TaxTMI 
TaxTMI 
2025 (1) TMI 236
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....st the intention of the legislature for which the provision was introduced, on the facts and circumstances of the case. 4. The CIT(A) is not justified in upholding the levy of penalty under section 269SS of the Act where there was reasonable cause as envisaged under section 273B of the Act, on the facts and circumstances of the case. 5. The authorities below have failed to appreciate that the sale of property is an ancestral property and constitutes part of HUF property, thus, no penalty could have been levied in the individual hands of the appellant, on the facts and circumstances of the case. 6. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 2. Further, the assessee has raised following additional grounds of appeal: ADDITIONAL GROUNDS OF APPEAL 1. Grounds on legal issues: a. The notice issued for initiation of penalty under section 271D of the Act is barred by limitation, on the facts and circumstances of the case. b. The order passed under section 271D of the Act is barred by limitation and deserves to be quashed on the facts and circumstances of the case. c. The ....
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.... in the case of assessee on 30.4.2019. The AO after carefully examining the details furnished by the assessee completed the assessment by accepting the return of income. Thereafter, to the surprise of the assessee, after a gap of more than 3 years ld. JCIT Range-4 (3) Bangalore had issued notice u/s 274 r.w.s. 271D of the Act asking to show cause in writing why an order imposing penalty u/s 271D of the Act shall not be made as the assessee had failed to comply with the provisions of section 269SS of the Act. In response to the above show cause notice, the assessee filed a reply stating that the property in question was agricultural property and was sold to his relative (blood related) who are agriculturists. The assessee further explained that the agricultural land is exempted u/s 2(14) of the Act and the sale proceeds received from sale of such agricultural land is not covered u/s 269SS of the Act. Further, the assessee also take a plea of his ignorance of law. He further explained that he is under the honest Bonafide belief that income on sale of agricultural property is exempt and accordingly prayed to consider his request and exempt him from the levy of penalty. The ld. JCIT di....
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.... honest and Bonafide belief that sale proceeds received in cash from sale of agricultural land is not covered u/s 269SS of the Act. Further, the ld. A.R. of the assessee was under the honest and Bonafide belief that property in question was agricultural property and was sold to his relatives (blood related) who are also agriculturist(s) and therefore, the provisions of section 269SS of the Act will not apply in his case. 7. The ld. D.R. has vehemently supported the order of the authorities below and submitted that there is clear violation of the provision of section 269SS of the Act and therefore, the authorities below have rightly levied the penalty of Rs. 14,64,000/- and prayed to dismiss the appeal of the assessee. 8. We have heard the rival submissions and perused the materials available on record. On going through the assessment order passed u/s 143(3) of the Act dated 30.4.2019, we take a note of the fact that there is no finding of AO regarding any violation of provision of section 269SS of the Act. The order of the assessment is very cryptic and only states that after carefully examining the details furnished by the assessee, the assessment is completed accepting the ....
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.... u/s 271D of the Act was not warranted and hence deleted. The relevant paragraph of the Hon'ble ITAT is reproduced below for ease of reference and record: 9. We have heard the rival submissions and perused the material on record. Admittedly, assessee had received cash amounting to Rs. 49,10,000/- towards sale consideration for transfer of her immovable property. It is the contention of the learned AR that receipt of such sale consideration is not covered under the provisions of section 269SS of the Act as the scope of said section is limited to receipt of money in the nature of advance. To adjudicate the issue, we need to examine the relevant provision of section 269SS of the Act, which reads as follows: "269SS. Mode of taking or accepting certain loans, deposits and specified sum. No persons hall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque ........ Explanation. - For the purposes of this section, - ....... (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to trans....
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.... Act and that it should be interpreted within the context in which it is used. The relevant finding of the Hyderabad Bench of the Tribunal reads as follows: "9. We are not persuaded by the contention of Sri Parthasarathy that the term 'otherwise' occurring in sub-cl. (iv) of cl. (c) of Explanation to sub-s. (8) of s. 40A would cover the chit fund business. The Legislature in its superior wisdom has used the term 'otherwise' in juxtaposition with 'loans' and 'advances'. There is force in the contention of the learned departmental representative that the principle of ejusdem generis should be applied and the term should be interpreted in the context in which it is used. There are several methods of financing in addition to making loans or advances, as for instance, by making deposits for a fixed term, by underwriting or standing as surety or guaranteeing the loan for a fee or a commission. In our view, in the context in which the term 'otherwise' occurs in the said subcl. (iv), it is only such other modes of financing which are envisaged but not the chit transactions which are totally alien in this context." 12. Further, we fi....
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....y. It is also proposed to provide a penalty of an equal amount in case of contravention of such provisions. The Memorandum forming part of Finance Bill, 201.5 highlighting the intention of the amendment is captured below: B. MEASURES TO CURB BLACK MONEY Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances The existing provisions contained in section 269SS of the Income-tax Act provide that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions have been provided in the section. Similarly, the existing provisions contained in section 269T of the Income-tax Act provide that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more. In order to curb gen....
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....t is also proposed to define "specified sum" as any sum of money receivable, whether as advance or otherwise in relation to transfer of an immovable property whether or not the transfer materialises. These amendments will take effect from 1st June, 2015. 12.1 In the present case, the sale consideration was received in cash at the time of execution of multiple sale deeds from different persons for the sale of plots and accepted as genuine in the assessment order completed on 23.05.2018 and admittedly there was no advance received by the seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as 'specified sum' and on such presumption the JCIT levied penalty u/s 271D of the Act. The intention of the amendment is very clear right from the Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale dee....
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....ces is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of anadvance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place. 54.5 Consequential amendments in section 271D and section 271E, to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively, have also been made. 54.6 Applicability: These amendments have taken effect from 1st day of June, 2015. From the above provisions, Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of 'sum specified' brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this provision was to curb the generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs. 20,000/- or more for any transaction in immovable property. This was explained by Hon'ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 269SS i.e., 'sum specified' means ....
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....aid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more. In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advance....