Penalty u/s 271D Imposed for Cash Transaction in Wrong AY: ITAT Directs AO to Delete Penalty [Read Order]

The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) directed the deletion of penalty imposed under Section 271D of Income Tax Act,1961, holding that the cash transaction in question pertained to the wrong assessment year (AY)

Jogendra Kumar Panda, appellant-assessee, through the Authorised Representative (AR), submitted that he had sold land for ₹39,20,000 in cash through a sale deed dated 23.03.2016. The Assessing Officer(AO) examined and accepted the transaction while completing the assessment.

However, for AY 2017-18, the JCIT, initiated penalty proceedings under Section 271D for alleged violation of Section 269SS due to the cash transaction. The AR argued that the sale took place in AY 2016-17 and no cash transaction occurred in AY 2017-18, so the penalty levied under Section 271D was liable to be quashed.

The Department Counsel clarified that the reference to AY 2017-18 was a typographical error and the correct year was AY 2016-17. It was further submitted that this was only a technical issue and that there was a clear violation of Section 269SS of the Act.

The two member bench comprising George Mathan (Judicial Member) and Rajesh Kumar (Accountant Member) noted that the land was sold through a sale deed dated 23.03.2016, which related to AY 2016-17.

It observed that although the AO referred to the cash receipt of ₹39,20,000 in the assessment for AY 2017-18 and treated it as a violation of Section 269SS, no addition was made. Since the transaction belonged to AY 2016-17, any violation should have been considered in that year. As no such action was taken, the tribunal held that the penalty for AY 2017-18 was not justified and directed the AO to delete it.

Accordingly the appeal was allowed.

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