2025 (2) TMI 1428 - AT - Income Tax

Penalty for cash acceptance in land sale overturned where registered agreement and ownership timing established payments as sale advances.

Assessee disputed penalty for accepting cash allegedly as a loan, asserting the sums were advances under a registered agreement for sale of land; revenue ... Penalty levied u/s. 271D - assessee has accepted cash loan for an amount of Rs. 1.00 crore - Assessee explained that the amount received was not a loan but it was an advance against the sale of land vide registered agreement - As per revenue assessee prepared the document on old stamp paper and it was a afterthought evidence. HELD THAT:- Upon conjoint reading of the direction of the bench in the first round and the information received by the ld. AO from the registrar about the ownership of the land by the assessee it is evident that the assessee acquired the right over the property on 10.04.2013 [though the stamp paper used for that transaction was dated 12.12.2012]. Therefore, based on the direction of the bench in the first round of litigation the assessee has first acquired the right over the property as per the registered agreement on 10.04.2013 and thereafter on 11.04.2013 accepted Rs. 40,00,000/-, 22.04.2013 Rs. 50,00,000/- and on 20.06.2013 Rs. 10,00,000/- totaling to Rs. 1,00,00,000/- from Smt. Maya Devi. Based on that set of facts and on being consistent to the finding so recorded by the bench vide order [2018 (12) TMI 2033 - ITAT JAIPUR] that 'In case, the land in question is found to be owned by the assessee then the claim of the assessee shall be accepted and no penalty can be levied. Appeal of the assessee is allowed. Issues: (i) Whether the delay of 108 days in filing the appeal should be condoned. (ii) Whether the penalty of Rs. 1,00,00,000/- imposed under section 271D of the Income-tax Act, 1961 is sustainable or liable to be quashed.Issue (i): Whether the delay of 108 days in filing the appeal should be condoned.Analysis: The assessee produced affidavit and explanation that the CIT(A)'s order was served to the assessee's son's email and due to a family tragedy the son did not see the communication; the assessee only became aware on receipt of demand notice and filed the appeal promptly thereafter. The bench applied the sufficient cause test and relied on established precedent permitting condonation where the appellant was prevented by sufficient cause.Conclusion: The delay of 108 days in filing the appeal is condoned in favour of the assessee.Issue (ii): Whether the penalty of Rs. 1,00,00,000/- under section 271D is sustainable.Analysis: The tribunal considered the ITAT's earlier direction to verify ownership of the land on the alleged agreement date. Records obtained from the Sub-Registrar established that the assessee acquired the property on 10.04.2013 and the payments from the purchaser were received thereafter (11.04.2013, 22.04.2013 and 20.06.2013). On this factual verification, the receipt was found to be an advance against sale of the immovable property rather than a prohibited cash loan under section 269SS. The tribunal applied the ITAT's limited remand scope and factual findings to assess the levy of penalty under section 271D.Conclusion: The penalty of Rs. 1,00,00,000/- imposed under section 271D is quashed and the appeal is allowed in favour of the assessee.Final Conclusion: The Tribunal condoned the filing delay and, after verifying ownership as directed on remand, accepted the assessee's claim of receipt as advance for sale of land and quashed the penalty under section 271D, resulting in allowance of the appeal.Ratio Decidendi: Where, on factual verification directed by the tribunal, the assessee is found to have owned the subject property before receipt of the sums, those receipts constitute specified sums/advances for transfer of immovable property and not prohibited cash loans under section 269SS; consequently penalty under section 271D cannot be sustained.