Hari Krishna Leela Prasad Vs ITO (ITAT Hyderabad)
Penalty u/s 271D not sustainable for cash consideration received under pre-amendment agreement – Relief granted on reasonable cause
The Hyderabad Bench of the ITAT, after carefully considering the facts and rival submissions, held that the penalty levied under Section 271D of the Income Tax Act, 1961 for alleged contravention of Section 269SS was not sustainable on merits. The Tribunal noted that the assessee had entered into an agreement for sale of immovable property on 15.05.2015 and had received an advance of Rs. 15,00,000 in cash prior to insertion of the definition of “specified sum” in Section 269SS with effect from 01.06.2015. Subsequently, the sale deed was executed on 11.04.2016 and the balance consideration of Rs. 15,78,000 was received in cash in terms of the contractual obligation, in the presence of witnesses at the time of registration.
The Tribunal observed that the assessee had duly disclosed the entire sale consideration in the return of income and paid the applicable taxes, and there was no dispute regarding the genuineness of the transaction. It was further held that, considering the agreement was executed prior to the amendment to Section 269SS and the receipt of cash was in accordance with the terms of the agreement, the assessee was under a bona fide belief that the provisions of Section 269SS were not attracted. In such circumstances, the Tribunal concluded that there existed a reasonable cause within the meaning of Section 273B of the Act.
Accordingly, the ITAT held that the Assessing Officer had erred in levying penalty under Section 271D for contravention of Section 269SS and directed deletion of the penalty of Rs. 15,78,000. Since relief was granted to the assessee on merits, the additional legal grounds challenging the validity of initiation of penalty proceedings were held to be academic in nature. The appeal filed by the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
