DELTA FARM SERVICES,MUZAFFARNAGAR V. ITO,WARD 3(1)(2), MUZAFFARNAGAR

ITA 236/DEL/2023

AI Insights

The case involves Delta Farm Services, which appealed against the penalties imposed by the Income Tax Officer (ITO) for allegedly violating section 269ST of the Income Tax Act by accepting cash transactions of Rs. 2 lakhs or more. The penalties were sustained by the CIT(Appeals) but were contested in the Tribunal. The Tribunal examined the circumstances under which the cash transactions occurred, the intent behind the introduction of section 269ST, and the specific provisions allowing for penalties. The Tribunal concluded that the penalties were not justified as the transactions were bona fide and there was no intention to evade tax.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34303 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Other Referred Cases: CIT vs. Jai Laxmi Rice Mills, Hindustan Steel Ltd. vs. State of Orissa, Asstt. Director of Inspection vs. Kumari A B Shanthi, CIT vs. Triumph International Finance, CIT vs. Dimple Yadav, Delhi State Taxi Operators vs. AO, ACIT vs. Lilavati Kirti Lai Mehta, CIT vs. Bhagwati Prasad Bajoria, CIT vs. Manoj Lalwani, CIT vs. Speedways Rubber P. Ltd., CIT vs. Ajanta Dyeing & Printing Mills, CIT vs. Smt. Dimval Yadav, Jitu Builders vs. Add. CIT, Muslim Urban Cooperative Credit Society vs. JCIT, Finesse International Design Pvt. Ltd. vs. Addl. CIT, Lodha Builders Pvt. Ltd. vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANDEEP PANWAR
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Reasonable cause; Bonafide belief; Principle of natural justice; Search and seizure; Competent authority
• Section: 143(3); 250; 143(1); 274; 271D; 264; 273B; 271E

Judgement Text

"ITA Nos.235 & 236/Del/2023 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A Nos.235 & 236/Del/2023 िनधा\tरणवष\t/Assessment Years:2018-19 & 2019-20 Delta Farm Services, Roorkee Road, Muzaffarnagar, Uttar Pradesh. PAN No.AABFD2801K बनाम Vs. ITO, Ward-3(1)(2), Muzaffarnagar. अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent Assessee by Dr. Rakesh Gupta, Adv. Shri Somil Aggarwal, Adv. & Shri Shrey Jain, Adv. Revenue by Shri Mandeep Panwar, Sr. DR सुनवाईक\bतारीख/ Date of hearing: 10.01.2025 उ\u000eोषणाक\bतारीख/Pronouncement on 21.02.2025 आदेश /O R D E R PER C.N. PRASAD, J.M. These two appeals are filed by the Assessee against different orders of the Ld. CIT(Appeals)-NFAC, Delhi dated 19.01.2023 for the assessment years 2018-19 and 2019-20 in sustaining the penalty levied u/s 271DA of the I.T. Act. The assessee in its appeals has raised the following common grounds except for the figures: - 1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in imposing penalty of ITA Nos.235 & 236/Del/2023 2 Rs.4,69,52,797/- u/s 27IDA and that too without assuming jurisdiction as per law and barred by limitation also. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned penalty order is contrary to law and has further erred in observing that there had been contravention of the provisions laid down in section 269ST of the Income Tax Act. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in imposing penalty u/s 27IDA and that too by recording incorrect facts and findings and not appreciating the facts and circumstances of the case and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in passing the impugned penalty order u/s 27IDA is illegal and against the fact and circumstances of the case and the same is not sustainable on various legal and factual grounds. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 2. Brief facts are that the assessee M/s Delta Farm Services is engaged in the business of trading in tractors and its spare parts filed returns of income for these two assessment years which were processed u/s 143(1) of the Act. The Assessing Officer noticed that as per Form 61A (statement of specified financial transactions u/s ITA Nos.235 & 236/Del/2023 3 285BA(1) of I.T. Act) filed by the assessee. The assessee reported that the assessee firm accepted and aggregate amounts of Rs.2 lakhs or more in cash. The Assessing Officer issued show-cause notice u/s 274 r.w.s. 271DA dated 02.03.2021 to explain as to why an order imposing penalty u/s 271DA of the Act should not be passed since the assessee has violated the provisions of Section 269ST of the Act after several opportunities the assessee finally on 15.09.2021 submitted that the business activity of the assessee firm is trading (sales of tractor) used for agricultural activity, the agriculturists mostly purchase tractor in cash or from bank loan. It was submitted that the assessee furnished SFT statement every year on Income tax portal and the assessee did not violate the provisions of section 269ST and hence no penalty u/s 271D can be imposed on the assessee. Not convinced with the reply the Assessing Officer imposed penalty u/s 271DA of the Act in respect of transactions relating to one event or an occasion from a person aggregating to Rs.4,69,52,797/-. On further appeal, the Ld. CIT(Appeals) sustained the penalty levied by the Assessing Officer. 3. Before us the Ld. Counsel for the assessee submits that section 269ST was introduced by the Finance Act, 2017 w.e.f. 01.04.2017 and the present year is the first year. Ld. Counsel for ITA Nos.235 & 236/Del/2023 4 the assessee submits that object of introduction of section 269ST is to prevent the circulation of black money and unaccounted money, to counteract tax evasion and in the instant case neither there is an allegation nor is there any tax evasion in view of the fact of comprehensive identification of purchases and accounting for the sales in the books of account. 4. The Ld. Counsel further submits that penalty cannot be levied on technical or venial breach. It is submitted that there were good and sufficient reasons for the alleged breach in terms of the proviso to section 269ST since new provision was introduced and this is the first year, loss of business could not be afforded, there was a bona fide belief in view of the language of section 269ST which uses the expression “single transaction” and thus, at any given point of time transaction of Rs.2 lakhs alone was entered, absence of satisfaction in the assessment proceedings/order as mandated by the Hon’ble Supreme Court penalty cannot be imposed. Alternative plea it is the submission that in each case benefit of Rs.2 lakhs be allowed. 5. The Ld. Counsel for the assessee further submits that there is a reasonable cause for accepting the sale consideration of the tractors in cash from the farmers and therefore there cannot be any penalty u/s 271DA of the Act. Ld. Counsel submits that if there are ITA Nos.235 & 236/Del/2023 5 good and sufficient reasons for accepting cash penalty may not be imposed as per the provisions of section 269ST of the Act. 6. Ld. Counsel further made his submission as under: “In the case of M/s Delta Farm Services for AY 2018-19 Only issue in the present appeal is against the levy of penalty of Rs.4,69,52,797/- u/s 27 IDA on the ground that the appellant has received cash more than Rs. 2 Lacs in respect of its sale from its customers in violation of section 269ST. Section 269ST introduced by the Finance Act, 2017 w.e.f. 1.4.2017 i.e. the present year is the first year, is reproduced here as under: 269ST. No person shall receive an amount of two lakh rupees or more- (a) in aggregate from a person in a day; or (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed: Provided that the provisions of this section shall not apply to— (i) any receipt by (a) Government; (b) any banking company, post office savings bank or co- operative bank; (ii) transactions of the nature referred to in section 269SS; ITA Nos.235 & 236/Del/2023 6 (iii) such other persons or class ofpersons or receipts, which the Central Government may, by notification in the Official Gazette, specify. Explanation.—For the purposes of this section,— (a) “banking company” shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; (b) \"co-operative bank” shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS. Broad arguments are on the following lines: a) Object of the introduction of section 269ST is to prevent the circulation of Black and unaccounted money to counteract tax evasion & in the instant case, neither this is an allegation nor is there any tax evasion in view of the comprehensive identification of purchasers and accounting for the sales in the books of accounts. b) Penalty cannot be levied for technical or venial breach. c) There were good and sufficient reasons for the alleged breach in terms of the Proviso to section 269ST: i) New provision introduced and this is first year, ii) Loss of business could not be afforded, iii) Bonafide belief in view of the language of section 269ST which uses the expression ‘single transaction’ and thus at any given point of time, transaction of Rs. 2 lacs alone was entered, d) Absence of ‘satisfaction’ in the assessment proceeding/order as mandated by Hon’ble Supreme Court e) Alternative plea- each case benefit of Rs. 2 lacs be allowed In Detail: ITA Nos.235 & 236/Del/2023 7 1. Above section 269ST comes under chapter XX-B which contains inter-alia other sections also such as section 269SS, 269T and 269ST. The title of the chapter XX-B reads “requirement as to mode of acceptance, payment or repayment in certain cases to counter act invasion of tax”. In fact, section 269SS and 269T have come up for interpretation before the Hon’ble Courts on several occasions and Hon’ble Courts have held that the object and purport of these sections is to prevent the circulation of black money and unaccounted money to counteract tax evasion. Deposit or loan in cash exceeding prescribed limit—Finding that transaction was bona fide and default was technical— Penalty could not be imposed—CIT vs. Speedways Rubber P. Ltd. 326ITR 31 (P&H) Asstt Director of Inspection vs. Kumari A B Shanthi 255 ITR 258, 263 (SC)- CLC 12-21 Page 13877-78 of Chaturvedi & Pithisaria 7th edition, Volume 9- caption- ‘Object of enacting section 269SS’ CIT vs. Bhagwati Prasad Bajoria 263 ITR 487 (Gau)-CLC 70- 75- it cannot be said that the assessee entered the transactions to avoid the payment of tax or to defraud the revenue. CIT vs. Manoj Lalwani 260 ITR 590 - it cannot be said that the assessee entered the transactions to avoid the payment of tax or to defraud the revenue. CIT vs. Triumph International 345 ITR 270 (Bom) CLC 41-51 CIT vs. Dimple Yadav 379 ITR 177 (All) Delhi State Taxi Operators vs. AO (Del) (ITAT) ACIT vs. Lilavati Kirti Lai Mehta (Mum) (ITAT) CLC 52-67 ITA Nos.235 & 236/Del/2023 8 Since, section 269ST too falls under the same chapter XX- B, hence the ratio of above judicial decisions would also apply to section 269ST also. Even in the following judicial decisions, there are direct decisions in the context of section 269ST which also lay down that the object of section 269ST is to prevent unaccounted income and black money. Finesse International Design Pvt. Ltd. vs. Addl. CIT in ITA No.2561/Del/2022 dated 02.04.2024 (ITAT Delhi Bench) in the context of section 269ST itself. ACIT vs. Lilavati Kirti Lai Mehta (Mum) (ITAT)- CLC 52-67 Even Memorandum to The Finance Act, 2017 also says the same. PB 5-6 is the copy of written submissions before Ld. CIT(A) wherein the relevant portion of the said memorandum is reproduced. 2. The appellant is farm tractors dealer which sells agricultural tractors to the farmers who come with cash & pay advance and balance amounts gradually in instalments and buy the farm tractors inter-alia by paying cash albeit less than Rs. 2 Lakhs at any given point of time. Such cash receipts are duly accounted for in sales and detailed particulars of the farmers are kept by the appellant proving their identity, ID Proof, Aadhar, Land Revenue record of the agricultural land, Form 60 etc., All statements in this regard were duly and regularly filed by the appellant and there is no intention to evade any tax nor there is any evasion of tax nor is there any such allegation made in the impugned order: PB 550-1075 are the ID proof of the farmers PB 446-549 is summary of payment received. PB 30-92 is the cashbook. PB 429-445 is the sale of tractor supported by documentary evidences. ITA Nos.235 & 236/Del/2023 9 PB 27-29 is the copy of p&l a/c and audited balance sheet. PB 4, 20-22 is the copy of written submissions before Ld. CIT(A) on this point. Therefore, when the farmers are identified, sale consideration is duly accounted for as income and to when there is no evasion of tax nor is even any iota of allegation of Ld. JCIT as to existence of any black or unaccounted money, such penalty /s 27IDA to the extent of Rs. 4,69,52,797/-, it is submitted with great respect, is not justified in view of the above Memorandum & Case laws. 3. Penalty is quasi-criminal in character and Hon’ble Courts have held that it should not be imposed for technical or venial breach. Hindustan Steel Ltd. vs. State of Orissa, (1972) 83 ITR 0026 (SC) (CLC 5-11) Deposit or loan in cash exceeding prescribed limit—Finding that transaction was bona fide and default was technical— Penalty could not be imposed—CIT vs. Speedways Rubber P. Ltd. 326 ITR 31 (P&H) Finesse International Design Pvt. Ltd. vs. Addl. CIT in ITA No.2561/Del/2022 dated 02.04.2024 (ITAT Delhi Bench) in the context of section 269ST itself. PB 17-20 is the copy of written submissions before Ld. CIT(A) on this issue. 4. There is a proviso to section 269ST which says that if there are good and sufficient reasons, penalty may not be imposed and this position of law has been accepted in Asst. Director of Inspection (Inv.) vs. Kum. AdEL Shanthi, (2002) 255 ITR 0258 (SC) (CLC 12-21) In the instant case, sale has been made to farmers who have paid in cash for purchase of farm tractors and there were other dealers in the town and insistence would have caused loss of business and hence there was good and sufficient reason for the default, if any. ITA Nos.235 & 236/Del/2023 10 PB 2-5, 9-17 are the copy of written submissions before the Ld. CIT(A) to this effect. Penalty under ss. 27ID and 27IE—Contravention of ss. 269SS and 269T Reasonable cause vis-a-vis journal entries—Though the assessee violated provisions of s. 269SS/269T in passing the journal entries but the same being with a view to raise funds from sister concerns, assign receivables among the sister concerns, adjust or transfer balances, consolidate debts, correct clerical errors, etc., all these transactions being commercial in nature carried out in the normal course of business operations of the group concerns, there is reasonable cause for the said violation and therefore, in the absence of any finding of the AO that the impugned transactions constitute unaccounted money and are not bona fide or not genuine, penalty under ss. 27ID and 27IE was not sustainable—Lodha Builders . (P) Ltd. vs. Asstt. CIT 106 DTR (Mumbai 'E') 226 Penalty under section 27ID—Contravention of s. 269SS Reasonable cause—When the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bona tides of the assessee and the cash given by the lender was not unaccounted money but was duly reflected in their books of account, s. 27313 was applicable and penalty under s. 27 ID was not sustainable.— CIT vs. Smt. Dimval Yadav 126 DTR (All) 60 Penalty under s. 271D—Contravention of s. 269SS— Reasonable cause—Assessee, a builder and developer of lands, having resorted to cash borrowings in order to seize a good business opportunity of purchase certain lands and to reap the advantages of ready cash back-up at the time of negotiations of the purchase of said land, it has to be accepted that there was reasonable cause for resorting to cash borrowing and penalty under s. 271D is no leviable— Jitu Builders (?) Ltd. vs. Add. CIT29 DTR 458(Ahd 'D')™ Assessment year 1998-99 - Assessing Officer levied penalty on assessee society under section 271E on ground that ITA Nos.235 & 236/Del/2023 11 assessee had repaid deposits in cash to various persons in contravention of provisions of section 269T - Whether since repayments of deposits were made to members of assessee - society such transactions were not impeached by department as non genuine and were not noticed outside books of account, and assessee society entertained a bona fide belief that no contravention of any provisions of Act was being made while making repayment of loans / deposits in cash, there was a reasonable cause within meaning of section 273B and no penalty under section 271E could be imposed - Held, yes - Whether therefore, impugned penalty was to be cancelled - Held, yes - MUSLIM URBAN CO- OP.CREDIT SOCIETY LTD. VS. JT.CIT 96 ITD 83 (PUNE). 5. In fact, there was even a bona fide belief that cash could be accepted at any point of time not exceeding Rs. 2 Lakhs and that is how cash was accepted at any given point of time within this limit of Rs.2 lacs. To entertain this belief was quite plausible in view of language of section 269ST which refers to ‘single transaction’ and whereas section 40A(3), 269SS, 269T used the expression ‘aggregate’. Even at one place, section 269ST too uses the expression ‘aggregate” Section 269ST was the new provision and this was the first year and therefore to entertain this belief was not something which was impossible. In fact, receipt of cash in sale of farm tractors from the farmers was a practice since the inception of the assessee. PB 10-12 is the copy of written submissions before Ld. CIT(A) on this issue. 6. Absence of satisfaction as to the impugned penalty is fatal to the levy of penalty. CIT vs. Jai Laxmi Rice Mills, Civil Appeal No. 1457 of2008 and 3614 of 2012 dates 20.11.2015 (SC) (CLC 1-4) ITA Nos.235 & 236/Del/2023 12 7. Alternative submission of the assessee on without prejudice basis is that while quantifying penalty, only excess of Rs. 2 Lakhs should be considered. CIT vs. Ajanta Dyeing & Printing Mills, (2003) 264 ITR 505 (Raj) (CLC 68-69) PB 13-14 is the copy of written submissions before the Ld.CIT(A) on this issue. Sd/- (Appellant/Counsel)” 7. The Ld. Counsel placed reliance on the following decisions in support of the above contentions: 1. “CIT Vs. jai Laxmi Rice Mills in ITA No.1457/2008 dated 20.11.2015 (SC); 2. Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 026 (SC); 3. Asstt. Director of Inspection (Inv.) Vs. Kum. AB Shanthi (2002) 255 ITR 0258 (SC); 4. Arjun Singh Vs. Mohindra Kumar & Ors. 1964 AIR 993 (SC); 5. CIT Vs. Triumph International Finance (I) Limited (2012) 345 ITR 0270 (Bom.); 6. ACIT Vs. M/s Lilavati Kirtilal Mehta Medical Trust, ITA No.1568/Mum/2021 (Mumbai Tribunal); 7. CIT Vs. Ajanta Dyeing & Printing Mills (2003) 264 ITR 505 (Raj.); 8. CIT Vs. Bhagwati Prasad Bajoria (HUF) (2003) 263 ITR 487 (Gauhati); 9. CIT Vs. Speedways Rubber P. Ltd. (2010) 326 ITR 31 (P&H); 10. CIT Vs. Manoj Lalwani (2003) 260 ITR 590 (Jaipur); ITA Nos.235 & 236/Del/2023 13 11. CIT Vs. Dimpal Yadav (2015) 379 ITR 177 (All.); 12. M/s Delhi State Taxi Vs. JCIT ITA Nos. 3107-3108/2019 dated 26.04.2023 (Del.); 13. Finesse International Design Pvt. Ltd. ITA No.2561/2022 dated 02.04.2024 (Del.); 14. Lodha Builders Pvt. Ltd. Vs. ACIT (2014) 34 ITR 0157 (Mum.); 15. Jitu Builders Pvt. Ltd. Vs. Addl. CIT (2010) 124 ITD 134 (All.); 16. Muslim Urban Cooperative Credit Society Ltd. Vs. JCIT (2005) 96 ITD 083 (Pune).” 8. On the other hand, the Ld. DR submits that since the assessee has received cash of rupees more than 2,00,000/- in aggregate from various persons it is a clear violation of provisions u/s 269ST of the Act. The Ld. DR strongly placed reliance on the orders of the authorities below. Ld. DR further submits that as per the provisions of section 269ST(C) of the Act transactions relating to one event or occasion from the person has been violated by the assessee by receiving Rs.2 lakhs and more from the farmers for purchase of tractors from the assessee. Ld. DR further submits that the decision relied on by the Ld. AR in the case of CIT Vs. Jai Laxmi Rice Mills (SC) the facts are different. ITA Nos.235 & 236/Del/2023 14 9. In the rebuttal the Ld. Counsel for the assessee submits that section 269ST sub-clause (c) is not applicable to the assessee since it is for one event or occasion which normally happens in the cases of weddings, engagements, birthday functions etc.. 10. Heard rival submissions, perused the orders of the authorities below and the voluminous documents placed before us. Perusal of the penalty order passed u/s 271DA of the Act by the Assessing Officer suggests that it was levied for the contravention of the provisions of section 269ST. The Assessing Officer is of the view that since the assessee has received sale consideration over and above Rs.2 lakhs in cash from the purchasers the assessee is violated the provisions of section 269ST. Accordingly penalty was levied. The Assessing Officer never doubted the genuineness of the transactions of cash sales. The assessee has furnished all the details in respect of the sales made by the assessee to various farmers who purchased tractors with the assessee. The sample details furnished by the assessee in respect of the sale of tractors to farmer Shri Satendra S/o Nain Singh Village Nagla Kabir District, Muzaffarnagar is as under: - ITA Nos.235 & 236/Del/2023 15 “REPORT SERIAL NO.-39 NAME AND ADDRESS OF CUSTOMER- SATENDRA S/O NAIN SINGH VILL NAGLA KABIR DIST. MUZAFFARNAGAR AADHAR NO. -709963858769 BILL NO. -DFS/1290 DATE 15.12.2018 INSURANCE AMOUNT - TOTAL AMOUNT OF BILL -482001 AMOUNT RECEIVED IN - DATE AMOUNT 12.06.2018 197000/- 10.11.2018 175000/- 15.11.2018 100000/- 15.12.2018 (-) 7500/- 17.12.2018 (-) 9501/- BANK- 10001/- TOTAL- 482001/- CUSTOMER AGRICULTURAL LAND AREA- 4.3110 (HACTARE) TRACTOR REGISTERATION NO.- UP12AX8759 (AGRICULTURAL TRACTOR)” 11. Similar details were furnished with respect to all the farmers who purchase tractors from the assessee. It is not the case of the Assessing Officer that the unaccounted money of the assessee is routed back in the form of cash sales. Neither the bona fide’s of the transactions were in doubt nor questioned by the Assessing Officer. The provision of section 269ST was introduced from ITA Nos.235 & 236/Del/2023 16 01.04.2017 and the assessee was making cash sales right from the inception of its business. We find considerable force in the submissions of the Ld. Counsel that there are good and sufficient reasons for accepting cash over and above Rs.2 lakhs from the farmers on account of sales of tractors. Loss of business could not be afforded by the assessee when the transactions are genuine and the purchaser is identified. 12. The assessee was also under bona fide belief in view of the language of section 269ST which uses the expression “single transaction” and thus, at any given point of time the assessee has recorded transaction of Rs.2 lakhs alone which was entered into provisions of section 269ST were introduced to prevent unaccounted income and black money. Assessee was under bona fide belief that cash could be accepted at any point of time not exceeding Rs.2 lakhs and that is how cash was accepted at any given point of time within this limit of Rs.2 lakhs. It was quite plausible to entertain this belief in view of language of section 269ST which refers to ‘single transaction’ and whereas section 40A(3), 269SS, 269T used the expression ‘aggregate’. Even at one place, section 269ST too uses the expression ‘aggregate’. Section 269ST was the new ITA Nos.235 & 236/Del/2023 17 provision and this was the first year and therefore to entertain this belief was not something which was impossible. 13. Further there is no allegation by the Assessing Officer that the unaccounted income and black money was introduced by the assessee in the form of cash sales. Assessee duly accounted for cash receipts, particulars of farmers are kept proving their identity, aadhar, land revenue record and agricultural land holding of all the farmers, Form 60, etc. and all the statements in this regard were duly and regularly filed by the assessee. In such circumstances it cannot be said that there is any intention to evade tax. 14. As held by the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (83 ITR 26) penalty is quasi criminal in character and therefore it should not be imposed for technical or venial breach. In the case of CIT Vs. Speedways Rubber Pvt. Ltd. (326 ITR 31) the Hon’ble Punjab & Haryana High Court held that when the transactions are bona fide and the default was technical imposing penalty u/s 271D is not justified. Similar view has been taken by the various High Courts referred to above. 15. The coordinate bench of the Delhi Tribunal in the case of Finesse International Design Pvt. Ltd. Vs. Add. CIT in ITA No. ITA Nos.235 & 236/Del/2023 18 2561/Del/2022 dated 02.04.2024 for the AY 2018-19 deleted the penalty levied u/s 271DA of the Act for the technical and venial breach in accepting cash over and above Rs.2 lakhs observing as under: - “2. Following grounds have been raised by the assessee: “1 . That the order dated 12.09.2022 passed u/s 250 of the Income-tax Act, 1961 (hereinafter called “the Act”) by the Ld. Commissioner o f Income-Tax (Appeals) -23, Delhi is against law and facts on the file in as much as he was not justified to partly uphold the action of the Learned Assessing Officer by restricting the penalty levied u/s 271DA o f the Act to Rs. 12,60 ,300/- as against Rs.25 ,78 ,300/- levied by the Ld . Assessing Officer for alleged splitting o f bills made by the Appellant Company during the year under consideration and alleged contravention o f the provisions o f Section 269ST on cash receipts o f Rs. 2 ,00 ,000/- or more in AY 2018- 19 by ignoring the facts and circumstances of the case and submissions filed on behalf of the Appellant Company .” 3. The grounds of appeal are related to levy of penalty u/s 271DA of the Income Tax Act, 1961 on cash receipts of Rs.2,00,000/- by the assessee . Penalty order u/s 271D of the Act has been passed in consequence to the proceedings of search and seizure operation that was conducted on Sh. Rishi Kishan Mehra and Shantanu Mehra, Directors o f M/s Finessee International Design Pvt. Ltd. on 29.05.2018 u/s 132A. During the search operation, incriminating documents related to the assessee were found and seized. Thereafter, proposal for initiating penalty proceedings u/s 271D of the Ac t was received from the Assessing Officer by the Addl. CIT, Central Range-1, New Delhi. On examination of the impounded documents and Assessment order, it was noted by the Addl. CIT, Central Range-1, New Delhi that the assessee company has violated provisions of section 269ST o f Income Tax Act, 1961 by way of cash ITA Nos.235 & 236/Del/2023 19 receipts o f Rs.2,00,000/- or more from a single persons by splitting the invoices against sale of goods at its stores. 4. Aggrieved, the assessee filed appeal before the ld. CIT(A). 5. The ld. CIT(A) deleted the penalty levied made on account of transactions through the bank and confirmed the transactions made through cash. 6. The ld. CIT(A) confirmed the penalty holding that the details of the customers from whom payment in cash exceeding Rs.2,00,000/- has been examined. The ld. CIT(A) held that the assessee has issued two bills to the customer bifurcating it below Rs.2,00 ,000/- and the purpose of bifurcating the bills into two is obvious i.e. circumventing the provisions o f section 269ST. The ld. CIT(A) held that no person issues two bills to the same customer for two different items. The ld. CIT(A) opined that if anyone goes to a shop and purchases 10 items, the bill is one for all the items and the payment is also made in one go . 7. Heard the arguments of both the parties and perused the material available on record. 8. The details are as under: S.No. Name of the Customer Item purchased Date of Invoice Bill Value (in Rs.) 1. Anubhav Gupta Sherwani Kurta Churidar 23.08.2017 155066 2. Anubhav Gupta Shoe 23.08.2017 3400 3. Anubhav Gupta Jodhpuri Trouser 23.08.2017 80500 4. Anubhav Gupta Sherwani Purqree 23.08.2017 22800 5. Anubhav Gupta Shoe 23.08.2017 22000 6. Nisha Bhalla Anarkali Gown and Saree Blouse Petticoat 19.12.2017 81000 7. Nisha Bhalla Gown and Saree Blouse Petticoat 19.12.2017 188000 8. Rohan Kiara 2 pair Lehnga, Choli Dupatta, 2 pair Sherwani, 10.11.2017 1153000 ITA Nos.235 & 236/Del/2023 20 Kurta Churidar and 2 pair Waistcoat Kurta Churidar 9. Rohan Kiara 3 pair shoes 10.11.2017 79000 10. Fahainda Islam Sherwani Kurta Churidar Stole Paqdee 31.12.2017 190000 11. Fahainda Islam Jodhpuri Shirt Trouser 31.12.2017 78000 12. Roopakshi Suri Gown 03.11.2017 230000 13. Nitant Khanna Sherwani Kurta Churidar 27.12.2017 187000 14. Nitant Khanna Jodhpuri Shirt Trouser 27.12.2017 78000 9. In the instant case, the items purchased are marriage dresses and of different items. 10. The provisions of Section 271DA are as under: “Penalty for failure to comply with provisions of section 269ST. 271DA . (1) I f a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt: Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.” 11. Legislative Intention behind introduction of Section 269ST: “Various legislative step s have been taken by the Finance Act, 2017 to curb black money by discouraging cash transaction and by promoting digital economy. These prominently include placing restriction on cash transaction by introduction of new sections 269ST & 271DA to the Income tax Act……… ..” ITA Nos.235 & 236/Del/2023 21 2 . Chapter XX-B which contains the section s 269SS/T/ST, is titled as “Requirement as to mode o f acceptance, payment or repayment in certain cases to Counteract Evasion of Tax.” 12. We have examined the judicial proposition on this issue. The Hon’ble Apex Court in the case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) held that held that penalty may not be imposed when there is technical or venial breach of the provisions of the Act. 13. Good cause’ as defined Lexicon “Reason which is found to be adequate or proper and justified by a court or a competent authority dealing with the matter.” ‘Sufficient cause’ “The expression ‘sufficient cause’ implies no negligence nor inaction nor want o f bona fides on the part of the party”. 14. Reliance is being placed on the following case laws with regard to good and sufficient cause: \u0001 CIT vs. Mysore Fertilizer Co. 145 ITR 91 (Mad.) \u0001 CIT vs. Chembara Peak Estates Ltd. 183 ITR 471 (Ker.) \u0001 CIT vs. Jaipur Electro P. Ltd. 183 ITR 476 (Raj.) \u0001 CIT vs. Bhikaji Ramchandra 183 ITR 478 (Bom.) 15. The Co-ordinate Bench o f ITAT Guwathi in the case of Addl.CIT Vs. Smt. Prahati Baruah in ITA No. 418/Guwahati/1998 has held as under: “5 . Further, section 269T was inserted in the Income- tax Act, 1961, originally by the Income- tax (Second Amendment) Act, 1981 with effect from July 11, 1981. The s cope and effect of section 269T have been elaborated the C .B .D .T.'s Circular No. ITA Nos.235 & 236/Del/2023 22 345, dated June 28, 1982 at para 2 .1 & 2 .2. A reading of the same shows that the introduction of section 269T and section 271E in the statute are to prevent proliferation of black/unaccounted money deposited with banks and other persons by introducing the system of repayment through account payee cheques and drafts and, thus ensure that the identity of the payees is established . In the instant case, it cannot be held that there was any such intention o f the assessee to hide the identity o f the lender. In the facts and circumstances of the case, the identity of the lender to whom repayment has been made is known to the Department and the genuineness of the loan transaction is not in doubt. Hence, in our considered opinion, it cannot be held that the breach of law, if any was deliberate. T he default, if any, at most be said to be a technical default. It has been held by the Hon’ble Apex Court in the case of Hindustan Steels vs. State of Orissa [1972] 83 ITR 26 that penalty cannot be levied merely because the authorities are empowered to levy and when there is technical or venial breach of the provisions of the Act, the authorities competent to impose penalty shall be justified in refusing to impose the penalty .” 16. Hence, keeping in view, the entire facts and peculiar circumstances of the case, we hold that no penalty is leviable in this case.” 16. In view of the above discussion, we hold that the assessee had bona fide reasons to receive cash over and above Rs.2 lakhs and the assessee has reasonable cause in accepting cash over and above Rs.2 lakhs from the farmers against sale of tractors. Penalty cannot be levied for the technical and venial breach. Therefore, we direct ITA Nos.235 & 236/Del/2023 23 the Assessing Officer to delete the penalty levied u/s 271DA of the Act. 17. The Ld. Counsel also made submission that in the absence of recording of satisfaction in the assessment order such penalty cannot be imposed and reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (supra). However, in the case on hand, we observe that there is no assessment order passed u/s 143(3) of the Act and therefore recording of satisfaction does not arise. The decision relied on by the Ld. Counsel may not be applicable to the present facts of the Assessee in these appeals. Since we have deleted the penalty on the ground that there is reasonable cause, this contention of the assessee is left open without expressing any opinion on this aspect of the matter. 18. The facts in the appeal for the AY 2019-20 are identical to the facts in the appeal for the Ay 2018-19 and therefore the decision taken for the AY 2018-19 applies mutatis mutandis to the appeal for the AY 2019-20. We order accordingly. ITA Nos.235 & 236/Del/2023 24 19. In the result, appeals for the AY 2018-19 and 2019-20 are partly allowed as indicated above. Order pronounced in the open court on 21.02.2025 Sd/- Sd/- (NAVEEN CHANDRA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 21.02.2025 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "