TaxTMI 
TaxTMI 
2026 (2) TMI 1296
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....ment year 2017-2018. The appeal ITA.No.1301/ Hyd./ 2025 is directed against the Order dated 10.07.2025 of the learned CIT(A) arsing from the Order passed u/sec.154 of the Act for the assessment year 2020-2021. 2. In the quantum appeals for the assessment years 2019-2020 and 2020-2021 the assessee has raised common grounds. The grounds raised for the assessment year 2019-2020 in ITA.No.972/Hyd./2024 are reproduced as under: 1. "The order passed u/s 250 of the Act dated 27.08.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interests of the appellant. 2. The Ld. CIT(A) erred in dismissing the appeal. 3. The Ld. CIT(A) has erred in holding that he is of the considered opinion that the assessee is not prevented from reasonable cause for filing Form 10B within the prescribed time limit. 3.1. The Ld. CIT(A) has erred in holding that since the application for condonation of delay in filing Form 10B has been rejected by the DGIT(Inv), Hyderabad, the entire gross receipts of Rs. 10,76,34,264/- are to be treated as income of the appellant for the AY 2019-20. 3.2. The Ld. CIT(A) erred in observing that the....
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....ver expenditure either to be taxed or to be exempted. 5.2. Without prejudice to other grounds, the Ld. CIT(A) ought to have appreciated that the assessee has duly complied with the provisions of Sec 11 of the Act in all the previous years and that not allowing the claim on the reason of delay in filing the audit report is against principles of natural justice. 6. Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal." 3. The assessee is an educational society registered under Cooperative Societies Act and was also registered u/sec.12AA of the Act as 'Charitable Institution'. The assessee filed its return of income for the year under consideration [A.Y. 2019-2020] on 30.11.2020 admitting Rs. NIL income after claiming exemption u/secs.11 and 12 of the Act. The return was processed u/sec.143(1) of the Act whereby the CPC has denied the benefit of secs.11 and 12 of the Act and assessed the total income at Rs. 10,76,30,364/- due to non-filing of the audit report in Form-10B/10BB. Aggrieved by the Order of the CPC dated 12.02.2022 passed u/se....
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....learned Authorised Representative of the Assessee has submitted that as per the CBDT's Circular the power to condone the delay was vested with the Commissioner of Income Tax as it was less than 365 days. He has also referred to the subsequent CBDT Circular No.16/2024 dated 18.11.2024 and submitted that the CBDT has again clarified that the Pr. CIT or CIT to admit and deal with the application for condonation of delay in filing inter alia, Form-10B/10BB for assessment year 2018-2019 and subsequent assessment year where the delay is up to 365 days. In case the delay is more than 365 days, this power is vested with the Pr. CIT or CCIT to deal with the application for condonation of delay. Thus, from the latest Circular of the CBDT the delay in filing Form-10B/10BB can be condoned by the Prescribed Authority if there is a 'reasonable cause' provided, the application is made within three years of the relevant assessment year. The learned Authorised Representative of the Assessee has submitted that the assessee has already made the application for condonation of delay in filing Form-10BB before the Pr. CIT, Hyderabad within the said period provided under the latest Circular of the CBDT. ....
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....B for both the assessment years on 17.09.2022 during the pendency of the appeals before the learned CIT(A) against the Order of CPC passed u/sec.143(1) while processing the return of income of the assessee. It is pertinent to note that for the assessment year 2019-2020 as well as for the assessment year 2020-2021 the majority of the delay period is covered by the Covid-2019 pandemic and the limitation was extended by the Hon'ble Supreme Court in suo motu Cognizance for Extension of Limitation (supra). Thus, the benefit of secs.11 and 12 of the Act was denied by the CPC as well as by the learned CIT(A) for want of filing of the Form-10B/10BB and delay in filing of these Forms. This Tribunal in the case of other Group Educational Institutions viz., Church Educational Society, Hyderabad & Others (supra) vide Order dated 14.11.2024 has considered an identical issue in Paras-9 to 14 as under: "9. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. We have also carefully considered various case laws relied upon by the assessee. Admittedly, the appeal filed by the assessee for the A.Y 2019-20 and 2020-21, ....
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....rity needs to be condoned. Thus, we condone the delay in filing of the appeal before the first appellate authority for A.Ys.2019-20 and 2020- 21. 10. Having said so, let's come back to the issue on merits. The appellant is a charitable institution registered u/s 12AA of the I.T. Act, 1961 for both the A.Ys. The appellant is also carrying out charitable activities in accordance with its objectives and the Assessing Officer and the learned CIT (A) has not pointed out any deviation or discrepancies in the activities carried by the assessee and the objects pursued for both the A.Ys. The only reason for the Assessing Officer to deny exemption u/s 11 of the Act, for both the A.Ys is non-filing of Form 10BB on or before the due date prescribed under the Act. There is no dispute with regard to the fact that the assessee has not filed the relevant form 10BB for A.Ys 2019- 20 and 2020-21 on or before the due date prescribed under I.T. Act, 1961. Further, the appellant has filed said form 10BB on 17/09/2022 with a delay of 610 days for A.Y 2020-21 and with a delay of 1036 days for A.Y 2019-20. Once again the delay in filing of Form 10BB is covered by Covid period and non-covid period....
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....r both the A.Ys. We find that in the Board's Circular No.15 of 2022, dated 19/07/2022, there is a provision for the authorities to condone the delay up to 3 years and there is no provision for condonation of delay or there is no clarification as to who will condone the delay, if delay is beyond 3 years. Since there is an ambiguity in the Circular issued by the CBDT on the issue of condonation of filing of Form 10BB and further the appellant submitted that it has filed a further application before the CBDT for condonation of delay, in our considered view, there is a merit in the argument of the assessee that the learned CIT (A) should have waited till the CBDT finally decides application filed for condonation of delay. Further, in our considered view, when the appellant is otherwise entitled for exemption under the Act, having satisfied all the conditions, the authorities should have taken a lenient view on belated filing or late filing of Form 10BB of the Act,. Since the appellant claims that it has filed further application before the CBDT for considering the condonation of delay in Form 10BB for both the A.Ys, in our considered view, the matter needs to be kept alive till such ti....
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....discussed the order passed by the Assessing Officer u/s 154 of the Act, dated 27/09/2022. In our considered view, the proceedings u/s 143(1) of the Act, and proceedings u/s154 of the Act, are separate proceedings and further there is a provision for filing appeal against both the orders. Therefore, in our considered view, the learned CIT (A) does not have any power to adjudicate the issue considered by the Assessing Officer in the order passed u/s 154 of the Act, while deciding the appeal filed by the assessee against the order passed by the Assessing Officer u/s 143(1)/143(3) of the Act. Therefore, in our considered view, the findings or directions given by the learned CIT (A) in Para 6.2.8 for the A.Y 2020- 21 is beyond the scope of the powers of the learned CIT (A) and thus, not in accordance with law. Hence, we delete the findings of the learned CIT (A) in Para 6.2.8 of his order for the A.Y 2020-21. 14. In so far as the assessment of gross receipts as income of the appellant derived from property held under the Trust, in our considered view, once any Trust/Institution loses its of exemption u/s 11 for any reason, including withdrawal of exemption granted u/s 12AA of t....
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....matter is remanded to the record of the Assessing Officer on the same terms. ITA.No.1300/Hyd./2025 - A.Y. 2017-2018: 9. The appeal ITA.No.1300/Hyd./2025 of the assessee for the assessment year 2017-2018 is arising from penalty levied u/sec.271D of the Act. The assessee has raised the following grounds of appeal: 1. "The order of the Ld. CIT(A) dt. 07.07.2025 for the AY 2020-21 is erroneous both 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. 84,37,500/-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. 84,37,500/- 4. The learned CIT(A) failed to consider that the penalty order passed u/s 271D of the Act is beyond the time as laid down u/s 275(1)(c) and therefore, is deserved to be quashed. 5. The Ld. CIT(A) failed to consider that the initiation and levy of penalty u/s 271D of the Act is not sustainable as the AO has not recorded his satisfaction for initiation of penalty p....
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....f natural justice. 12. Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal." 10. During the assessment proceedings for the year under consideration, the Assessing Officer noted that the assessee has received a sum of Rs. 84,37,500/- in cash against the sale of land at Raigir Village to M/s. Incredible India Projects Private Limited vide sale deed dated 03.08.2016. The Assessing Officer noted that there was a violation of provisions of sec.269SS of the Act and also declined to accept the claim of the assessee that the land in question is a rural agricultural land and not assessable to tax and therefore, the provisions of sec.269SS would not be applicable in the case of the assessee. Thereafter, the JCIT levied the penalty u/sec.271D of the Act vide order dated 23.06.2021 which was challenged by the assessee before the learned CIT(A) but could not succeed. 11. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that there was a search and seizure operation u/sec.132 of the Act in the case of M/s. Aurora Ed....
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....3), Hyderabad and Another in ITA.Nos.520 and 522/Hyd./2022 Order dated 31.05.2023 as well as other decisions of this Tribunal i.e., in the case of Late Nimmatoori Rajababu and Nimmatoori Ramesh Babu in ITA.Nos.594, 596 & 597/Hyd./2025 Order dated 12.09.2025; in the case of Nimmatoori Yashoda and Nimmatoori Sulochana in ITA.Nos.602 & 603/Hyd./2025 Order dated 10.09.2025 and in the case of Nimmatoori Ramesh Babu and Others vs. ACIT, Central Circle-2(4), Hyderabad in ITA.No.591/Hyd./2022 etc., batch Order dated 14.08.2024, taking a consistent view that the sale consideration received in cash for transfer of agricultural land does not fall in the ambit of provisions of sec.269SS of the Act and consequently, the provisions of sec.271D of the Act are not attracted. The learned Authorised Representative of the Assessee has contended that the impugned order passed under sec.271D of the Act is not sustainable in law and liable to be quashed. 12. On the other hand, the learned DR has submitted that the Assessing Officer has given the details of the cash received by the assessee which is in violation of the provisions of sec.269SS of the Act which amounts to satisfaction of the Assessing O....
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....ion of the learned Authorised Representative of the Assessee that the consideration received against sale of immovable property at the time of registration before Sub-Registrar does not fall in the ambit of provisions of sec.269SS of the Act. At the outset, we note that an identical issue has been considered by this Tribunal in the case of Kesireddy Ravinder Reddy, Uppal, Hyderabad & Another vs. ITO, Ward-11(1), Hyderabad in ITA.Nos.1617 & 1722/Hyd./2025 dated 11.02.2026 held in Paras-6 to 10 as under: "6. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the alleged cash of Rs. 7,82,500/- was received by the assessee as part of the sale consideration on transfer of the immovable property along with the co-owner. The JCIT has levied the penalty u/sec.271D of the Act vide Order dated 25.02.2020 due to violation of the provisions of sec.269SS of the Act. The assessee has challenged the levy of penalty inter alia, on the ground that the cash received as part of the sale consideration for transfer of the immovable property and duly mentioned in the registered sale deed as acknowledgement of the receipt of the cash bef....
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....ke 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 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 twent....
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....ere 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 deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017-18 with a view to cover all situations of cash transaction Rs. 2 Lakhs or over other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT Circular No.19 of 2015, dated 27.11.2015 and the relevant circular reads as under:- Departmental Circular No. 19 of 2015, dated 27/11/2015:- 54. Mode of taking or accepting ....
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.... 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 only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the sub-registrar at the t....
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....1/29, Plot No.29, situated at S.N. Reddy Nagar, Saidabad, Hyderabad for a total sole consideration of Rs. 43,50,000/- vide Sale deed No 4535/2016, dated 12.09.2016. During this transaction, the vendor accepted Rs. 43,50,000/- in cash in contravention to the provision of Section 269SS of the Income-tax Act, 1961 which attracts penalty u/s. 271D. Section 269SS prohibits taking or accepting loan or deposit or any specified sum in excess of Rs. 20,000/- otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. In the above section, the words "Specified sum" was introduced w.e.f., 1-6- 2015 by the Finance Act of 2015. "Specified sum" has been defined in explanation (iv) under section 26955 as under: "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 transfer takes place. Section 271D prescribes penalty for taking or accepting any loan or deposit or specified sum. The penalty shall be equal to the amount so taken. In this matter, as acceptance of cash during the above tran....
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....order imposing a penalty under this Chapter shall be passed- (a) in a case where the relevant assessment or other order is the subject- matter of an appeal to the Deputy Commissioner (Appeals) or the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of 4 the Deputy Commissioner (Appeals) or] the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later; [Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initi....
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.... or the Supreme Court is received by the "[Principal Chief Commissioner or] Chief Commissioner or the "[Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed; Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this subsection] 2. The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March,1989.] Explanation. - In computing the period of limitation for the purposes of this section, - (i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129. (ii) any period during which the immunity granted under section 245H remained in force; and (iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded. 9. The limitation for passing the order imposing penalty u....
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...."3. We have heard learned counsel for the appellant. 4. The only point for consideration in this appeal is whether the assessee had contravened the provisions of Section 269T of the Act by making repayment of loan/deposits of Smt. Kusum Lata Thakral, through account payee cheque or account payee drafts to M/s. Babyloan Builders Pvt. Ltd., Gurgaon and, therefore, penalty under Section 271E was leviable. 5. The Assessing Officer had levied the penalty amounting to Rs. 11,02,6107- which has been deleted by the Tribunal. The Tribunal while deleting the penalty recorded that the return of the assessee was processed as on 31.12.2003 and the notice u/s. 274 read with section 271E of the Act was issued on 12.06.2007. Such notice was issued when there was no proceedings pending before the Assessing Officer. Relying upon Delhi High Court judgment in CIT v. Standard Brands Ltd. [20061 285 ITR 295/155 Taxman 383, the Tribunal further observed that action for penalty may be permissible only after regular assessment has been framed and since no regular assessment order had been passed in this case, the recourse to penalty proceedings under Section 27IE were not justified. The f....
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....ssessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed." 11. Therefore, it is pre-requisite condition that the initiation of penalty 271D/271E of the Act, there must be assessment proceedings or proceeding arising from assessment order are pending in the case of the assessee. Accordingly in the facts and circumstances of the case and following the judgment of Hon'ble Supreme Court as well as Coordinate Bench of the Tribunal in case of Vijayaben G. Zalavadia vs. JCIT (supra), we hold that the penalty levied u/s 271D of the Act without any assessment proceedings in the case of the assessee is not valid and liable to be quashed. We order accordingly." 7. Thus, it is a pre-requisite condition for initiation of the penalty u/sec.271D/271E of the Act that there must be an assessment proceeding or proceedings arising from assessment order or any other proceedings under the Act. This aspect is also clarified by the CBDT vide Circular No.9/2016 dated 26.04.2016. We further note that recording of satisfaction by the Assessing Office....
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....to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. 24. Reverting back to the facts of the present case, we find that petitioner had submitted reply to the show cause notice on 02.06.2022. In his reply, petitioner mentioned that no satisfaction was recorded by the assessing officer in the assessment order as to infraction of Section 269SS of the Act. Therefore, no penalty could be levied under Section 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 Sec....
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.... petitioner." 8. We have specifically given an opportunity to the learned DR to produce relevant record if any, to show that some proceedings were initiated in the case of assessee and satisfaction was recorded by the Assessing Officer. However, the learned DR has submitted that no record was made available by the Assessing Officer. Accordingly, in the facts and circumstances of the case and in the interest of justice and by following the decision of Hon'ble Jurisdictional High Court as well as the decisions of various Coordinate Benches of the Tribunal including the decision of ITAT, Indore Bench in the case of Shri Umakant Sharma vs., JCIT, Ratlam (supra), we hold that the penalty levied by JCIT u/sec.271D without recording the satisfaction in assessment proceedings or any other proceedings under the Act, is not valid and liable to be quashed. We Order accordingly." 9. Thus, the Tribunal by following the Judgment of Hon'ble Jurisdictional High Court in the case of Srinivas Reddy Reddappagari vs. JCIT (supra) has deleted the penalty levied u/sec.271D of the Act for want of satisfaction in the assessment proceedings by the Assessing Officer whereas the learned DR ....
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....f the assessment proceedings and be completed within six months thereafter. What is a reasonable period will depend upon the facts of each case. 16. Viewed in the above perspective, this Court holds that if a case falls under the latter part of section 275(1)(c) of the Act, proceedings for imposition of penalty under section 271B of the Act must be initiated and completed within a reasonable time of the assessment order. 17. Since the assessment order in the instant case does not refer to any proceeding for imposition of penalty under section 271B, the time limit cannot be said to have emanated from the assessment order. However, as the assessment proceedings itself would have revealed the absence of an audit report, as contemplated under sections 44A and 44B, the show cause notice should have been issued within a reasonable time of the assessment order. By applying the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the end date for passing orders was extended till 31.03.2022, and the respondents were entitled to issue a notice within a reasonable time of the expiry of the said period. Taking into reckoning th....