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Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, New Delhi, dated 22.01.2026 arising out of penalty order dated 30.09.2029 passed by Ld. JCIT, Rohtak Range, under section 271D of the Act for the Assessment Year 2011-12. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the penalty of Rs 24,40,000 levied u/s 271D of the Income-tax Act, 1961, without appreciating the true nature of the transaction and the factual matrix of the case.
2.That the Ld. CIT(A) has failed to appreciate that the impugned cash amount was neither a loan nor a deposit within the meaning of section 269SS, and therefore, the very foundation for levy of penalty u/s 271D is invalid and unsustainable in law .
3.That the Ld. CIT(A) has erred in ignoring the undisputed fact that the assessee merely acted as a mediator/facilitator in a property transaction on behalf of his relative and the cash was temporarily routed through his bank account and immediately transferred to the actual owner, without any intention of accepting a loan 0R deposit.
4.That the Ld. CIT(A) has erred in law in confirming the penalty merely on the basis of suspicion, conjectures and surmises, without bringing any material on record to establish that the assessee had accepted any loan 0R deposit in contravention of section 269SS.
5.That the Ld. CIT(A) has erred in holding against the assessee on the ground that no commission 0R mediation income was disclosed, whereas disclosure 0R non-disclosure of commission income is wholly irrelevant for invoking provisions of section 269SS and levying penalty u/s 271D.
6.That the Ld. CIT(A) has erred in law by shifting the burden upon the assessee to explain accounting treatment in the hands of third parties (seller/purchaser), which is beyond the scope of proceedings u/s 271D and contrary to settled legal principles.
7.That the Ld. CIT(A) has failed to consider that the entire transaction was bona fide, transparent, duly recorded in bank statements and supported by surrounding circumstances, and therefore covered by the protection of section 273B, warranting deletion of penalty.
8.That the Ld. CIT(A) has erred in confirming the penalty without appreciating that the assessee had demonstrated reasonable cause within the meaning of section 273B, and hence penalty u/s 271D was not exigible.
9.That the ld. Cit(A) has erred in law by confirming the penalty without establishing any mens rea, contumacious conduct deliberate violation of law on the part of the assessee.
10.That the order passed by the ld. CIT(A) is bad in law contrary to facts opposed to principles of natural justice and liable to be quashed.
The only issue arising in the present appeal is regarding the imposition of penalty u/s 271D of Rs.24,40,000/-. Brief factual matrix of the case is that it was noted that the assessee had received an amount of Rs.24,47,000/- on 15.11.2010 from one Shri Jain Singh in violation of section 269SS. Pursuant to a reference by the ITO, ld. JCIT, Rohtak proceeded to impose a penalty of Rs.24,40,000/-upon the assessee u/s 271D of the Act through his order dated 30.09.2019. While doing so, he rejected the arguments of the assessee that he was merely a middle man or a facilitator between his relatives who had agreed to keep the cash for some time and later deposited the same in his bank account. In appeal, the ld. CIT(A) confirmed the order of JCIT imposing penalty u/s 271D of the Act.
The ld. Counsel for the assessee vehemently reiterated the arguments taken before the ld. JCIT. It was submitted that the appellant is an agriculturist and was acting as a mediator in a property dealing between his relatives Shri Jai Singh (seller) and Smt. Kamla Dhull (purchaser). During the course of dealing, Smt. Dhull had handed over Rs.24,47,500/- on 15.11.2010 to the appellant in the presence of Shri Jai Singh, the seller. This act was done as she was going out of stations on the agreed sale deed date of 18.11.2010. The appellant submitted that for safe custody of the cash, he had deposited the impugned amount in his bank account and later handed over cheque no.6666671 dated 18.11.2010 for Rs.24,47,000/- to Jai Singh the seller of the property. This cheque was cleared on 19.11.2010. It was submitted that the sale deed would show that he was a witness to the agreement also. It is the case of the assessee that consequently a case of reasonable cause u/s 273B has been made out in its case and therefore no penalty deserves to be levied. In support of her contentions, the ld. Counsel has placed on record affidavit of seller and purchaser, registered sale deed dated 18.11.2010, bank statement of Shri Jai Singh showing credit of cheque and bank statement of appellant showing the cash deposit and the debit of cheque.
The ld. DR placed reliance upon the order of the lower authorities.
We have heard rival submissions in the light of material placed on records. We have noted and considered the documents placed on records by the appellant. We are in agreement with the hypothesis propounded by the appellant, that he was a mediator and that therefore he would be entitle to protection u/s 273B of the Act. We have noted from the submission made and evidences produced on record that the appellant has neither given any loan or deposit falling within the meanings of section 269SS so as to attract penalty u/s 271D. Accordingly, we are of the considered view that no case of any penalty u/s 271D is made out and the case of the appellant. We, therefore, set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned penalty of Rs.24,40,000/-imposed u/s 271D of the Act.
In the result, the appeal of the assessee is allowed.