TaxTMI 
TaxTMI 
2023 (5) TMI 1254
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....oup cases of M/s. Moksha Infracon Pvt Ltd and M/s. Kaveri Infra Projects (P) Ltd on 9.8.2018. The assessee filed his return of income on for the A.Y under consideration on 14.02.2020 admitting total income of Rs. 1,46,37,210/- and agriculture income of Rs. 12,05,000/-. Statutory notices u/s 143(2) & 142(1) of the I.T. Act were issued and served on the assessee to which the AR of the assessee appeared before the Assessing Officer from time to time and furnished the requisite details. 2.1 The Assessing Officer observed that during the course of search operation in the residence of the appellant, certain loose sheets were found and seized. As per the page no., 4 of Annexure A/NRR/01, cash of Rs. 2,00,00,000/- was noted to have been received by Sri J. Sampath Rao on 25-07-2018 on behalf of 5 sellers of an immovable property located at Bondugula Village. The assessee is one of the 5 sellers mentioned therein. A Sworn statement of Sri J. Sampath Rao was recorded during the course of search and he had stated to have received cash of Rs. on 2,00,00,000/- on behalf of 5 sellers including the assessee. Subsequently, the assessee agreed to have received cash of Rs. 40,00,000/- as his share....
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....s received for. Further, It is also to noted that the said cash of Rs. 40,00,000/- was added to the returned income of the appellant as undisclosed money in the assessment order passed u/s. 143(3) dated 21.04.2021 and taxed as per the provisions of Section 115BBE of the IT Act. The appellant had preferred an appeal against the assessment order before the undersigned and the appellate order was passed on 04.05.2022 allowing the appeal of the appellant. In the appellate order, it was held that the said amount of Rs. 40,00,000/- was not undisclosed money and it was in fact the consideration received in connection with the sale of immovable property by the appellant. Therefore nexus has been clearly established between the cash received and the sale of immovable property. Thus the appellant had received Rs. 40.00.000/- in cash as part o! consideration towards sale of immovable property. Hence, in view of the above discussion, the provisions of Section 2693S are attracted straight forward in the case of the appellant and therefore liable to penalty u/s. 271D of the Act. The relevant extract of section 269SS and 271D are reproduced below: "269SS. No person shal....
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.... every person will be abide by the Law of the land and the principle is embodied in the well-known maxim" Ignorantia juris neminem excusat", means ignorance of law is no excuse for breaking it'. This is one of the essential principles of jurisprudence. The rationale behind this principle is that if ignorance was an excuse, every person who is charged for any offence or involved in a crime would merely claim that he was unaware of the law in question in order to avoid liability, even though he was well aware of the consequences of breaking the law. The law enforcement machinery shall come to a grinding halt if ignorance is accepted as a defense. Also it can also lead to mishandling of law on the part of law breakers and this can never be the intention of the legislature to enrich the law breakers by providing a shield of ignorance. Hon'ble Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Modi Food Products Ltd., held that every individual is deemed to know the law of the land. The courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore the argument that the appe....
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..... The Hon. CIT -A had erred in opining that that the appellant had not disclosed the cash portion of the consideration. The learned CIT-A failed to appreciate the fact that the appellant had already disclosed Rs. 40.00 lakhs with the Department - which disclosure date was much before the date of registration of property. 4. The Ld.CIT-A had erred in forming an opinion that the tax payer ought to have full and complete knowledge of all provisions tax laws, which is contrary to the popular judicial views. The leaned CIT-A failed to appreciate basic practical premise that income tax law is a highly dynamic and ever-changing law and that there is high probability for knowing a provision fully well by an average tax payer till a transaction or two covered by a section are undertaken. 5. For the grounds pleaded above or for such other additional grounds that may be pleaded at the time hearing the appellant prays for the deletion of the said penalty amount levied under section 271D or to grant such other relied as the Hon'ble Bench may deem fit and proper under the facts and circumstances of the case. " 5. The assessee has also raised an additional ground which re....
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....rpose of initiation of penalty proceedings u/s 271D of the I.T. Act. Therefore, in view of the binding decision of the Hon'ble jurisdictional High Court, the penalty levied by the Assessing Officer u/s 271D and sustained by the learned CIT (A) is not sustainable in law since there is no satisfaction recorded by the Assessing Officer in the original assessment order. 11. The learned DR, on the other hand, heavily relied on the order of the learned CIT (A). He submitted that the decision of the Hon'ble Supreme Court is not penalty on u/s 271D but was on penalty u/s 271E. Therefore, the argument of the learned Counsel for the assessee cannot be accepted. So far as the merit of the case is concerned, he submitted that the learned CIT (A) has given exhaustive reasons while sustaining the penalty. Therefore, the same should be upheld and the ground raised by the assessee should be dismissed. 12. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case levied p....
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....that in the assessment order dated 24.03.2022 passed under Section 153A of the Act, return of income filed by the petitioner was accepted by the assessing officer and accordingly, the total income was assessed. In the return of income, petitioner had admitted receiving total income of Rs.80,84,180.00 which was also accepted by the assessing officer. 16. Subsequently, respondent No.1 took the view that petitioner had sold immovable properties for a total sale consideration of Rs. 92,13,000.00 out of which he had accepted cash to the tune of Rs. 87,80,000.00 which was in violation of Section 269SS of the Act, attracting penalty under Section 271D of the Act. 17. Before we advert to the reply submitted by the petitioner, we may mention that under Section 269SS of the Act, no person shall take or accept from any other person (referred to as a depositor) any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if the amount of such loan or deposit or specified sum is twenty thousand rupees or more.....
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.... bank etc. Section 271E of the Act reads as under: Penalty for failure to comply with the provisions of section 269T. 271E. [(1)] If a person repays any [loan or] deposit [or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit [or specified advance] so repaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 21. Thus, sub-section (1) of Section 271E of the Act provides that if a person repays any loan or deposit or specified advance referred to in Section 269T of the Act otherwise than in accordance with the provisions of that section, he shall be liable to pay by way of penalty a sum equal to the amount of the loan or deposit or specified advance so repaid. Sub-section (2) clarifies that any penalty imposable under subsection (1) shall be imposed by the Joint Commissioner. 22. From an analysis of Sections 271D and 271E of the Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attract....
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....271D of the Act without recorded satisfaction. In this connection, reference was made to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act. However, this aspect of the matter was not considered by respondent No.1 while passing the impugned order. Respondent No.1 relying upon the Kerala High Court decision in Grihalaxmi Vision (2 supra) noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data Ltd. wherein it was observed that assessing officer has to satisfy himself as to whether penalty proceedings should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No.1 imposed the penalty under Section 271D of the Act. 25. We are afraid respondent No.1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). In the said decision as extracted above, Supreme Court had concurred with ....
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....d.2022 - Sri Venkateshwar Reddy Pacchica (A.Y 2019-20) 16. The ground raised by the assessee are as under: "1. The Commissioner of Income tax - Appeals -11, Hyderabad [ herein after denoted as Hon CIT -A] erred in confirming the penalty order of Additional Commissioner of Income Tax, Central Circle -1, Aayakar Bhavan Hyderabad [herein after termed as Ld. Add. CIT] of levy of penalty under section under section 271D of Income tax Act, 1961/ for short - the Act]. 2. The Hon.CIT-A had erred in summarily rejecting the judicial views submitted by the appellant. 3. The Hon. CIT -A had erred in opining that that the appellant had not disclosed the cash portion of the consideration. The learned CIT-A failed to appreciate the fact that the appellant had already disclosed Rs. 40.00 lakhs with the Department - which disclosure date was much before the date of registration of property. 4. The Ld.CIT-A had erred in forming an opinion that the taxpayer ought to have full and complete knowledge of all provisions tax laws, which is contrary to the popular judicial views. The leaned CIT-A failed to appreciate basic practical premise that income tax law i....
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....e amount in cash on behalf of all the five owners. Though the appellant was aware about the offer, but he was not aware about collection of advance in cash at the time of its actual collection. The Page 1 of 10 Document 2 Nalla Raja Reddy A.Y.2019-20 appellant and other four co-owners have broadly permitted Sri J Sampath Rao to identify and negotiate a prospective vendee. The identification of a vendee, the crystalizing of the deal and the receipt of advance - all the three aspects have happened in such a quick succession that the appellant could not keep pace with these developments. The appellant was left with no time or opportunity to carry the matter of land sale deal to his tax consultant and to ascertain the income tax related nuances involved in a property sale. The receipt of Rs.2,00,00,000 and its distribution (of a proportionate share) to appellant, seizer of a portion of the said cash advance in a search action conducted under section 132 of Income tax Act, 1961 for short - the Act] on 08-08-2018 - all happened in a lightning speed and, as already submitted, the things did not leave room to discuss with the tax consult....
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.... was conducted, though this amount was treated as unexplained income and taxed under section 69, yet the Hon. CIT-A, on filing an appeal, had held that the said amount of Rs.40,00,000 is part of sale consideration and negated the observation of the learned AO that it was an unexplained amount. Thus, the said amount of Rs.40,00,000 was duly offered to tax though received in cash. 5. It is further submitted that the practice of receiving cash on sale of immovable properties was prevalent in this country for centuries. This age-old practice of acceptance of cash when coupled with the fact that a normal person [ i.e., other than persons who deal in real estate more regularly], very rarely sells his immovable property in his lifetime, had hardly provided any opportunity to learn about latest changes like changes that were made in section 289SS etc., that have a tremendous bearing on dealing in real estate transactions. Moreover, as can be seen from the date of amendment these changes were made in the Act a very few years ago. Page 4 of 10 Document 5 - Nalla Raja Reddy A.Y.2019-20 6. In this country we have a maze of complex a....
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....turn. ITAT's order deleting the penalty was upheld. • In the case of Sunil Chandra Vohra v ACIT 2009 32SOT 365 (Mum), it was observed that "the tax laws in this country are so complex and complicated that even a person specialized in this field, including tax administrators, may not understand the law in the correct perspective or a particular provision may go unnoticed because of the number of amendments made to the tax enactments from year-to-year. Under these circumstances, it would be a travesty of truth and justice to hold that the assessee ought to have known the correct law and comply therewith, even though he was not aware of the provisions." Page 6 of 10 Document 7 Nalla Raja Reddy A.Y.2019-20 Assessee's explanation about ignorance of law was accepted as a bonafide and reasonable cause. 7. It is further submitted that on the basis of facts and position of law as enumerated above, in the humble opinion of the appellant, there existed a reasonable cause in inadvertently missing to comply with the provisions of section 269SS. But for the unawareness of recently introduced law there was no other motive. In Azadi ....