PANDHARINATH TUKARAM PATHARE, Pune V. Additional Commissioner of Income Tax(NFAC), Delhi, Delhi

ITA 46/PUN/2023

AI Insights

The case involves Mr. Pandharinath Tukaram Pathare, who appealed against a penalty imposed by the A.O for contravening section 269SS of the Income-tax Act by accepting a cash payment of Rs. 10,00,000 during a property sale. The NFAC upheld the penalty, rejecting the assessee's explanation that the cash was needed for urgent medical expenses. The Tribunal, however, found that the correct provision to be applied was section 269ST, which was not in effect during the relevant financial year, leading to the conclusion that the penalty was unjustified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124363 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 11-01-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 273B; 271D; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI INTURI RAMA RAO, A.M. AND SHRI PARTHA SARATHI CHAUDHURY, JM ITA No. 46/PUN/2023 : Assessment Year : 2017-18 Mr. Pandharinath Tukaram Pathare Sr.No. 49/2 Pathare Complex, Chandannagar Kharadi, Pune-411 014 PAN; AIXPP2101J Appellant Vs. The Asstt. CIT (NFAC), Delhi Respondent Appellant by : Shri Sarvesh Khandelwal Respondent by : Shri M.G. Jasnani Date of Hearing : 27-03-2023 Date of Pronouncement : 28-03-2023 ORDER PER SHRI PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 16-12-2022 for the Assessment Year 2017-18 on the following grounds of appeal. 1. On the facts and circumstances prevailing in the case and as per provisions of law and scheme of the Act it be held that the JCIT has erred in holding that the explanation offered and supporting documents submitted by the appellant in response to the show cause notice u/s 274 r.w.s. 271D are not acceptable and has erred in concluding that the appellant has contravened the provisions of section 269SS of the Act. The order passed by the JCIT has been upheld by the CIT(A). the penalty of Rs. 10,00,000/- levied u/s 271D and upheld by the first appellate authority in the case is unjustified and unwarranted. The same may kindly be directed to be deleted. 2. The appellant prays to be allowed to add, amend, modify, recitify, delete, raise any grounds of appeal at the time of hearing.” 2. The only effective ground of appeal is the imposition of penalty of Rs. 10,00,000/- u/s 271D of the Income-tax Act, 1961 (hereinafter referred to as the ‘Act’). During the course of assessment proceedings, it was noticed that the assessee had sold his property at Lohegaon on 20-11-2016 and received his share of consideration of Rs.1,30,20,000/- from sale of property at Lohegaon. 2 ITA No. 46/PUN/2023 Pandhrinath Pathare A.Y. 2017-18 The assessee shown capital gain of Rs. 1,26,68,437/-. On verification of the sale deed, it was observed by the A.O that the assessee had received cash of Rs. 10,00,000/- on 14-12-2015 from the purchasers as per the sale deed. The assessee had taken Rs. 10,00,000/- in cash and hence, the AO applying the provisions of sec. 269SS r.w.s. 271D of the Act imposed penalty of Rs. 10,00,000/- on the assessee for contravention of provisions of sec. 269SS of the Act. 3. Before the NFAC as well as before the A.O during the penalty proceedings, the assessee had submitted that owing to the need of medical emergencies of his son he was in need of funds on urgent basis. Hence, he has taken the above amount as he had to deposit in cash in Bombay Hospital and other hospitals in Pune. The reason that the assessee had accepted the amount of Rs. 10,0,000/- in cash due to illness of his elder son was not acceptable to the NFAC as appearing in its order at page 6 and accordingly, it was held that the reason given by the assessee was general in nature and does not explain the reasonable cause within the meaning of section 273B of the Act and thus penalty u/s 271D of the Act was confirmed. 4. We have heard the rival contentions, considered the materials / documents available on record, analysed the facts and circumstances of this case. The crux of the transaction is that the assessee had sold his property at Lohegaon and had received his share of consideration from sale of the property. During the course of assessment proceedings, it was observed by the A.O that the assessee thus receiving sale consideration had received the amount of Rs. 10,00,000/- in cash. Accordingly, the A.O has invoked provisions of section 269SS r.w.s. 271D of the Act and passed an order of penalty on 15-09-2021 imposing penalty of Rs. 10,00,000/- on the assessee 3 ITA No. 46/PUN/2023 Pandhrinath Pathare A.Y. 2017-18 for the above alleged contravention. Section 269SS is a provision which prevents a person to accept loan or deposit otherwise than by account payee cheque or account payee bank draft or use of electronic clearing system...... . Therefore, this provision lays down the category of transaction where a person is accepting loan or deposit than what is the mode in which such loan or deposit can be taken or accepted. But as examined in the case of the assessee, it is neither a question of loan nor it is a deposit. It is the sale consideration accepted by the assessee by selling the plot of land. The applicable provision in this case should have been sec. 269ST of the Act. Now this provision i.e. sec. 269ST has been introduced by the Finance Act, 2017 w.e.f. 01-04-2017 i.e. for F.Y. 2017-18 relevant to A.Y. 2018-19, whereas the case of the assessee falls in F.Y. 2016-17 relevant to A.Y. 2017-18 and thus it is outside the rigors of provisions of section 269ST also, meaning thereby the A.O has applied wrong provision to the facts of assessee’s case and has imposed penalty u/s 271D of the Act. When the very basis of imposing penalty for contravention of substantive provision is applied wrongly, then there cannot be any legal sustenance of such a penalty order. In view thereof, we set aside the order of NFAC and direct the A.O to delete the penalty from the hands of the assessee. The grounds of appeal are allowed. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 28 TH day of March 2023. Sd/- sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, the 28 th day of March 2023. Ankam 4 ITA No. 46/PUN/2023 Pandhrinath Pathare A.Y. 2017-18 Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The NFAC Delhi 4. Pr. CIT concerned. 5. The D.R. ITAT ‘A’ Bench Pune. 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. 5 ITA No. 46/PUN/2023 Pandhrinath Pathare A.Y. 2017-18 Date 1 Draft dictated on 27-03-2023 Sr.PS/PS 2 Draft placed before author 28-03-2023 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 28-03-2023 Sr.PS/PS 7 Date of uploading of order 28-03-2023 Sr.PS/PS 8 File sent to Bench Clerk 28-03-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order