Indian Kanoon - Search engine for Indian Law

1. "The penalty order dated 17.03.2022 levying penalty of Rs.63,74,600 under section 271D of the Act for the alleged violation of section 269SS of the Act, and the order of Id.

CIT(A)/NFAC sustaining levy of penalty are illegal and bad in law.

ITA.No.2309/Hyd./2025

2. Both the authorities below failed to appreciate that there is no finding in the assessment order nor there is any satisfaction recorded by the AO in the assessment order in respect of the alleged violation of provisions of section 269SS of the Act, and therefore, the initiation of penalty, levy of penalty and sustaining such penalty are illegal and unsustainable in law and have to be set aside.

"12. The proceedings under Section 271D of the Act were initiated by the Joint Commissioner on the ground that during the assessment year, the assessee had accepted an amount of Rs.40,00,000/- in cash from its customers on sale of plots/residential house as advance/initial payment. The details of cash received were enumerated in the form of a chart, which showed that such amounts were received from various persons exceeding Rs.20,000/- during the assessment year in violation of Section 269SS of the Act. The assessee took the plea that the assessee had sold its land to various persons who are farmers. They were unable to make the payment in cheque and gave the money in cash. The accountant unknowingly collected cash and deposited in the bank. The amount collected from its customers was below Rs.2 lakhs from every individual. The deposited amount is in the form of cash receipt for sale of individual plots. According to the assessee, under Section 269ST of the Act, a person should not receive an amount of Rs.2 lakhs or more except by way of an account payee cheque, bank draft or electronic clearing system through a bank account or any other electronic mode in respect of a single transaction. Therefore, the question of ITA.No.2309/Hyd./2025 applying Section 269SS and levying the penalty under Section 271D of the Act does not arise. The amounts have been treated as cash receipts and deposited in bank. He made a request to drop the penalty proceedings as it is within the purview of Section 269ST of the Act.

In this case, the assessee sold the immovable property for a total consideration of Rs 43,50,000/-. The assessee accepted the entire amount of Rs.43,50,000/- in cash in contravention to the provision of Section 269SS of the Income tax Act, 1961 which attracts penalty u/s 271D.

Despite being given sufficient opportunity, there was no response from the assessee to justify receipt of cash.

Keeping in view the totality of the facts and circumstances of the case, I hereby levy a penalty of Rs.43,50,000/- u/s 271D of the I.T. Act for the A. Yr.2017-18 for violating the provisions of section 269SS of the I.T. Act i.e., accepting cash of Rs.43,50,000/- for sale of immovable property.

22. From an analysis of Sections 271D and 271E of the Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attracted on a person accepting loan or deposit or specified sum in contravention of Section 269SS of the Act, penalty under Section 271E of the Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T.

Therefore, in a way, the two provisions are complimentary to each other.