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Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals)-30, New Delhi, dated 25.09.2025 arising out of Penalty Order dated 26.07.2024 passed by Additional Commissioner of Income Tax, Central Range-1, New Delhi, under section u/s 271D of the Act for the Assessment Year 2019-20. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The Department has raised the following grounds of appeal:
1)Whether on the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the penalty u/s 271D amounting to Rs.1,50,17,400/- on the ground that quantum addition has been deleted by the ITAT, disregarding the fact that penalty u/s 271D is independent of quantum addition in the assessment order as elaborated in the CBDT circular No. 10/2016 dated 26.04.2016 and circular no. 09/DV/2016 dated 26.04.2016.
2)Whether on the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the penalty u/s 271D amounting to Rs. 1,50,17,400/- on the ground that quantum addition has been deleted by the ITAT, disregarding the fact that the quantum addition was deleted on technical ground of assumption of jurisdiction u/s153C and no findings were made in respect of transactions relating to imposition of penalty u/s 271D.
The only issue emanating from the above grounds of appeal raised by the Revenue are regarding the imposition of penalty u/s 271D by the ld. Assessing Officer and its deletion by the ld. CIT(A). Before proceeding further, we deem it is necessary to briefly examine the factual matrix of this case. The assessee had filed its Return of Income on 02.10.2019 declaring income of Rs.25,71,770/-. The ld. Assessing Officer noted that search u/s 132 was conducted on 17.08.2020 upon one Shri Pranjil Batra leading to recovery and seizure of incriminating documents. The impugned documents included an agreement dated 06.08.2018 forming part of Annexure-10 of the seized documents. It transpired therefrom that the assessee had purchased property bearing no.61 in Vijay Block of Lakshmi Nagar, Delhi, comprising land admeasuring 200Sq. Yd. from Shri Pranjil Batra and his wife Poonam Batra, As per the impugned document, the assessee along with two co-owners, Shri Pradeep Singh and Smt. Renu Singh had received cash amount of Rs.90 lakhs. The total consideration of the property was fixed at Rs.4,49,50,000/-.Perusal of the same Annexure-10 alluded towards a sale deed 06.09.2018 for the same property according to which the same property was sold for a sum of Rs.1,49,00,000/-. The ld. Assessing Officer Noted that the cheque numbers in the two agreements were same. The ld. Assessing Officer therefore concluded that the purchase price was Rs.4.49 crores out of which Rs.1.49 crores was transacted through bank and balance Rs.3 Crores by cash. As the appellant assessee was 50% owner, the Ld. Assessing Officer held him to the recipient of cash of Rs.1,50,17,400/-. Invoking the provision of section 269SS of the Act, penalty proceedings u/s 271D were initiated. In first appeal, the ld CIT(A) confirmed the action of the Ld Assessing Officer . In appeal a coordinate bench of this tribunal in ITA No.435/Del/2025 deleted the impugned addition by relying upon the fact that this Tribunal in the case of other co-owners Shri Pradeep Singh and Smt. Renu Singh, has quashed the assessment on legal grounds of jurisdictional insufficiency. Meanwhile, the ld. Assessing Officer had imposed a penalty u/s 271D of Rs.1,50,17,400/- upon the assessee. In view of the tribunal order, the Ld CIT(A) deleted the penalty. The appellant revenue is contesting the action of the LD CIT(A).
The ld. CIT-DR, Shri Mahesh Kumar, placed reliance upon the order of the lower authorities.
It was contended that penalty u/s 271D can be levied even if there is no quantum and that there is evidence of cash received by the assessee on records.
The ld. Counsel for the assessee reiterated the arguments taken before the ld. First Appellate Authority and submitted that the Tribunal has quashed the assessment and therefore the penalty does not survive.
We have heard rival submissions in the light of material placed on record. As regards, the issue of ld. DR that the penalty proceedings u/s 271D are independent, the matter has been examined at length. On the issue as to whether penalty proceedings for violation of provisions of section 269SS, 269T r.w.s. 271D and 271E, etc. are independent of assessment proceeding or not, we have noted that the issue had come up for consideration before the Hon’ble Delhi High Court which resolved the controversy in its decision Commissioner of Income Tax v. Worldwide Township Projects Ltd. The issue that arose was as to whether the penalty under Section 271D is independent of the assessment or not. The issue in particular was regarding the compliance to be made to timelines for passing of a penalty order u/s 275 of the Act. In these cases, the penalty under Section 271D was initiated at the time of assessment but was kept in abeyance till the disposal of appeal on assessment order by the appellate authority as per section 275(1)(a). The penalty was then imposed after receiving the appellate order in accordance to time limit under Section 275(1)(a). The assessee argued that penalty u/s 271D has no bearing on assessment, and therefore penalty can be levied only within the financial year or 6 months from the end of month in which penalty was initiated whichever is later as per section 275(1)(a). The penalty therefore has been argued to be barred by limitation. This issue got resolved by the decision of Honorable Delhi High Court by affirming the view of the Rajasthan High Court in the case of Commissioner of Income-Tax v. Hissaria Bros.(2007) 291 ITR 244 (Raj.) holding as under:
"The expression other relevant thing used in Section 275(1)(a) and clause (b) of Sub-section (1) of section 275 is significantly missing from clause (c) of section 275(1) to make out this distinction very clear.
We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under sections 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under sections 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, clause (a) of sub-section (1) of section 275 cannot be attracted to such proceedings. If that were not so clause (c) of section 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of clause (c) would arise."
Coming to the factual matrix of the case, we have noted that the case of the Revenue is not favourably served even considering the above judicial precedents. We have noted that the addition made by the ld. Assessing Officer of Rs.1,50,17,400/- made by the ld. Assessing Officer as representing cash receipt is not based upon any cogent documents but upon a conjecture drawn by the ld Assessing Officer. Admittedly, the Assessing Officer has only found a document indicating cash receipt of some Rs.90 lakhs of which assessee’s share was only Rs.45 lakhs. Thus, seen the addition made by the ld. Assessing Officer invoking provisions of section 269SS does not rest on firm footing so as to attract penalty provisions of section 269SS. The revenue has not placed on record any demonstrative evidence to allude real cash transactions. Accordingly, as the Revenue’s case has failed on this basic premise of availability of cash transaction so as to invoke provisions of section 269SS r.w.s. provisions of section 269SS, we are of the considered view that no case of any penalty is made out in assessee’s case. We therefore confirm the order of the ld. CIT(A) and dismiss the grounds of appeal raised by the appellant revenue.
In the result, the appeal of the Revenue is dismissed.