SURAJ WASUDEORAO SADAMWAR,CHANDRAPUR V. INCOME TAX OFFICER, CHANDRAPUR

ITA 270/NAG/2025

AI Insights

The case revolves around a penalty imposed on Suraj Wasudeorao Sadamwar for receiving cash in a property transaction, which was alleged to be in violation of Section 269SS of the Income Tax Act. The assessee, along with his brother, sold a joint property and received the sale consideration in cash prior to the amendment of Section 269SS that included 'specified sum'. The Assessing Officer (AO) imposed a penalty under Section 271D, which was contested by the assessee on grounds of procedural impropriety and substantive non-violation of the law as it stood at the time of the transaction. The Tribunal's decision highlighted issues of procedural fairness, proper application of law, and the importance of non-discriminatory practices in tax assessments.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 843922 (ITAT-NAGPUR)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 24-04-2025
• Other Referred Cases: CIT Vs Jai Laxmi Rice Mill (2015) 379 ITR 521 (SC)/ 64 taxmann.com 75(SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJIT KUMAR SAHA
• Assessee Lawyers: NARESH KALARA
• Keywords: Set aside; Period of limitation; Time period of passing order
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “NAGPUR” BENCH, NAGPUR BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI KHETTRA MOHAN ROY, ACCOUNTANT MEMBER ITA No. 270/NAG/2025 (A.Y.: 2016-17) (Physical hearing) Suraj Wasudeorao Sadamwar SBI Colony, D. G. Tukum, Chandrapur, Maharashtra – 442402. PAN: BKJPS5435B Vs ITO Ward – 2, Chandrapur Appellant /Assessee Respondent /Revenue Assessee by Shri Naresh Kalara, Advocate . Revenue by Shri Surjit Kumar Saha,SR. DR Date of hearing 24.02.2026 Date of pronouncement 16.03.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short “CIT(A)”], for assessment year 2016-17. The ld CIT(A) confirmed the penalty levied under section 271D of Rs. 8,50,000/-. The assessee has raised the following grounds of appeal: “1. That the Ld. CIT (A) erred in dismissing the appeal without passing a reasoned order on merits, in violation of Section 250(6) of the Income Tax Act, 1961. 2. That the entire consideration of Rs. 8, 50,000/- was not received solely by the Appellant but was jointly received with his brother, who has already been exonerated in a parallel proceeding. 3. That the Ld. CIT (A) wrongly held that no submissions or evidence were filed, despite due compliance by the Appellant, despite due compliance by the Appellant. 4. That the penalty under Section 271D is not sustainable as the transaction took place prior to the amendment to Section 269SS including \"specified sum.\" 5. That the penalty order is time-barred under Section 275(1) on the said Act. Printed from counselvise.com ITA No.270/Nag/2025 (AY 2016-17) Suraj Wasudeorao Sadamwar 2 6.That the impugned order is bad in law, discriminatory and liable to be set aside.” 2. Brief facts of the case are that during the relevant financial year i.e., 2015-16, the assessee sold a plot of land and executed sale deed and received entire sale consideration in cash. As per contents of penalty order the assessee received Rs. 8,50,000/- in cash. The Assessing Officer (AO) initiated penalty u/s. 271D for violation of Section 269SS. The show cause notice u/s. 271D was issued to the assessee on 02.12.2019. The AO recorded that no reply was furnished by the assessee. The AO accordingly imposed penalty of Rs. 85,000/- i.e., equal to the sale consideration allegedly received in cash by vide order dated 27.12.2021. Aggrieved by the penalty levied u/s. 271D, the assessee filed appeal before the ld. CIT(A). The assessee while filing first appeal furnished detailed statement of fact to substantiate the grounds of appeal raised against the validity of order passed u/s. 271D. In the statement of facts, the assessee stated that he filed return of income for A.Y. 2016-17 on 14.03.2017, declaring income of Rs. 6,25,550/-. No assessment u/s. 143(3) was completed in his case. However, AO/National Faceless Appeal Centre (NFAC) passed order u/s. 271D in imposing penalty of Rs. 1,50,000/- for alleged violation of provision of Section 269SS, merely on the ground that whole of the sale consideration was received by assessee in cash. The correct facts are that assessee sold joint property along with co-owner/brother Pawan Vasudev Sadamwar having 50% share each. Sale deed was executed on 21.07.2015, though the payment in cash was received prior to 01.06.2015. The assessee has received 50% share i.e., 50% of total sale consideration of Rs. 8,50,000/- which is only of Rs. 4,25,000/-. The assessee received such Printed from counselvise.com ITA No.270/Nag/2025 (AY 2016-17) Suraj Wasudeorao Sadamwar 3 sale consideration in cash prior to 01.06.2015 which date is relevant, provision of Section 269SS. All the payments were received prior to 01.06.2015 when provision of Section 269SS were not in existence. The question of invoking provision of Section 271D or levying penalty is non-est. Share of the assessee was only Rs. 4,25,000/-, however, a penalty of Rs. 8,50,000/- is levied which itself is wrong and void ab initio. The ld. CIT(A) on considering the statement of fact and the penalty order took his view that no further submission is filed by the assessee and he confirmed the action of AO. Further, aggrieved the assessee has filed present before the Tribunal. 3. We have heard the submission of ld. Authorised Representative (AR) of the assessee and ld. Senior Departmental Representative (SR. DR) for the revenue. The ld. AR of the assessee submits that penalty levied by AO u/s. 271D is barred by time limit prescribed u/s. 275 of the Act. The assessment was completed u/s. 143(1) by processing return of assessee vide order dated 11.04.2017. The penalty was levied vide order dated 27.12.2021, which is admittedly beyond limitation period prescribed under section 275(1)(c). In other alternative submission, the ld. AR submits that no satisfaction is recorded by AO while processing/passing assessment order u/s. 143(1) of the Act. Thus, in absence of initiation of penalty levied u/s. 271D is void ab initio. To support his view, the ld. AR relied upon the decision of Hon’ble Apex Court in CIT Vs Jai Laxmi Rice Mill (2015) 379 ITR 521 (SC)/ 64 taxmann.com 75(SC). In third alternative submission, the ld. AR of the assessee submits that the assessee entered into transaction for sale of joint property prior to 01.06.2015 when the provision was not in existence. Moreover, the assessee Printed from counselvise.com ITA No.270/Nag/2025 (AY 2016-17) Suraj Wasudeorao Sadamwar 4 has received 50% of sale consideration i.e., Rs. 4,25,000/- and penalty of Rs. 8,50,000/- is levied. In fourth alternative submission, the ld. AR of the assessee submits that prior to 01.06.2015, cash receipt was permissible on sale of property. Thus, there is no irregularity under the law i.e., either under Income Tax Act or any other general law. The ld. AR also submits that no penalty was levied i.e., co-owner (Pawan Wasudeorao Sadamwar PAN: ATCPS 6248 P), though penalty was initiated against and was dropped vide order dated 22.02.2022, copy of order of dropping the penalty proceeding is placed on record. The ld. AR prayed that he is liable to be succeed on legal issue as well as on merit. 4. On the other hand, the ld. Senior DR for the revenue submits that assessee has not filed any reply in response to show cause notice before AO. Further, no detailed written submission was filed before ld. CIT(A). Hence, matter may be restored back to the AO for fresh consideration. 5. We have considered the rival submissions of both the parties and perused the orders of lower authorities and record carefully. We find that there is no much dispute on facts. There is no dispute that the assessee sold plot of land with his brother for a sale consideration of Rs. 8,50,000/-. As per sale deed, copy of which is on record, the assessee received half of total sale of Rs. 8,50,000/- that is only Rs. 4,25,000/-. Further, no assessment was completed under section 143(3). The return was processed under section 143(1) on 11.04.2017. No addition in the return of income was made by CPC. There was no occasion for assessee to file further appeal or revision. Admittedly, there is no initiation of penalty under section 271D, either by CPC or by Jurisdictional Printed from counselvise.com ITA No.270/Nag/2025 (AY 2016-17) Suraj Wasudeorao Sadamwar 5 assessing officer. The jurisdictional AO straightway issued show cause notice for levying penalty under section 271D vide notice dated 02.12.2019 for levying penalty. Thus, in absence of initiation of penalty in the assessment order, the order of penalty under section 271D is not justified as has been held by Hon’ble Apex Court in CIT Vs Jai Laxmi Rice Mills (supra). 6. We further find that despite issuing similar show cause notice to the co-owner no such penalty was levied. Copy of order in dropping similar penalty is also available on record at page No. 39. Thus, similar situated assessee cannot be treated indifferently. Moreover, the penalty order is also time barred as per the time limit prescribed under section 275(1)(c). Thus, the assessee succeeded on three primary submission of his ld AR. Considering the facts that we have accepted three alternative submissions of ld AR of the assessee, therefore, adjudication on other submissions have become academic. In result, the grounds of appeal raised by the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order was pronounced on 16.03.2026 as per Rule 34 of the Income Tax (Appellate Tribunal) Rules, 1963. Sd/- KHETTRA MOHAN ROY ACCOUNTANT MEMBER Sd/- PAWAN SINGH JUDICIAL MEMBER Mumbai, Dated: 16/03/2026 Karishma J. Pawar, SR. PS Printed from counselvise.com ITA No.270/Nag/2025 (AY 2016-17) Suraj Wasudeorao Sadamwar 6 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By Order Assistant Registrar/Senior Private Secretary ITAT, Nagpur Printed from counselvise.com "