The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, clarified that where the taxpayer has received cash towards the sale of immovable property, and the agreement to sell was entered into before the amendment to Section 269SS of the Income Tax Act, then there existed reasonable cause under Section 273B, warranting no levy of penalty under Section 271D.
The Tribunal has given thoughtful consideration to the reasons given by the Assessing Officer to impose penalty under section 271D in light of various arguments of the appellant and does not subscribe to the reasons given by the Assessing Officer for the simple reason that, the appellant had entered into agreement for sale of property and had also received Rs.15 lakhs before the amendment came to provisions of section 269SS, by insertion of ‘specified sum’ which includes any amount received towards sale of property whether the transactions takes place or not.
In the instant case, there is no dispute with regard to the fact that, the appellant had entered into an agreement for sale of property and also received a sum of Rs.15 lakhs advance in cash and finally executed the sale deed in favour of the purchaser, and received the balance consideration of Rs.15.78 lakhs in cash in the presence of witnesses at the time of registration of the property before the Sub-Registrar.
The Tribunal found that the appellant had also declared the sale consideration and paid the relevant taxes in the return of income filed for the relevant assessment year. Since the appellant has received the consideration in cash as per the contractual agreement entered into with the purchaser, and the said agreement was executed before the amendment to section 269SS, there exists a reasonable cause for accepting the consideration in cash.
The Division Bench comprising Ravish Sood (Judicial Member) and G. Manjunatha (Accountant Member) observed that the term ‘specified sum’ referred to under Section 269SS includes any sum of money receivable, whether as an advance or otherwise, in relation to the transfer of any immovable property, whether or not the transfer takes place.
The Bench found that the appellant was under the bona fide belief that, since the transactions involving the sale of property are not coming within the ambit of section 269SS, the appellant has agreed to accept the remaining amount of consideration for the sale of property in cash. Therefore, the Bench concluded that there is a reasonable cause for the appellant to accept the cash consideration for the sale of property, and the case of the appellant falls within the ambit of section 273B.
Briefly, the appellant, an individual proprietor engaged in contract works, entered into an agreement to sell immovable property, and received a cash advance of Rs. 15 lacs. The sale deed was executed, and the balance consideration of Rs. 15.78 lacs was received in cash at the time of registration. The sale consideration was disclosed in the return, and the due taxes were paid.
Later, a show-cause notice was issued by the Joint Commissioner, and penalty proceedings under Section 271D were initiated. The AO held that, post June 01, 2015, Section 269SS covers any ‘specified sum’ received in relation to the transfer of immovable property and levied a penalty of Rs. 15.78 lacs for accepting cash towards sale consideration.
Appearances:
CA C. Maheshwar Reddy, for the Appellant/ Taxpayer
Dr Sachin Kumar, for the Respondent/ Revenue
