The case originated after an Assessing Officer discovered through property registrar records that a seller accepted a substantial cash sum alongside bank transfers for a real estate sale. Authorities initially levied penalties after treating the transaction as an illicit advance under Section 269SS. However, the appellate tribunal struck down the penalty because the funds were received upon executing a sale deed, meaning the officer invoked the incorrect statutory provisions.
Key points
Real estate sale deed cash receipts fall under Section 269ST and Section 271DA rather tha…: Real estate sale deed cash receipts fall under Section 269ST and Section 271DA rather than Section 269SS.
The tribunal relied on precedents from the Arati Saraf and Satyabrata Panda cases to esta…: The tribunal relied on precedents from the Arati Saraf and Satyabrata Panda cases to establish the statutory misapplication.
Tax penalties can be completely invalidated when revenue officials rely on the incorrect…: Tax penalties can be completely invalidated when revenue officials rely on the incorrect legal sections to penalize cash transactions.
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In cases of property deals, cash transactions are allowed up to a certain limit. What if you sell a property and take a part in cash and the Income Tax Department imposes a penalty?
In one case, the assessee faced a tax penalty but managed to get relief, but only on a technical ground. Read on to find out why the Income Tax Appellate Tribunal (ITAT) ruled in favour of the property seller.
What the case is about
A property owner sold it and accepted Rs 5.22 lakh in cash while the balance amount was received in his bank account. Income tax provisions prohibit the receipt of more than Rs 2 lakh in cash in such transactions.
The Income Tax Assessing Officer (AO) in Berhampur received information from the property registrar's office in Jharsuguda that the man had sold a property and collected Rs 5.22 lakh in cash as part of the payment. The registered sale deed also mentioned the cash component.
Following this information, the AO issued the man a notice under Section 269SS of the Income Tax Act…
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