Nirav Mahendrabhai Tamboli Vs ITO (ITAT Ahmedabad)
Ahmedabad ITAT Deletes Section 271D Penalty on Cash Component of Property Sale; Reasonable Cause and Consistency Among Co-owners Recognised
Summary: The assessee and several family members jointly sold ancestral property for a recorded consideration of ₹27.90 crore. A subsequent search revealed that the actual consideration was ₹35.57 crore, including a cash component of ₹7.67 crore, of which the assessee’s share was ₹15,97,906. For Assessment Year 2021-22, the assessee filed an updated return under Section 139(8A), disclosed the entire consideration and increased his taxable income from ₹13,83,210 to ₹29,81,120.
Although the Assessing Officer accepted the income disclosed in the updated return, penalty proceedings under Section 271D were initiated for receipt of cash in violation of Section 269SS. The AO levied a penalty of ₹15,97,906, which was confirmed by the CIT(A), on the ground that the assessee had not established sufficient cause under Section 273B.
The assessee submitted that the property was jointly owned by numerous family members, most of whom were agriculturists with limited education and awareness of tax provisions. The family urgently needed to liquidate the inherited property, while the purchasers dictated the terms of payment. The assessee also pointed out that the entire consideration was subsequently disclosed and that penalty proceedings arising from the same transaction had been dropped in the case of another co-owner, Jayaben Ramanlal Tamboli.
