An Odisha taxpayer sold two properties for roughly Rs 47.54 lakh in cash, reported the transactions, and paid the capital gains tax, which the Centralised Processing Centre initially accepted. An Assessing Officer in Berhampur later imposed a penalty under Section 271D for an alleged breach of Section 269SS. The ITAT Cuttack cancelled the penalty after the Commissioner of Income Tax (Appeals) rejected the initial appeal, finding the officer cited the wrong statute. Although the penalty was quashed, experts caution that potential action under the correct law remains bound by statutory limitation periods.
Key points
Penalties issued under Section 271D cannot stand if the tax officer relies on an incorrec…: Penalties issued under Section 271D cannot stand if the tax officer relies on an incorrect statutory section for cash property sales.
Legal provisions under Section 269ST and Section 271DA represent the relevant statutes go…: Legal provisions under Section 269ST and Section 271DA represent the relevant statutes governing large cash receipts rather than Section 269SS.
Fresh enforcement proceedings by the tax department under proper statutory rules remain s…: Fresh enforcement proceedings by the tax department under proper statutory rules remain subject to strict limitation periods.
Sources checked by our analysis pipeline: 1
What if you sell properties but receive the payment in cash? Despite recording capital gains in your tax return, are you still likely to face penalties from the
Income Tax Department?
The Income Tax Appellate Tribunal (ITAT), Cuttack, has ruled in favour of a taxpayer who was penalised for accepting cash from the sale of properties, despite having declared the transactions in his income tax return and paid the applicable capital gains tax.
What the case is about:
The case concerned a man in Odisha who, according to the submissions before the tribunal, sold two properties for a combined consideration of around Rs 47.54 lakh. However, for this sale he received the entire amount in cash. The person in question disclosed the property transactions in his income tax return (ITR) and paid the capital gains tax due on the sales.
The Income Tax Department's Centralised Processing Centre (CPC) in Bengaluru processed his return and accepted his computation of capital gains tax.
However, the Assessing Officer (AO) in Berhampur, Odisha, subsequently received information indicating that the man had collected the Rs…
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