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TMI Blog2025 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 269ST too uses the expression 'aggregate'. Section 269ST was the new provision and this was the first year and therefore to entertain this belief was not something which was impossible. There is no allegation by the Assessing Officer that the unaccounted income and black money was introduced by the assessee in the form of cash sales. Assessee duly accounted for cash receipts, particulars of farmers are kept proving their identity, aadhar, land revenue record and agricultural land holding of all the farmers, Form 60, etc. and all the statements in this regard were duly and regularly filed by the assessee. In such circumstances it cannot be said that there is any intention to evade tax. As held in the case of Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] penalty is quasi criminal in character and therefore it should not be imposed for technical or venial breach. We hold that the assessee had bona fide reasons to receive cash over and above Rs. 2 lakhs and the assessee has reasonable cause in accepting cash over and above Rs. 2 lakhs from the farmers against sale of tractors. Penalty cannot be levied for the technical and venial breach. Therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 61A (statement of specified financial transactions u/s 285BA(1) of I.T. Act) filed by the assessee. The assessee reported that the assessee firm accepted and aggregate amounts of Rs. 2 lakhs or more in cash. The Assessing Officer issued show-cause notice u/s 274 r.w.s. 271DA dated 02.03.2021 to explain as to why an order imposing penalty u/s 271DA of the Act should not be passed since the assessee has violated the provisions of Section 269ST of the Act after several opportunities the assessee finally on 15.09.2021 submitted that the business activity of the assessee firm is trading (sales of tractor) used for agricultural activity, the agriculturists mostly purchase tractor in cash or from bank loan. It was submitted that the assessee furnished SFT statement every year on Income tax portal and the assessee did not violate the provisions of section 269ST and hence no penalty u/s 271D can be imposed on the assessee. Not convinced with the reply the Assessing Officer imposed penalty u/s 271DA of the Act in respect of transactions relating to one event or an occasion from a person aggregating to Rs. 4,69,52,797/-. On further appeal, the Ld. CIT(Appeals) sustained the penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed: Provided that the provisions of this section shall not apply to- (i) any receipt by (a) Government; (b) any banking company, post office savings bank or cooperative bank; (ii) transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. Explanation.-For the purposes of this section,- (a) "banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; (b) "co-operative bank" shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS. Broad arguments are on the following lines: a) Object of the introduction of section 269ST is to prevent the circulation of Black and unaccounted money to counteract tax evasion & in the instant case, neither this is an allegation nor is there any tax evasion in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in the following judicial decisions, there are direct decisions in the context of section 269ST which also lay down that the object of section 269ST is to prevent unaccounted income and black money. Finesse International Design Pvt. Ltd. vs. Addl. CIT in ITA No.2561/Del/2022 dated 02.04.2024 (ITAT Delhi Bench) in the context of section 269ST itself. ACIT vs. Lilavati Kirti Lai Mehta (Mum) (ITAT)- CLC 52-67 Even Memorandum to The Finance Act, 2017 also says the same. PB 5-6 is the copy of written submissions before Ld. CIT(A) wherein the relevant portion of the said memorandum is reproduced. 2. The appellant is farm tractors dealer which sells agricultural tractors to the farmers who come with cash & pay advance and balance amounts gradually in instalments and buy the farm tractors inter-alia by paying cash albeit less than Rs. 2 Lakhs at any given point of time. Such cash receipts are duly accounted for in sales and detailed particulars of the farmers are kept by the appellant proving their identity, ID Proof, Aadhar, Land Revenue record of the agricultural land, Form 60 etc., All statements in this regard were duly and regularly filed by the appellant and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les among the sister concerns, adjust or transfer balances, consolidate debts, correct clerical errors, etc., all these transactions being commercial in nature carried out in the normal course of business operations of the group concerns, there is reasonable cause for the said violation and therefore, in the absence of any finding of the AO that the impugned transactions constitute unaccounted money and are not bona fide or not genuine, penalty under ss. 27ID and 27IE was not sustainable-Lodha Builders. (P) Ltd. vs. Asstt. CIT 106 DTR (Mumbai 'E') 226 Penalty under section 27ID-Contravention of s. 269SS Reasonable cause-When the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bona tides of the assessee and the cash given by the lender was not unaccounted money but was duly reflected in their books of account, s. 27313 was applicable and penalty under s. 27 ID was not sustainable.- CIT vs. Smt. Dimval Yadav 126 DTR (All) 60 Penalty under s. 271D-Contravention of s. 269SS- Reasonable cause-Assessee, a builder and developer of lands, having resorted to cash borrowings in order to seize a good bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting Mills, (2003) 264 ITR 505 (Raj) (CLC 68-69) PB 13-14 is the copy of written submissions before the Ld.CIT(A) on this issue. Sd/- (Appellant/Counsel)" 7. The Ld. Counsel placed reliance on the following decisions in support of the above contentions: 1. "CIT Vs. jai Laxmi Rice Mills in ITA No.1457/2008 dated 20.11.2015 (SC); 2. Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 026 (SC); 3. Asstt. Director of Inspection (Inv.) Vs. Kum. AB Shanthi (2002) 255 ITR 0258 (SC); 4. Arjun Singh Vs. Mohindra Kumar & Ors. 1964 AIR 993 (SC); 5. CIT Vs. Triumph International Finance (I) Limited (2012) 345 ITR 0270 (Bom.); 6. ACIT Vs. M/s Lilavati Kirtilal Mehta Medical Trust, ITA No.1568/Mum/2021 (Mumbai Tribunal); 7. CIT Vs. Ajanta Dyeing & Printing Mills (2003) 264 ITR 505 (Raj.); 8. CIT Vs. Bhagwati Prasad Bajoria (HUF) (2003) 263 ITR 487 (Gauhati); 9. CIT Vs. Speedways Rubber P. Ltd. (2010) 326 ITR 31 (P&H); 10. CIT Vs. Manoj Lalwani (2003) 260 ITR 590 (Jaipur); 11. CIT Vs. Dimpal Yadav (2015) 379 ITR 177 (All.); 12. M/s Delhi State Taxi Vs. JCIT ITA Nos. 3107-3108/2019 dated 26.04.2023 (Del.); 13. Finesse International Design Pvt. Ltd. ITA No.2561/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IN - DATE AMOUNT 12.06.2018 197000/- 10.11.2018 175000/- 15.11.2018 100000/- 15.12.2018 (-) 7500/- 17.12.2018 (-) 9501/- BANK- 10001/- TOTAL- 482001/- CUSTOMER AGRICULTURAL LAND AREA- 4.3110 (HACTARE) TRACTOR REGISTERATION NO.- UP12AX8759 (AGRICULTURAL TRACTOR)" 11. Similar details were furnished with respect to all the farmers who purchase tractors from the assessee. It is not the case of the Assessing Officer that the unaccounted money of the assessee is routed back in the form of cash sales. Neither the bona fide's of the transactions were in doubt nor questioned by the Assessing Officer. The provision of section 269ST was introduced from 01.04.2017 and the assessee was making cash sales right from the inception of its business. We find considerable force in the submissions of the Ld. Counsel that there are good and sufficient reasons for accepting cash over and above Rs. 2 lakhs from the farmers on account of sales of tractors. Loss of business could not be afforded by the assessee when the transactions are genuine and the purchaser is identified. 12. The assessee was also under b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 250 of the Income-tax Act, 1961 (hereinafter called "the Act") by the Ld. Commissioner of Income-Tax (Appeals) -23, Delhi is against law and facts on the file in as much as he was not justified to partly uphold the action of the Learned Assessing Officer by restricting the penalty levied u/s 271DA of the Act to Rs. 12,60,300/- as against Rs. 25,78,300/- levied by the Ld. Assessing Officer for alleged splitting of bills made by the Appellant Company during the year under consideration and alleged contravention of the provisions of Section 269ST on cash receipts of Rs. 2,00,000/- or more in AY 2018- 19 by ignoring the facts and circumstances of the case and submissions filed on behalf of the Appellant Company. " 3. The grounds of appeal are related to levy of penalty u/s 271DA of the Income Tax Act, 1961 on cash receipts of Rs. 2,00,000/- by the assessee. Penalty order u/s 271D of the Act has been passed in consequence to the proceedings of search and seizure operation that was conducted on Sh. Rishi Kishan Mehra and Shantanu Mehra, Directors of M/s Finessee International Design Pvt. Ltd. on 29.05.2018 u/s 132A. During the search operation, incriminating documents related to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi Suri Gown 03.11.2017 230000 13. Nitant Khanna Sherwani Kurta Churidar 27.12.2017 187000 14. Nitant Khanna Jodhpuri Shirt Trouser 27.12.2017 78000 9. In the instant case, the items purchased are marriage dresses and of different items. 10. The provisions of Section 271DA are as under: "Penalty for failure to comply with provisions of section 269ST. 271DA. (1) I f a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt: Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 11. Legislative Intention behind introduction of Section 269ST: "Various legislative step s have been taken by the Finance Act, 2017 to curb black money by discouraging cash transaction and by promoting digital economy. These prominently include placing restriction on cash transaction by introduction of new sections 269ST & 271DA to the Income tax Act.......... ." 2. Chapter XX-B which contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2] 83 ITR 26 that penalty cannot be levied merely because the authorities are empowered to levy and when there is technical or venial breach of the provisions of the Act, the authorities competent to impose penalty shall be justified in refusing to impose the penalty. " 16. Hence, keeping in view, the entire facts and peculiar circumstances of the case, we hold that no penalty is leviable in this case." 16. In view of the above discussion, we hold that the assessee had bona fide reasons to receive cash over and above Rs. 2 lakhs and the assessee has reasonable cause in accepting cash over and above Rs. 2 lakhs from the farmers against sale of tractors. Penalty cannot be levied for the technical and venial breach. Therefore, we direct the Assessing Officer to delete the penalty levied u/s 271DA of the Act. 17. The Ld. Counsel also made submission that in the absence of recording of satisfaction in the assessment order such penalty cannot be imposed and reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (supra). However, in the case on hand, we observe that there is no assessment order passed u/s 143(3) of the Act and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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