2022 (9) TMI 764 - AT - Income Tax

Appeal allowed, penalty deleted under I.T. Act; 'reasonable cause' cited, emphasizing individual assessment.

Smt. Anuradha Chivukula Challa Versus The Additional Commissioner of Income-tax, International Taxation, Range – 1 Bangalore.

Smt. Anuradha Chivukula Challa Versus The Additional Commissioner of Income-tax, International Taxation, Range – 1 Bangalore. - TMI Issues:- Justification of confirming penalty u/s 271D of the I.T. Act by CIT(A)Analysis:The case involved the imposition of a penalty under section 271D of the I.T. Act on an assessee, a non-resident individual, for accepting part sale consideration in cash for two immovable properties during the relevant assessment year. The Assessing Officer (A.O.) initiated the penalty based on information received regarding the cash receipts by the assessee, which violated the provisions of section 269SS of the I.T. Act. The A.O. imposed a penalty of Rs. 12,37,000 due to the lack of a satisfactory explanation from the assessee despite notices issued. The CIT(A) upheld the penalty, stating that the assessee had violated the provisions of the Act by accepting cash instead of banking transactions only, as required by law.The assessee contended that there was a reasonable cause for accepting cash, citing the circumstances of the transactions during the demonetization period and the urgency to complete the deals due to various factors affecting the real estate market. The assessee's father, aged 87, played a crucial role in the negotiations and the sale of the properties. The Tribunal noted that the assessee had disclosed the cash receipts in both the sale deeds and the income tax returns, indicating no intention to defraud or evade taxes. The Tribunal considered the peculiar facts of the case, including the NRI status of the assessee and the urgency to finalize the transactions, as constituting a 'reasonable cause' under section 273B of the I.T. Act, thereby justifying the acceptance of cash.Moreover, the Tribunal distinguished the case from precedent relied upon by the Departmental Representative, emphasizing that the assessee's situation warranted leniency due to factors beyond her control. Citing judicial pronouncements, including decisions by various High Courts, the Tribunal concluded that the penalty imposed under section 271D was unwarranted in this case. Relying on the principles of 'reasonable cause' and considering the facts and circumstances presented, the Tribunal allowed the appeal filed by the assessee and deleted the penalty imposed under section 271D of the I.T. Act.In conclusion, the Tribunal's decision highlighted the importance of assessing each case on its individual merits, considering the specific circumstances and justifications presented by the assessee. The ruling emphasized the application of legal principles such as 'reasonable cause' and precedent from judicial pronouncements to determine the appropriateness of penalties under tax laws, ultimately leading to the deletion of the penalty in this particular case.