Section 269SS not apply to cash sale of immovable property, it applies only to loan/deposit

Section 269SS not apply to cash receipt of sale consideration of immovable property, it deals only with loan or deposit – ITAT

In a recent judgment, ITAT has held that section 269SS of the Act does not deals with the receipt of ‘sale consideration of immovable property’ in cash, in other words, the section 269SS only deals with loan or deposit and not the sale consideration of immovable property.

ABCAUS Case Law Citation:
ABCAUS 3837 (2024) (01) ITAT

In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre (NFAC/CIT(A)) in confirming the levy of penalty u/s 271D of the Income Tax Act, 1961 (the Act) for violation of provisions of section 269SS of Act.

The Income Tax Department received information regarding the violation of provisions of Section 2695S of the Act in the case of sale of immovable property.

On perusal of the said information, it was observed by the Assessing Officer that the appellant assessee had received the sale consideration in cash exceeding Rs. 20,000/-, which is in violation of provisions of section 269SS of the Act.

The matter was referred to the Joint Commissioner of Income Tax of the Range to consider levy of penalty u/s 271D of the Act for violation of provisions of section 269SS of the Act.

Further, it was gathered that with same concerns, total sixteen cash transactions against sale of property were done by the assessee.

The JCIT observed that the appellant had failed to prove that these transactions had been declared in Income Tax Returns as no details like ITR, PAN, Bank Account etc. were furnished. Further appellant failed to prove that there was reasonable cause for

receiving cash payments. The JCIT also rejected the claim of the appellant that he was illiterate and uneducated person who was not aware of the penal provisions.

Accordingly, the JCIT levied penalty u/s 271D of the Act for violation of provisions of section 269SS of the Act.

The Tribunal observed that the plain reading of the provisions of section 269SS of the Act mandates that, no person shall take or accept from any other person any loan or deposit otherwise then an account payee cheque or account payee bank draft if ……

The Tribunal observed that thus, as per section 269SS of the Act, there is a specific bar to receive a sum more than 20,000/- from any other persons by way of loan or deposit. However, the section 269SS of the Act does not deals with the receipt of ‘sale consideration of immovable property’ in cash, in other words, the section 269SS only deals with loan or deposit and not the sale consideration of immovable property.

The Tribunal opined that the Authorities below had wrongly interpreted the provisions of Section 269SS of the Act while invoking the penalty in the present case wherein the subject matter was receipt of sale consideration in cash in respect of selling the immovable properties.

The Tribunal held that Assessing Officer had committed error in invoking the provisions of section 269SS r.w.s 271D of the Act and imposing the penalty.

Accordingly, the ITAT deleted the penalty imposed by the Assessing Officer which was confirmed by the CIT(A).

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