Cash refund on cancelled property deal not covered by section 269SS, so penalty under section 271D was unsustainable.

Cash refund of an advance earlier paid for a cancelled property transaction was not treated as a loan, deposit, or specified sum under section 269SS of the Income-tax Act. The refund represented repayment of the assessee's own advance and not acceptance of loan or deposit, nor money received as an advance or otherwise in relation to transfer of immovable property. As section 269SS did not apply, penalty under section 271D could not be sustained. The later insertion of section 269ST was noted as a separate anti-cash-receipt provision, but it did not govern this transaction.

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Issues: Whether cash receipt of an amount refunded on cancellation of an agreement constituted a loan, deposit or specified sum within the meaning of section 269SS of the Income-tax Act, 1961, so as to attract penalty under section 271D.

Analysis: The amount received by the assessee was found to be a refund of advance earlier paid for purchase of property on cancellation of the agreement. Section 269SS applies only to acceptance of loan, deposit or specified sum, and the definition of specified sum covers money receivable as an advance or otherwise in relation to transfer of immovable property. A refund of advance already paid by the assessee was held not to be a receipt in the nature of loan or deposit, nor a specified sum received for transfer of immovable property. The subsequent insertion of section 269ST was noticed as a separate anti-cash-receipt provision, but it did not govern the present transaction for penalty under section 271D.

Conclusion: The cash refund did not fall within section 269SS, and the penalty under section 271D was unsustainable. The assessee succeeded and the Revenue's appeal was dismissed.

Ratio Decidendi: A cash refund of an advance earlier paid for a cancelled property transaction is not a loan, deposit or specified sum received so as to trigger section 269SS and consequential penalty under section 271D.

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