KRISHNA WANTI,NEW DELHI V. JCIT RANGE-35, DELHI

ITA 158/DEL/2023

AI Insights

The case involves Krishna Wanti, the appellant, who contested a penalty imposed by the Assessing Officer (AO) under section 271D for alleged violations of section 269SS of the Income Tax Act, 1961, concerning cash transactions. The penalty was initially confirmed by the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre (NFAC), which erroneously applied section 271DA and section 269ST, provisions that were not in effect at the time of the transaction. The Tribunal's decision focused on the retrospective application of these sections, ultimately ruling that the penalty was incorrectly applied as the relevant provisions were enacted after the transaction date.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46891 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: VED JAIN
• Section: 131; 271D

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘C’ BENCH, NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 158/DEL/2023 [A.Y. 2017-18] Krishna Wanti Vs. The J.C.I.T 70, Bhai Parmanand Colony Range - 35 Mukherjee Nagar, New Delhi New Delhi PAN: AARPW 3697 C (Applicant) (Respondent) Assessee By : Shri Ved Jain, Adv Shri Ayush Garg, CA Department By : Shri Daya Inder Singh Sidhu, CIT-DR Date of Hearing : 07.04.2025 Date of Pronouncement : 09.04.2025 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 20.12.2022 for A.Y 2017-18. 2 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti 2. The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case, the order passed by the learned Commissioner Income Tax (Appeals), National Faceless Appeal Centre (CIT(A), NFAC)) is bad, both in the eye of law and on the facts. 2 On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the action of the AO (JCIT, Range-35) levying the penalty of Rs. 33,60,000/- invoking section 271D of the Income Tax Act. 3. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in passing the order by wrongly holding that the assessee has violated the provisions of section 269ST of the Income Tax Act and thus liable for penalty under section 271DA of the Act by grossly ignoring the fact that AO has levied the penalty under section 271D in respect of violation of the provisions of section 269SS of the Income Tax Act. 4. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in ignoring the contention of the assessee that the penalty has been levied by the AO despite there being no contravention of the provisions of section 269SS of the Income Tax Act. 5. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that the penalty has been initiated and levied by the AO without recording any satisfaction as to the contravention of provisions of section 269SS of the Income Tax Act by the assessee. 3 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti 6. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that the penalty has been levied by the AO despite the fact that no cash has been received by the assessee against the alleged sale transaction and thus, there is no contravention of the provisions of section 269SS of the Income Tax Act. 7. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that the penalty has been levied by the AO without bringing on record any evidence which could justify that the assessee has received the cash against the sale of property. 8 On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that the property alleged to have been sold by the assessee does not belong to the assessee and not registered in the name of the assessee. 9. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that alleged agreement to sell on the basis of which the penalty has been levied has no reference that the assessee has received any cash amount from the buyer. 10 On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that civil suit has been filed 4 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti against the alleged document (agreement to sell) and the same is the dumb document which should not be relied upon by the AO. 11. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that AO has made the allegation that the assessee has received the cash without conducting any independent enquiry from the buyer of the property by invoking section 131 of the Income Tax Act. 12. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on fact and in law, in confirming the penalty ignoring the contention of the assessee that the penalty has been levied by indulging into surmises and conjectures without bringing on record any adverse material on record against the assessee. 13. The appellant craves leave to add, amend or alter any of the grounds of appeal. 3. In addition to the above, the assessee has raised an additional ground which reads as under: “On the facts and circumstances of the case, the penalty order passed by the Assessing Officer u/s 271D is bad in law and liable to be quashed in view of the fact that no regular assessment order where penalty has been initiated has been passed against the assessee.” 5 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti 4. Brief facts of the case are that Assessing Officer had made out a case that the assessee has allegedly received cash in violation to the provisions of section 269SS of the Act and, accordingly, a penalty order u/s 271D of the Income-tax Act, 1961 [the Act, for short] was passed on 20.01.2020. 5. Aggrieved, the assessee filed an appeal before the CIT(A) who modified the case of the Assessing Officer by changing the whole of the section in which penalty order was passed by Assessing Officer from section 271D to section 271DA and, accordingly, held that assessee has violated the provisions of Section 269ST as against the case made by the Assessing Officer that assessee has allegedly violated the provisions of Section 269SS. 6. Now the further aggrieved assessee is in appeal before us. 7. Among the many legal grounds taken by the assessee, we find it suffice to adjudicate the legal ground no. 3 taken by the assessee i.e., the learned CIT(A), NFAC has erred both on fact and in law, in passing the order by wrongly holding that the assessee has violated the provisions of section 269ST of the Income Tax Act and thus liable for 6 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti penalty under section 271DA of the Act by grossly ignoring the fact that AO has levied the penalty under section 271D in respect of violation of the provisions of section 269SS of the Income Tax Act. 8. The ld AR of the assessee vehemently argued that the application of section 271DA by the CIT(A) is misapplied and is contrary to law. The invocation of Section 269ST by the CIT(A), NFAC, in the present case is misapplied, as the provision was not in effect at the time of the transaction. The transaction took place on 23.05.2016 before the enactment and assent of the Finance Bill, 2017. Hence, invoking Section 269ST and applying penalties under Section 271DA is legally unsound. It is the say of the ld AR that even if it is assumed that the transaction involved cash, the relevant provisions cannot be retrospectively applied, as they were not in force when the transaction was executed. Thus, the CIT(A) has erred in applying the section 269ST to the assessment year under consideration. 9. The ld DR heavily relied on the orders of the authorities below. The ld DR stated that the CIT(A) has mistakenly invoked the section 269ST and 271DA and this is only a typographical error. 7 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti 10. We have heard the rival submission and have perused the materials on record. We find that the provisions of section 269ST and penalty u/s 271DA was brought in the statutes by the Finance Act, 2017 w.e.f 1.4.2017. We find that the transaction in question took place on 23.05.2016, well before Section 269ST and 271DA was enacted. We are therefore of the considered view that the provisions of section 269ST and 271DA cannot be applied retrospectively, as the law did not exist at the time of the transaction. It is a well-established principle that penal tax provisions cannot be applied retrospectively unless the statute expressly provides for such application. In this case, there is no indication in the Finance Act, 2017 that Section 269ST was intended to apply retrospectively to transactions that occurred prior to its introduction. In view of the above, we hold that the upholding of penalty is not legally valid. 11. We are also of the opinion that the invocation of section 271DA and 269ST is not typographical error as the ld DR has tried to make the case. We say so because the CIT(A)/NFAC has acknowledged the appeal being filed against the levy of penalty u/s 271D for violation of section 269SS. We are thus, of the opinion that the action of CIT(A) in upholding the penalty order u/s 271DA is wholly untenable and bad in law. 8 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti Accordingly, we direct the AO to delete the penalty. The ground no 3 is allowed. 12. Since the penalty is deleted on legal ground, the other grounds taken by the assessee are not adjudicated. 13. In the result, appeal of the assessee in ITA No. 158/DEL/2023 is allowed. The order is pronounced in the open court on 09.04.2025. Sd/- Sd/- [YOGESH KUMAR US] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09th APRIL, 2025. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi 9 ITA No. 158/DEL/2023 [A.Y 2017-18] Krishna Wanti Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order .04.2025 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member .04.2025 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order "