Penalty u/s 271D deleted as cash deposited belonged to father who had no bank account

Penalty u/s 271D deleted as the amount of cash deposited in assess’s bank belonged to his father who was an agriculturist, not having any operating bank account.

In a recent judgment, ITAT Chandigarh has deleted penalty under section 271D as the amount of cash deposited in assessee’s bank belonged to his father who was an agriculturist, not having any operating bank account and amount was deposited for safety and security.

ABCAUS Case Law Citation:
4849 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) NFAC in confirming the penalty levied by the Assessing Officer (AO) u/s 271D of the Income Tax Act, 1961 (the Act).

The the AO noticed that assessee had received Rs. 20 lacs in cash during the relevant Financial Year which was deposited in his bank account. The AO observed that the assessee had violated the provisions of Section 269SS of the Act by accepting loan or deposit in cash greater than Rs. 20,000/-. 

The AO, therefore, show caused the assessee in this respect. The assessee explained before the AO that the father of the assessee had entered into a contract for sale of his land and received Rs. 20 lacs from him as earnest money.  Since his father was an agriculturist, who did not have any operating bank account, therefore, the said amount of Rs.20 lacs was deposited by him into the account of the assessee for a short duration, only for the purpose of safety and security. 

It was stated that the amount was withdrawn and paid back to him just after 5 days of the deposit.  It was, therefore, submitted that the aforesaid deposit of Rs. 20 lacs into the account of the assessee was not any loan or deposit and hence, the assessee had not done anything in contravention of the provisions of Section 269SS of the Act. It was, therefore, pleaded that it was not a case of levy of penalty u/s 271D of the Income Tax Act. 

The AO, however, did not get satisfied with the above reply of the assessee and levied the impugned penalty u/s 271D of the Act, which was further confirmed by the CIT (Appeals).

The Tribunal observed that the assessee had duly explained that his father was an agriculturist who did not have any operating bank account. It had also been duly explained that his father had received earnest money on account of sale of land which, for the very short period was parked into the account of the assessee for the purpose of safety and security. 

The Tribunal noted that the above plea of the assessee had not been rebutted by the Revenue. 

In view of this, the Tribunal held that it was not a case of levy of penalty u/s 271D of the Act and the same was ordered to be deleted.

Download Full Judgment Click Here >>

• CA Misconduct – Order quashed as judgment not passed by same members who heard arguments.
• Deceased homemaker can not be considered as dependant for award of compensation under MV Act – SC
• CIT notice u/s 263 quashed as AO rightly took DVO value of property as actual sale price
• Extension of timeline for implementation of Ship To GSTIN & Voluntary Closure of E-Way Bill functionalities
• No protective addition required when additions is confirmed in hands of searched person – ITAT