Section 271D penalty fails where cash sale consideration was genuine, banked, and accepted in assessment without adverse findings.

Penalty under section 271D was found unsustainable where cash received as sale consideration for immovable property was supported by an agreement to sell, deposited in the bank account, and accepted in assessment without any adverse finding on source or genuineness. The statutory breach was therefore treated as not attracting penal consequences because the underlying transaction was genuine and had not been doubted by the Assessing Officer. On that basis, the penalty was set aside in favour of the assessee.

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Issues: Whether penalty under section 271D of the Income-tax Act, 1961 was sustainable where cash received as sale consideration for immovable property was deposited in the bank account and the assessment order did not doubt the source or genuineness of the transaction.

Analysis: The cash receipt was supported by an agreement to sell, the amount was deposited in the bank, and the assessment order did not record any adverse finding on the source or genuineness of the transaction. On the facts found, the statutory breach was treated as not attracting penal consequence because the transaction was genuine and had already been accepted in assessment. The legal principle applied was that when the Assessing Officer accepts the deposits as genuine and makes no addition on account of their veracity, penalty for violation of sections 269SS and 271D is not warranted.

Conclusion: The penalty under section 271D was held unsustainable and was set aside, in favour of the assessee.

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