TaxTMI 
TaxTMI 
2025 (8) TMI 620
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....;) issued notice u/s. 153A of the Income Tax Act, 1961 (for short, 'the Act'). In response to the notice issued, the assessee filed his return of income declaring income of Rs. 7,36,140/-. Against the said return of income, the assessment was completed by the AO vide order dated 31/12/2017 passed u/s. 143(3) of the Act at a total income of Rs. 7,49,97,987/-. Subsequently, JCIT, Central Range, Kochi issued notice u/s. 274 r.w.s. 271D of the Act dated 18/10/2022 calling upon the assessee to show-cause as to why penalty should not be levied for violation of provisions of section 269SS, for accepting cash sale consideration of Rs. 8,32,99,000/- in connection with property at Sirajul Huda Educational Complex. The sale deed was registered on 16/06/2015 vide registration No.1135/2015only for Rs. 53,80,000/-,out of total consideration of Rs. 13,72,99,000/-received in cash an amount of Rs. 8,32,99,000 on 15/06/2015. The JCIT was of the opinion that receipt of consideration in cash was made after the amended provision to section 269SS came into effect from01/06/2015. He formed an opinion that assessee had violated the provisions of section 269SS. Accordingly, issued a show-cause noti....
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.... sale of property does not come within the ambit of specified sum as defined in 269SS of the Act brought into effect from 01/06/2015. It is submitted that since the major portion of sale consideration was received well before the amended provision to section 269SS came into force, the assessee was forced to accept the balance consideration in cash which constitute the reasonable cause and, therefore, no penalty should be levied. 6. On the other hand, ld. CIT-DR placing reliance on the provisions of clause (iv) of Explanation inserted to section 269SS of the Act submitted the fact that the assessee executed and registered the sale deed was apparent consideration of Rs. 53,80,000/- only and not filed the return of income within the time prescribed u/s. 139(1) would demonstrate the contemptuous conduct of the assessee in concealing the actual consideration. He further submitted that the deletion of penalty would be defeated the very purpose because the enactment of section 269SS of the Act. He also placed reliance on the decision of coordinate bench of this Tribunal in the case of Subramanian Harikumar Palakkad vs. JCITin ITA No. 711/Coch/2024, dated 20/03/2024. 7. We have heard....
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....ty. Even, in appeal before the Ld. CIT(A), the issue of limitation was rejected by placing reliance on the decision of Jurisdictional High Court in the case of Girihalaxmi Vision (supra) and held that there was no reasonable cause for accepting the sale consideration in cash. Accordingly, confirmed the levy of penalty. 9. The correctness of the findings of Ld. CIT(A) is under challenge before us. We shall now deal with the contention of the assessee that the proceedings initiated u/s. 271D are barred by limitation. The material on record clearly indicates that the AO has made reference to the JCIT to initiate penalty proceedings for violation of section 269SS on 11/10/2022. The JCIT initiated penalty proceedings on 18/10/2022 and the penalty order was finalized on 28/04/2023. Thus, the penalty proceedings were concluded within a period of 06 months from the date of initiation of penalty proceedings by the JCIT, therefore it cannot be said that penalty proceedings are barred by limitation, in view of the judgment of the Hon'ble Kerala High Court in the case of Grihalaxmi Vision (supra). If the assessment order is to be taken into consideration, as the initiation of penalty pr....
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....n Bench of this Tribunal in the case of Subramanian Harikumar Palakkad (supra) wherein after making a reference to the provisions of clause (iv) of Explanation inserted to section 269SS of the Act as amended by the Finance Act, 2015, held as under:- "8. We have heard the rival contentions of both the parties and perused the material available on record. Admittedly, in the present case the appellant had received sale consideration on sale of residential property located at Vadakkanthara Road, Palakkad in cash at the time of registration of the sale deed. It is the case of the Jt. Commissioner of Income Tax that receipt of sale of consideration of the property in cash falls within the ambit and scope of provisions of clause (iv) of Explanation inserted to section 269SS of the Act. The said provisions of clause (iv) of the Explanation to section 269SS reads as under: - "Mode of taking or accepting certain loans, deposits and specified sum. 269SS. ........................................ (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfe....
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.... than by an account payer cheque or account payee bank draft or by electronic clearing system through a bank account, if for amount of such loan or deposit or such specified sum is twenty thousand rupees or more. 54.4 Section 269T of the Income-tax Act has also been amended 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 advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, 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 sections 269-SS and 269T, respectively, have also been made. 54.6 Applicability: - These amendments have taken effect from 1-6-2015." 9. As a result of the amended provisions of section 269SS, no person shall....
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.... considered opinion the decision of the coordinate bench have failed to interpret the words "or otherwise" found in clause (iv) of the Explanation inserted to section 269SS of the Act. Thus, the decision of the coordinate bench is a per incuriam and does not constitute binding precedent. As regards the contention of the appellant that satisfaction to initiate penalty proceedings were recorded by the AO but the penalty proceedings were initiated by the Jt. Commissioner of Income Tax, therefore, the penalty proceedings are bad in law cannot be accepted in view of decision of the Hon'ble Kerala High Court in the case of Grihalakshmi Vision (supra) wherein it was held as under: - "10. Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could ....
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.... JM passing the order at the first instance and the Vice-President after the split verdicts; deleted the penalty in toto. 8. The explanation of the assessee was manifold: (i) no evasion of tax, hence no penalty can be levied, (ii) deposits taken from staff were refundable, (iii) Rs. 50 lakhs was a loan taken from one Zeenath, since cash was required urgently and (iv) no penalty proceedings issued by A.O. The loans and deposits taken from staff members was detailed in a list produced at Annexure-B. Annexure- B also indicated that some of those loans were repaid by cheques. The Addl. Commissioner who passed the original order under Section 271D found that there is no mandate of detection of evasion to impose penalty. Section 269SS was intended at plugging inflow of black money, to ensure transactions above a threshold limit are traceable and there is no differentiation as far as genuine transactions are concerned. The contention of refundable advance even if accepted, would not offer any mitigation to the assessee insofar as the penalty imposed under Section 271D since the law does not distinguish refundable or non-refundable loans or deposits. As far as urgent requirement o....
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....ision in P.K.Shamsuddin on facts and upheld the imposition of penalty. What is discernible from a reading of the above decisions is that P.K.Shamsuddin has application only in the peculiar facts coming out in the said decision; and cannot be applied across the board in all cases where there is violation of Section 269SS leading to imposition of penalty under Section 271D 10. A.B. Shanthi found Sections 269SS and 271D to be constitutionally valid. The amendment was found to have been brought in, to put an end to the practice of false and spurious explanation by the taxpayers, on recovery of unaccounted cash, in the searches conducted by the I.T department and to plug the loopholes insofar as subsequent explanation offered of loans and deposits; with confirmatory letters from third parties. The attack on the ground of violation of Article 14; since the lender or depositor; whose income the loan or deposit would be, has not been taxed or penalised, was negatived. It was found that the amendment intends to curb the menace of frivolous explanations being offered for unaccounted money, with certificates obtained from third parties, of loans and deposits. The borrower who adopts ....