Sec 269SS is not applicable where cash receipt on sale of flat is due to unavoidable circumstances: ITAT

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Sec 269SS is not applicable where cash receipt on sale of flat is due to unavoidable circumstances: ITAT

Smt. Vijapurapu Sudha Rao. (I.T.A. No.111/Viz/2023)

Facts:

  1. The assessee sold an immovable property to Mrs. Pusapati Appala Narsimha Raju for a total consideration of Rs. 34,65,000/- out of which the assessee received an advance of Rs. 5 lakhs on 01/12/2015 through cheque and the remaining amount of Rs. 29,65,000/- on 04/04/2016 by cash.
  1. The Ld. AO-NFAC observed that since the assessee received Rs. 29,65,000/- in cash, which resulted in violation of the provisions of section 269SS of the Income Tax Act and therefore initiated the penalty proceedings U/s. 271D of the Act and issued a notice U/s. 274 r.w.s 271D of the Act dated 26/08/2021 and served on the assessee. The AO not satisfied by the response of the assessee, passed orders and levied the penalty.
  1. The assessee maintained that the sale of property was a distress sale as the assessee had only a registered Will in her name and his mother’s name and being a senior citizen the assessee could not procure proper buyers for the site. So she sold the property at a lower price and accepted the consideration as paid by the buyer.
  1. She further submitted that she did not take any advance in cash before the registration and immediately on receipt of the remaining sale consideration in cash, under unavoidable circumstances and deposited the same in her bank account which clearly shows the genuineness of the transaction and also paid taxes thereon.

ITAT Vishakhaptnam held as below:

  1. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee.
  1. The assessee has also offered the capital gains to tax. Further, the explanation given by the assessee for receipt of sale consideration of Rs. 29,65,000/- constitutes a “reasonable cause” as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circumstances and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the capital gain tax thereon.
  1. Under these circumstances, we are of the considered view that the penalty levied by the Ld. AO-NFAC U/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law and accordingly the orders of the Ld. AO-NFAC and Ld. CIT(A)-NFAC are set aside and thereby we delete the penalty. It is ordered accordingly.

The copy of the order is as under:

1701260341-111 OF 2023 - VIJAPURAPU SUDHA RAO LR OF V SURYANARAYANA RAO (2)

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