Sh. Balbir Singh Vs ACIT (ITAT Jaipur)
Income Tax Appellate Tribunal (ITAT) Jaipur has quashed a penalty levied under Section 271D of the Income Tax Act against Balbir Singh, ruling that the funds he received were advances against a property sale, not loans. This decision follows a second round of litigation, where the ITAT revisited the case to verify the ownership of the property in question. The initial dispute centered on Rs. 1 crore received by Singh from Smt. Maya Devi, which the Assessing Officer (AO) had deemed a loan, triggering the penalty for non-compliance with Section 269SS, which mandates certain transactions to be conducted through banking channels.
In the first round of litigation, the ITAT had directed the AO to investigate whether Singh owned the land related to the transaction. The tribunal’s earlier order stated that if the land was indeed owned by Singh, his claim that the funds were advances against a property sale should be accepted, and no penalty levied. Following this directive, the AO obtained information from the Sub-Registrar, Neemrana, confirming that Singh had purchased the land on April 10, 2013. This finding was crucial, as it established Singh’s ownership at the time of the transactions.
The ITAT, in its recent order, noted that Singh received the funds—Rs. 40 lakh on April 11, 2013, Rs. 50 lakh on April 22, 2013, and Rs. 10 lakh on June 20, 2013—after acquiring the property. Based on this timeline and adhering to its previous directive, the tribunal concluded that the funds were indeed advances against the property sale. Therefore, consistent with its earlier stance, the ITAT quashed the penalty imposed under Section 271D.
The tribunal’s decision underscores the importance of verifying property ownership in such disputes and ensures that penalties are not levied when transactions are genuinely related to property sales. This ruling reaffirms that when an assessee owns the property, and the money is received after the purchase of the property, the money is considered as an advance, and no penalty can be levied.
Petitioner was represented by Sh. Sidharth Ranka, Adv. & Sh. Saurav Harsh, Adv.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
