LATE PRAFUL DURLABHBHAI CHAMPANERI L/H. R P MALTIBEN P CHAMPANERI,NAVSARI V. INCOME TAX OFFICER, WARD-4, NAVSARI

ITA 673/SRT/2024

AI Insights

The case involves Late Praful Durlabhbhai Champaneri, who, due to urgent medical needs, received a portion of the sale proceeds of his immovable property in cash, violating section 269SS of the Income-tax Act, 1961. The Income Tax Officer (ITO) initiated penalty proceedings under section 271D, which were upheld by the Commissioner of Income Tax (Appeals). However, the Tribunal, considering the medical emergencies and the expenses incurred for treatment, ruled that the assessee had a reasonable cause for the non-compliance, thus quashing the penalty.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473286 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 28-10-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 12-06-2024
• Other Referred Cases: Woodward Governor India Private Limited vs. CIT, 100 Taxman 433 (Del)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: SUJESH C. SURATWALA
• Keywords: Reasonable cause
• Section: 250; 22; 271D; 273B; 271B; 20

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.673/SRT/2024 Assessment Year: (2016-17) (Hybrid Hearing) Late Praful Durlabhbhai Champaneri, (Through Legal RP Maltiben P. Champaneri), 1, Navsari Tech Institute, Chhapra Road, Navsari, Navsari – 396445 Vs. The ITO, Ward – 4, Navsari èथायीलेखासं./जीआइआरसं./PAN/GIR No: ABNPC6340F (Appellant) (Respondent) Appellant by Shri Sujesh C. Suratwala, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 28/10/2024 Date of Pronouncement 06/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 22.05.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2016-17. 2. The grounds of appeal raised by the assessee are as under: “1. Learned AO as well as CIT(A)/NFAC has erred in leaving penalty for Rs.7,81,000/- U/s 271D of the Act for accepting cash amount towards transfer of Immovable property for the very reason that circumstances prevent him to accept other than cash. 2. On the facts, Circumstances of the case and in law, assesse was suffering from \"Tongue Cancer/Ulcer\" and expired on 02nd January 2024. The cash money received by the assessee towards cancer treatment which is covered well within the definition of Section 273B as \"Reasonable Cause\" but learned CIT(A)/NFAC 2 ITA No.673/SRT/2024/AY.2016-17 Late Praful Durlabhbhai Champaneri failed to appreciate the medical treatment documents along with death certificate hence order passed by the learned CIT(A)/ NFAC should be quash. 3. The appellant craved leaves to add, alter, delete, amend or modify any portion of appeal with the prior permission of CIT (A)/NFAC.” 3. The facts of the case in brief are that as per the information received from ITO, (I&C), Surat, the assessee accepted cash of Rs.7,81,000/- from transfer of an immovable property which was sold for total consideration of Rs.12,71,000/-. For violation of provisions of section 269SS of the Act, penalty proceedings were initiated u/s 271D of the Act vide letter dated 12.03.2021. Penalty show cause notice u/s 271B of the Act was issued to the assessee on 16.07.2021 and 06.10.2021 to furnished reply on or before 02.08.2021 and 11.10.2021 respectively. The assessee had not made compliance to the show cause notices. Thereafter, the assessee’s case was referred to the Designated Verification Unit (DVU) and the assessee was intimated through speed post, but no reply of the assessee was received. Despite ample opportunities provided to the assessee, the assessee failed to furnish reply to the penalty show cause notices. The Addl./Joint CIT observed that there was no reasonable cause for accepting cash of Rs.7,81,000/- on transfer of an immovable property for total sale consideration of Rs.12,71,000/-. The Addl./Joint CIT further noticed that there was a deliberate defiance of law and no cogent reasons for non- compliance of statutory provisions of law has been furnished by the assessee. Thereafter, he imposed a penalty of Rs.7,81,000/- u/s 271D of the Act. 4. Aggrieved by the penalty order, the assessee filed this appeal before the Ld. CIT(A). The Ld. CIT(A) has reproduced the submission of the assessee, 3 ITA No.673/SRT/2024/AY.2016-17 Late Praful Durlabhbhai Champaneri remand report of AO and rejoinder of assessee at page nos. 3 to 20 in his appellate order. The Ld. CIT(A) observed that the assessee had sold immovable property for a consideration of Rs.12,71,000/-. The assessee received Rs.7,81,000/- in cash in violation to section 269SS of the Act out of the said consideration. In Column No.11 of Form 35, the assessee himself accepted that to meet expenses of cancer treatment, the assessee accepted part consideration in cash from the purchaser. The provisions of section 269SS and 271D of the Act were reproduced at page nos. 21 and 22 of the appellate order. The Ld. CIT(A) further observed that the amount of Rs.7,81,000/- was nothing but a “specified sum” as explained in Explanation u/s 269SS of the Act. It is undisputed that the assessee operated bank accounts and there is no proper explanation as to why the sale proceeds could not be deposited through banking channels by cheque or DD or by RTGS. The Ld. CIT(A) had not accepted the assessee’s medical expenses as the payment can be made through banking channels. Finally, the Ld. CIT(A) concluded that the assessee accepted sale proceeds in cash to the extent of Rs.7,81,000/- and held that AO was correct in his action in levying penalty of Rs.7,81,000/- u/s 271D of the Act. Hence, Ld. CIT(A) dismissed the appeal of the assessee. 5. Aggrieved by the order of Ld. CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted a paper book containing page nos.1 to 41. The assessee submitted copy of sale deed no. CKL/1602/2015, dated 20.10.2015 for a consideration of Rs.12,71,000/-, copy of medical treatment done by the assessee at “Kokilaben 4 ITA No.673/SRT/2024/AY.2016-17 Late Praful Durlabhbhai Champaneri Dhirubhai Ambani” Hospital & Medical Research Centre, Mumbai along with necessary lab reports and copy of recent medical bills/reports of recurrence of tongue cancer and undergoing the treatment with ‘Fortis’ Hospital, Mumbai. The assessee in fact expired on 02.01.2024. The sale deed was executed on 20.10.2015 and the admission date at Kokilaben Dhirubhai Ambani Hospital, Mumbai was 30.10.2015, which was only ten days after the sale deed. The Ld. AR submitted that the medical condition of the assessee forced him to receive the sale consideration in cash. He submitted that the case of the assessee is covered under the exception provided in section 273B of the Act. Hence, he requested to quash the penalty u/s 271D of the Act. 6. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) of the Revenue supported the order of lower authorities. 7. We have heard both the parties and perused the materials available on record. The assessee has submitted copy of the sale deed which is at page 1 to 26 of the paper book. The sale deed was registered on 20.10.2015 for a total consideration of Rs.12,71,000/-. The assessee has received Rs.4,90,000/- in cheque and Rs.7,81,000/- in cash. This is evident from page 4 of the sale deed. The assessee was admitted to Kokilaben Dhirubhai Ambani Hospital and Medical Research Institute, Mumbai on 30.10.2015 and was discharged on 03.11.2015, which is evident from pages 27 to 30 of the paper book. He was diagnosed with tongue cancer and was under the care of Dr. Rajesh Mistry. He underwent wide local excision on 31.10.2015 by Dr. Mistry under GA (general anaesthesia). Subsequently, he has taken treatment at Fortis Hospital Limited, Bhandup, West 5 ITA No.673/SRT/2024/AY.2016-17 Late Praful Durlabhbhai Champaneri Mumbai due to recurrence of the said diseases. The details of medical treatment and report of recurrence of tongue cancer are at pages 27 to 41 of the paper book. It is therefore clear that the assessee had undergone treatment for cancer at Kokilaben Dhirubhai Ambani Hospital, Mumbai from 30.10.2015, only 10 days after the sale deed of 20.10.2015. Therefore, the plea of the Ld. AR that there was reasonable cause which prevented the assessee from complying with the provisions of section 269SS of the Act cannot be brushed aside. As per section 273B of the Act, no penalty shall be imposable under provisions of various sections including section 271D of the Act mentioned therein on a person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. The Hon’ble Delhi High Court in case of Woodward Governor India Private Limited vs. CIT, 100 Taxman 433 (Del) held that ‘reasonable cause’ as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state or circumstances, which assuming to be true would reasonably read any ordinary prudent and cautious man placed in the position of the person concerned, to come to the conclusion that the same was right thing to do. In the present case, the assessee was suffering from tongue cancer. He was to be treated at Kokilaben Dhirubhai Ambani Hospital, Mumbai which is a very expensive hospital. Ten days before he was admitted to the hospital on 30.10.2015, he has sold the property vide sale deed dated 20.10.2015. It is also seen that there was recurrence of tongue 6 ITA No.673/SRT/2024/AY.2016-17 Late Praful Durlabhbhai Champaneri cancer for which he was treated at Fortis Hospital Limited, Bhandup, West Mumbai. The assessee finally expired on 02.01.2024. It is common knowledge that treatment at Kokilaben Dhirubhai Ambani Hospital, Mumbai is very expensive. The assessee was residing at Navsari but the treatment was taken in Mumbai. Hence, due to medical urgency, he has accepted cash amounting to Rs.7,81,000/- which is clearly mentioned in the sale deed. The assessee has not hidden anything from the knowledge of the Department. In view of the above facts, we are of the considered view that the assessee has been able to establish ‘reasonable cause’ within the meaning of section 273B of the Act for non- compliance of provisions of section 269SS of the Act. Accordingly, penalty levied u/s 271D of the Act by the Addl. / Joint CIT and confirmed by the Ld. CIT(A) is set aside. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 06/11/2024 Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 06/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "