Receipt of cash consideration for agricultural land can be excused where a bona fide registered sale is disclosed and reasonable cause negates penalty.

Tribunal addressed whether cash receipt on sale of agricultural land attracts penalty for prohibited cash advances and whether the seller established reasonable cause to avoid penalty. It applied the principle that bona fide, registered sales disclosed in return and lacking material of mala fide intent or tax evasion can constitute reasonable cause to negate penalty under the statutory penalty regime; accordingly the penalty was deleted on merits. The tribunal also considered limitation, noting statutory extensions that kept the penalty order within the extended period, but this temporal finding did not prevent deletion of the penalty on substantive grounds.

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Issues: (i) Whether penalty under Section 271D of the Income-tax Act, 1961 can be sustained for receipt of cash sale consideration for agricultural land by applying Section 269SS of the Income-tax Act, 1961 and whether the assessee has demonstrated 'reasonable cause' under Section 273B of the Income-tax Act, 1961; (ii) Whether the penalty order dated 23.06.2021 is barred by limitation under Section 275(1)(c) of the Income-tax Act, 1961 read with the extensions by TOLA 2020 and subsequent notifications.

Issue (i): Whether Section 269SS/271D applies to the cash sale consideration for agricultural land and if so whether the assessee is exonerated by demonstrating reasonable cause under Section 273B.

Analysis: The term "specified sum" in Section 269SS was introduced to curb cash advances in immovable property transactions. The assessee's sale was a bona fide registered sale of agricultural land, the cash receipt was recorded in the registered sale deed and disclosed in the return, and there is no material of mala fide intent or tax evasion. The tribunal examined statutory purpose, relevant amendments and precedents, and applied the principle that penalty provisions are not automatic; an honest and reasonable explanation may constitute "reasonable cause" under Section 273B and preclude levy of penalty under Section 271D.

Conclusion: Penalty under Section 271D is not sustainable in the facts of these appeals; the assessee has demonstrated reasonable cause and the penalty is deleted. This conclusion is in favour of the assessee.

Issue (ii): Whether the penalty order is time-barred under Section 275(1)(c) of the Income-tax Act, 1961.

Analysis: The limitation period under Section 275(1)(c) was subject to extension by the Taxation and Other Laws (Relaxation and Amendment) measures in 2020 and subsequent CBDT notifications, which extended the time for passing penalty orders up to 30.09.2021. The penalty order dated 23.06.2021 thus falls within the extended limitation period.

Conclusion: The penalty order is within time and not barred by limitation. This conclusion is against the assessee on limitation point but does not affect the ultimate deletion of penalty on merits.

Final Conclusion: The tribunal allows the appeals by setting aside the CIT(A)'s order and directing deletion of penalty under Section 271D of the Income-tax Act, 1961, on the ground that the assessee has demonstrated reasonable cause and the cash sale consideration for agricultural land, recorded and disclosed, defeats imposition of penalty in the present facts.

Ratio Decidendi: Where a genuine, registered sale of agricultural land is recorded and disclosed and there is no material of mala fide intent or tax evasion, the assessee may establish "reasonable cause" under Section 273B of the Income-tax Act, 1961 to negate imposition of penalty under Section 271D for receipt of cash, notwithstanding the definition of "specified sum" in Section 269SS.

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