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Case Law Details

Case Name : Nammalvar Lingusamy Vs ACIT (ITAT Chennai)
Appeal Number : I.T.A. No. 532/Chny/2022
Date of Judgement/Order : 07/02/2024
Related Assessment Year : 2017-18
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Nammalvar Lingusamy Vs ACIT (ITAT Chennai)

The case of Nammalvar Lingusamy Vs. ACIT (ITAT Chennai) involves an appeal against the penalty imposed under Section 271D of the Income Tax Act, 1961. The parties involved are the assessee, Nammalvar Lingusamy, and the revenue authority represented by the Additional Commissioner of Income Tax (ACIT). The legal issue at hand revolves around the acceptance of part of the sale consideration for an immovable property in cash, allegedly violating Section 269SS of the Income Tax Act.

Background: The relevant laws in this case include Section 271D and Section 269SS of the Income Tax Act, 1961. Section 271D pertains to penalties for contravention of the provisions of Section 269SS, which prohibits acceptance of certain loans and deposits in cash. Prior to the current case, the Assessing Officer initiated penalty proceedings against the assessee for receiving a portion of the sale consideration in cash, contrary to the provisions of Section 269SS.

Contention of the Assessee: The assessee argued that the consideration clause in the deed of sale inaccurately portrayed the transaction as a cash deal. Instead, the assessee contended that it was an adjustment of an existing debt through a journal entry. Citing the decision of the Hon’ble Madras High Court in Anamallais Bus Transports (P.) Ltd. v. PCIT [2024] 158 com 245 (Madras), the assessee sought the deletion of the penalty. The rationale behind this contention was to establish that the transaction did not violate Section 269SS as it was not a cash transaction but rather an adjustment of debt.

Contention of Revenue: The revenue authority argued that the assessee admitted to receiving cash in the sale deed before the Sub-Registrar’s Office (SRO). Additionally, it was asserted that the assessee failed to provide adequate evidence to support their claim of the transaction being an adjustment of debt. The revenue relied on legal provisions and case law to assert that the penalty was justified under Section 271D.

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