TaxTMI 
TaxTMI 
2026 (9) TMI 1634
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....he penalty provisions u/s 269SS of the Act does not apply to the assessee as the cash component / consideration received is not as an 'advance' but the final payment in front of the Sub-Registrar at the time of registration for sale of property, when the provisions of Section 269SS clearly speaks that '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? 3. On the facts and in the circumstances of the case and in law, the CIT(Appeals) is erred in treating the words 'advance or otherwise' mentioned in the definition of 'specified sum' u/s 269SS as 'advance can be in any manner' by ignoring the legislative intent behind section 269SS, which is to curb cash transactions? 4. On the facts and in the circumstances of the case and in law, the CIT(Appeals) failed to appreciate that the provisions of section 269SS are applicable irrespective of the timing or nomenclature of the receipt? 5. On the facts and in the circumstances of the case and in law, the CIT(Appeals) erred in not appreciating that penalty proceedings under section 271D are indep....
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....issue is covered by various decisions, including the decision of jurisdictional High Court in the case of Grandhi Sri Venkata Amarendra v. Jt. CIT (2024) 301 Taxman 516 (AP)(HC), which is a binding precedent for this Tribunal. He has also relied upon the decision of coordinate Bench of this Tribunal dated 18.07.2025 in the case of Kosanam Rama Rao Vs.ACIT in ITA No.226/Viz/2025. Thus, the Ld.AR has submitted that the CIT(A) has followed various binding decisions including the judgement of jurisdictional High Court and Hon'ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills [2015] 379 ITR 521. He has supported the impugned order of the CIT(A) on this issue. 5. We have considered the rival submissions as well as relevant material on record. Learned CIT(A) deleted the penalty levied by the AO u/s 271D in para 6.2. of the impugned order as under : "6.2. Ground No 2 The appellant in the ground contends and claims that no satisfaction was recorded by the AO in the assessment order for the initiation of penalty proceedings for the relevant year. The appellant claims that in the absence of any satisfaction being recorded the consequent penalty order is without jurisdi....
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....he Visakhapatnam Bench of the Tribunal, judgement of Hon'ble jurisdictional High Court of Andhra Pradesh is a binding precedent. Therefore, the decision of the Tribunal followed by the CIT(A) also fortified by the judgement of Hon'ble jurisdictional High Court which is a binding precedent for the CIT(A). We further note that coordinate Bench of this Tribunal in the case of Kosanam Rama Rao Vs.ACIT has again considered this issue in para 10 to 17 as under : 10. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 11. Before proceeding any further, it would be relevant to cull out the provisions of Section 269SS of the Act, which contemplates that no loan/deposit/specified sum exceeding the amount therein prescribed is to be received by an assessee otherwise than as per the modes therein contemplated, which reads as under: "269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan o....
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....an or deposit" means loan or deposit of money; (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 transfer takes place." As the failure to comply with the provisions of Section 269SS of the Act results in saddling an assessee with the penalty u/s. 271D of the Act; therefore, it will be apposite to cull out the same as under: "271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 12. Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not the penalty imposed on the assessee by the Addl/Joint Commissioner of Income Tax, NFAC under Section 271D of the Act, in the absence of the recording of satisfaction by the A.O for initiating the said penalty proceedings in the body of the assessment order under S....
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....on'ble Apex Court concluded that as the A.O. in the fresh assessment order had not recorded his satisfaction regarding penalty under Section 271D of the Act, therefore, in the absence of recording of the requisite satisfaction, the penalty imposed under Section 271D of the Act could not be sustained and was liable to be quashed. For the sake of clarity, the relevant observation of the Hon'ble Apex Court is culled out as under: "6. 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." We find that the aforesaid view taken by the Hon'ble Supreme Court had, thereafter, been followed by the Hon'ble High Court of Andhra Pradesh in the case of Grandhi Sri Venkata Amrendra Vs. Joint Commissioner of Income-tax, CWP No. 32872/2023, dated 04.10.2024. The Hon'ble High Court, drawing support from the order....
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....pted 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. However, as per the first proviso, the rigor of Section 269SS is not applicable to the Government, banking company, post office savings bank or cooperative bank etc. As per the second proviso, this provision would also not be applicable where both the depositor and the receiver are having agricultural income and neither of them has any income chargeable to tax under the Act. 18. Section 271D of the Act deals with penalty for failure to comply with the provisions of Section 269SS of the Act. Section 271D of the Act ....
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....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. (2) any penalty imposable under sub-section (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 attracted on a person accepting loan or deposit or specified sum in contravention of Section 269SS of the Act, penalty under Section 271E of the Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T. Therefore, in a way, the two provisions are complimentary to each other. 23. In Jai Laxmi Rice Mills Ambala City (supra), Supreme Court considered the question as to whether penalty proceedings under Section 271D of the Act is independent of th....
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....lier decision of the Supreme Court in CIT V. Mac Data Ltd.3 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 the view taken by the High Court holding that satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be it an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court. 26. Article 141 of the Con....
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....e have in terms of our aforesaid observations quashed the penalty imposed under Section 271D of the Act by the Addl/Joint Commissioner of Income Tax, NFAC; therefore, we refrain from adverting to and dealing with the other contentions advanced by the Ld. AR regarding the validity of the penalty order, which, thus, are left open." 7. Thus, there are series of decisions of Hon'ble High Courts, including the jurisdictional High Court on this point as well as judgement of Hon'ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (supra). Further, when there are divergent views of the High Courts, the judgement of jurisdictional High Court is binding on the Tribunal. Accordingly, by following the earlier decisions of this Tribunal as cited supra, we do not find any error or any illegality in the order of the CIT(A) in deleting the penalty u/s 271D of the Act. In any case, in view of the judgement of Hon'ble Supreme Court in the case of Commissioner of Income Tax v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), when there are divergent views, the view in favour of the assessee has to be followed. 8. In the result, appeal of the Revenue is dismissed. CO No.10/Viz/2026 ....