ACIT Vs KNS Memorial (ITAT Lucknow)
The appeal before the Income Tax Appellate Tribunal (ITAT), Lucknow, was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], who had deleted a penalty of ₹1,43,01,202 levied under Section 271DA for alleged violation of Section 269ST of the Income Tax Act, 1961 for Assessment Year 2018–19.
The assessee, a company running a nursing home, was subjected to inspection by the Directorate of Intelligence and Criminal Investigation on 09.03.2018 to verify compliance with reporting provisions. During inspection, it was observed that the assessee had received cash of ₹2,00,000 or more in 51 instances during the financial year, aggregating to ₹1,43,01,202. The Assessing Officer (AO) treated these receipts as violations of Section 269ST, which restricts cash receipts exceeding ₹2,00,000 in a day, per transaction, or for a single event or occasion. Accordingly, penalty proceedings were initiated and penalty equal to the cash receipts was imposed under Section 271DA.
In response, the assessee submitted that as a hospital, it could not deny treatment based on mode of payment, and patients often made payments in cash. It was also stated that compliance challenges arose in cases where patients did not have PAN. The assessee argued that the provisions of Section 269ST were not applicable. However, the AO rejected these arguments, holding that hospital treatment constituted a single event, and cash receipts exceeding ₹2,00,000 against a patient’s treatment violated the law. The AO relied on patient-wise data and statements of the accounts head, who admitted lack of awareness of compliance requirements.
