Naresh Kumar Vs ITO (ITAT Delhi)
Delhi ITAT Deletes Penalties under Sections 271D & 271E: Cash Transactions with Farmers Held Protected by ‘Reasonable Cause’
The Delhi ITAT deleted penalties of ₹34 lakh each levied under sections 271D and 271E for alleged violations of sections 269SS and 269T, holding that the assessee had established a reasonable cause under section 273B. The Tribunal accepted that the cash receipts and repayments were genuine transactions connected with the proposed purchase of agricultural land.
The assessee, an agriculturist, had received cash from three farmers for purchase of agricultural land. However, the transaction could not materialise due to the death of the assessee’s father, following which the amounts were returned to the farmers in cash after about six months. The Assessing Officer treated the cash receipts and repayments as violations of sections 269SS and 269T and levied penalties under sections 271D and 271E, which were confirmed by the CIT(A).
Before the Tribunal, the assessee produced bank statements, the father’s death certificate, affidavits, revenue records (Jamabandi), and other supporting documents to establish the genuineness of the transactions and the circumstances leading to the cancellation of the land deal.
The Tribunal found that these documents sufficiently demonstrated a reasonable cause for receiving and repaying the amounts in cash. It observed that the transactions were bona fide, arose out of a failed agricultural land transaction, and were not intended to evade tax.
