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TMI Blog2024 (1) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... order framed u/s. 143(3) of the Act dated 23.05.2018. The Ld. counsel for the assessee stated that there is no recording of satisfaction in the assessment order for initiation of this penalty proceedings and even there is no mention that violation of the provisions of Section 269SS of the Act for levy of penalty u/s. 271D of the Act. On this, when the Bench was put a query to the Ld. counsel for the assessee whether this issue was raised by the assessee before the Jt. Commissioner of Income tax passing order u/s. 271D of the Act or before CIT(A) during the course of appellate proceedings. The Ld. counsel stated that there is no such issue raised by the assessee, but he stated that he can raise this issue under Rule 27 of the Rules in view of the decision of Hon'ble Madhya Pradesh High Court in the case of Dy. CIT vs. Turquoise Investment & Finance Ltd. [2008] 299 ITR 143 (M.P). 3. On the other hand, the Ld. CIT-DR opposed the admissibility of the issue of satisfaction recorded by the A.O raised by the assessee under Rule 27 of the Rules for the reason that the Tribunal Rules are very clear on this issue and the issue can be raised only when the CIT(A) has allowed the relief and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established. 4. CIT(A) ought to have appreciated the tact that in the Finance Act, 2015 the scope of sec.269SS was extended to include cash receipt n immovable property transaction which are applicable to the AY 2016- 17. 5. CIT(A) ought to have appreciated the fact that the provisions of sec.269SS itself provide exceptions in certain circumstances. None of such exceptions are applicable to the assessee's case. 7. The brief facts of the case are that the assessee is engaged in real estate business and develop plots for sale. The assessee during the course of business during Financial Year 2015-16 relevant to this A.Y 2016-17 sold various plots to various people for a total consideration of Rs. 3,03,46,301/- in cash. The assessee has not received any advance but entire sale consideration were received at the time of registration of sale deeds in cash and non transaction was done through banking channels. Accordingly, the A.O referred the matter to the JCIT for levy of penalty u/s. 271D of the Act for violation of the provisions of Section 269SS of the Act and the JCIT, Kanchipuram Range, Kanchipuram levied penalty u/s. 271D of the Act vide order dated 12.06.2019 for an equival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year ended 31.03.2016. It is noted that the appellant has disclosed the entire amount of Rs. 3, 03, 46,301/- received on account of sale of plots in the Trading, Profit and Loss Account. 5.3 In the light of this fact it is clearly evident that the sale of plots for which money has been received in cash has been fully disclosed in the IT return of the appellant. Therefore, I am of the view that levy of penalty under section 269 SS is not correct. The imposition of penalty has been done in a mechanical manner without taking into consideration the legislative intent behind the* amendment of the section 269SS of the IT Act. 5.4 Secondly, the appellant has taken the issue of "reasonable cause" u/s 273B of the IT Act by highlighting the issue of "bona fide" belief coupled with the genuineness of transactions. Reliance was placed on the case of Saini Medical Stores decided by Hon'ble Punjab and Haryana High Court and reported in 277 ITR 420 (2005) where this judicial premise has been pronounced. The gist of the High Court decision is mentioned in the 4para on Page 5 of this order where bona fide belief and genuineness of the transactions form the bed rock of "reasonable caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble property transactions. The learned CIT(A) accepted the submission of the assessee with a finding, 'since the appellant has fully disclosed the entire sale transactions in his profit and loss account, the issue of generation of unaccounted income does not arise. (ii) The imposition of penalty has been drawn in a mechanical manner without taking into consideration the legislative intent behind the amendment of the section. (iii) The CIT(A) has opined that the assessee could establish a reasonable cause for violation of Sec.269SS. He has observed that the persons who have invested in lands are people of meagre means, living in small villages in Kancheepuram district. (iv) The learned CIT(A) has gone through the list of 82 persons, the plot number, area and the amounts involving in such transactions. (v) There has not been any loss to the revenue since the appellant has disclosed the entire sales amount in the return of income. 9.1 The Ld. CIT-DR stated that the decision taken by the CIT(A) is not acceptable for the following reasons: (i) From plain reading of Sec.269SS, penalty is imposable for violation of Sec.269SS either for accepting cash over Rs. 20,000/- in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as a dealer. An order imposing penalty for failure to carry out statutory obligation is the result of a quasi criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the beach flows form a bonafide belief that the offender is not liable to act in the manner prescribed by the statute". It may be mentioned that the quasi-criminal angle is not present in Sec.271D of the Act. In fact, Sec.271DD providing for imprisonment for a maximum of two years for violation of provisions of Sec.269SS has been omitted w.e.f.1.4.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made at one go at the time of registration of sale deed. The Ld. counsel stated that further a provision was brought in by the legislature in the statute vide Finance Act, 2017 w.e.f 01.04.2017 by introducing the provision of section 269ST, wherein even the purchase of property if the amount is two lakhs or more will be covered and penalty will be levied of an equivalent to the amount u/s. 271DA of the Act, which was also simultaneously introduced by the Finance Act, 2017 w.e.f 01.04.2017. Hence, according to Ld. counsel, this provision of 'specified sum' introduced w.e.f 01.06.2015 does not hit the assessee's transaction, because on facts the assessee has not entered into any agreement for sale rather, he only directly registered the documents with the Sub Registrar and accepted cash at the time of registration of sale deed for sale of plots. For this, he produced few of documents for verification which was not denied i.e., neither by the A.O nor by CIT(A) and even now by Ld. CIT-DR. 11. In reply, the Ld. CIT-DR stated that the whole consideration was received in cash at the time of registration of sale deed, that this also is hit by the provisions of Section 269SS of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 twenty thousand rupees or more. It is also proposed to amend secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances. 54.1 Provisions contained in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 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, penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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