Bommarabettu Madhusudhana Acharya Vs ITO (ITAT Bangalore)
Penalty u/s 271D Deleted – Cash Received as Sale Consideration Not Loan/Deposit – Reasonable Cause & Bona Fide Transaction Covered u/s 273B – ITAT Bangalore
In ITA No.937/Bang/2025, AY 2016-17, the assessee received ₹13,56,500 in cash from buyers towards sale of flats, which was treated by the Department as violation of Sec.269SS, leading to penalty u/s 271D equal to the amount received. The assessee contended that the cash represented balance sale consideration and was accepted due to insistence from buyers, who were temple workers without active banking facilities.
The Tribunal noted that the genuineness of the transaction and sale of property were never disputed and that confirmation letters from buyers were furnished. Referring to judicial precedents and principles of Sec.273B (reasonable cause), ITAT observed that penalty u/s 271D is not automatic and must consider bona fide circumstances. The purpose of Sec.269SS is to curb unaccounted money, not to penalize genuine transactions.
Considering that the cash receipts were genuine, arose from property sales and were accepted under business compulsion, ITAT held that the assessee had demonstrated reasonable cause. Accordingly, the penalty of ₹13,56,500 was deleted, and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This Appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 12.03.2025 vide DIN and Order No: ITBA/NFAC/S/250/2024-25/1074386977 (1) passed u/s. 250 of the income Tax Act, 1961 (in short “the act”) for the AY 2016-17.
