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TMI Blog2025 (5) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... d in confirming the penalty levied u/s 271D of tire Act without appreciating that the provisions of section 269SS of the Act are not applicable with respect to cash sales of stock in trade but the provisions of section 269ST are applicable in respect of such cash sale of stock-in-trade and section 269ST of the Act has been introduced in the Act for the first time w.e.f. 01.04.2017 and accordingly applicable from the A.Y. 2017-18 onwards. 3 Without prejudice to the above, on the facts and circumstances of the case as well as in law, the learned CJT(A) has erred by confirming the penalty of Rs. 21,00,000/- u/s 271D r.w.s. 273B of the Act without appreciating that as per explanation furnished and material placed on record, there was reasonable and sufficient cause within the meaning of section 273B of the Act for non-adherence of section 269SS of the Act as the assessee was under the bonafide belief that the provisions of section 269SS are not applicable. 4. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of." 3. Brief facts of the case are that the assessee is a partnership firm engaged in the business of civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provision of section 269SS of the Act with effect from 01.06.2015 and as per amended provisions, specified sum was included in the said section and the definition of specified sum as given in explanation to section 269SS of the Act defined that if any sum of money receivable, whether as advance or otherwise, in relation to transfer of immovable property whether or not the transfer takes place. The newly inserted definition of specified sum in section 269SS of the Act was applicable for advance given at the time of entering into agreement for purchase/sale of property and not for actual registration done and sale consideration received at the time of registration of sale deed for purchase/sale of property. The said contention of the assessee is also supported by the further amendment made vide finance Act 2017 with effect from 01.04.2017 by introducing the provision of section 269ST of the Act which specifically state that even in the case of purchase of immovable property if the amount is 2,00,000/- or more the penalty will be levied for equivalent amount u/s 271DA of the Act. It proves that the provisions of specified sum introduced with effect from 01.06.2015 does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n [1972] 83 ITR 26 (SC) wherein it has been held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or guilty of conduct, contumacious or dishonest, or acted in conscious disregard to 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 breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. CIT vs. Sahara India Mutual Benefit Co. Ltd. [2023] 153 taxmann.com 405 (SC) Section 271D, read with sections 271E and 273B, of the Income-tax Act, 1961 - Penalty - For failure to comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted - Held, yes - Whether, therefore, impugned penalty was liable to be quashed - Held, yes [Para 7] [In favour of assessee] Mohanjeet Singh v. JCIT as reported in [2016] 70 taxmann.com 335 [ITAT CHANDIGARH BENCH 'SMC] Section 269SS, read with sections 271D and 273B, of the Income-tax Act, 1961 - Deposits - Mode of taking/accepting (Penalty) - Assessment year 2008-09 - Assessee received cash deposits for more than Rs. 20,000 from his agriculturalist friend - Assessing Officer opined that assessee accepted cash deposits in contravention of section 269SS - Consequently, he levied penalty under section 271D - It was found that source of money was completely from explained sources - Amount in question had not been treated as cash credits under section 68 - Assessee explained that said amount was received from his friend for making investments on his behalf - Whether transaction in question was genuine and bona fide and, therefore, penalty was liable to be deleted - Held, yes [Para 7] [In favour of assessee] CIT vs. Smt. Dimpal Yadav* as reported in [2015] 61 taxmann.com 219 [HIGH COURT OF ALLAHABAD] Surendra Engg. Corpn. vs. JCIT as reported in [2020] 113 taxmann.com 290 (M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by explanation (iv) to section 269SS of the Act 61 and in this case the assessee has accepted a "specified sum" of Rs twenty-one lakhs, and he prays for sustaining the penalty. 9. We have heard the rival counsels and considered the materials on record and the judgments relied upon by the assessee, referred to in above paragraphs. The factual aspect of the matter as admitted by the assessee and revenue, is that plots of land, which was held as stock in trade by the assessee, has been sold to buyers by execution of registered sale deeds, and payments received in one lump sum before the Government registration authorities, and there is no dispute regarding the disclosure of the sale proceeds in the books of accounts and return of income, which has formed a part of the total turnover, and admittedly there has not been any loss of Government revenue. 9.1 As per submission of the assessee, the assessee acted under the bonafide belief that provisions of section 269SS which is operative w.e.f. 01/06/2015, was not applicable to the immovable property held as stock in trade, because viewed from the angle of the assessee the developed plots of lands are his business stock which is meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether or not the transfer takes place. 54.5 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, have also been made. 54.6 Applicability: These amendments have taken effect 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 bringing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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