Revenue's penalty appeal dismissed as Section 269SS applies only to advance payments not final sale consideration during property registration

The ITAT Chennai dismissed the Revenue's appeal regarding penalty u/s 271D for alleged violation of Section 269SS concerning cash acceptance in immovable property transactions. The assessee received cash payments during registered sale deed execution before the sub-registrar. The ITAT held that Section 269SS applies only to advance payments in immovable property transactions, not to final sale consideration paid during registration. The court relied on the Finance Minister's budget speech and CBDT Circular No.19/2015 clarifying the provision's intent to curb black money generation through advance cash transactions exceeding Rs. 20,000. Since payments were made at registration completion, no Section 269SS violation occurred, making penalty non-exigible.

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Issues Involved:
1. Jurisdictional Issue regarding the recording of satisfaction by the Assessing Officer (A.O).
2. Deletion of penalty under Section 271D of the Income Tax Act for violation of Section 269SS.

Summary:

Jurisdictional Issue:
The assessee's counsel raised a jurisdictional issue under Rule 27 of the Appellate Tribunal Rules, 1963, arguing that the penalty order under Section 271D dated 12.06.2019 was invalid due to the absence of recorded satisfaction by the A.O in the assessment order dated 23.05.2018. The Tribunal noted that Rule 27 allows a respondent to support the order on grounds decided against him only if those grounds were raised at some stage of the proceedings. Since the assessee did not raise this issue before the CIT(A) or the adjudicating authority, the Tribunal rejected the petition under Rule 27.

Deletion of Penalty under Section 271D:
The Revenue's appeal contested the CIT(A)'s deletion of the penalty levied by the JCIT under Section 271D for accepting cash in excess of Rs. 20,000 in violation of Section 269SS. The CIT(A) had deleted the penalty, observing that the entire cash amount was disclosed in the assessee's Trading, Profit and Loss Account, and thus there was no loss of revenue. The CIT(A) also considered the "reasonable cause" under Section 273B, noting that the transactions involved people of meagre means from small villages.

The Tribunal upheld the CIT(A)'s decision, emphasizing that the amendment to Section 269SS effective from 01.06.2015 aimed to curb black money by prohibiting cash advances in immovable property transactions. However, it did not apply to cash received as sale consideration at the time of registration of sale deeds. The Tribunal concluded that the assessee's transactions did not violate Section 269SS, as the cash was received at the time of registration, not as an advance. Therefore, the penalty under Section 271D was not applicable, and the appeal by the Revenue was dismissed.

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