TaxTMI 
TaxTMI 
2025 (9) TMI 1749
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....h on facts and in law to the extent the order is prejudicial to the interests of the appellant. 2. The Ld. CIT(A) ought to have appreciated that the Assessing Officer erred in levying penalty of Rs. 1,62,70,380/- u/s 271D of the Act without appreciating the facts of the case. 3. The Ld. CIT(A) has grossly erred in upholding the imposition of penalty u/s 271D for a sum of Rs. 1,62,70,380/-. 4. The Ld. CIT(A) ought to have appreciated that the land being agricultural land, the sale proceeds from that land do not represent income so as to attract the provisions of section 271D rws 269SS of the Act. 5. The Ld. CIT(A) ought to have appreciated that the sale consideration of Rs. 1,62,70,380/- is in the nature of sale and not in the nature of loans or advances or deposits and thus there is no violation of provisions of section 271D rws 269SS of the Act. 6. The Ld. CIT(A) ought to have appreciated that the AO, initiating penalty u/s 271D is legally invalid, as the order passed is beyond his legal jurisdiction of the AO, in terms of section 271D(2) of Act. 7. The Ld. CIT(A) ought to have appreciated that the AO has not recorded his satis....
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.... appeal at any time before or at the time of hearing of the appeal." 2. Briefly stated facts of the case are that, the assessee, an individual and is one of the Trustees of M/s. Aurora Educational Society & Other Group Trusts. The assessee has originally filed her return of income for the Assessment Year 2017-2018 on 29.12.2017 admitting total income of Rs. 3,53,050/-, after claiming Chapter-VIA deductions of Rs. 1,50,000/-. A Search and Seizure operation u/s 132 of the Income Tax Act, 1961 [in short "the Act"] was conducted in the case of M/s. Aurora Educational Society & others Group in which the assessee was also covered. The warrant of authorization was executed on 23.03.2018. During the course of assessment proceedings, the Assessing Officer noticed that, the assessee was in receipt of monies by ways other than account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode. The monies were received on account of sale of land at Bommaipally Village to M/s Aishwarya Infra Developers which is evident vide Para-8 of the assessment order dated 21.12.2019, it has been stated that, the assessee, al....
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....ssee has violated its provisions. The said section prohibits a person from accepting specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. The section defines "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 takes list. The section does not discriminate the amounts received on the basis of their taxability under the Act. Further, the Jt. /Addl. CIT, Central Range-2, Hyderabad noted that, to invoke the section, it is not necessary that, the amount received should partake the nature of being an income under the Act. In view of the above, the Jt. /Addl. CIT, Central Range-2, Hyderabad noted that, the assessee fails in his attempt to seek shelter from the attendant penalty provisions under the garb of the incomes not being liable to tax. The assessee in his submissions has not disputed the quantum of the amounts determined by the Assessing Officer as receipts from the aforesaid transactions. The presumption of the assessee that, incomes not liable to tax are not subject to provisions of se....
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....to be falling within the definition of 'specified sum' as per the provisions of section 269SS of the Income Tax Act, 1961 and thus, the submissions made by the assessee are not acceptable. Since the assessee had violated the provisions of section 269SS of the I.T. Act, 1961, the Jt. / Addl. CIT, Central Range-2, Hyderabad held that, the assessee is liable for penalty u/sec.271D of the I.T. Act, 1961 being 100% of the amount received by way of cash. Accordingly, penalty under section 271D is levied on the assessee for receiving Rs.1,62,70,380/- by ways other an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other prescribed electronic mode which should be paid as per the demand notice u/sec. 156 of the Income Tax Act, 1961. 3.1 On being aggrieved by the penalty order dated 23.06.2021 passed by the learned Jt. / Addl. CIT, Central Range-2, Hyderabad, u/sec.271D of the Income Tax Act, 1961, the assessee preferred an appeal before the learned CIT(A) and filed his written submissions dated 09.11.2023 which are reproduced in para-5.2 of the learned CIT(A)'s order. The learned CIT(A), during the c....
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....ty proceedings are also barred by limitation u/sec. 275(1)(c) of the Income Tax Act, 1961. The learned CIT(A) without considering the submissions of the assessee, rejected the ground. 5. Sri Siva Prasad SV, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the Assessing Officer has proposed for initiation of penalty proceedings u/sec. 271D of the Income Tax Act, 1961, in view of violation of provisions of sec. 269SS of the Income Tax Act, 1961. The assessee could not substantiate her claim with supporting documentary evidences. Therefore, the Assessing Officer has rightly levied the 100% penalty. The learned CIT(A) after considering the written submissions of the assessee, remand report from the Assessing Officer has rightly sustained the penalty levied by the Assessing Officer. He, therefore, submitted that, the penalty sustained by the learned CIT(A) should be upheld. 5.1. Further, the learned Sr. AR for the Revenue, has filed written submissions on the issue including on the issue of limitation in passing the penalty order u/sec. 271D of the Act and submitted that, there is no merit in the grounds taken by the Lea....
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....bove case are distinguishable from the facts of the present case because, in the said case, the assessee has sold ancestral agricultural land to his relatives and received sale consideration in cash on a honest and bonafide belief that, sale proceed received in cash from sale of agricultural land was not covered u/sec.269SS of the Act. Under those facts, the Tribunal came to the conclusion that, there is a reasonable cause for the assessee for accepting cash for sale of agricultural land and thus, directed the Assessing Officer to delete the penalty. In the present case, the assessee being a person regularly assessed to tax is well aware of the knowledge of tax law and, therefore, it is presumed that, the assessee is aware of the provisions of sec. 269SS of the Act and consequently, now, the assessee cannot plead that, he was under bonafide belief that, provisions of sec. 269SS of the Act are not applicable for sale of agriculture land. Therefore, the argument of the Counsel for the Assessee lacks merit and the same should be rejected. 5.2. The learned Sr. AR for the Revenue further submitted that, the argument of Counsel for Assessee that, if a transaction is included in the re....
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.... of Assistant Director of Inspection vs., Kum. AB Shanti (supra), has levied penalty of Rs.1,62,70,380/- being 100% of the amount received by way of cash for sale of land on the ground that, the assessee has violated the provisions of Sec. 269SS of the Act, which attracts penalty u/sec. 271D of the Act. Therefore, it is necessary for us to deal with the issue of penalty levied u/sec.271D of the Act in light of arguments of Counsel for the Assessee and the learned Sr. AR for the Revenue on the issue of limitation provided under section 275(1)(c) of the Act for passing the order imposing penalty and also the arguments of the Counsel for the Assessee in light of provisions of section 273B of the Act. 7. Coming back to the arguments of Counsel for the Assessee on the issue of limitation in passing Orders by the Jt. / Addl. CIT, Central Range-2, Hyderabad. Learned Counsel for the Assessee referring to various judicial precedents including decision of Hon'ble Delhi High Court in the case of PCIT vs., Mahesh Wood Products (P.) Ltd., 82 taxman.com 39 (Del.) submitted that, the limitation for passing penalty order u/sec. 271D of the Act starts from the date when the Assessing Officer....
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....or passing the order u/sec. 271D of the Act commences from the date when the Assessing Officer send proposal to the Range Head for imposition of penalty and if we go by the said date, in the present case, the Order passed by the Jt/Addl. CIT, Central Range-2, Hyderabad was on 23.06.2021 is barred by limitation. We once again do not subscribe to the arguments of the Counsel for Assessee for the simple reason that, even if we consider the date, on which, the Assessing Officer sent proposal to the Range Head for imposition of penalty on 20.12.2019, the time limit for passing the Order u/sec. 271D of the Act will be up-to 30.06.2020 because, as per the provisions of section 275(1)(c) of the Act, the order imposing the penalty, shall be passed within 6 months from the end of the month in which action for imposition of penalty is initiated. In the present case, even if we go by the date, on which, the Assessing Officer sent proposal to the Range Head for imposition of penalty, the due date for passing the Order u/sec. 271D of the Act is up-to 30.06.2020 and thus, our findings in the preceding paragraph in light of TOLA 2020 and subsequent Notifications issued by the CBDT extending limita....
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....culture land and outside scope of the tax. Therefore, it is necessary for us to examine the arguments of the Counsel for Assessee in light of provisions of secs.269SS of the Act and 271D of the Act and 273B of the Act. 11. First of all, we have to understand, whether the transaction attracts the provisions of sec. 269SS of the Act and if so, whether the assessee has demonstrated 'reasonable cause' envisaged under section 273B of the Act to attract penalty u/sec. 271D of the Act. It is not disputed that, the transactions in the present case is genuine and duly recorded in the Registered Sale Deed. The land sold by the appellant is agriculture land and is not a capital asset within the meaning of section 2(14) of the Act. The assessee has explained that, cash was received at the time of sale of agriculture land on the bonafide belief that, agriculture land is exempt from tax and consequent receiving cash for sale of said agriculture land, will not attract provisions of sec. 269SS of the Act and sec. 271D of the Act. In our considered view, the provisions of sec.271D of the Act are not automatic and the exceptions of 'reasonable cause' exonerates an assessee to exem....
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....e black-money in immovable property transactions. If we go by the said amendment, in our considered view, stretching the genuine consideration received for sale of an immovable property including agriculture land before the witnesses at the time of registration, cannot be brought within the ambit of the term "specified sum" merely because, the same has been received in cash. In our considered view, if we really understand the purpose of insertion of said term in sec. 269SS of the Act, it is only to check the abuse of law by the tax-payers by entering into various kinds of agreements for transfer of immovable property showing consideration paid or received in cash and finally the registration has not taken place. In a situation, where the consideration paid for transfer of any immovable property at the time of registration before the witnesses and further, the said transaction is a genuine transaction and also part of regular books of accounts of the assessee or disclosed in the return of income filed for the relevant assessment year, then, in our considered view, the said transaction cannot be brought within the ambit of "specified sum" merely because the 'consideration' ha....
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....ultural property) situated at Plot No.135/5, Kodagu district, Virajpet Taluk, Balele Hobli, Kottagri village measuring 3.30 acres for a total sale consideration of Rs. 29,28,000/- to agriculturists who are relatives (blood related) of the assessee. During the course of proceedings, the assessee explained his shares out of total sale consideration of Rs. 29,28,000/- is Rs.14,64,000/- and his share of total sale consideration were received in cash. The assessee was under the honest and Bonafide belief that the agricultural property sold to his relatives who are agriculturists is not covered u/s 269SS of the Act. Further, the assessee was also under the honest and Bonafide belief that as the agricultural land is exempt u/s 2(14) of the Act, the sale proceeds received from the agricultural land is exempt and therefore, sale proceeds received from sale of such agricultural lands is also not covered u/s 269SS of the Act. We are of the considered opinion that assessee has received cash amounting to Rs.14,64,000/- towards the sale consideration for transfer of his agricultural land. In the instant case, the sale of property and consequent receipt of sale consideration in cash are not dispu....
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....fically enumerated.". We are of the view that the word "otherwise" used under section 269SS of the Act cannot include "sale consideration" as the word "otherwise" should be read in accordance with the principle of Ejusdem Generis. The word "otherwise" should draw its colour from other words used in the provisions contained in section 269SS of the Act i.e., "money receivable as an advance". Invoking the doctrine of Ejusdem Generis, we are of the view that the term "otherwise" should be interpreted in a narrow sense and it must include the words similar to "money receivable, as advance". In other words, the term "otherwise" cannot be given a wider interpretation. The Hon'ble Supreme Court in the case of Kamlesh Kumar Sharma v. Yogesh Kumar Gupta reported in (1998) 3 SCC 45 held that wherever there is term "otherwise" the word is to be given a restricted meaning. The relevant finding of the Hon'ble Apex Court reads as follows: "13. We find, after giving our careful consideration that in case the appellant's' argument is accepted by giving wider interpretation to the word "otherwise", it would thwart the very object of the Act .... The word "otherwise" has to b....
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....l in the case of ITO v. Shri. R. Dhinagharan (HUF) (supra) had held that the consideration received on execution of the sale deed would not be covered under section 269SS of the Act but only an advance in relation to sale of property. The Chennai Bench of the Tribunal, after considering the relevant provisions of the Act and the Circular issued by the Board, had held as under : "12. We have heard the rival contentions, and gone through the facts and circumstances of the case. We find that the Revenue has challenged the correctness of the decision rendered by the CIT(A) vide order dated 30.09.2019 in deleting the penalty levied u/s 271D of the Act vide penalty order dated 12.06.2019. The CIT(A) had deleted the penalty on two counts namely on the non-applicability of the provisions of Section 269SS of the Act to the facts of the present case and on the ground of reasonable cause within the scope of Section 273B of the Act. We noted that the provisions of Section 269SS of the Act was amended w.e.f. 01.06.2015 to include the 'specified sum' within its ambit and the said term was defined in Explanation to the said Section which is reproduced as under: A "specif....
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.... 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 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. It is further proposed to make 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. These amendments will take effect from 1st day of June, 2015. The Notes on Clauses forming part of Finance Bill, 2015 highlighting the intention of the amendment is captured below: Clause 66 of the Bill seeks to substitute section 269SS of the Income tax Act rel....
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...., dated 27-11-2015: 54. Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances. 54.1 Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided 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 were provided in the section. 54.2 Similarly, the provisions contained in section 269T of the Income-tax Act, before amendment by the Act, provided 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. 54.3 In order to curb generation of black money by way of dealings in cash in immovable property transactions, section 269SS of the Income-tax Act has been amended to provide that no person shall accept from....
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....sh payment was made at one go before the subregistrar at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS of the Act in the present case in the given facts and circumstances of the case and hence, penalty is not exigible in this case. Hence, we confirm the order of CIT(A) deleting the penalty but on entirely different ground i.e., on jurisdictional issue only. Accordingly, the appeal of the Revenue is dismissed." 13. Similar view has been held by the Hyderabad Bench of the Tribunal in the case of Ramkumar Reddy Satty v. ACIT (supra). The Hyderabad Bench of the Tribunal followed the Order of the Chennai Bench of the Tribunal in the case of ITO v. Shri. R. Dhinagharan (HUF) (supra). 14. Further, on the facts of the present case, we find there is "reasonable cause" as mandated under section 273B of the Act, for the failure to comply with section 269SS of the Act. Section 269SS of the Act was amended by the Finance Act, 2015, wherein the term "specified sum" was introduced to include amount received for transfer of immovable property as a measure to curb generation of black money. The relevant ex....
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....9T, respectively. These amendments will take effect from 1st day of June, 2015. [Clauses 66, 67, 69 & 70] 15. In the present case, there was no intention, whatsoever, to generate unaccounted money/black money as the assessee had recorded the receipt of entire cash in the registered sale deed and duly disclosed the same in the return of income filed. Assessee had also claimed exemption under section 54 of the Act towards construction of residential house. In this context, it is pertinent to note that the claim made by the assessee under section 54 of the Act has been allowed by the AO in the assessment completed. Copy of the bank statement and the Assessment Order dated 09.12.2019 is placed on record. Therefore, it is clear that there is no unaccounted money / black money in the transaction. Moreover, we find that in this case there was no agreement to sell executed between the parties as is evident from the sale deed. Therefore, the assessee had no legal right to enforce the sale. All the payments were made through DD and cheques and cash was paid to the assessee only on the date of sale deed being executed. Hence, denial by the assessee to receive the co....
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....se, it was the finding of the Hon'ble High Court of Madras that, "where there was no material to show that in fact there was a real exigency that compelled assessee to go for cash loan, penalty u/sec. 271D of the Act rightly levied." In the present case, going by the facts available on record, there is a 'reasonable cause' for the assessee for accepting cash for sale of agricultural land on the bonafide belief that, the said transaction is outside the scope of sec.269SS of the Income Tax Act, 1961. Therefore, in our considered view, the case law relied upon by the Revenue is not applicable and thus, rejected. Further, the learned Sr. AR for the Revenue relied upon Judgment of Hon'ble Supreme Court in the case of Assistant Director of Inspection vs., Kum. A.B. Shanti (supra). We once again do not appreciate the arguments of Revenue in light of above Judgment going by the facts and record because, the issue before the Hon'ble Supreme Court in the above case is constitutional validity of sec.269SS of the Act and penalty order u/sec.271D of the Act, but, it does not deal with facts related to 'reasonable cause' provided u/sec.273B of the Act. Therefore, the ....