ITAT erased penalty as assessee took cash on sale of flat as she required money for daughter’s wedding.

Sonia Verma v. ITO – [2023] (Chandigarh – Trib.)

A resident person known as the assessee sold an apartment for cash during the year in consideration. The revenue authorities then assessed an assessment against the assessee for receiving the sales consideration in cash under section 271D and issued a notice under section 274 as a result.

The punishment imposed was upheld on appeal by CIT(A). An appeal was submitted to the Chandigarh Tribunal in protest of the order.

The assessee stated that she was in desperate need of money to make her daughter’s wedding happen, which had been put off several times after their engagement due to money issues. She added that she didn’t know that cash transfers made in exchange for the sale of a property were prohibited by law.

The Tribunal determined that Section 273B specifically indicates that the penalties discussed therein, including those under Section 271D, are not attracted if the assessee provides an explanation demonstrating reasonable cause for the failure.

In this instance, the assessee received the profits of the sale of the flat in cash five times; the assessee’s daughter’s marriage, which was officially announced in January 2013, was repeatedly delayed due to a lack of funds before finally taking place in December 2016.

Additionally, the buyer had disclosed his inability to pay in full through a one-time payment. Due to her husband’s illness, the assessee travelled to Delhi on various times to collect the proceeds of the sale money and made purchases for her daughter’s wedding at the same time. There is available supporting documentation for these claims.

The assessee had provided appropriate justifications that were consistently on record and supported their claim with evidence that has not been refuted. Fair, useful, and sensible are the definitions of “reasonable” in the basic dictionary. A reasonable cause is a standard of proof that is applied to a set of facts or actions to demonstrate whether a reasonable person, given the totality of the circumstances, would have reached the same decision or taken the same action.

The assessee had successfully made out a case indicating a reasonable cause for her to accept payments in cash, taking into account the consistent explanation present on record.

The assessee further claimed to be unaware of the law. The Tribunal agreed with the revenue’s claims that breaking the law because of ignorance is not an acceptable defence. However, it is important to remember the laws that were cited. The problem is to be evaluated in accordance with the general clause of section 273B, not on the basis of the defence of ignorance of the law. Therefore, the claim that the assessee was at best ignorant of the law can be viewed as a submission to make the point that there was no willful and intentional disregard for the law on the part of the assessee.

The penalty order was therefore annulled as a result of the assessee’s request being accepted.