RAM KRISHAN SANDHU,NEW DELHI V. JCIT RANGE 64 NEW DELHI, NEW DELHI

ITA 2505/DEL/2024

AI Insights

The case revolves around a penalty imposed on Ram Krishan Sandhu for receiving a part of the sale consideration in cash during the sale of immovable property, which was alleged to be in violation of section 269SS of the Income Tax Act, 1961. The assessee sold a property for Rs. 1,12,00,000, receiving Rs. 11,40,320 in cash and the remainder through banking channels. The Assessing Officer initiated penalty proceedings under section 271D, which was upheld by the CIT(A). However, the ITAT found that the cash received was part of the sale consideration and not an advance, thus not falling under the ambit of section 269SS as amended by the Finance Act, 2015. The Tribunal's decision was influenced by the interpretation of the amended section and the intent behind the legislative change aimed at curbing black money in real estate transactions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 838142 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 18-05-2024
• Other Referred Cases: ITO Vs. Sh. R. Dhinagharam (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: K.V.S. GUPTA
• Keywords: Reasonable cause; Capital Gains
• Section: 273B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Manish Agarwal, Accountant Member ITA No. 2505/Del/2024 :Asstt. Year: 2017-18 Ram Krishan Sandhu, D-748, Chitranjan Park, New Delhi-110019 Vs JCIT, Range-64, New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AOQPS7943N Assessee by: Sh. K. V. S. Gupta, Adv. Revenue by: Sh. Ajay Kumar Arora, Sr. DR Date of Hearing: 18.12.2026 Date of Pronouncement: 18.02.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: This assessee’s appeal for Assessment Year 2017-18 is directed against order of the CIT(A)/NFAC, Delhi’s dated 24.04.2024, in proceedings u/s 271D of the Income Tax Act, 1961 (in short “the Act”). 2. Brief facts of the case are that the assessee has filed return of income declaring an income of Rs.21,39,230/- which was processed under section 143(1) of the Act. During the course of hearing, it was observed that the assessee sold an immovable property bearing No. C-1/73, West Enclave, Pitampura, Delhi to Shri Babu Ram &others for a total sale consideration of Rs. 1,12,00,000/- vide sale deed dated 10.05.2016. Out of the total sale consideration of Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 2 Rs.1,12,00,000/-, a sum of Rs. 11,40,320/- was received in cash and the balance amount of Rs. 99,47,680/- was received through banking channels. The assessee disclosed the entire sale consideration, including the cash component of Rs.11,40,320/-, in the return of income for A.Y. 2017–18 and offered capital gains to tax. Thereafter, penalty proceedings under section 271D were initiated on 01.02.2019 and show- cause notice dated 02.02.2019 was issued to the assessee. In response, the assessee filed his reply dated 13.8.2019, which has been duly considered by the Assessing Officer and held as under: “3. The submission and explanation of assessee has been carefully examined. The assessee’s explanation is that there was agreement between the vendor and vendees to transfer the property at a consideration of Rs. 1,12,00,000/- which is above the circle rate. He also explained that as the Bank sanctioned only Rs. 99,47,680/- as loan to the buyers and the fact was known only when both parties were present before Sub- Registrar for completing the registration of sale deed, the situation compelled him to accept part payment of Rs. 11,40,320/- in cash. The argument of assessee is that had he insisted on full cheque payment, he would have lost out on a priced customer who was willing to pay above the circle rate. The reasons given by assessee for receipt of sale consideration in cash is found to be without sufficient cause as nothing prevents the vendees to make the payment of balance sale amount in cheque and the vendor from insisting on the same. Both the parties must have had extensive talks and discussions before presenting themselves before the Registrar. Therefore, to state that the fact of bank loan being below the agreed sale consideration amount came to notice only when both parties presented themselves before Registrar is something which does not take place in normal circumstances but rather borders as concoction of events only to help explain the case. The assessee also failed to place any cogent evidences to substantiate this Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 3 explanation. Therefore, this explanation of assessee submitted to constitute reasonable cause is rejected. 3.1 It is however true that in the relevant IT returns filed for A.Y. 2017-18, assessee had disclosed the entire sale consideration and also offered Capital Gain of Rs. 10,60,003/- to tax. However, this doesn’t negate the fact that in the stated transaction cash of Rs. 11,40,320/- was received in contravention of section 269SS of I.T. Act, 1961 regarding which assessee has failed to give explanation to show reasonable cause with cogent evidences. In his submission, assessee has quoted decision of Hon’ble Apex Court is MotilalPadampal Sugar Milk Co. Ltd. but it is observed that the cited case law is not squarely applicable to the instant case.” 3. Aggrieved, the assessee filed appeal before the ld. CIT(A) who vide order dated 24.04.2024, dismissed the appeal and confirmed the penalty under section 271D made by the AO. 4. Aggrieved by the order of the ld. CIT(A), the assessee filed appeal before us and raises the following grounds of appeal: “1. The action of Ld. CIT(A) Delhi in upholding the action of Ld. JCIT in imposing penalty of Rs. 11,40,320.00 and coming to the conclusion that there was no reasonable cause his illegal, arbitrary, unwarranted, uncalled for, and against the facts and circumstances of the case. 2. The action of Ld. CIT(A) in upholding acting of Ld. JCIT in not considering the fact that there is no evasion of tax as the cash received was duly disclosed in the income tax return much before notice u/s 27ID was issued voluntary and that itself being a reasonable cause, penalty is liable to be deleted. 3. On the facts and in law the Ld. CIT(A) erred in confirming action of Ld. JCIT in imposing penalty u/s 27ID of Rs. 11,40,320.00 without considering the written arguments rationally and not applying his mind. 4. On facts and in law the CIT(A) erred in upholding imposing of penalty by Ld. JCIT u/s 27ID of Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 4 Rs.11,40,320.00 by making wrong inferences andwrong conclusion from facts. 5. The appellant reserves the right to add/ alter/ amend/ modify/ withdraw any ground/s of appeal. 6. The above grounds are without prejudice to each other.” 5. Heard the arguments of both the parties and perused the material available on record.During the course of hearing, the ld. Counsel for the assessee has filed a supplementary Paper Book of Legal Decisions containing page nos. 1 to 52 and stated that the issue in dispute is squarely covered by the order of the Co-ordinate Bench of the Tribunal, Chennai Benches in the case of ITO Vs. Sh. R. Dhinagharam (HUF) in ITA No. 3329/Chny/2019 for A.Y. 2016-17order dated 29.12.2023. For the sake of ready reference, the operative part of the said order is reproduced as under: “12. We have heard the rival contentions, and gone through the facts and circumstances of the case. We find that the Revenue has challenged the correctness of the decision rendered by the CIT(A) vide order dated 30.09.2019 in deleting the penalty levied u/s 271D of the Act vide penalty order dated 12.06.2019. The CIT(A) had deleted the penalty on two counts namely on the non-applicability of the provisions of Section 269SS of the Act to the facts of the present case and on the ground of reasonable cause within the scope of Section 273B of the Act. We noted that the provisions of Section 269SS of the Act was amended w.e.f. 01.06.2015 to include the ‘specified sum’ within its ambit and the said term was defined in Explanation to the said Section which is reproduced as under: “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.” Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 5 The Budget Speech of the Hon'ble Finance Minister while placing the Finance Bill, 2015 highlighting the intention of the amendment relevant for decision making in the present appeal is captured below: 3. A. Measures to curb black money 3.1 With a view to curbing the generation of black money in real estate, it is proposed to amend the provisions of section 269SS and 269T of the Income-tax Act so as to prohibit acceptance or re- payment of advance in cash of Rs. 20,000 or more for any transaction in immovable property. It is also proposed to provide a penalty of an equal amount in case of contravention of such provisions. The Memorandum forming part of Finance Bill, 201.5 highlighting the intention of the amendment is captured below: B. MEASURES TO CURB BLACK MONEY Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances The existing provisions contained in section 269SS of the Income-tax Act provide that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions have been provided in the section. Similarly, the existing provisions contained in section 269T of the Income-tax Act provide that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section twenty thousand rupees or more. if the amount of loan or deposit is twenty thousand rupees or more. In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 6 immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place. It is further proposed to make consequential amendments in section 271D and section 271E to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively. These amendments will take effect from 1st day of June, 2015. The Notes on Clauses forming part of Finance Bill, 2015 highlighting the intention of the amendment is captured below: Clause 66 of the Bill seeks to substitute section 269SS of the Income-tax Act relating to mode of taking or accepting certain loans and deposits. The existing provision contained in section 269SS provides that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account if the amount of such loan or deposit is twenty thousand rupees or more. It is proposed to substitute the said section so as to provide that no person shall take from any person, any loan or deposit or specified sum, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account if the amount of such loan or deposit or specified sum is twenty thousand rupees or more. Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 7 It is also proposed to define \"specified sum\" as any sum of money receivable, whether as advance or otherwise in relation to transfer of an immovable property whether or not the transfer materialises. These amendments will take effect from 1st June, 2015. 12.1 In the present case, the sale consideration was received in cash at the time of execution of multiple sale deeds from different persons for the sale of plots and accepted as genuine in the assessment order completed on 23.05.2018 and admittedly there was no advance received by the seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as ‘specified sum’ and on such presumption the JCIT levied penalty u/s 271D of the Act. The intention of the amendment is very clear right from the Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed. In fact, the statute brought in another amendment in Section 269ST of the Act from the assessment year 2017- 18 with a view to cover all situations of cash transaction Rs. 2 Lakhs or over other than the situation captured in Section 269SS of the Act. This provision has been explained with more clarity by the CBDT Circular No.19 of 2015, dated 27.11.2015 and the relevant circular reads as under:- Departmental Circular No.19 of 2015, dated 27-11- 2015:- 54. Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances. 54.1 Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions were provided in the section. Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 8 54.2 Similarly, the provisions contained in section 269T of the Incometax Act, before amendment by the Act, provided that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more. 54.3 In order to curb generation of black money by way of dealings in cash in immovable property transactions, section 269SS of the Incometax Act has been amended to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property(specified sum) otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. 54.4 Section 269T of the Income-tax Act has also been amended to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place. 54.5 Consequential amendments in section 271D and section 271E, to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively, have also been made. 54.6 Applicability: These amendments have taken effect from 1st day of June, 2015. From the above provisions, Memorandum explaining the intention of amendment by Finance Bill, 2015 including the definition of ‘sum specified’ brought in the Explanation to Section 269SS of the Act, it is clear that the intention for brining this provision was to curb the Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 9 generation of black money in real estate prohibiting acceptance or repayment of advance in cash of Rs.20,000/- or more for any transaction in immovable property. This was explained by Hon’ble Finance Minister while placing the Finance Bill, 2015 in her budget speech highlighting the intention of the amendment that the amendment in Explanation to Section 269SS i.e., ‘sum specified’ means only applicable for advance receivable, whether as advance or otherwise means advance can be in any manner. Hence, this provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In the present case before us, it is an admitted fact that all sale deeds were registered and cash payment was made at one go before the sub- registrar at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS of the Act in the present case in the given facts and circumstances of the case and hence, penalty is not exigible in this case. Hence, we confirm the order of CIT(A) deleting the penalty but on entirely different ground i.e., on jurisdictional issue only. Accordingly, the appeal of the Revenue is dismissed. 13. In the result, the appeal filed by the Revenue is dismissed.” 6. Upon careful consideration of the aforesaid decision of the ITAT Chennai Bench, we are of the considered view that the issue in the instant case is fully covered by the aforesaid decision, hence, respectfully following the aforesaid precedent, we delete the penalty made u/s. 271D of the Act amounting to Rs. 11,40,320/- which is equal to the amount of cash so taken out of the total consideration from sale of immovable property and accordingly allow the grounds raised by the assessee. Printed from counselvise.com ITA No. 2505/Del/2024 Ram Krishan Sandhu 10 7. In the result, the appeal of the assessee is allowed in above terms. Order Pronounced in the Open Court on 18/02/2026. Sd/- Sd/- (Manish Agarwal) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 18/02/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR Printed from counselvise.com "