ITO Vs R. Dhinagharan (HUF) (ITAT Chennai)
The appeal before the ITAT Chennai arose from deletion of penalty levied under section 271D of the Income-tax Act, 1961, for assessment year 2016–17. The Joint Commissioner had imposed a penalty of ₹3,03,46,301 for alleged violation of section 269SS, on the ground that the assessee, a Hindu Undivided Family engaged in real estate development, received the entire sale consideration for sale of plots in cash at the time of registration of sale deeds. The Commissioner (Appeals) deleted the penalty, holding that the transactions were fully disclosed, genuine, involved no loss of revenue, and were supported by reasonable cause under section 273B.
Before the Tribunal, the assessee attempted to raise a jurisdictional objection under Rule 27, contending that no satisfaction for initiating penalty was recorded in the assessment order. The Tribunal rejected this plea, holding that Rule 27 does not permit raising a completely new ground that was never urged or adjudicated before lower authorities.
On merits, the Tribunal examined whether section 269SS, as amended with effect from 1 June 2015, applied to cash received as final sale consideration at the time of registration of immovable property. The Tribunal analysed the statutory amendment, the definition of “specified sum” under Explanation to section 269SS, the Finance Minister’s Budget Speech, the Memorandum explaining the Finance Bill, 2015, and CBDT Circular No. 19 of 2015. These materials consistently indicated that the amendment was intended to curb generation of black money by prohibiting acceptance of cash advances in immovable property transactions.
