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2025 (5) TMI 1579 - AT - Income TaxPenalty u/s 271D - cash receipt of Rs. 7 lakhs from the sale of immovable property thus violating provisions of section 269SS - HELD THAT - Except the right over immovable property all other transaction of civil nature cannot be negated if such a document otherwise required to be registered remains unregistered. Assessee has produced the agreement to sale though unregistered has culminated in to sale deed subsequently. Therefore there is no dispute over the title of Immovable property. Whether the consideration of cash received by the assessee in that deed should be accepted or not ? - Assessee has submitted the copy of the agreement to sale where the name and address of the person who paid cash of Rs 7 lakhs to the assessee is mentioned. Neither the ld. AO nor the ld. CIT (A) thought it fit to verify from the payer about the date of cash payment and the veracity of agreement to sale. Thus Lower authorities have rejected the claim of the assessee that cash was received at the time of execution of agreement to sale without any cogent reason or on any inquiry. Thus no reason to doubt the facts that cash of Rs 7 lakhs is received by the assessee at the time of executing agreement to sale on 31.1.2015. Therefore as on the date on which money is received in cash by the assessee of Rs. 7 lakhs from the buyer on sale of immovable property was not in violation of provisions of section 269SS of the Act. Therefore on this ground itself penalty is not leviable. DR could not show us any reason that sum so received in cash by the assessee is in violation of provisions of section 269SS of the Act. Therefore on the merits we do not find any reason to uphold the penalty order passed by the ld. AO on 24.11.2023 and confirmed by the appellate order dated 12.8.2024 by the ld. CIT(Appeals). Accordingly on merits we direct the ld. AO to delete the penalty. Delay in filing of appeal - CIT(Appeals) on the top of his appellate order has stated that appeal was instituted on 23.12.2023 from the order of assessment unit dated 24.11.2023 . Thus it is filed within the prescribed time limit. However in the first para of the appellate order he mentioned that appeal was instituted on 26.3.2024 we do not know wherefrom he has taken this date which is contrary to the date mentioned in the appellate order itself. As there is no delay in filing of the appeal naturally in Form 35 assessee has mentioned that there is no delay in filing of appeal and therefore there is no condonation petition. Therefore CIT(Appeals) is incorrect in dismissing the appeal of the assessee on that ground also. Appeal by the assessee is allowed.
The core legal questions considered in this appeal are:
1. Whether the penalty under section 271D of the Income-tax Act, 1961 (the Act) can be levied on cash receipt of Rs. 7 lakhs from the sale of immovable property, in light of the provisions of section 269SS of the Act. 2. Whether the cash receipt of Rs. 7 lakhs was received on 31.1.2015 (prior to the amendment effective from 1.6.2015) or on 31.5.2016 (date of registered sale deed), affecting applicability of section 269SS. 3. Whether the non-registration of the agreement to sale affects its evidentiary value for proving the date and receipt of cash consideration. 4. Whether the appeal filed by the assessee before the Commissioner of Income Tax (Appeals) was barred by delay and if so, whether such delay was condonable. Issue-wise Detailed Analysis Issue 1 & 2: Applicability of Section 269SS and Penalty under Section 271D on Cash Receipt Relevant legal framework and precedents: Section 269SS prohibits acceptance of any sum of Rs. 20,000 or more in cash in relation to transfer of immovable property, effective from 1.6.2015 as per Finance Act, 2015 amendment. Section 271D provides penalty for contravention of section 269SS. The amendment introduced the concept of "specified sum" with effect from 1.6.2015. Court's interpretation and reasoning: The Court noted that the agreement to sell was executed on 31.1.2015, prior to the amendment date, and the sale deed was executed on 31.5.2016, post amendment. The assessee contended that the Rs. 7 lakhs cash was received on the date of agreement (31.1.2015), when no prohibition existed on cash receipt. The Revenue treated the date of sale deed (31.5.2016) as the date of receipt and imposed penalty accordingly. Key evidence and findings: The agreement to sell (though unregistered) specifically acknowledged receipt of Rs. 7 lakhs in cash on 31.1.2015. The sale deed did not mention the date of cash receipt. The Revenue did not verify the buyer's version or conduct any inquiry to disprove the assessee's claim. Application of law to facts: Since the cash receipt was on 31.1.2015, prior to the amendment, the provisions of section 269SS and penalty under section 271D were not applicable. The Court found no violation of section 269SS on the facts. Treatment of competing arguments: The Revenue argued that the agreement was unregistered and therefore not enforceable or admissible as evidence under section 49 of the Registration Act, 1908. The assessee argued that registration is not mandatory for agreement to sell and that the document is admissible as evidence of cash receipt. The Court examined the scope of registration requirements and evidentiary value of unregistered documents. Conclusions: The Court accepted the assessee's contention that the cash receipt was prior to the amendment and thus not in violation of section 269SS, negating the basis for penalty under section 271D. Issue 3: Effect of Non-registration of Agreement to Sell on Evidentiary Value Relevant legal framework and precedents: Section 17 of the Registration Act requires registration of certain documents affecting immovable property. Section 49 of the Registration Act provides that unregistered documents required to be registered shall not affect immovable property nor be received as evidence of transactions affecting such property, except in certain cases such as suits for specific performance or collateral transactions. The Supreme Court's ruling in Suraj Lamp and Industries (P) Ltd. vs. State of Haryana was cited, explaining the advantages and purposes of registration: providing orderliness, public notice, protection from fraud, and evidentiary certainty. Court's interpretation and reasoning: The Court observed that the agreement to sell was unregistered, but it culminated in a registered sale deed, confirming the title and ownership transfer. It held that registration primarily affects rights in immovable property but does not negate other civil transactions or evidence of payment. Key evidence and findings: The agreement to sell contained the name and address of the buyer and acknowledged receipt of Rs. 7 lakhs in cash. Neither the Assessing Officer nor the CIT(A) made any effort to verify the buyer's statement or the authenticity of the cash receipt. Application of law to facts: The Court held that the unregistered agreement to sell was admissible as evidence of receipt of cash consideration, notwithstanding its non-registration. The non-registration did not negate the fact of cash receipt or the date thereof. Treatment of competing arguments: The Revenue's reliance on section 49 to reject the agreement as evidence was found misplaced, as section 49 does not bar unregistered documents from being evidence of collateral transactions or contracts for specific performance. Conclusions: The Court concluded that the unregistered agreement was valid evidence of the cash receipt on 31.1.2015 and the Revenue erred in disregarding it. Issue 4: Delay in Filing Appeal before CIT(A) Relevant legal framework: Appeals must be filed within prescribed time limits. Delay in filing requires condonation with sufficient cause shown by the appellant. Court's interpretation and reasoning: The CIT(A) noted a delay of over 94 days in filing the appeal and dismissed the appeal for want of condonation petition or affidavit showing sufficient cause. However, the appellate order itself recorded the appeal as instituted on 23.12.2023, within the time limit, while elsewhere mentioning a contradictory date of 26.3.2024. Key evidence and findings: The appellant's Form 35 did not indicate any delay or need for condonation. The contradictory dates in the appellate order suggested an error by the CIT(A). Application of law to facts: The Court held that since the appeal was filed within time, dismissal on the ground of delay was incorrect. Treatment of competing arguments: The Revenue did not provide any explanation or evidence to justify the delay or the CIT(A)'s contradictory findings. Conclusions: The Court set aside the dismissal of the appeal on the ground of delay and held that the appeal was validly filed. Significant Holdings "The agreement to sell though unregistered has culminated into sale deed subsequently. Therefore, there is no dispute over the title of immovable property. But the only issue is whether the consideration of cash received by the assessee in that deed should be accepted or not. Assessee has submitted the copy of the agreement to sell where the name and address of the person who paid cash of Rs 7 lakhs to the assessee is mentioned. Neither the ld. AO nor the ld. CIT (A) thought it fit to verify from the payer about the date of cash payment and the veracity of agreement to sell. Thus, the ld. Lower authorities have rejected the claim of the assessee that cash was received at the time of execution of agreement to sell, without any cogent reason or on any inquiry. Thus, we do not find any reason to doubt the facts that cash of Rs 7 lakhs is received by the assessee at the time of executing agreement to sell on 31.1.2015." "As on the date on which money is received in cash by the assessee of Rs. 7 lakhs from the buyer on sale of immovable property was not in violation of provisions of section 269SS of the Act. Therefore, on this ground itself, penalty is not leviable." "The ld. CIT(Appeals) on the top of his appellate order has stated that 'appeal was instituted on 23.12.2023 from the order of assessment unit dated 24.11.2023'. Thus it is filed within the prescribed time limit. However, in the first para of the appellate order, he mentioned that appeal was instituted on 26.3.2024, we do not know wherefrom he has taken this date which is contrary to the date mentioned in the appellate order itself. As there is no delay in filing of the appeal, naturally in Form 35 assessee has mentioned that there is no delay in filing of appeal and therefore there is no condonation petition. Therefore, the ld. CIT(Appeals) is incorrect in dismissing the appeal of the assessee on that ground also." Core principles established include:
Final determinations: The Court allowed the appeal, set aside the penalty of Rs. 7 lakhs imposed under section 271D, and held that the cash receipt on 31.1.2015 did not violate section 269SS. The dismissal of the appeal before the CIT(A) on the ground of delay was also held to be erroneous. The Assessing Officer was directed to delete the penalty accordingly.
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