Cash payment for property sale at registration violates Section 269SS; penalty under Section 271D upheld without reasonable cause

The ITAT held that receipt of sale consideration in cash for immovable property at the time of registration violates section 269SS, as per clause (iv) of the Explanation to the section. The provisions aim to prevent unaccounted income through cash transactions exceeding Rs. 20,000. The court interpreted "or otherwise" in the Explanation as inclusive of cash receipt during property transfer, confirming the transaction fell within the prohibition. Since the appellant did not establish reasonable cause for the violation, the penalty under section 271D was upheld against the appellant.

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ISSUES:

Whether receipt of sale consideration in cash at the time of execution and registration of sale deed falls within the ambit and scope of clause (iv) of the Explanation inserted to section 269SS of the Income Tax Act, 1961.Whether the provisions of section 269SS apply only to advances or also to other sums received "in relation to transfer of an immovable property."Whether penalty proceedings under section 271D can be validly initiated by the Joint Commissioner of Income Tax when the Assessing Officer records satisfaction for initiation.Whether the penalty under section 271D is leviable in absence of any reasonable cause for violation of section 269SS.

RULINGS / HOLDINGS:

The receipt of sale consideration in cash at the time of registration of the sale deed falls within the ambit and scope of clause (iv) of the Explanation inserted to section 269SS, as the words "or otherwise" are inclusive and relate to any sum of money received "in relation to transfer of an immovable property."The provisions of section 269SS are not restricted to advances alone but extend to "any sum of money receivable, whether as advance or otherwise," thereby covering cash receipt at registration.Penalty proceedings under section 271D can only be validly initiated by the Joint Commissioner of Income Tax; the Assessing Officer's recording of satisfaction is inconsequential and does not confer jurisdiction to initiate penalty proceedings.In absence of any plea or proof of reasonable cause for violation of section 269SS, penalty under section 271D is exigible and the order confirming penalty is upheld.

RATIONALE:

The Court applied the statutory framework of section 269SS and its Explanation clause (iv), which was amended to include "specified sum" relating to immovable property transactions to curb black money generation through cash dealings.The Court relied on the legislative intent as explained in CBDT Circular No. 19 of 2015, emphasizing that the amendment aimed to prohibit acceptance of cash sums exceeding Rs. 20,000/- in immovable property transfers unless paid through prescribed banking channels.The Court interpreted the phrase "or otherwise" in clause (iv) of the Explanation to section 269SS as inclusive and not restrictive, thereby extending the prohibition beyond advances to any sum received in relation to immovable property transfer.The Court distinguished and held the coordinate bench decision relied upon by the appellant as per incuriam for failing to interpret the phrase "or otherwise" correctly.Regarding initiation of penalty proceedings, the Court followed the binding precedent of the jurisdictional High Court holding that only the Joint Commissioner is competent to initiate penalty proceedings under section 271D, and the Assessing Officer's satisfaction recorded in assessment order is not sufficient to confer jurisdiction.The Court noted absence of any plea or evidence of reasonable cause under section 273, which is a prerequisite to avoid penalty under section 271D once violation of section 269SS is established.

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