Cash Consideration for Registered Agricultural Land Sale: penalty not leviable where bona fide payment is recorded, disclosed and no mala fide intent.

Penalty under the cash-transaction prohibition is not exigible where the sale consideration for agricultural land is a bona fide cash receipt recorded in a registered sale deed, disclosed in return and assessment, and there is no material of mala fide intent or tax evasion; the tribunal applied ejusdem generis and purposive interpretation to exclude such factual matrices from the mischief of the restriction and therefore held penalty unsustainable. The limitation defence was rejected because limitation was extended by legislative amendment and subsequent notifications, and the assessee established reasonable cause, so penalty was deleted.

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Issues: (i) Whether penalty under section 271D of the Income-tax Act, 1961 is leviable for acceptance of cash consideration for sale of agricultural land in the facts of these cases; (ii) Whether the penalty orders dated 23.06.2021 are barred by limitation under section 275(1)(c) of the Income-tax Act, 1961 read with TOLA 2020 and subsequent CBDT notifications; (iii) Whether the assessee has demonstrated "reasonable cause" under section 273B of the Income-tax Act, 1961 to escape penalty under section 271D.

Issue (i): Whether penalty under section 271D of the Income-tax Act, 1961 is leviable for acceptance of cash consideration for sale of agricultural land.

Analysis: The statutory scheme defines "specified sum" in section 269SS to include sums receivable in relation to transfer of immovable property. The amendment introducing "specified sum" aimed at curbing cash dealings in immovable property. Where a transaction is a genuine, registered sale of agricultural land that is outside the ambit of capital gains (section 2(14)), and the cash receipt is recorded in the registered sale deed and disclosed in the return and assessment, applicability of penalty under section 271D is subject to whether the transaction falls within the intended target of section 269SS and whether there is mala fide or tax evasion. The Tribunal examined coordinate decisions applying ejusdem generis, CBDT circulars and the purpose of the 2015 amendment and found that completed sale consideration properly recorded at registration and disclosed may not be brought within the mischief of section 269SS as "specified sum" for penalty purposes in such factual matrix.

Conclusion: Penalty under section 271D is not leviable on the facts where the cash consideration was part of a bona fide, registered sale of agricultural land and was disclosed; decision in favour of the assessee on this issue.

Issue (ii): Whether the penalty orders dated 23.06.2021 are barred by limitation under section 275(1)(c) read with TOLA 2020 and CBDT notifications.

Analysis: Section 275(1)(c) prescribes the time limit for passing penalty orders. The Tribunal considered the Taxation and Other Laws Amendment Act, 2020 (TOLA 2020) and subsequent CBDT notifications extending limitation periods and held that the effective limitation for passing penalty orders under chapter XXI was extended to cover the date on which the impugned orders were passed (23.06.2021), and therefore the orders fall within the extended limitation period.

Conclusion: The penalty orders are within time; the limitation objection fails and is rejected.

Issue (iii): Whether the assessee has demonstrated "reasonable cause" under section 273B to avoid penalty under section 271D.

Analysis: Section 273B provides that penalty shall not be imposed if the assessee proves reasonable cause. The Tribunal applied settled principles that penalty is not automatic and considered evidence that the transaction was genuine, registered, disclosed in return and assessment, and there was no material of mala fide intent or tax evasion. Coordinate and precedent authorities where bona fide belief about non-applicability of section 269SS or the agricultural nature of the land was accepted were relied upon to conclude presence of reasonable cause.

Conclusion: The assessee has established reasonable cause under section 273B; penalty under section 271D is not sustainable and is deleted in favour of the assessee.

Final Conclusion: The Tribunal allowed the appeals and set aside the orders sustaining penalty under section 271D, holding that the penalty was not exigible on the facts (genuine registered sale of agricultural land duly disclosed), the limitation objection was unsustainable in view of TOLA 2020 and notifications, and reasonable cause under section 273B was established.

Ratio Decidendi: Where cash receipt is the bona fide, recorded and registered sale consideration for agricultural land disclosed in returns and assessments, and there is no material of mala fide intent or tax evasion, penalty under section 271D for contravention of section 269SS cannot be imposed; limitation for penalty orders is governed by section 275(1)(c) read with TOLA 2020 and applicable CBDT notifications.

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