ITAT deletes section 271D penalty for cash receipt in property transfer due to reasonable cause under section 273B

The ITAT Visakhapatnam allowed the assessee's appeal and deleted the penalty imposed under section 271D for receiving cash of Rs. 15,41,000 in relation to immovable property transfer. The tribunal held that section 269SS was not attracted since the assessee immediately deposited the cash into bank account without suppressing receipts and offered capital gains to tax. The cash receipt under unavoidable circumstances with immediate banking constituted reasonable cause under section 273B, making the penalty unsustainable. The orders of AO-NFAC and CIT(A)-NFAC were set aside.

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Issues involved: Appeal against penalty order u/s. 271D of the Income Tax Act, 1961 for AY 2016-17 due to receipt of cash in relation to transfer of immovable property.

Delay Condonation:
The appellant filed an appeal with a delay of 53 days due to a reasonable cause of suffering from a Fibula Fracture, which prevented timely filing. The Tribunal condoned the delay and proceeded to adjudicate the appeal on merits.

Background and Assessment:
The assessee declared income for AY 2016-17 and during scrutiny, explained cash deposits from the sale of immovable property. The AO initiated penalty proceedings u/s. 271D for receiving cash exceeding Rs. 15,41,000, violating section 269SS. The assessee's submissions were not considered, leading to the penalty order.

Grounds of Appeal:
The assessee challenged the penalty, citing contrary facts and laws, lack of justification by the CIT(A), and invoking section 273B. An additional ground questioned the validity of the penalty order due to lack of satisfaction recorded by the AO in the assessment order.

Arguments and Case Laws:
The assessee argued the genuineness of the transaction, capital gains computation, and cited various case laws to support the appeal. The Departmental Representative supported the Revenue Authorities' decision.

Core Issue and Analysis:
The key issue was the validity of penalty u/s. 271D for cash receipt related to property transfer, violating section 269SS. The Tribunal analyzed the provisions and noted the objective to curb black money. As the cash was deposited, capital gains were declared, and a reasonable cause was established, the penalty was deemed unsustainable.

Judgment:
The Tribunal set aside the penalty, ruling in favor of the assessee, as the cash receipt was deposited, taxes paid, and a reasonable cause existed. The appeal was allowed, and the penalty was deleted. The decision was pronounced on 28th May, 2024.

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