Cash receipt beyond statutory limit attracts penalty and enhancement stands when notice is given and receipt is admitted

Receipt of sale consideration in cash beyond the statutory limit attracted the cash transaction bar under Section 269SS, and in the absence of reasonable cause the penalty under Section 271D was correctly levied. The Tribunal noted that the cash receipt was admitted and that the assessee's role in the transfer arrangement was substantive, not limited to a bare power-of-attorney holder. The appellate enhancement of the penalty was also upheld because notice of enhancement had been issued and the increase was based on the admitted receipt. The penalty was sustained in full and the appeal failed.

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Issues: (i) Whether penalty under Section 271D read with Section 269SS was leviable for receipt of sale consideration in cash. (ii) Whether the enhancement of penalty by the appellate authority was valid.

Issue (i): Whether penalty under Section 271D read with Section 269SS was leviable for receipt of sale consideration in cash.

Analysis: The cash receipt was admitted in the assessee's own reply and the transaction documents showed that the assessee had a substantive role in the transfer arrangement, not merely that of a bare power-of-attorney holder. The Tribunal held that receipt of more than the prescribed cash limit in connection with sale consideration attracted the statutory bar under Section 269SS and consequently penalty under Section 271D. No reasonable cause was established to explain acceptance of the amount in cash.

Conclusion: The penalty under Section 271D was held to be correctly leviable, against the assessee.

Issue (ii): Whether the enhancement of penalty by the appellate authority was valid.

Analysis: The appellate authority had issued notice for enhancement and put the assessee to notice before increasing the penalty amount from the figure adopted by the Assessing Officer to the amount corresponding to the admitted cash receipt. The Tribunal found no procedural infirmity in the enhancement exercise.

Conclusion: The enhancement of penalty was upheld, against the assessee.

Final Conclusion: The statutory penalty for violation of the cash transaction restriction was sustained, and the appeal failed in full.

Ratio Decidendi: Receipt of sale consideration in cash beyond the statutory limit, absent reasonable cause, attracts penalty under Section 271D, and an appellate enhancement is sustainable when preceded by notice and based on the admitted receipt.

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