Aryanparv Realty LLP Vs ITO (ITAT Ahmedabad)
Separate Cash Contributions from Same Partner Cannot Be Automatically Clubbed: ITAT Cancels Penalty
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) cancelled a ₹2,08,000 penalty under Section 271DA, holding that two cash contributions received from a partner on different dates could not be aggregated merely because both were credited to his capital account.
In Aryanparv Realty LLP vs. ITO, Ward-3(3)(1), Ahmedabad, ITA No. 910/AHD/2026, concerning Assessment Year 2022-23, the Tribunal found no material establishing that the receipts represented a single transaction or transactions relating to one event or occasion.
Accountant Member Narendra Prasad Sinha and Judicial Member Sanjay Kumar pronounced the order on 14 October 2026, allowing the LLP’s appeal.
Scrutiny Reveals Cash Capital Contributions
The assessee filed a belated return under Section 139(4), declaring total income of ₹6,000.
Its case was selected for scrutiny to examine high liabilities compared with the low income or receipts disclosed.
During assessment, the Assessing Officer noticed that the LLP had received ₹2,08,000 in cash from Naimish Yadukant Patel, one of its partners.
He considered the receipt contrary to Section 269ST and initiated penalty proceedings while completing assessment under Section 143(3) read with Section 144B on 28 March 2024.
A separate order dated 27 September 2024 imposed a penalty equal to the alleged contravening receipts.
CIT(A) Sustains ₹2.08 Lakh Penalty
The LLP challenged the penalty before the CIT(A)/NFAC.
The first appellate authority dismissed the appeal through an order dated 5 January 2026, leaving the ₹2,08,000 levy intact.
Before the Tribunal, the assessee argued that the authorities had incorrectly combined two distinct receipts without establishing the statutory conditions for aggregation.
Its representative submitted that the cash was received on separate dates and that neither receipt individually reached ₹2 lakh.
The Revenue supported the orders of the lower authorities. The Tribunal therefore examined the partner’s ledger and the specific categories of receipts covered by Section 269ST.
Ledger Records Receipts Fifteen Days Apart
The assessee’s representative explained that the partner had introduced total capital of ₹2,76,16,530 during the year.
The relevant ledger recorded ₹1,99,000 in cash on 1 November 2021, followed by a ₹25,53,653 RTGS transfer on 2 November 2021.
A further ₹9,000 cash contribution was received on 16 November 2021.
Thus, the two disputed cash receipts occurred 15 days apart. Their combined total was ₹2,08,000, but no single day’s cash receipt from the partner reached the threshold.
The representative also maintained that the partner’s identity and the source of the money were explained.
Three Statutory Categories Require Examination
The Tribunal explained that Section 269ST restricts receipts of ₹2 lakh or more otherwise than through prescribed banking or electronic modes where a receipt falls within specified categories.
Those categories concern amounts received in aggregate from a person in a single day, in respect of a single transaction, or in respect of transactions relating to one event or occasion from a person.
A contravention may attract penalty under Section 271DA, subject to the applicable statutory requirements.
The inquiry therefore could not end with the observation that total cash received from one partner during the year exceeded ₹2 lakh.
Single-Day Threshold Not Breached
Examining the ledger reproduced in the assessment order, the Tribunal found that the ₹1,99,000 and ₹9,000 receipts were made on different dates.
Neither receipt, considered individually, reached ₹2 lakh. The interval between them also meant they could not be treated as cash received from the partner on a single day.
The intervening RTGS entry formed part of the recorded sequence but did not convert the two cash contributions into one same-day receipt.
Accordingly, the factual basis required for aggregation under the single-day category was absent.
Common Capital Account Does Not Prove Single Transaction
The Tribunal then examined whether the other aggregation categories applied.
It found no material establishing that the two cash receipts formed part of one transaction or related to one event or occasion.
The fact that the amounts came from the same partner towards the LLP’s capital did not, by itself, establish either connection.
The authorities therefore could not aggregate the contributions solely by reference to the contributor’s identity and the accounting head used.
They first had to demonstrate that the receipts fell within a specific category prescribed by Section 269ST. The record did not establish that requirement.
Penalty Cancelled on Facts
The Tribunal held that the alleged contravention had not been established and cancelled the penalty order dated 27 September 2024.
The appeal was allowed on merits, rather than remanded for another inquiry.
The ruling does not create a blanket exemption for cash introduced by partners or establish that receipts on different dates can never be aggregated.
Its conclusion rests on the absence of evidence linking these particular receipts to a single transaction, event or occasion, together with the fact that the single-day threshold was not crossed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 05.01.2026 for the Assessment Year (A.Y.) 2022-23 in the proceeding u/s 271DA of the Income Tax Act [hereinafter referred as “the Act”].
2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2022-23 u/s. 139(4) of the Act declaring total income of Rs.6,000/-. The case of the assessee was selected for scrutiny to examine the high liabilities as compared to low income/receipt declared in the ITR. In the course of assessment the AO noticed that the assessee had received a sum of Rs. 2,08,000/- in cash from Shri Naimish Yadukant Patel, one of the partner, which was in contravention to provision to section 269ST of the Act. Therefore, penalty proceeding u/s. 271DA of the Act was initiated by the AO while completing the assessment u/s. 143(3) of the Act r.w.s 144B of the Act on 28.03.2024. Thereafter, a separate penalty order u/s. 271DA of the Act was passed on 27.09.2024 imposing penalty of Rs. 2,08,000/- on the assessee.
3. Aggrieved with the penalty order, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee dismissed.
4. Now, the assessee in second appeal before us. The following grounds have been taken in this appeal:
1. The Ld. CIT(A) has grossly erred in law and on the facts in upholding the decision of Ld. AO in imposing penalty of Rs. 2,08,000/- u/s. 271DA of the IT Act 1961.
2. The appellant reserves the right to add alter amend or modify any of the grounds of appeal during the course of the appellate proceedings.
5. Ms. Ishika Jain, the Ld. AR of the assessee submitted that the provision of section 271DA of the Act was attracted only in a case where an amount of Rs. 2,00,000/- or more was received in cash in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion. She explained that this condition was not fulfilled in the present case. The Ld. AR further submitted that Shri Naimish Yadukant Patel was a partner and had introduced capital of Rs.2,76,16,530/- during the year. As per the confirmation of account, duly reproduced in the assessment order, a sum of Rs.1,99,000/- only was paid in cash on 01.11.2021. Thereafter, there was transfer of Rs.25,53,653/- on 02.11.2021 through RTGS. Subsequently, another cash payment of Rs. 9,000/- was made on 16.11.2021. Thus, there was no payment of Rs. 2,00,000/- or more in aggregate on a single day. The Ld. AR further submitted that the identity of the partner was undisputed and the source of the money was duly explained which was credited to partner’s capital account. Under the circumstances, the imposition of penalty u/s. 271DA of the Act was not called for.
6. Per contra, Ms. Kalpana Singh, the Ld. Sr-DR supported the order of the lower authorities.
7. We have considered the rival submissions and perused the material available on record. The issue for consideration is whether the cash contributions made by the partner on different dates attracted the provisions of section 269ST of the Act, thereby warranting the imposition of penalty u/s 271DA of the Act. Section 269ST of the Act prohibits the receipt of an amount of Rs. 2,00,000/- or more otherwise than through the prescribed banking or electronic modes, where such receipt falls within any of the following categories: (i) in aggregate from a person in a single day; (ii) in respect of a single transaction; or (iii) in respect of transactions relating to one event or occasion from a person. A contravention of this provision may attract penalty under section 271DA of the Act, subject to the applicable statutory conditions. In the present case, the penalty of Rs.2,08,000/- has been imposed by aggregating two cash contributions of Rs. 1,99,000/- and Rs. 9,000/- received on 01.11.2021 and 16.11.2021, respectively. The ledger account of the partner, as reproduced in the assessment order, records a cash contribution of Rs. 1,99,000/- on 01.11.2021, a transfer of Rs. 25,53,653/- through RTGS on 02.11.2021, and a further cash contribution of Rs. 9,000/- on 16.11.2021. It is evident from the above entries that the two cash contributions were received on different dates, separated by a period of fifteen days. Neither cash receipt, considered individually, reached the threshold of Rs. 2,00,000/-. Further, on the facts recorded in the assessment order, there is no material to establish that the two cash receipts represented amounts received in respect of a single transaction or transactions relating to one event or occasion within the meaning of section 269ST of the Act. The mere fact that both amounts were contributed by the same partner towards the firm’s capital does not, by itself, establish that the receipts constituted a single transaction or related to one event or occasion for the purposes of the said provision. In these circumstances, the aggregation of the two cash contributions merely because they were received from the same partner cannot be sustained without establishing that the receipts fall within one of the specific categories prescribed under section 269ST of the Act. Since the material on record does not establish such a contravention, the levy of penalty under section 271DA of the Act is not justified. Accordingly, the penalty order dated 27.09.2024 passed under section 271DA of the Act is cancelled, and the assessee’s appeal is allowed.
8. In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 14/10/2026 at Ahmedabad.
