Section 269SS not applicable when Substantial Sale Consideration of Immovable property is evidenced by registered agreement: ITAT deletes Penalty u/s 271D [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that Sale transaction evidenced by registered agreement prevents implementation of Section 269SS from curbing black money

The assessee sold certain property for Rs.50 Lacs. The consideration of Rs.45 Lacs was received by cheque whereas the balance consideration of Rs.5 Lacs was received in cash. Noticing the violation of the provisions of Sec.269SS,  AO invoked penalty provisions of Sec.271D. The extant provisions provide for levy of penalty equal to the amount of loan or deposit or specified sum so taken or accepted. Accordingly, impugned penalty of Rs.5 Lacs was levied by  AO Upon further appeal,  CIT(A) confirmed the penalty. Aggrieved as aforesaid, the assessee appealed before the tribunal.

The tribunal noted that the Explanatory Notes to the Finance Act, 2015, enlarging the scope of Sec.269SS, clearly provide that in order to curb generation of black money by way of dealings in cash in immovable property transactions, Section 269SS of the Income tax Act has been amended to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property (specified sum) otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.

Very clearly, the intention of the amendment is to include sale consideration also arising out of immovable property within the ambit of Sec.269SS. This argument raised by  AR was rejected.

Proceeding further, from the facts, it emerges that the assessee has sold property for sale consideration of Rs.50 lacs out of which substantial sale consideration to the extent of Rs.45 Lacs has been received in Cheques whereas only a small sale consideration of Rs.5 Lacs has been received in cash. The sale transaction is duly evidenced by the registered agreement / deed.

The two member bench consisting of V. Durga Rao (Judicial member) and Manoj Kumar Aggarwal (Accountant member) held that the provisions of Sec.269SS are mainly to curb generation of black money by way of dealings in cash in immovable property transactions which is absence in the present case, we would hold that it is not a fit case for levy of impugned penalty. Therefore the addition was deleted and the appeal was allowed.

To Read the full text of the Order CLICK HERE

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