Delhi ITAT Deletes Section 271D Penalty on Co-owner Following Rectification Deed and Principle of Parity

Neetu Kalra Vs CIT (ITAT Delhi)

The Delhi ITAT deleted the penalty levied under section 271D for alleged violation of section 269SS, holding that the assessee, being a co-owner of the property, was entitled to the same relief already granted to the other co-owner. The dispute arose because the sale deed incorrectly recorded the dates of receipt of cash consideration as 2016 instead of the actual year 2014, leading the Department to initiate penalty proceedings. Subsequently, a registered Deed of Rectification was executed correcting the dates.

The Tribunal noted that in the case of the assessee’s mother-in-law, who was the other co-owner of the same property, the Assessing Officer had accepted the rectification deed and dropped the penalty proceedings under section 271D. Since both co-owners were parties to the same transaction and received identical treatment of facts, there was no justification for sustaining the penalty only in the assessee’s case.

Applying the principle of parity, the Tribunal held that the assessee deserved identical relief. Accordingly, it set aside the impugned order and directed deletion of the penalty under section 271D. The assessee’s appeal was allowed.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 09.02.2026, for Assessment Year 2017-18.

2. Shri Prateek Gupta, appearing on behalf of the assessee submits that the assessee in appeal has assailed the order of CIT(A) in upholding penalty levied u/s.271D of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). He submits that the assessee and Mrs. Urmila Kalra her mother-in-law jointly owned immovable property bearing no. B-509, First Floor, Sudershan Park, New Delhi in equal undivided share of 50% each. The assessee and Mrs. Urmila Kalra entered into an agreement to sell aforesaid property with Shri Rajesh Mendiratta on 24.10.2014 for a consideration of Rs.17,10,000/-. The said property was sold vide registered sale deed dated 29.10.2016. From the total consideration of Rs.17,10,000/-, Rs.5,10,000/- were received in cash at the time of entering agreement to sell. The share of assessee in the cash received as part of consideration was Rs.2,55,000/-. The assessee and her mother-in-law received showcause notice dated 11.12.2024 u/s.274 r.w.s. 271D of the Act for violation of provisions of section 269SS of the Act. The assessee and Mrs. Urmila Kalra in reply to the showcause notice explained that in Sale Deed the year of receipt cash consideration has been wrongly mentioned as 2016 instead of 2014. It was further explained that the assessee has executed Registered Deed of Rectification for correcting dates in the Sale Deed before the Sub Registrar office on 08.01.2025. The actual dates on which cash payments were received are as under:-

3. Consequent to Rectification Deed dated 08.01.2025 penalty proceedings initiated u/s.271D of the Act in the case of Mrs. Urmila Kalra were dropped. The ld. Counsel placed on record a copy of order u/s.271D of the Act dated 26.06.2025 in the case of Mrs. Urmila Kalra. The ld. Counsel for parity of reasons prayed for quashing penalty order in the case of assessee as well.

4. Per contra, Ms. Harpreet Kaur Hamra, strongly supporting the impugned order prayed for dismissing appeal of assessee. The ld. DR submits that the assessee has violated provisions of section 269SS of the Act by accepting cash amounting to Rs.5,10,000/- during the period relevant to assessment year under appeal. She further stated that the assessee had made Deed of Rectification of sale deed after initiation of penalty proceedings u/s.271D of the Act. This clearly shows that the rectification in sale deed is an afterthought to circumvent penalty u/s.271D of the Act.

5. Both sides heard, orders of the lower authorities examined. The AO initiated penalty proceedings u/s.271D of the Act for contravention of provisions of section 269SS of the Act. The assessee allegedly received part consideration on sale of immovable property during the Financial Year 2016-17 in cash. The immovable property that was sold during the year was jointly owned by assessee with her mother-in-law Mrs. Urmila Kalra in equal share. The cash component of the total consideration received by both owners aggregate to Rs.5,10,000/-. Penalty proceedings u/s.271D of the Act were also initiated against the Smt. Urmila Kalra. It is contended that cash part of sale consideration Rs.5,10,000/- was in fact received during FY i.e. 2014-15 on 24.10.2014, 31.10.2014, 02.11.2014 and 07.11.2014. Inadvertently, the aforesaid dates were recorded in sale deed as 24.10.2016, 31.10.2016, 02.11.2016 and 07.11.2016. The aforesaid mistake in the Sale Deed was rectified by way of Deed of Rectification dated 08.01.2025. In light of the said Rectification deed, the AO in the case of Smt. Urmila Kalra vide order dated 26.06.2025 levied no penalty u/s.271D of the Act. The assessee, being co-owner of the same immovable property, deserves the same treatment on the principle of parity. Accordingly, for similar reasons penalty levied u/s.271Rof the Act is directed to be deleted.

6. In the result, impugned order is set aside and appeal of the assessee is allowed.

Order pronounced in the open court on Friday the 31″ day of July, 2026.