Ram Krishan Sandhu vs JCIT

“3 . The submissi on and explanation of assessee has been carefully examined. The assessee’s explanati on i s that there wa s agreeme nt between the vendor and vendees to tr ansfer t he property at a consideration of Rs. 1,12,00,000/- whi ch is above the circle rate. He also explai ned that as the B ank sancti oned o nly Rs. 99,47,680/- as loan to the buyers and the fact was kno wn only when both parties wer e pres ent before Sub-Registrar for c ompleti ng t he registrati on of s ale deed, the sit uati on compelled him t o ac cept part paym ent of Rs. 11,40,320/- in cas h. The ar gument of ass essee is tha t had he i nsisted o n full che que payment, he would hav e l ost out on a pric ed customer who was willing to pay above the ci rcle rate . The r easons gi ven by ass essee for receipt of sal e consi deration in cash is found to be without sufficient caus e as nothi ng preve nts the vendees to make the payment of bala nce sale amount i n che que and the ve ndor from insisting on the same . Both t he parties must have had extensive talks a nd discussions before pres enti ng t hems elves before the R egi strar. Ther efore, to st ate tha t t he fact of bank l oan bei ng bel ow the agr eed sal e consideration amount came to notice only when both pa rti es pres ent ed themse lves before Registrar is somethi ng which does not tak e place i n nor mal circumstances but rather borders as concoction o f events only to hel p explain t he case. The as sessee also failed to place any cogent evidences to substantiate this explanati on. Therefore, this explanati on of assess ee submitt ed t o constitute reas onabl e caus e is rej ected.

3.1

It is however tr ue t hat in the rel evant IT r eturns filed for A.Y. 2017-18, assessee had disclosed the entire sale consideration and also offered Capit al Gai n o f Rs. 10,60,003/- to tax. Ho wever, t his doesn’t negat e the fact tha t in the stat ed transac tion cash of Rs. 11,40,320/-was rec eived i n co ntravention o f s ecti on 269SS of I.T. Act, 1961 rega rding whi ch assesse e has failed t o give explanati on to show r eas onabl e cause with coge nt evidences. In hi s s ubmi ssio n, assessee has quoted decisi on of Ho n’ble Apex Court is MotilalPada mpal Sugar Milk C o. Ltd. but i t is obser ved that the cited case law is not squar ely ap plicable t o t he insta nt case.”

“1 . The action of L d. CIT (A) Del hi i n uphol ding the action of L d. JCIT i n imposi ng pe nalty of Rs. 11,40,320.00 and c omi ng to t he concl usi on that there was no reaso nabl e cause his illegal, arbitr ary, unwarr anted, uncalled for, and against the facts and circumstances of the case.

2.

The action of Ld. CIT(A) i n uphol ding acti ng o f Ld. JCIT i n not consideri ng the fac t t hat there is no evas ion of tax as the cas h rec eived was duly disclosed i n the income tax ret urn much before notic e u/s 27ID was issued voluntary and that itself bei ng a reas onabl e ca use, penalty is liabl e to be delet ed.

3.

On the fac ts a nd in law the L d. CIT(A) e rred i n confirmi ng acti on of Ld. JC IT i n i mposi ng penalty u/s 27ID of Rs. 11,40,320.00 without co nsideri ng the writt en arguments rationally and not applyi ng his mi nd.

4.

On facts and in law the C IT(A ) err ed i n uphol ding imposing of pe nalty by Ld. JCIT u/s 27ID of Rs.11,40,320.00 by maki ng wrong inferenc es andwrong conclusi on fr om facts.

5.

The appellant reserv es t he right to add/ alter/ amend/ modify/ wi thdraw any gr ound/s of appeal .

6.

The above gro und s ar e without prejudice to eac h ot her.”

“12.

We have heard the rival conte ntions , and gone thr ough the fac ts and circ umstanc es of t he cas e. We find tha t t he Revenue has c hallenged the c orrectness of the decisi on re ndered by the CI T(A) vide order dated 30.09.2019 in del eti ng t he penalty levi ed u/s 271D of t he Act vide penalty order da ted 12.06.2019. The C IT(A ) had deleted t he penalty on two c ounts namely on t he non-applicability of the provi sio ns of S ecti on 269SS of the Act t o the facts of the pres ent c ase and on t he ground of reaso nable cause withi n the scope of S ection 273B of t he Act. We noted that t he pr ovisions of S ection 269SS of the Ac t was amended w.e.f . 01.06.2015 to incl ude the ‘specified sum’ wi thin it s ambit and the said te rm was defined in Explana tion to the said S ecti on whic h is r eproduced as unde r:

“specified s um" m eans any s um of money rec eiv abl e, whether as advance or other wise, in rela tion t o tra nsf er of an immovabl e prop erty, whether or not the trans fer takes place.” The B udget Speech of the H on'ble Finance Mi nister while placi ng the Fi nance Bill, 2015 hi ghl ighti ng the intention of the amendment relevant for decision maki ng i n the present ap peal is captured below:

3. A. Meas ures to curb bl ack money

3.1

Wit h a view to curbi ng the generati o n of blac k money i n real estat e, i t is pro posed to amend t he provisions of s ection 269SS and 269T of t he Income-t ax Act so as to pr ohibit acceptance or re-pay ment of advance i n cash of Rs. 20,000 or more for a ny t ransaction i n immova ble property. It is also pro posed to provide a penalty of an equal amo unt in case of contr ave ntion of s uch provisions .

The Memor andum forming pa rt of Fi nanc e Bill, 201.5 hi ghli ghti ng t he intentio n of the amendme nt is captured below:

B. MEASURES TO CURB BLACK MO NEY

Mode of ta ki ng o r acc epti ng c ertai n loa ns, de posits and specifi ed s ums and mode of r epayment of loans or deposits and specifi ed advanc es

The existing pr ovisions contai ned i n secti on 269SS of the Income-tax Act provi de t hat no person s hall ta ke from any person any lo an or deposit other wise tha n by an account pa yee c heque or acco unt pay ee bank dr aft or onli ne transf er thro ugh a bank acco unt, if t he am ount of s uch loan or deposit is twe nty thous and rupees or more. Howe ver, certai n excepti ons have been provided in the secti o n.

Similarly, t he existing provisions contained i n section 269T of the Income-ta x Act pr ovide that any loan or deposit shall not be repaid, othe rwise t han by an acco unt payee cheque or account payee bank draft or onli ne trans fer through a bank account, by the persons specifi ed i n the sec tion twenty tho usand rupees or more. if the amount o f loa n or deposit is t wenty thousand rupees or more.

In or der to c urb generati on of black money by way of deali ngs in cas h i n immovabl e property tr ansactions it is propos ed to amend section 269SS, of t he Inc ome-tax Act so as to provide that no person s hall acce pt fr om any pers on any loan or deposit or any s um of money, whet her as a dvanc e or other wise, i n rel ati on t o transf er of an immovable property ot herwise t han by an acc ount pay ee c heque or acc ount payee bank draft or by electr onic clear ing system through a bank acc ount , if the amount of suc h loan or deposit o r suc h specified sum is twenty t housand rupees or mor e.

It is also propos ed to amend s ection 269T of t he Income-t ax Act so as t o pr ovide that no person shall repay any l oan or deposit ma de wi th it or any specified advanc e receiv ed by it, ot herwis e tha n by an acco unt payee cheque or acc ount payee bank draft or by elect roni c cl eari ng system through a bank acc ount, if t he amount or aggregate amount of loans or de posits or specifi ed adv ances is twent y tho usand rupe es or more . The spe cified adv ance sha ll mea n any sum of money in the na ture o f an advance, by whatever name called, in rela tion to tr ansfer of a n immovable proper ty whether or no t the tra nsfer take s place.

It is further propos ed to make cons equential amendments i n secti on 271D and sec tion 271E to provide penalty for fai l ur e t o c omply with t he amended provisio ns o f s ec tion 26 9SS and 269T, res pectivel y. These amendments will tak e effect from 1st day of June, 2015.

The Notes o n Clauses formi ng par t of Fi nance Bi ll, 2015 highli ghti ng the i ntention of the amendme nt is capture d bel ow:

Claus e 66 of the Bill seeks to substit ute sec tion 269SS of t he Inc ome-tax Act relating to mode of ta ki ng or accepti ng cer tai n lo ans and de posits. The existing provision c ontaine d i n sectio n 269SS provides that no pers on s hall ta ke fr om any pers on any loan or depo sit othe rwise tha n by an acco unt pay ee cheque or account payee ba nk dra ft or onli ne tr ansfer through a bank account if the am ount of such loan or deposit is twe nty thousand rupees or more .

It i s pr oposed t o substitute the said sec tion so as to provide that no pers on s hall tak e fr om any perso n, any loan o r deposit or specifi ed sum, other wise tha n by an account pa yee c heque or acco unt pay ee bank dr aft or onli ne transf er thro ugh a bank acco unt if the a mount of s uch loan or dep osi t or specified sum is twenty t housand rupees or mor e. It is also pr oposed to d efi ne "specifi ed s um" as any sum of m oney re ceivable, whether as advanc e or ot herwise i n relat ion to transfer of an immovable prop erty whet her or not the transfer materialises.

These amendme nts will take effec t from 1st June , 2015.

12.1

In t he pr esent c as e, the sale considerati on was rec eiv ed i n cash at the time of execution of mul tiple s ale dee ds f rom different p ersons for the sal e of pl ots and accepted as genui ne i n t he assessm ent order c ompleted on 23.05.2018 and admitt edly t here was no advanc e rec eiv ed by t he seller. The amended provisions of S ection 269SS of the Ac t was applied by t he A .O to the facts of the prese nt case only to the sal e consideration received as ‘s pecifie d sum’ and on s uch presumpti on the JCIT levied penalty u/s 271D of the Act. The i ntention of the amendment is very clear right from the B udget speech of the Financ e Minister that t he sai d ame ndment is brought into the statut e i n Sectio n 269SS of the Act woul d ge t attrac ted to sum rec eived in cas h as an advance in an immovable property transacti on and not t o the c ompleted tr ansaction namel y cash r eceived as a sale consideration at the tim e of execution of the regi stered sale deed. In fact, t he stat ute bro ught i n another amendment in Secti on 269ST of t he Act from t he assessm ent year 2017-18 wit h a vi ew to cover all situa tions of ca sh transaction Rs. 2 Lakhs or o ver ot her than t he situati on capt ured in Secti on 269SS of the Act. This pr ovision has been explai ned with mo re clarity by t he CBDT Circular No. 19 of 2015, dat ed 27.11.2015 and the rel evant circular reads as under:-

Departme ntal Circular No .19 of 2015, dated 27-11- 2015:-

54.

Mode of t aking or accepti ng certai n loans , deposits and speci fied s ums and mode of r epayment of l oans or deposits a nd specifie d advanc es.

54.1

Provisions contai ned in s ecti on 269SS of t he Income-t ax Act, before amendme nt by the Act , provided that no pers on shall take from any person any loan or depo sit othe rwise tha n by an acco unt pay ee cheque or account payee ba nk dra ft or onli ne tr ansfer through a bank account, if the amount of such loan or deposit is twe nty thousand rupees or more . However, certai n exceptions were pr ovided in the sec tion.

54.2

Similarly, t he provisio ns contained i n s ection 269T of the I ncometax Act, before ame ndment by the Act, pr ovided t hat any loan or deposit shall not be repaid, otherwise than by an account pay ee cheque or acc ount payee bank draft or onli ne tr ansfer thro ugh a bank account , by the persons specified i n the secti o n if the am ount of loan or deposit is t wenty thousand rupees or more.

54.3

In ord er to curb generation of black money by way of deali ngs in cash in immovabl e property tr ansactions, sect ion 269SS of the Incometax Act has been amended t o provide that no perso n shall accept from any person any loan or deposit or any sum of money, whethe r as advance or other wise, i n rela tion to trans fer of an immovable prop erty(specifi ed sum) othe rwise than by an acco unt paye e cheque or account payee ba nk draft or by electronic clear ing system through a bank acco unt, if the amount of s uch loan or deposit or such speci fied s um is t wenty t housand rupees or more .

54.4

Section 269T of the Inc ome-tax Act has also bee n ame nded to provide that no person shall repay any loan or depo sit made with it or any specifi ed adv ance received by it, otherwi se than by an acco unt paye e cheque or account payee ba nk draft or by electronic clear ing system through a bank acco unt, if the amount or aggregate amount of loans or de posits or specifi ed adv ances is twent y tho usand rupees or more. The specifi ed a dvance shall mean any sum of money i n the nat ure of an adv ance , by whateve r name c alled, in r elatio n to tr ansfer of an immovable property whether or not the transfer ta kes place.

54.5

Consequenti al amendments in secti on 271D and s ection 271 E, to provide penalty f or failure to comply wi th the amende d provisio ns of section 269SS and 269T, respec tively, have also been made.

54.6

Applicability: These amendme nts have tak en effect from 1st day of June, 2015.

Fr om t he above provi sions , Memorand um explaini ng t he inte nti on of amendment by Fi nance Bill, 2015 including the defi nition o f ‘s um specified’ bro ught in t he Explanati on to Section 269SS of the Act, it is cl ear that the i nte nti on for bri ni ng t his provi sion was t o c urb the generation of black money i n rea l estate pro hibiting acceptanc e or r epayme nt of advance in cash of Rs.20,000/- or more for any transacti on i n immov able prop erty. This was explai ned by Hon’ble Finance Mi ni ster whil e placing the Fi nanc e Bill, 2015 in he r budget speec h hi ghli ghting the intention of the amendment t hat t he amendment i n Ex planation to S ec tion 269SS i.e., ‘s um specified’ mea ns only applicabl e for advance rec eivable, whether as advance or otherwise means advance can be in any manner. Henc e, this pr ovis io n will not apply to the transaction that happens at t he time of fi nal payme nt at the ti me of registra tion of sale deed and payment is made be fore s ub-registr ar at the ti me of r egistratio n of prop erty. In the present case before us, it is an admitted fact t hat al l sale deeds were r egist ered and cash payment was made at one go before the sub-registr ar a t the time of r egistration of sale deeds of plots. Hence , in our view, ther e is no vi olation of provisions of s ec tion 269SS of the Act i n the present case in the gi ven facts and circ umstanc es of t he case and henc e, penalty is not exigible i n t his case. Henc e, we confirm t he order of CIT(A ) d el eti ng the penalty but on entirely different gro und i.e., on j urisdictional issue only. Accordi ngly, the appeal of the Revenue is dis missed.

13.

In the result , the appeal filed by the R evenue is dismissed. ”