RAJU SIDDAIAH,ANJANAPURA V. INCOME TAX OFFICER, WARD-1(2)(6), BANGALORE

ITA 1985/BANG/2024

AI Insights

The case involves Raju Siddaiah, an employee of Bharat Sanchar Nigam Limited (BSNL), who appealed against a penalty imposed under section 271D of the Income Tax Act for accepting cash exceeding Rs. 20,000 during the sale of two immovable properties. The Assessing Officer (AO) had initially accepted the explanation that the cash deposits were from the sale proceeds but later imposed a penalty for contravening section 269SS, which prohibits such cash transactions above the specified limit. The Commissioner of Income Tax (Appeals) upheld the penalty, leading to the current appeal before the Tribunal. The Tribunal, after considering the circumstances and the genuine nature of the transaction, decided in favor of the assessee, citing the provisions of section 273B which allows for non-imposition of penalties if there is a reasonable cause.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34143 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji and Ors., People Education & Economic Development Society Vs/ ITO, Dimple Yadav, Charan Dass Ashok Kumar v. CIT, Auto Piston MFG. Co. (P.) Ltd. v. CIT, P. Baskar v. CIT, M. Janardhana Rao v. Jt. CIT, Bhagwati Prasad Bajoria (HUF) v. CIT, Chamundi Granites (P.) Ltd. v. Dy. CIT/Asstt. Director of Inspection v. Kum. A.B. Shanthi, CIT Vs. Panchsheel Owners Associations
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Assessee Lawyers: LAXMI GARLAPATHY
• Keywords: Condonation of delay; Reasonable cause; Search and seizure; Initiation of penalty proceedings
• Section: 142(1); 143(2); 250; 13; 274; 271D; 273B

Judgement Text

"ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1985/Bang/2024 Assessment Year: 2017-18 Raju Siddaiah No.17, Near TCH College Hari Nagar Cross Anjanapur Post Bangalore 560 062 PAN NO :ATRPS2954B Vs. ITO Ward-1(2)(6) Bangalore APPELLANT RESPONDENT Appellant by : Smt. Laxmi Garlapathy, A.R. Respondent by : Sri V. Parithivel, D.R. Date of Hearing : 25.11.2024 Date of Pronouncement : 21.01.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 22.8.2023 vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1055330017(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 2 of 17 ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 3 of 17 ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 4 of 17 3. There is a delay of 419 days in filing the appeal before this Tribunal. The assessee has filed an application dated 16/10/2024 addressed to the Asst. Registrar, Income Tax Appellate Tribunal, Bengaluru requesting for considering of condonation of delay not accepted by the ld. CIT(A)/NFAC, however on going through the order of the of the ld. CIT(A)/NFAC we find that in fact on para-7 of the order, he had clearly observed that the delay deserves to be condoned & accordingly condoned the delay & the appeal was admitted for adjudication on merits. Therefore we are of the opinion that the application dated 16/10/2024 become Infructuous. Further, the assessee has also filed an affidavit dated 23/11/2024 stating reason for the delay in filing the appeal before this Tribunal. The main reason as stated that the CA of the assessee was otherwise busy in audit & other work and hence, the assessee could not file the appeal within time and accordingly prayed that the delay in filing the appeal by 419 days may be condoned in the interest of justice and equity as on merits also the assessee has very good chance to succeed. 4. We have gone through the affidavit filed by the assessee stating the reason for delay in filing the appeal before us. It is explained that CA who was pre-occupied with the audit and other cases could not file the appeal on time. Consequently, for the delay on the part of the CA of the assessee we cannot say that the assessee is very callous in his approach. 4.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 5 of 17 (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 4.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 6 of 17 Therefore, in our opinion, by preferring the substantial justice, the delay of 419 days has to be condoned. 4.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”. 4.4 Accordingly, we condone the delay of 419 days in filing the appeal before us and admit the appeal for adjudication. 4.5 Before leaping straightaway to the penalty proceedings, it is very much pertinent here to discuss with regard to assessment proceedings for each of the understanding and appreciating the real facts which leads to the initiation of penalty proceedings. 5. Brief facts or the case are that the assessee being an employee working in Bharat Sanchar Nigam Limited (BSNL), e-filed his return of income for the assessment year 2017-18 on 21.7.2017 declaring total income of Rs.3,52,800/-. The case was thereafter selected for the limited scrutiny through CASS to verify “Cash deposited during the year”. Accordingly, the notices u/s 143(2) as well as 142(1) of the Act were issued calling for the details. In response to notices, the assessee furnished copy of bank statement of Canara Bank bearing account No.2476101006038. On verification of bank statement, it was seen that there are cash deposits aggregating Rs.10,20,500/- during the year under appeal. The assessee duly explained that cash deposit of Rs.20,500/- (Rs.2,500/-+Rs.4,000/-+Rs.13,500/-+Rs.5,00/-) are from salary ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 7 of 17 savings. Further, the cash deposits of Rs.10,00,000/- (Rs.2,68,000/- + Rs.7,32,000/-) are out of the sale proceeds of immovable properties. During the course of assessment proceedings, the assessee also submitted the copies of sale deed as well as purchase deed. The AO found assessee’s explanation for cash deposits are out of sale proceeds of immovable properties and the claim of the assessee is correct and accordingly completed the assessment. 5.1 Thereafter in accordance with the provisions of section 274 of the Act, a show cause notice u/s 271D of the Act was issued and served on 20.3.2020 and assessee was asked to explain why an order imposing a penalty u/s 271D of the Act should not be imposed for the contravention of the provision of section 269SS of the Act. However, the assessee had not responded to the show cause notice. The AO in absence of any submission issued another show cause notices on 14.6.2021 and 21.1.2022. However, again the assessee had not responded to any of the notices. Accordingly, the AO held that it is a fit case for imposition of penalty u/s 271D of the Act amounting to Rs.10,32,000/- as the assessee for the reasons best known to him chosen to remain silent to the various statutory/show cause notices without offering any explanation. Aggrieved by the penalty order dated 17.2.2022 passed u/s 271D of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC. 5.2 The ld. CIT(A)/NFAC dismissed the appeal of the assessee by observing that the assessee sold two immovable properties on 22.3.2017 and received an amount of Rs.6,66,000/- for each property, out of which Rs.5,16,000/- is received in cash for each property. The ld. CIT(A)/NFAC uphold that since the assessee has accepted the cash towards the consideration of sale of immovable ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 8 of 17 property which is more than Rs.20,000/-and the penalty proceedings u/s 271D of the Act is for the contravention of provision of section 269SS of the Act and hence the assessee is liable for penalty u/s 271D of the Act amounting to Rs.10,32,000/- and accordingly dismissed the appeal of the assessee. 5.3 Aggrieved by the order of ld. CIT(A)/NFAC, the assessee filed the present appeal before this Tribunal. 5.4 The solitary issue that is raised whether the ld. CIT(A)/NFAC justified in confirming the penalty levied u/s 271D of the Act as the assessee has received Rs.10,32,000/- in cash on sale of immovable property? 5.5 Before us ld. A.R. of the assessee vehemently submitted that the authorities below ought to have appreciated that there is reasonable and sufficient cause as the acceptance of cash payment was required at the time of registration for completion of the sales transaction as the buyer did not pay the A/c payee cheque or draft well before the date of the registration and therefore, the penalty should not be levied as per the provisions contained in section 273B of the Act. Further, ld. A.R. of the assessee submitted that the amount received was only towards the sale consideration at the time of registration of property, which had also been accepted by the AO during the course of assessment proceedings and therefore, this is not a case of any black money in loans/deposits/advances as well as property transactions. 6. The ld. D.R. on the other hand supported the orders of the authorities below and submitted that it is a clearcut violation of the provision of section 269SS of the Act by accepting the amount ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 9 of 17 which is more than Rs.20,000/-. Therefore, the penalty of Rs.10,32,000/- is justified. 7. We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that originally the case was selected for limited scrutiny for examining cash deposited during the year. As the assessee duly explained the cash deposited on 24/03/2017 amounting to Rs.10,00,000/- (Rs.2,68,000/- + Rs.7,32,000/-) by submitting that the same were from the sale proceeds of two immovable properties on 22.3.2017, the AO after considering assessee’s explanation also found that deposits are out of the sale proceeds of immovable properties only and accordingly completed the assessment. We are of the considered opinion that there is no dispute on the amount of money received by the assessee in the impugned transaction on sale of property. Therefore, the genuineness of the transaction is clearly established. 7.1 The purpose of introduction of section 269SS of the Act was discussed in the judgement of Hon’ble Allahabad High Court in the case of Dimple Yadav reported in 379 ITR 177 (All.), wherein the Court considered the recourse of section 271D of the Act and also the provisions of section 273B of the Act to hold as under: “6. The short question that arises for consideration is, whether any penalty could be imposed under Section 271D of the Act? 7. The learned counsel for the department contended that the unsecured loan, which was more than Rs.20,000/- taken by the assessee from a political party should have been taken by a cheque or a demand draft through banking channels, which had not been done. The taking of the loan in cash, which was more than Rs.20,000/- was in gross violation of Section 269SS of the Act and, consequently, by operation of law, the penalty was rightly imposed, which had wrongly been deleted by the appellate authorities. The learned counsel contended that there was no urgency for the assessee to receive the entire amount in cash nor any dire need was shown for taking such huge amount in cash. In support of his submission, the learned counsel has placed reliance upon a decision of the Punjab and Haryana ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 10 of 17 High Court, Charan Dass Ashok Kumar v. CIT [2014] 365 ITR 367/[2015] 231 Taxman 513/[2014] 52 taxmann.com 424 and Auto Piston MFG. Co. (P.) Ltd. v. CIT [2013] 355 ITR 414/218 Taxman 150 (Mag.)/38 taxmann.com 61 (Punj. & Har.) as well as the decision of the Madras High Court P. Baskarv. CIT [2012] 340 ITR 560/21 taxmann.com 78. 8. On the other hand, Sri Vijay Bahadur Singh, the learned Senior Counsel contended that the transaction of loan found place in the books of accounts of the assessee as well as by the lender, namely, the Samajwadi Party and that the assessing authority while completing the assessment order had found that the transaction of loan was genuine. The learned counsel submitted that in the absence of any finding that the transaction of loan was not genuine or it was a sham transaction to cover unaccounted money, no penalty could be imposed. In support of his submission, the learned Senior Counsel relied upon a decision of Gauhati High Court in CIT v. Bhagwati Prasad Bajoria (HUF)[2003] 263 ITR 487/133 Taxman 426, Chamundi Granites (P.) Ltd. v. Dy. CIT/Asstt. Director of Inspection v. Kum. A.B. Shanthi [2002] 255 ITR 258/122 Taxman 574 (SC)and M. Janardhana Rao v. Jt. CIT [2005] 273 ITR 50/142 Taxman 722 (SC). 9. In order to appreciate the submission of the learned counsel for the parties, it would be appropriate to refer to a few provisions which will have a bearing to the issue involved in the present case, namely, Sections 269SS, 271D and Section 273B of the Act. For facility, the said provisions are extracted hereunder: '269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if – (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by, – (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 of the ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 11 of 17 Companies Act, 2013 (18 of 2013); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation. - For the purposes of this section, – (i) \"banking company\" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) \"co-operative bank\" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); (iii) \"loan or deposit\" means loan or deposit of money; (iv) \"specified sum\" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property whether or not the transfer takes place. 271D.(1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 273B. Notwithstanding anything contained in the provisions of clause (b) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271H, section 271-I, clause (c) or clause (d) of sub- section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA, or section 272B or sub-section (1) or sub-section (1A) of section 272BB or clause (b) of subsection (1) of section or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the 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.' 10. The object of introducing Section 269SS of the Act was to ensure that a tax payer was not allowed to give false explanation for his unaccounted money or if the tax payer made some false entries, he would not escape by giving false explanation for the same. It was found that during the search and seizure, unaccounted money was found and the tax payer usually gave an explanation that ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 12 of 17 he had borrowed or received deposits from his relatives or friends and, consequently, it became easy for the so called lender to manipulate his record to suit the plea of the tax payer. In order to curb this menace, Section 269SS of the Act was introduced to do away with the menace of making false entries in the account books and later give an explanation for the same. Section 269SS of the Act consequently, required that no person shall take or accept any loan or deposit, if it exceeds more than Rs. 20,000/- in cash. 11. Section 271D of the Act provided that a person who takes or accepts any loan or deposit in contravention of the provision of Section 269SS of the Act, he would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted. 12. Section 271D of the Act caused undue hardship to the tax payers where they took a loan or deposit in cash exceeding Rs. 20,000/- even where there was a genuine or bona fide transaction. The legislature accordingly, introduced Section 273B of the Act, which provided that if there was a genuine and bona fide transaction and the tax payer could not get a loan or deposit by an account payee cheque or demand transaction for some bona fide reason, the authority vested with the power to impose penalty had a discretion not to levy the penalty. 13. In Chamundi Granites (P.) Ltd. (supra) the Supreme Court considered the provision of Section 271D and 273B of the Act and held:— \"It is important to note that another provision, namely section 273B was also incorporated which provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision is he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by account-payee cheque or account-payee demand draft, then the penalty may not be levied. Therefore, undue hardship is very much mitigated by the inclusion of section 273B in the Act. If there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power.\" 14. In Bhagwati Prasad Bajoria's (HUF) (supra) the Gauhati High Court held: \"..... The transaction of loan has found place in the books of account of the assessee as well as the lender of the loan. None of the authorities have reached the conclusion that the transaction of the loan was not genuine and it was a sham transaction to cover up the unaccounted money. It appears to us that the assessee felt need of money and thus he approached the money-lender for advancement of the money, the transaction is reflected in the promissory notes executed by the assessee in favour of the lender. When there is an immediate need of money the person cannot get such money from the nationalised bank to satisfy the immediate requirement. .....\" ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 13 of 17 15. In the instant case, we find that the Tribunal has given a categorical finding that the assessee had established a reasonable cause for failure to comply with the provision of Section 269SS of the Act. The Tribunal further found that the loan given by the Samajwadi Party was a genuine loan, which was reflected in the books of accounts on account of the Samajwadi Party as well as in the books of account of the assessee and that the cash given by the party was deposited in the bank of the assessee and, thereafter, used for the purpose of converting the nazul land into free hold. The Tribunal found that the genuineness of the transaction was also not disputed by the Assessing Officer. 16. In the light of the aforesaid, we find that even though the assessee had taken a loan in cash, nonetheless, the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bona fides of the assessee. The cash given by the lender was not unaccounted money but was duly reflected in their books of account. The Assessing Officer also accepted the explanation and found the transaction to be genuine. The contention of the learned counsel for the appellant that since there was no urgency, the assessee could have taken the loan through cheque and should have processed the matter through regular banking channels is immaterial, inasmuch as the genuineness of the transaction has not been disputed by the Assessing Officer. Further, we find that the cash was deposited in the bank account of the assessee and the money was thereafter, routed through the banking channel for payment to the government for converting the land into free hold property. 17. In the light of the aforesaid, we are of the view that reasonable cause had been shown by the assessee and the provisions of Section 273B of the Act was applicable. The appellate authorities were justified in holding that no penalty could be imposed since a reasonable cause was shown by the assessee.” 7.2 Though the judgement cited (supra) was given before the introduction of amendment, wherein property transaction in cash was included, but the basic premise of section 269SS of the Act remains the same i.e. to deter the use of unaccounted money and allow relief as per provisions of section 273B of the Act considering reasonable cause. On a similar footing, the Hon’ble Gujarat High Court in CIT Vs. Panchsheel Owners Associations (2017) 395 ITR 380 (Guj) (HC), held that “genuineness of the transaction had not been disputed and there is reasonable cause”. The Hon’ble Supreme Court in the case of Chamundi Granites (Pvt.) ltd. (2002) (122 taxman 574) (SC) while considering hardship caused by section 269SS of the Act as appended to the provisions of section 273B of the Act and held that “section 273B of the Act was also ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 14 of 17 incorporated which provides that notwithstanding anything contained in the provisions of section 271D of the Act, no penalty shall be imposable on the 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 such failure and if the assessee proves that there was reasonable cause for failure to take a loan and otherwise than by account payee cheque, or account payee demand draft, then the penalty may not be levied”. 7.3 The test to be provided for reasonable cause u/s 273B of the Act by Hon’ble Supreme Court (255 ITR 258) for section 271D r.w.s. 269SS of the Act which are as under: a) Reasonable cause to take a loan otherwise than by account payee cheque or draft and b) Transaction is Bonafide. 7.4 If assessee does not fulfil both of these tests of reasonable cause, assessee fails to substantiate with evidences, Bonafide not of taking/accepting the sales consideration in cash and he was unable to procure the sales consideration by account payee cheque or account payee demand draft. 7.5 Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure. A clause beginning with 'notwithstanding anything' is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict, an over-riding effect over the provision or Act mentioned in the non obstante clause - Orient Paper & Industries Ltd. v. State of Orissa AIR 1991 SC 672. A non obstante clause may ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 15 of 17 be used as a legislative device to modify the ambit of the provision or law mentioned in the non obstante clause, or to override it in specified circumstances - T.R. Thandur v. Union of India AlR 1996 SC 1643. The true effect of the non obstante clause is that in spite of the provision or the Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstanteclause will not be an impediment for the operation of the enactment - Smt. Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi ÅIR 1996 SC 1963. Therefore, in order to bring in application of section 27ID of the Act in the backdrop of section 273B, absence of reasonable cause, existence of which has to be established by the assessee, is the sine qua non. 7.6. Levy of penalty under section 271D is not automatic. Before levying penalty, that concerned officer is required to find out that even if there was any failure referred to in the concerned provision, the same was without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. '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 a probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. The cause shown has to be considered and only if it is found to be frivolous, ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 16 of 17 without substance or foundation, the prescribed consequences will follow. 7.7 In the instant case, sale of property and consequent receipt of sale consideration in cash are not disputed by the either side. The assessee had only sold his two immovable properties on 22.3.2017 for Rs.6,66,000/- each out of which Rs.5,16,000/- was received in cash for each property. The genuineness of the transaction is also accepted by the AO in the Assessment proceedings. The assessee after receiving the cash amounting to Rs.10,32,000/- on the date of the registration of sale deed i.e. on 22/03/2017 immediately deposited the cash of Rs.10,00,000/- on 24/03/2017 into his bank Account. The contention of the assessee is that the buyer had not given the account payee cheque or demand draft well before the date of registration of the sale deed & he was compelled to accept the cash on the date of the registration of sale deed. Further he had no choice but to accept the cash on the date of the registration in order to complete the registration of sale deed. The assessee had also to acknowledge before the Registering Authority about the receipt of full & final amount against the sale consideration of immovable property. 7.8 Keeping all facts and relevant case laws (supra) into consideration, in our considered opinion, there is a reasonable cause for contravention to section 269SS of the Act in accepting cash otherwise than account payee cheque/account payee draft in the case of the assessee and further the genuineness of the transactions is also accepted by the AO. We find the claim of the assessee is Bonafide and within the meaning of provisions of section 273B of the Act and accordingly we direct the AO to delete the penalty levied u/s 271D of the Act amounting to Rs.10,32,000/-. ITA No.1985/Bang/2024 Raju Siddaiah, Bangalore Page 17 of 17 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 21st Jan, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 21st Jan, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "