Rajan Singh vs ITO, Ward 43 (1)

PER S. RIFAUR RAHMAN, AM :

This appeal is filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)] dated 05.12.2025 for the Assessment Year 2017-18 raising following grounds of appeal :-

Brief facts of the case are, as per the information available with Income Tax Department, the assessee has sold immovable property i.e. 462/34, Onkar Nagar, Tri Nagar, Delhi vide sale deed dated 21.04.2016 to joint buyer Shri Naseeb Alam and Irshad Ali for a total sale consideration of Rs.9,00,000./-. AO observed that on perusal of sale deed, it has been noticed that the assessee had received whole amount of Rs.9,00,000/- total sale consideration in cash which is in violation of provision of section 269SS of the Income-tax Act, 1961 (for short ‘the Act’). Hence, the penalty proceedings under section 274 r.w.s.271D of the Act were attracted of the Act and the assessee accordingly issued a show cause notice u/s. 271D of the Act to the assessee on 15.05.2023 and duly served upon the assessee through e-filling portal and on registered email id for requiring the assessee to explain as to why penalty on him should not be made under section 271D of the Act in contravention of the provisions of section 269SS of the Act. Assessee was provided several opportunities and details of which are given at pages 1 & 2 of the 271D order. During penalty proceedings, the assessee has made submissions dated 05.10.2023 and 13.10.2023 wherein the assessee has stated that he does not have any documents and furnished copy of bank statement, however, it is not related to the cash transaction. AO observed that as the assessee is non-responsive, the case was referred to Verification Unit and the same has submitted a report as per which the Inspector has visited the address given by the assessee, as mentioned in the show cause notice, however, he could not serve the notice and nobody was there. Hence, he has served the letter/notice to the assessee by affixture. Further, the Verification Unit has sent the notice/letter to the assessee by Speed post. However, on verification of speed post consignment track, it is seen that the letter was not delivered due to non availability of addressee (assessee). Hence, he observed that it is clear that the assessee has not updated his latest addressee on e-filing portal as well as intimated to the Department. However, it is noticed that the assessee has responded to the show cause notices afterwards.

Further the assessee submitted that he does not have any document related to the sale of immovable property. AO considered the reply but found not to be acceptable that the assessee has sold aforesaid immovable property to joint buyer Sh. Naseeb Alam and Irshad Ali for total sale consideration of Rs.9,00,000./-. Further on perusal of sale deed, it was noticed that the assessee had received total sale consideration of Rs.9,00,000/- in cash which is in violation of provision of section 269SS of the Act. AO observed that the assessee accepted specified sums being consideration amount against sale of property in cash in excess of Rs.20,000 or more i.e. specified sums were accepted by the assessee otherwise than by account payee cheque, account payee draft, means of electronic clearing system through a bank account or means of such other prescribed electronic mode as mandated in section 269SS of the Act. Such mode of accepting cash clearly violates the provisions of section 269SS of the Act. The assessee as well as purchaser both have banking facilities. The assessee in his reply failed to explain with sufficient documentary evidences justifying that the assessee was prevented by sufficient and reasonable cause from accepting the specified sums of Rs.9,00,000/- through account payee cheque, account payee draft, means of electronic clearing system through a bank account or means of such other prescribed electronic mode as mandated in section 269SS of the Act.

During the penalty proceeding, AO provided an opportunity to the assessee to explain with supporting documentary evidences and the reasonable cause for accepting the specified sum of Rs.9,00,000/- in cash in contravention of provisions of section 26SS of the Act. Moreover, the assessee has not explained with supporting documentary evidences, the circumstances under which the assessee was compelled to accept specified sums in cash despite there being several other modes of accepting the same through an account payee cheque, account payee draft, or means of electronic clearing system through a bank account. AO further observed that it should be proved that there existed reasonable and acceptable cause for not accepting loans or deposits through crossed cheques or demand drafts; mere proof regarding genuineness of transaction or intention in accepting amounts in cash or that there was no attempt to induct black money into business, etc., cannot be considered as a reasonable cause or as compelling circumstances provided under section 273B to avoid penal action under section 271D of the Income Tax Act. The AO discussed in details the provisions of section 273B/271D/269SS of the Act in his order. Hence, the AO held that consideration received of Rs.9,00,000/- in cash from purchaser of property during the AY 2017-18 on account of sale of immovable property was in contravention of the provisions of section 269SS of the Act in exceeding sum of Rs.20,000/- and thus, imposed penalty proceedings under section 271D of the Income Tax Act for default in contravention of the provisions of section 269SS of the Act without any reasonable cause which had been elaborately discussed.

Aggrieved assessee preferred an appeal before the ld. CIT (A). Ld. CIT (A) observed that the order was served on 26.11-2023, however, the assessee filed the appeal on 25.04.2025, with a delay of 487 days. The assessee filed detailed reply for the delay. However, ld. CIT (A) considered the contention of assessee but not accepted the same. The ld. CIT (A) after relying on various decisions observed that he is not satisfied that the assessee had “sufficient cause” for not filing the appeal within the due date stipulated u/s. 249(2)(b) of the Act. Accordingly, he did not condone the delay and dismissed the appeal as not admitted.

Aggrieved against the above order, assessee is in appeal before us.

At the time of hearing, ld. AR of the assessee submitted that show-cause-notice u/s 274 r.w.s 271D dated 15.05.2023 was issued by Range Head who noted that on perusal of sale deed, it was noticed that the assessee had received entire sale consideration in cash in contravention of 269SS. He submitted that the sale deed nowhere mentions that the consideration was received in cash. He further submitted that the sale deed mentions that the entire consideration amount of Rs.9,00,000/- which the vendor has received from the vendee prior to the execution of this sale deed and the vendor hereby acknowledges the receipt of the said amount in full and final settlement before the Sub-Registrar, Delhi, at the time of registration of this sale deed. As such, he submitted that the penalty proceedings were initiated on a wrong premise. He further submitted that copy of the bank statement was filed on 05.10.2023 before the AO in response to show-cause-notice dated 29.09.2023 wherein it clearly shows that Rs.4,50,000/- was received by clearing on 23.02.2016 and further sum of Rs.5,00,000/- was received by clearing on 12.04.2016, thus, it is evident that no cash was received towards sale consideration of house. He submitted that the sale consideration for house was settled at Rs.9,00,000/- and Rs.50,000/- were settled for miscellaneous equipments installed in the house. He further submitted that copy of sale deed is not delivered to the seller by the Sub-Registrar, that is why the assessee was not in possession of copy of sale deed. However, the AO did not provide the primary document based on which the penalty proceedings were initiated. He submitted that copy of bank statement was submitted highlighting the payments received by clearing towards sale consideration which is placed at page 28-31 of the paper book. He further submitted that the assessee again informed the AO on 13.10.2023 that he was not having any record and again requested that copy of sale deed may be supplied so that he could defend himself & could give details. Bank statement was again furnished. He submitted that the assessee asked the AO to provide the copy of sale deed many times but the AO did not provide the copy of the sale deed, which was a primary document on the basis of which penalty proceedings were initiated. He submitted that the AO even did not go through the bank statement to find that the sale consideration had been received by clearing. Accordingly, he submitted that assessee was advised to make an application before the Sub- Registrar for supply of a copy of sale deed and was provided copy on 25.03.2025 and accordingly, the assessee could file appeal before CIT(A) only thereafter on 25.04.2025 and the delay was caused due to this before the ld. CIT (A). In view of his submissions above and the details of documents filed in the form of paper book, he submitted that the appeal may be allowed and the penalty be deleted.

On the other hand, ld. DR of the Revenue relied on the orders of the lower authorities.

Considered the rival submissions and material placed on record. After hearing both the parties, we observed that there was a reasonable cause in filing the appeal delayed before the ld. CIT (A), accordingly, we are condoning the delay in filing the appeal before the ld. CIT (A).

We observed that AO issued show-cause-notice u/s 274 r.w.s 271D dated 15.05.2023 to the assessee and noted on perusal of sale deed, that the assessee had received entire sale consideration in cash in contravention of provisions of section 269SS. We observed from the sale deed, which is placed at pages 9 to 19 of the paper book that the sale deed nowhere mentions that the consideration was received in cash. We further observed that from the copy of the bank statement, which was filed on 05.10.2023 before the AO in response to show-cause-notice dated 29.09.2023 and also placed at pages 28 to 31 of the paper book, wherein it clearly shows that Rs.4,50,000/- was received by clearing on 23.02.2016 and further sum of Rs.5,00,000/- was received by clearing on 12.04.2016, thus, it is evident that no cash was received towards sale consideration of house. We further observed that the assessee was not having the copy of the sale deed to prove the same but later on, he requested the Sub-Registrar to provide the copy of the sale which was received on 25.04.2025. We observed that the AO did not provide the primary document based on which the penalty proceedings were initiated. We also observed that assessee has asked for the copy of the sale deed on many occasion and the AO even did not go through the bank statement to find that the sale consideration had been received by clearing. Accordingly, after going through the bank statements, sale deed and other documents, we are of the considered opinion that the transactions are through banking channel and no cash was received, hence the provisions of section 269SS are not attracted and accordingly, we delete the penalty levied u/s 271D of the Act and allow the grounds raised by the assessee.

In the result, the appeal filed by the assessee is allowed.