AO cannot club separate cash sales bills under Rs. 2 lakh to impose section 271DA penalty

The ITAT Delhi upheld the CIT(A)'s decision to delete the penalty imposed under section 271DA for alleged violation of section 269ST. The AO had aggregated multiple cash sales bills from different dates and sales executives, presuming they were split bills to circumvent the Rs. 2 lakh cash transaction limit. The ITAT found the AO failed to prove the bills were to a single person or identify the alleged accommodated parties. Individual bills were below Rs. 2 lakh, and section 269ST does not permit clubbing different cash sales invoices. The violation requires conclusive proof that cash exceeding Rs. 2 lakh was received from one person in a single day, which was absent. The Revenue's appeal was dismissed.

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Issues Involved:
- Appeal filed by Revenue against deletion of penalty under section 269ST of the Income-tax Act, 1961 for Assessment Year 2018-19.
- Appeal filed by Revenue against order of Commissioner of Income-tax (Appeals) for Assessment Year 2019-20 based on revised monetary limit for filing departmental appeals.

Analysis:

Issue 1: Appeal against Deletion of Penalty for Violation of Section 269ST (Assessment Year 2018-19)

The primary issue in this appeal was the deletion of a penalty of Rs. 1,43,56,339 imposed on the assessee for violating the provisions of section 269ST of the Income-tax Act, 1961. The case stemmed from search and seizure operations revealing cash receipts exceeding Rs. 2,00,000 from a single person, allegedly in violation of section 269ST. The Assessing Officer invoked penalty proceedings under section 271DA, leading to the deletion of a portion of the penalty by the Commissioner of Income-tax (Appeals) (CIT(A)).

The CIT(A) deleted the penalty based on the submission and evidence presented by the assessee during the appellate proceedings. The assessee argued that the invoices were below Rs. 2 lakhs, issued across various stores and times, by different salespersons. The CIT(A) found that the Assessing Officer's presumption of splitting bills to evade section 269ST was incorrect. The CIT(A) highlighted that the law does not permit aggregating different cash sales bills in a day to allege a violation of section 269ST. The CIT(A) emphasized the need for conclusive proof that cash exceeding Rs. 2 lakhs was received from a single person in a single day, which was lacking in this case.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, noting that the CIT(A) had thoroughly analyzed the facts and evidence before deleting the penalty. The ITAT found no reason to disturb the CIT(A)'s findings, ultimately dismissing the Revenue's appeal.

Issue 2: Appeal Based on Revised Monetary Limit for Filing Departmental Appeals (Assessment Year 2019-20)

In the second appeal, the Revenue challenged the CIT(A)'s order for Assessment Year 2019-20. However, during the hearing, the assessee's counsel pointed out that the tax effect in the Revenue's appeal was below Rs. 60 lakhs, in line with the CBDT's Circular No.09/2024 dated 17.09.2024, which revised the monetary limit for filing departmental appeals to Rs. 60 lakhs. The Revenue's appeal was thus deemed not maintainable based on the revised limit.

The ITAT dismissed the Revenue's appeal for Assessment Year 2019-20, aligning with the CBDT's circular and the reduced monetary threshold for departmental appeals. Consequently, both appeals filed by the Revenue were dismissed.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the penalty in the first appeal and dismissed the Revenue's appeal for the second assessment year based on the revised monetary limit for filing departmental appeals.

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