Smt. Nimmatoori Yashoda Vs DCIT (ITAT Hyderabad)
Reasonable Cause Saves Assessees- Cash Sale of Agricultural Land -ITAT Hyderabad Deletes Penalty u/s 271D
Background
Both assessees, trustees of Aurora Educational Society group, were covered in a search u/s 132. They had jointly sold agricultural land at Bommaipally village to M/s Aishwarya Infra Developers. As part of sale consideration, substantial amounts were received in cash – ₹1.62 crore (Yashoda) & ₹90.80 lakh (Sulochana). AO referred matter for penalty, holding receipt of cash consideration violated Section 269SS (“specified sum” in relation to transfer of immovable property). Addl. CIT levied penalty equal to cash received u/s 271D. CIT(A) confirmed levy.
Assessee’s Defence
- Land was rural agricultural land situated beyond notified limits, not a “capital asset” u/s 2(14).
- Sale consideration of agricultural land cannot be equated with “loan, deposit or specified sum” for purpose of Section 269SS.
- Cash was received at time of registered sale deed in presence of witnesses – a bona fide transaction duly recorded.
- Invoked protection of Section 273B, arguing there was “reasonable cause” & no intent to evade tax.
Tribunal’s Observations
- Tribunal relied on its earlier order in assessee’s own case for AY 2016-17 (ITA No.337/2022, order dt. 14.08.2024), holding the very same land to be agricultural land beyond scope of capital gains.
- Genuine sale consideration of exempt agricultural land, even if received in cash, cannot be treated as “specified sum” u/s 269SS.
- Purpose of “specified sum” (inserted by Finance Act 2015) was to curb black money in immovable property transactions, especially unregistered deals, not to penalise genuine registered agricultural land sales.
- Cited CIT vs. Eli Lilly & Co. (India) Pvt. Ltd. (312 ITR 225, SC) – penalty provisions not automatic; reasonable cause exempts from levy.
- Relied on ITAT Bangalore ruling in Rakesh Ganapathy vs. JCIT (2025) granting similar relief.
- Distinguished Revenue’s reliance on P. Bhaskar (340 ITR 560, Mad.) & A.B. Shanthi (255 ITR 258, SC), noting those did not apply where bona fide reasonable cause
Tribunal’s Decision
- Penalty of ₹1.62 crore (Yashoda) & ₹90.80 lakh (Sulochana) deleted in full.
- Held that receipt of cash consideration for sale of agricultural land does not attract Section 269SS.
- Appeals allowed in toto.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
