The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has upheld the penalty under Section 271D of the Income Tax Act 1961 on contravention of Section 269SS for sale of property for Hindu Undivided Family.
Siddha Chetty Natarajan, during the financial year 2016-17 relevant to assessment year 2017-18, the assessee has received cash on sale of immovable property from M. Gomathi. Since, the assessee had violated provisions of section 269SS of the Income-tax Act, 1961, the AO issued a show cause notice as to why penalty under Section 271D of the Act could not be levied.
The assessee submitted that the property had been held in the joint name of HUF and his wife with 50% of share. The HUF had declared rental income from said property and also declared capital gain on sale of property. Therefore, penalty u/s. 271D of the Act could not be levied in the hands of the individual. The AO, not convinced with the explanation, imposed a penalty under Section 271D of the Act.
271D. [(1)] deals with penalty imposed which is equal to amount of loan or deposited taken If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS
As per Section 269SS, any deposit or loan more than 20000 should not be accepted from any person other than by an account payee bank draft, account payee cheque, or through an electronic clearing system via bank account.
V.S. Jayakumar, on behalf of the assessee submitted that, the assessee had filed necessary evidences including ITR returns filed by the HUF to prove that property had been purchased by HUF in the year 2013 and also relevant capital gains on sale of property had been offered by the HUF only. He further submitted that the assessee had not received the amount in violation of provisions of section 269SS of the Act.
D. Hema Bhupal, on behalf of the revenue submitted that,as per sale deed executed by the assessee, the assessee had executed said sale in his individual capacity along with his wife. Further, when the property was purchased in the year 2013, the assessee had given his individual PAN number.
The Division Bench of Mahavir Singh, (Vice President) and G. Manjunatha, (Accountant Member) dismissed the appeal filed by the assessee observing that, “As regards, the claim of the assessee that property was owned by HUF, if you go by date of generating PAN number for HUF, the assessee HUF has generated PAN number on 03.03.2017 much after the date of sale of asset. Further, the appellant has filed a return for HUF capacity on 30.03.2018. In our considered view, the documents relied upon by the assessee can only be considered as an afterthought to circumvent penalty proceedings initiated in his individual capacity.”
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