill the mandate of law which requires that the satisfaction of violation of section 269SS and a reference for initiating penalty u/s 271D of the Act should be made and recorded by the AO in the body of the assessment order. The reliance in this regard is rightly placed by Ld. AR on the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified advances The existing provisions contained in section 269SS of the Income-tax Act provide 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 have been provided in the section. Similarly, the existing provisions 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 electron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted on 23.05.2018 and admittedly there was no advance received by the seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as 'specified sum' and on such presumption the JCIT levied penalty u/s 271D of the Act. The intention of the amendment is very clear right from the Budget speech of the Finance Minister 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve provisions, Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of 'sum specified' brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this provision was to curb the generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs. 20,000/- or more for any transaction 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 plo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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