Draft submission for no penalty u/s 271D if reasonable cause persists with the assessee u/s 273B of the Act
Written submissions in the case of Sh. XXXXXX, R/O XXXXXX with reference to penalty u/s 271D levied by AO vide order Dt. 22.12.2021. Every Grounds of appeal has been explained elaboratively below in the written submissions .
The appellant is an income tax assessee having rural background. In the normal course, he had been filing his income tax returns every year declaring small income in respect of small business income and Agriculture Income. The assessee is an individual and he received cash amount of Rs. 56,50,000/- on sale of Agriculture land situated at Village & PO, XXXXXX during the F.Yr. 2016-17. There existed a reasonable cause for the assessee to accept the sales consideration partly in cash and hence penalty under section 271D is not leviable.
However, he had sold his agricultural land situated in village XXXXXX vide sale deed dated 28.9.2016 for consideration of Rs.96,50,000/-.The consideration was received partly in cash i.e. Rs.56,50,000/- and balance amount by cheque/draft. Copy of sale deed is enclosed.
The income tax return was for A.Y. 2017-18 was duly filed on 2.01.2018. All relevant details of income and sales of property relating to the year under consideration were filed before the A.O. in the course of assessment proceedings initiated u/s 143(2) of the Act.
The assessment for the year under consideration i.e. A.Y. 2017-18 was also made by the AO u/s 143(3) accepting the income declared by the assessee vide order dt. 28.12.2019 in which entire sales consideration of sale of land of Rs. 96,50,000/- was shown as capital receipts.
However, penalty proceedings u/s 271D were initiated by the Additional CIT, XXXXXX by issue of notice dated 02.01.2020.
Detailed reply dt 24.01.2020 was submitted with additional commissioner earlier with faceless and also submitted with JCIT, Faceless. JCIT, Faceless has not mentioned this reply in his order dt. 22.12.2021.
All the relevant details were also filed in the course of penalty proceedings. However, he levied the penalty of Rs.56,50,000/- u/s 271D despite the genuineness of evidences produced before him and written reply related to reasonable cause u/s 273B of the Act .
The penalty has been levied simply on the basis of mere contravention of the provisions of S.269SS and ignoring the decisions of Supreme Court as well as high courts and the Tribunal.
List of reasonable cause with the assessee when he accepted specified sum in cash of Rs. 56,50,000/- during the F.Yr. 2016-17
Rural back ground of the assessee.
Assessee is not an educated person. He is below matriculation standard as far as his education is concerned. He belongs to Village and Post Office, XXXXXX from the very beginning. From the very beginning he did agriculture activities earlier with his father and later on himself. He cannot write and cannot read well. He was absolutely not known to the law when he accepted cash from the buyer of the land. It was bonafide belief of the assessee that he is an agriculturist and agriculturist can sale the property in cash as in the rural area numerous cases are there where sale and purchase of lands were made in cash. This was bonafide belief of the assessee that he was not doing any wrong and he shall not be avoiding taxes. No one told him not to accept the cash neither Registrar, nor stamp vendor, nor his tax consultant. He was ill that time he had not discussed the issue of receipt of cash with any one and out of ignorance of the law he accepted cash.
As he was not known to the Law, there arose no difference in accepting the payment in cash as well as through banking channel.
Ill health of the assessee
During the same year assessee got operated for liver transplant at XXXXXX Hospital, XXXXXX. A report of Dr. XXXXXX is enclosed. Survival chances of his life were almost zero. But by the grace of God he has survived and now taking care of his family. As he needed the money and he was fetching the good price for sale of the land he accepted offer of the buyer. Money was needed for his expenses on post surgery effects, medicine and every take care, for running the family. Mostly he was not aware of the law and he could not discuss much about the made of payment with his tax consultant. He felt no difference in accepting the payment in cash as well as banking channel because there was no bad intention with the assessee and he never desired to avoid tax liabilities, Being law abiding citizen and an agriculturist he always filed his returns.
No intention to avoid taxes
The sales transaction was proved genuine during the course of assessment proceedings u/s 143 (3) of the Act and sales was considered as income of the assessee and though assessee claimed deduction u/s 54B of the act and it was accepted by AO after due verification of the records and no concealment was proved and no generation of black money was detected for which the section 269SS was introduced by parliament to curb the black money. As the transaction was genuine and not sham and there was utter ignorance of law with the assessee.
The fault was technical and venial in nature.
The fault with the assessee was technical and venial in nature. This proves the Innocence of the assessee in accepting the payment in cash. Hence the Hon’ble CIT (Appeals) NFAC is requested to delete the penalty as the penalty is harsh for an old, innocent, law abiding citizen and who never desired to conceal the transaction and evading taxes .
Bonafide belief of the assessee
It was bonafide belief of the assessee that he is an agriculturist by birth and agriculturist can accept the payment in cash for sale of their lands and purchase of lands. He accepted the payment in cash and as he was not known to the newly inserted amendment with section 269SS of the Act. It was belief of the assessee that he shall not be avoiding taxes if situation arises. He was having bank account with him but he accepted the payment in cash under a bonafide belief that he is not making or thinking to avoid taxes and he felt no difference in cash as well as bank. He accepted the payment in cash as buyer wanted to make the part payment in cash. Absolutely he was not known to the law. It was bonafide belief of the assessee that cash shall be consumed in purchasing agriculture lands for the welfare of the family as usually sale purchase of lands were made in cash in rural areas. Whether payment was in cash or though banking channel registry was not denied by the registrar. Even Registrar was not known to the law when he made Registry of the assessee.
Sale deed not doubted by the revenue
The revenue has neither challenged the registration of the sale deed and nor has challenged the cash consideration received by the assessee from the buyer at the time of registration. The sale consideration was accepted by AO as income of the assessee and assessee claimed deduction u/s 54B of the Act.
No one told the assessee not to receive the payment in cash.
No one has told the assessee about the changes in law. Not buyer, not tax advisor, not registrar, not document writer who typed the registry and he did many registration of the lands on daily basis and monthly basis.
Law was nascent to the public at large particularly for the people those who were from village back ground. Earlier to this sale there are so many instances where cash was taken and given for sale and purchase of all the properties.
Violation of principal of natural justice in the order of the AO, NFAC
The penalty order was passed by the ld. JCIT in violation of the Principal of natural justice without granting to the assessee a fair, proper and meaningful opportunity to be heard not providing him with a draft order so that he may counter the objections of Ld. JCIT, NFAC.
The Penalty order is arbitrary and bad in law
The penalty order is arbitrary and bad in law. The Ld. JCIT squarely rejected, without providing explanations, the various case laws from Hon’ble SC and Hon’ble HC.
Legal submissions:
It is humbly submitted, that penalty u/s 271D cannot be levied simply on the basis of mere contravention of the provisions of section 269SS of the Act. The legislature has provided sufficient safeguard by enacting the provisions of section 273B of the Act. It provides in clear terms that penalty cannot be levied where the assessee is able to prove that there was reasonable cause for non-compliance of provisions specified in the section which includes S.271D. Thus, penalty cannot be levied on mere contravention of the provisions of law and therefore the A.O. must consider the facts & circumstances of the case as well as the object behind the penal provisions before levying the penalty. Reliance is placed on the CBDT Circular No-19/2015 dated 27.11.2015 wherein it has been made clear that S. 269SS was amended in order to curb generation of black money by way of dealings in cash in immoveable transactions. Thus, penalty cannot be levied where there is no indication regarding use of black money.
At this stage, it would be appropriate to refer certain important judgments delivered by the apex court as well as high courts.
The first important decision would be the decision of Hon’ble Supreme court in the case of Motilal Padampat Sugar Mills Ltd.-vs- State of Uttar Pradesh (1979) 210 SC wherein it has been observed as follows:
“There is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement; there is no such maxim known to the law. It is therefore not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of the law.”
Similar view has been taken by the Hon’ble apex court in the case of Hindustan Steels Ltd-vs-State of Orissa 83 ITR 26 SC by holding that penalty cannot be levied for mere failure to carry out a legal obligation. Penalty provisions, being quasi criminal proceedings, cannot be invoked unless the party acted deliberately in defiance of law or acted in conscious disregard of its obligation. Hence, penalty cannot be levied on mere breach of technical or venial breach of the provisions of law or where breach flows from a bona fide belief.
This shows that levy of penalty is not automatic i.e. on mere contravention of the provisions of law. However, the legislature has also taken care of this aspect by introducing the provisions of S. 273B in the I.T. Act 1961 which provides that no penalty shall be imposed where the assessee is able to prove that there was reasonable cause for such failure. Thus, the combined of reading of both the above provisions along with the above said decisions of the apex court shows that penalty u/s 271D is not automatic. Thus, the object behind such legislation is to be taken in consideration in such cases. Since, in the present case, the income tax return filed by the appellant has been accepted by the AO himself u/s 143(3), penalty u/s 271 D should not have been imposed on mere technical ground.
In view of the above legal position, it is submitted no penalty can be imposed on the basis of mere contravention of any law. In the present case, firstly, the appellant belongs to a rural village and thus was unaware of any provisions of the I.T. Act 1961 what to speak of the of S.269SS as well as 271D. Further, he was not well educated since studied below matriculation and thus was totally dependent upon his consultant even for filing income tax return. There was also no intention of evading tax leviable on the sale of land which is apparent from the fact that no tax is leviable on the sale of agricultural land in issue which is also apparent from the fact that the return of income filed by the assessee has been accepted by the AO himself. The object of the legislation behind the introduction of penalty provisions u/s 271D & 271E was to curb the generation of black money and thus penalty is not to be proposed in each and every case for mere breach of the provisions of sections 271D & 271E of the Act as held by the courts mentioned earlier. Various circumstances have been taken into consideration by the Courts & Tribunal for considering the scope of reasonable cause.
The decisions of the apex court, mentioned earlier, clearly hold that that levy of penalty u/s 271D is not automatic simply on the basis that the assessee had accepted the sale consideration partly in cash and partly by cheques. The apex court has clearly held that no penalty u/s 271D or 271E should be imposed merely because that an assessee had accepted or paid cash in contravention of the provisions of sections 269SS or 269T of the Act unless there is an attempt on the part of the assessee to evade the tax due. The fact that the income tax return filed by the appellant had been accepted by the AO u/s 143(3) itself shows that there was no attempt on the part of the appellant to evade the tax due from him.
Reliance is also placed on the following binding decisions:-
(i) ADI-vs-KumariA.B.Shanthi 255 ITR 258 SC wherein it was held by the Apex court that If there is a genuine and bona fidetransaction and if for any reason the taxpayer cannot get a loan or deposit by account payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. Hence, penalty u/s 269SS need not be imposed in each case.
(ii) CIT-vs-Saini Medical Store 276 ITR 79 (PH) (Page No 76-80 of paper book) wherein it was held that If there is a genuine and bona fidetransaction then the authority vested with the power to impose penalty has got discretionary power not to levy penalty. Inthis case, the court had accepted version given by the assessee that violation of the provisions of the Act was under a bona fide belief of the assessee and the same was not with any intention to avoid or evade the tax;.
(iii) Omec Engineers-v-CIT 294 ITR 599 (Jharkhand) (Page No 73-75 of paper book) wherein the Hon’ble high court, after considering the various decisions of SC held as under:
In the instant case, as noticed above, there is no finding of the assessing authority, the appellate authority or the Tribunal that the transaction made by the assessee in breach of the provisions of section 269SS was not a genuine transaction. On the contrary, the return filed by the assessee was accepted after scrutiny under section 143(3) of the Act. Further, there is no finding of the appellate authority that the transaction in breach of the aforesaid provisions made by the assesseewas mala fideand with the sole object to conceal the income . The authorities have proceeded on the basis that breach of condition provided under section 269SS of the Act shall lead to penal consequences. In our view, in the facts and circumstances of the case, the imposition of penalty merely on technical mistake committed by the assessee, which has not resulted in any loss of revenue, shall be harsh and cannot be sustained in law.
(iv) CIT-vs-Smt. Dimple Yadav 379 ITR 177 (Page No 68-72 of paper book) (All) wherein it was observed that object behind such legislation was to ensure that a tax payer was not allowed to give the false explanation for his unaccounted money. Thus, in order to curb the menace of black money, section 269SS was introduced in the Act by the legislature. It was further noted that in order to avoid undue hardship to the taxpayers, the provisions of section 273B was also introduced by the legislature.
The ignorance of law can be a reasonable casue as held by Bombay high court in the case of CIT Vs. Shell international (2005) 278 ITR 630 (Bombay ) (Page No 65-67 of paper book)
Referring to the observations of the Hon’ble Supreme Court in the case of MotiLalPadam pat Sugar mills , A coordinate bench of the Trinbunal in the case of Sudarshan Auto and General Finance Vs. CIT (60ITD 177 ), observd as follows “
The ignorance of the law may or may not constitute a valid excuse for justifying non-compliance with a provision of statute. It will depend upon the nature of the default. If it is merely a technical or venial breach, no penalty would be imposable because the levy of penalty under any statutory provision necessarily implies existence of some guilty intention on the part of the defaulter or the offender. In order to determine the existence or absence of any guilty intention on the part of the assessee, one will have to consider all the surrounding facts and circumstances. Whether by committing any default of non-compliance with a statutory provision of law, an assessee has derived any benefit, gain or advantage whether by such a default or noncompliance the assessee has defrauded the Revenue or has caused any loss to the Revenue. These are some of the factors which will have to be seriously considered before considering the fact as to whether the ignorance on the part of the assessee and his consultant can constitute a valid excuse or a reasonable cause for the purposes of s. 273B
The expression reasonable cause has to be considered pragmatically and if the facts of the present case are examined keeping the legislative spirit in mind, we find that there were enough circumstances to show that the assessee had acquired bonafide belief that its activities are at par with the bank.
The supreme Court of India laying down the law with reference to interpretation of the statutes held in Kehar Singh Vs. State (AIR 1988 SC 1889 ) (Page No 100 of paper book)-
We now do not look to the statues at present according to grammatical and ordinary sense of the word. We now look for the intention of the legislature or the purpose of the statute. First, we examine the words of the statute. If the words are precise and cover the situation in hand, we do not go further .We expound those words in the natural and ordinary sense of the words. But, if the words are ambiguous, uncertain or any doubt arises as to the terms employed, we deem it as our paramount duty to put upon the language of the legislature rational meaning. We examine the necessity which gave rise to the act. We will not view the provision as abstract principles separated from the motive force behind .we will consider the provision in the circumstances to which they own their origin.
The purpose and rationale behind the introduction of section 269SS was to curb the black money.
The purpose and rational has to be watched for introduction of section 269SS of the act not by its words and its grammatical meaning. In the case of the assessee in hand there is no generation of black money. .
The assessee proves the bonafide beyond the shadow of doubt. Once bonafide is proved .there remains is only procedural default which is of a venial nature. Reasonable cause means genuine belief based on reasonable grounds. The assessee was at the verge of death. Assessee wanted to sale the land by this way or that way. When buyer wanted to make payment in cash assessee had not denied as he was not aware of the newly inserted law w.e.f. 01.06.2015.
The circumstances under which the sales consideration was received in cash were not disputed. The assessee felt that the delay in receipt of payment may defeat the purpose. The purpose was not tax evasion. The assessee was not well and buyer wanted to make the payment in cash the assessee accepted the offer to receive the payment in cash. He did not want to defer the issue. He was not in a position to resist buyer to make the payment through banking channel as earlier there was sale purchase of lands in cash all around.
The background of the assessee is belonging to village and he is not an educated person. He was not aware of the new law. As earlier he used to purchase the property in cash in the same way he sold the land in cash. No one told him not to accept the payment in cash. Registering authority never told the assessee not to receive the payment in cash. If registrar is not known to the law and tax advisor is also not known to the law then how an uneducated person can be expected to know the law. It is prescribed under section 273B of the Act that penalty is not to be imposed on the assessee if he proves that there existed a reasonable cause for not complying with the provision.
Explaining the reasonable causes with the assessee and assessee was prevented by sufficient cause not to comply with the provision of law in strict compliance.
(a) The education of the assessee. The assessee is not an educated person. The nature of his income is small business and earning Agriculture income . He was not aware of the newly inserted law w.e.f. 01.06.2015. Not at all he was aware of the amendment. Earlier every sale and purchase of the lands were sold and purchased in cash to the maximum. Assessee could have accepted the payment through cheques but he was not aware of the law. He is law abiding citizen. He is regularly filing his ITR but truly, fairly he was not aware of the law. No one in the vicinity told assessee about the newly inserted law. Registrar never told assessee about the new law. The income tax consultant never told assessee about the law. He is not at all up to date on news papers and news channel. No information was with the assessee when he accepted the payment in cash.
(b) Health of the assessee .
The assessee was got operated in the month of July 2016 and he was undergone liver transplant. He was not in hope to recover from these severe surgery and acute ill health. He wanted to sale the land as earlier as possible. When seller desired to make the part payment in cash for a sum of Rs. 56,50,000/- he had not resisted to buyer for payment through cheques as he wanted to finalise the deal. He was not in hope to survive. Cash was needed in the family for his care in the family and for further purchase of the land in cash. He was not aware of the law. He used to make sales and purchase of Agricultural lands in cash earlier to this transaction. This made him to accept the offer in cash. He accepted to receive the payment in cash.
(c) General market conditions to receive the payment in cash.
Earlier to 01.06.2015 maximum agriculture lands rural or urban were sold and purchased in cash. Instances are numerous. Instances are with the assessee. There was not fear absolutely among the masses to make the payment in cash and receive the payment in cash. The same trend was followed by the assessee when he sold the land for a sum of Rs. 56,50,000/-. General awareness was not there regarding the change in law. Over the years people has come to know that law has changed.
(d) The land sold is agriculture land.
The income of the assessee is Agricultural income. Mainly assessee is an agriculturist. The main source of income is agriculture income. He did some other business but main source is agriculture income. Not thinking much he accepted the payment in cash. He never desired not to keep the stream of justice clear and pure. Justice demands fairness. Fairness itself is a flexible, pragmatic and relative, concept, and not a rigid, ritualistic or sophisticated abstraction. The prime object of law is to secure justice to the people. In view of this the legislature took proper safeguard under section 273B of the Act and penalty is not to be imposed on the assessee if he proves that there existed a reasonable cause for not complying with the provision of section 269SS of the Act.
CBDT’s Circular No. 387 also clarified that section 269SS were introduced with a view to countering the various devices adopted by the tax evaders for explaining their accounted cash found during the course of search or for introducing their unaccounted income in the form of loans and deposits and it was introduced for countering major economic evil of proliferation of black money, etc. In the instant case in hand, such facts do not appear as assessee was never a tax evader, or it never gave cooked up explanation before the Ld. AO, NFAC, New Delhi or manually before Ad CIT, Range –I , XXXXXX.
In the memorandum explaining the provisions of the Finance Bill, 1984, it was explained as follows
“Unaccounted cash found in the course of searches carried out by the IT department is often explained by tax payers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of accounts in the form of such loans and deposits, and tax payers are also able to get confirmatory letters form such persons in support of their explanation. Legislative intention in bringing section 269SS was to avoid certain circumstances of tax evasion whereby huge transactions are made outside the books of accounts by way of cash. As far as the case of the assessee is concerned, there is no case against the assessee that these transactions had anything to do with evasion of tax or concealment of income.
Provision of section 269SS were brought in the statute book to counter the evasion of tax in certain cases, as clearly stated in the heading of chapter XX-B which reads “requirement as to mode of acceptance, payment or repayment in certain cases to counteract evasion of tax”
The AO has given a categorical finding in the assessment order that the assessee’s contention was found correct with reference to the details filed in respect of sales of agriculture land and deduction taken u/s 54B of the Act. It was clear that the assessee had no intention to conceal any particulars of sale transactions. The return of the assessee was accepted by the AO while making assessment u/s 143(3) of the Act. The purpose of introducing section 269SS was to dampen the transaction in cash to introduce unaccounted transactions.
In the case of CIT Vs Balaji Traders (2008) 303 ITR 312 (Madras)
There is no revenue loss to exchequer,
Trasactions are genuine and not doubted.
Penalty was not sustainable.
In ITO Vs. Prabhu Lal Sahu (2006) 99 TTJ ( Jd.) it was held that assessee was not aware of provisions of sections 269SS and 269T His counsel did not apprise him about the provisions , No penalty u/s 271D shall be attracted .
Circular No. 387 dt. 6. 7.1984. It was stated that circular of the board was binding on the Income tax Authorities and violation of the same by the assessing authority was uncalled for.
The text of the Finance Minister’s speech clearly indicates that genuine loans / deposits were not covered under section 269SS / 269T of the Act. The text clearly gives a message that no hardship should take place in the genuine cases. The penalty is always for the purpose of bending the assessee and not for breaking the assessee. Any penalty which tends to break the assessee is draconian in nature which cannot be permitted by the courts.
Legislative intention in bringing section 269SS in the Income tax Act 1961 which reads “requirement as to mode of acceptance, payment or repayment in certain cases to counteract, evasion of tax. Legislative intention in bringing section 269SS in the IT act was to avoid certain circumstances of tax evasion, whereby huge transactions are made outside the books of accounts by way of cash. As far as the case of the assessee is concerned, there is no case against the assessee that these transactions had anything to do with evasion of tax or concealment of income.
Imposition of penalty in the given set of circumstances is not mandatory bus discretionary.
It is submitted that no penalty is otherwise levyable since the amount has already been surrendered as income and re-investment for purchase of agriculture lands already made and deduction u/s 54B taken and accepted in the assessment order.
After taking into consideration, the totality of circumstances, namely the bonafide belief of the assessee that the transactions were exempted from the requirements of section 269SS of the Act, there being no material to show that the transactions have been carried out with any intention to avoid or evade taxes, the assessee has been successful in showing that there was a reasonable cause for his failure to comply with the provisions of section 269SS of the Act. Assessee was under the bonafide belief that being an agriculturist and he can receive the payment in cash on sale of agriculture land. The assessee does not possess the necessary qualification as well as the provisions of the Income tax Act, that he has committed mistake under a bonafide belief. There was a widespread belief, even if erroneous belief that the provisions of section 269SS did not apply to the sale of Agriculture Land. An Affidavit is given to the effect that he was not aware of the law and no one told him about the law. The assessee has committed a lapse but there was a reasonable cause for committing that lapse.
Violation of principal of natural justice in the order.
The penalty order was passed by the Ld. JCIT, NFAC in violation of the principal of natural justice without granting to the assessee a fair, proper and meaningful opportunity to be heard by not providing him a draft order so that he may counter the objections of the Ld. JCIT, NFAC. The Ld JCIT, NFAC has not gone through the reply filed by the assessee earlier to faceless which was duly uploaded on the portal.
Penalty order is arbitrary and bad in law.
The penalty order is arbitrary and bad in law. The ld JCIT squarely rejected, without providing explanations, the various case laws from Hon’ble Supreme Court and Hon’ble High Courts.
No black money was generated through assessee on sale of agriculture land in cash
The Ld JCIT erred in law and in facts and circumstances of the case by not considering that no black money was generated in the cash transactions of the assessee. The central board of direct taxes (CBDT) released a circular No. 19/2015 on 27.05.2015 titled explanatory notes to the provisions of the Finance Act 2015 in which this amendment was explained with the preamble. In order to curb generation of black money in cash in immovable transactions. The CBDT circular clearly states that the purpose of the amendment to section 269SS was to curb black money. This was the real object and purpose of the enactment of amendment to section 269SS and the interpretation of this amendment must fall in line with the advancement of that object and purpose. The object and purpose was not to strike at honest and bonafide transactions. The fact that the cash transactions of the assessee did not generate any black money has been established during the assessment proceedings and this section 269SS is not applicable in this case. In the land mark judgement on 04.09.1981 by Hon’ble Supreme court in the case of K P Vergese Vs ITO 131 ITR 597, The Apex court concluded that the statute must be read applicable only to cases where apart from the first condition mentioned in the statute itself being established, the object and purpose as stated in the circular must also be satisfied as a necessary and distinct second condition.
No penalty to be imposed in case of bonafide belief coupled with genuineness of transactions and absence of any loss to exchequer.
The ld JCIT erred in law and facts and circumstances of the case by not considering the bonafide belief coupled with genuineness of transactions and absence of loss to the revenue constitutes grounds for reasonable cause under section 273B and this precludes penalty under section 271D
Being a non financial person, the assessee being incognizant of this nascent amendment to section 269SS, the cash receipts were accepted under banafide belief and not deliberately in conscious disregard of the law. The cash transactions were genuine, duly recorded in the sale deeds as sales consideration and registered before the sub registrar. There was no loss to the exchequer, no prejudice was done to the revenue all sales consideration was declared during the course of assessment u/s 143(3) of the act . There arose no capital gains tax as assessee claimed deduction u/s 54B of the act. The assessment was made at zero tax liability. In the Choudhary Co. Bhujiawala 89TTJ NULL 357, the Hon’ble Rajasthan High Court made the following observation.
Bona fide belief coupled with the fact that all transactions have been accepted by the department as genuine constitute a reasonable cause rendering the said default on the part of the assessee as merely of a technical or venial in nature and no penalty in such case can be levied under section 271D in view of section 273B.
No penalty to be imposed in case of bonafide belief coupled with genuineness of transactions and absence of any loss to exchequer.
In the Sudarshan Auto and General Finance Vs. Commissioner of Income tax case (1998) 60 TTJ Del 567, The Hon’ble Delhi High Court made the following observation.
It will depend on the nature of the default. If it is merely a technical or venial breach , no penalty would be imposable because the levy of penalty under any statutory provision necessarily implies existence of some guilty intention on the part of the defaulter or non compliance the assessee has defrauded the revenue or has caused any loss to the revenue .
At the time of assessment u/s 143(3) complete cash flow statement was submitted with the AO which was prepared out of the books of the accounts maintained by the assessee. The correctness of the same was examined by the AO from the records produced by assessee. He also examined the utilization of cash on sale of Agriculture Land. On receiving cash of Rs. 56,50,000/- it was deposited with the banks of the assessee and used for purchase of Agriculture Lands. Mentioned in the Assessment order Dt. 28.12.2019. As such no transaction was beyond the books.
Without prejudice to the above submissions and grounds, the assessee submits that that the penalty imposed is unjustifiably harsh and the same may please be deleted as there is no generation of black money and there was no evasion of tax out of sale of agricultural land by the assessee during the F.Y.2016-17. The Ld.CIT (A), NFAC is requested to give an opportunity to the assessee for any further evidence or explanation from the assessee and assessee requests for a virtual hearing.
In view of the above discussion, it is prayed that the impugned order of the penalty u/s 271D be quashed and consequently, appeal of the appellant be allowed.
Paper book containing 100 pages is enclosed including additional evidences, application u/r 46A of the Income Tax Rules, 1962 and some court judgements.
Thanks with Regards
XXXXXX
(Counsel of the Assessee)
Dated: 29.05.2022
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