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Judgment
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2017-18, arises against the C IT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1077083605(1) dated 16.06.2025, in proceedings u/s 271D of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
We notice at the outset that both the learned lower authorities have levied section 271D penalty of Rs.6,80,000/- in the assessee’s hands thereby holding here to have receive d the sale price of R s.6,80,000/- in cash in vio lation of section 269SS r.w. Explanation (iv) inserted in the Act vide Finance Act, 2015 w.e.f. 01.06.2015.
That being the case, the Revenue could hardly dispute that this tribunal’s recent le arned co -ordinate bench o rder in ITO Vs. Shri R. Dhinagharan (HUF) ITA No. 3329/Chny/2019 dated 29.12.2023 has already settle d the issue in the assessee’s favour and against the department that the impugned penalty provision applies only regarding advances than that received at the time of re gistration of the sale deed as under:
“12.We have heard the rival contentions, and gone thro ugh the facts and circumstances of the case. We find that the Re venue has challenged t he correctness o f the decision rendere d by the CIT(A) vide o rder dated 30.09.2019 in de leting the penalty levie d u/s 271D o f the Act vide penalty order date d 12.06.2019. The CIT(A) had delete d the penalty o n two counts namely on the non-applicability of the provisio ns of Section 269SS o f the Act to the facts of the prese nt case and o n the ground of reasonable cause within the scope of Section 273B of the Act. We no ted that the pro visions of Sectio n 269SS of the Act was amended w.e.f. 01.06.2015 to include the ‘specified sum’ within its ambit and the said term was defined in Explanation to the said Section which is repro duce d as under:
“specified sum" means any sum of money receivable , whether as advance or o therwise , in relatio n to transfer of an immovable property, whethe r or not the tr ansfer takes place.
The Budge t Speec h of the Hon'ble Finance Minister while placing the Finance Bill, 2015 highlighting the intention of the amendment relevant fo r decision making in the present appeal is capture d below:
3. A. Measures to curb black money
3.1With a vie w to curbing the generatio n of black money in real estate , it is proposed to amend the provisio ns of section 269SS and 269T of the Income-tax Act so as to prohibit acce ptance or re-payment of advance in cash of Rs. 20,000 or more for any transactio n in im movable property. It is also pro posed to provide a pe nalt y of an equal amount in case of contr ave ntio n of such pro visions.
The Memorandum form ing part of Finance Bill, 201.5 highlighting the intention of the ame ndment is capture d below:
B. MEAS URES TO CURB BLACK MON EY
Mode of tak ing or accepting ce rtain loans, deposits and specifie d sums and mode of repayment of loans or
deposits and specified advances
The existing provisions containe d in section 269SS of the Income-tax Act provide that no person shall take from any pe rson any loan or deposit otherwise than by an account payee cheque or acco unt payee bank dr aft or online transfe r through a bank account, if the amount o f such loan o r deposit is twenty thousand rupees or more. However, ce rtain exceptio ns have bee n provide d in the section. Similarly, the e xisting provisio ns contained in section 269T of the Income-tax Act provide that any loan or deposit shall no t be repaid, otherwise than by an account payee cheque or acco unt payee bank draft or online transfer through a bank account, by the persons specified i n the section twenty thousand r upees o r more .
In order to cur b generatio n o f black money by way of dealings in cash in immovable property transactions it is propose d to am end sectio n 269SS, o f the Income-tax Act so as to pro vide that no per son shall acce pt fro m any pe rson any lo an o r deposit o r any sum o f money, whether as advance or o therwise , in relatio n to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft o r by electro nic clearing system through a bank account, if the amount o f such loan or depo sit or such specifie d sum is twenty thousand rupees or m ore.
It is also pro po sed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specifie d advance received by it, otherwise than by an account payee cheque or account payee bank draft o r by electro nic clearing system through a bank account, if the amount or aggregate amount of loans or deposits o r specifie d advances is twe nty thousand rupees o r more. The specified advance shall mean any sum o f money in the nature of an advance , by whatever name calle d, in relatio n to transfer of an immovable property whe ther or no t the transfer takes place.
It is furthe r propose d to make consequential amendments in section 271D and sectio n 271E to provide penalty for failure to comply with the amended provisio ns of section 269SS and 269T, respectively.
These amendments will take effect from 1st day o f June, 2015.
The Notes on Clauses forming part o f Finance Bill, 2015 highlighting the intention of the ame ndment is capture d below:
Clause 66 of the Bill seeks to substitute sectio n 269SS of the Income-tax Act relating to mode of taking or accepting certain loans and de posits. The e xisting provisio n containe d in section 269SS pro vides that no person shall take from any pe rson any lo an or deposit otherwise than by an account payee cheque or acco unt payee bank draft or online transfer through a bank account if the amount of such loan or deposit is twenty thousand r upees o r more .
It is pro posed to substitute the said section so as to provide that no person shall take from any perso n, any loan o r deposit o r specified sum, otherwise than by an account payee cheque or account payee bank draft or online transfe r through a bank acco unt if the amount of such lo an or deposit o r specified sum is twenty thousand r upees o r more .
It is also propo sed to define "specified sum" as any sum of money receivable , whe ther as advance or o ther wise in relation to transfer of an immovable property whether o r not the transfer mate rializes.
These amendments will take effect from 1st J une, 2015.
12.1In the present case, the sale consideration was receive d in cash at the time of executio n of multiple sale deeds from different pe rsons for the sale of plots and accepte d as genuine in the assessm ent o rder completed on 23.05.2018 and admittedly there was no advance rec eived by the sel ler. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale conside ration receive d as ‘specified sum’ and o n such presumptio n the JCIT levied penalty u/s 271D of the Act. The inte ntion of the amendment is very clear right from the Budget speech o f the F inance Minister that the said am endment is brought into the statute in Section 269SS o f the Act would get attracte d to sum receive d in c ash as an advance in an immovable pro perty transactio n and not to the completed transaction namely cash rece ive d as a sale co nsideratio n at the time of execution o f the registe red sale dee d. In fact, the statute brought in another amendment in Se ction 269ST of the Act from the assessment ye ar 2017-18 with a vie w to cover all situations of cash transactio n Rs. 2 Lakhs o r ove r other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT C ircular No.19 of 2015, date d 27.11.2015 and the relevant circular reads as under:-
Departmental Cir cular No.19 of 2015, dated 27-11-2015:-
54. Mode of taking or accepting ce rtain lo ans, deposits and specified sums and mode of repayment of loans or
deposits and specified advances.
54.1Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided that no person shall take from any person any loan o r deposit othe rwise than by an account payee che que or account payee bank draft or online transfe r through a bank account, if the amount o f suc h loan or deposit is twenty thousand rupees or more . However, ce rtain exceptions we re provided in the sect ion.
54.2Similarly, the provisions co ntained in sectio n 269T of the Income tax Act, be fore amendment by the Act, provide d that any loan o r de posit shall no t be re paid, otherwise than by an account payee cheque or acco unt payee bank draft or online transfer through a bank account, by the persons specifie d in the section if the amount of lo an or deposit is twenty thousand rupees or more.
54.3In orde r to curb ge neratio n of black money by way of de alings in cas h in immovable property transactio ns, section 269SS of the Income tax Act has been amende d to pro vide that no person shall acce pt from any perso n any lo an or de posit or any sum of money, whether as advance or o therwise, in re lation to transfe r of an immovable pro perty(spe cified sum) otherwise than by an account payee cheque or acco unt payee bank dr aft or by electronic clearing system through a bank account, i f the amount of s uch loan or de posit or such specifie d sum is twenty thousand rupees or more .
54.4Section 269T of the Income-tax Act has also been amended to provide that no pe rson shall re pay any lo an or deposit made with it or any specified advance receive d by it, other wise than by an account payee cheque or acco unt payee bank draft or by electro nic clearing system through a bank account, if the amount or aggregate amount of loans o r deposits or specified advances is twe nty tho usand rupees or more. T he specifie d advance shall mean any sum of money in the nature o f an advance, by whatever name calle d, in relatio n to transfer of an immovable property whe ther or no t the transfer takes place.
54.5Consequential amendments in section 271D and section 271E, to provide penalty for failure to comply with the amende d pro vis ions o f section 269SS and 269T, respectively, have also been made.
54.6Applicability: These amendments have taken e ffe ct from 1st day of June, 2015.
From the above provisio ns, Memorandum explaining the intention of amendment by F inance Bill, 2015 including the definitio n of ‘sum specifie d’ brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this pro vision was to curb the gene ration of blac k money in real estate prohibiting acceptance or re payment of advance in cash of Rs.20,000/- or more for any transactio n in im movable property. This was explained by Hon’ble F inance Ministe r while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Se ction 269SS i.e ., ‘sum specified’ means only applicable for advance rece ivable, whether as advance o r otherwise means advance can be in any manner. Hence, this provisio n will not apply to the transactio n that happens at the time of final payment at the time of regis tr atio n of sale deed and payment is made befo re sub-re gistr ar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registere d and cash payment was made at one go before the sub-registrar at the time o f registration of sale deeds of plots. Hence , in our view, the re is no violatio n of provisio ns of section 269SS of the Act in the present case in the give n facts and circumstances of the case and hence, penalty is not e xi gible in this case. Hence, we confirm the o rder of CIT(A) deleting the penalty but on entirely different ground i.e., o n jurisdictional issue only. Accordingly, the appeal of the Reve nue is dismisse d.”
We adopt the above extracted detailed discussion to conclude that both the learned lower authorities have erred in law and on facts in levying the impugne d section 271D penalty which is hereby deleted in very terms.
This assessee’s appeal is allowed.