Receiver of Sum in Cash Liable u/s 269ST of Income Tax Act: ITAT Quashes Proceedings against Investor for Investment made in Cash [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore bench, while quashing a revisional proceeding, has held that the provisions of section 269ST of the Income Tax Act, 1961 are applicable on the person who receives the sum in cash.

The assessee is a partnership firm and filed the return of income for assessment year under consideration on 29.11.2018 declaring an income of Rs.7,58,25,710/-. The proceedings under section 263 of the Act was initiated against the assessee mainly on the ground that asum of Rs.4.50 crores was invested by assessee in cash that has not been recorded in the books of account.

Against the addition, the assessee contended that provisions of Section 269ST of the Act is applicable only to the receiver of the amount and not the payer. It was also contended that the assessee has paid money for the purpose of investment which is not disputed and therefore the provisions of Section 269ST of the Act is not applicable.

A bench of Shri N.V. Vasudevan, Vice President and Ms. Padmavathy S (Accountant Member) has held that “with regard to whether the provisions of Section 269ST of the Act is applicable in the payments made to the extent of Rs. 4.5 crores in cash, learned A.R. submitted that provisions of Section 269ST of the Act is applicable only to the receiver of the amount and not the payer. In the given case it is submitted that the assessee has paid money for the purpose of investment which is not disputed and therefore the provisions of Section 269ST of the Act is not applicable. Further the learned A.R. drew our attention to para 5.8 of the assessment order wherein the AO has taken note of the fact that the impugned amount of Rs.4.5crores is already disclosed as undisclosed income and assessed the same accordingly in AY 2017-18. Therefore it is submitted that there is no error in the order of assessment of the AO warranting revision under Section 263 of the Act.”

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