2023 (7) TMI 1201 - AT - Income Tax

ITAT overturns penalty for cash sale of property, citing no black money involvement.

Noordeen Ahmed Amina Versus ITO NFAC New Delhi

The ITAT allowed the appeal and deleted the penalty imposed under section 271D for receiving cash on the sale of immovable property, holding that the ... Penalty levied u/s. 271D - assessee has received cash on sale of immovable property which was held to be in contravention of Section 269SS - AR submitted that applying the rule of Ejusdem generis to the expression advance or otherwise, the phrase otherwise would not cover sale consideration and such sale transactions are excluded from the purview of Sec. 269SS - HELD THAT:- The Explanatory Notes to the Finance Act, 2015, enlarging the scope of Sec. 269SS, clearly provide that in order to curb generation of black money by way of dealings in cash in immovable property transactions, Section 269SS of the Income tax Act has been amended 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 (specified sum) 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. Very clearly, the intention of the amendment is to include sale consideration also arising out of immovable property within the ambit of Sec. 269SS. This argument raised by Ld. AR stand rejected. Digital signatures on the penalty order could not be verified - DR produced copy of penalty order wherein digital signatures have clearly been affixed on the penalty order. DR submitted that there is no further requirement that the digital signatures should be verified by the web browser. We concur with Sr. DR's plea since the only requirement is that the order should be signed digitally and nothing more. This argument also stands rejected. But facts as emerges that the assessee has sold property for sale consideration of Rs. 50 lacs out of which substantial sale consideration to the extent of Rs. 45 Lacs has been received in Cheques whereas only a small sale consideration of Rs. 5 Lacs has been received in cash. The sale transaction is duly evidenced by the registered agreement / deed. Considering the fact that the provisions of Sec. 269SS are mainly to curb generation of black money by way of dealings in cash in immovable property transactions which is absence in the present case, we would hold that it is not a fit case for levy of impugned penalty - Decided in favour of assessee. Issues involved: Confirmation of penalty under section 271D for receiving cash on sale of immovable property in contravention of Section 269SS of the Act.Summary:Issue 1: Condonation of delay in appealThe assessee appealed against the penalty imposed under section 271D for receiving Rs. 5 Lacs in cash on the sale of an immovable property of Rs. 50 Lacs. The delay of 34 days in filing the appeal was condoned despite opposition from the Department.Issue 2: Violation of Section 269SSThe penalty was levied by the Assessing Officer under Section 271D due to the violation of Section 269SS, which prohibits accepting specified sums in cash in relation to the transfer of immovable property. The penalty was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)].Issue 3: Interpretation of Section 269SSThe CIT(A) upheld the penalty, emphasizing that the intention of Parliament in amending the section was to curb black money in cash dealings in immovable property transactions. The argument that the sale consideration was disclosed as income was deemed simplistic, and the wider definition of immovable property includes both land and buildings.Issue 4: Adjudication by ITATThe ITAT rejected the argument that sale consideration is excluded from the purview of Section 269SS, stating that the intention of the amendment was to include sale consideration arising from immovable property. The digital signatures on the penalty order were deemed valid, and the ITAT concluded that the penalty was not justified in this case as the transaction did not involve black money dealings in cash.In conclusion, the ITAT allowed the appeal and deleted the penalty imposed under section 271D.