Principle of Consistency Prevails: ITAT Ahmedabad Strikes Down Section 271D Penalty on Cash Real Estate Transaction

The appellate mechanisms under the Income Tax Act 1961 frequently grapple with the strict application of penal provisions versus the fundamental principles of natural justice and consistency. A prominent illustration of this balancing act is found in the recent judicial pronouncement by the Income Tax Appellate Tribunal (ITAT), Ahmedabad. In the matter of Ashok Ramanlal Tamboli Vs ITO, the Tribunal addressed a contentious penalty levied under Section 271D for alleged violations of cash transaction limits during a property sale.

The ruling underscores a critical jurisprudential concept: the revenue department cannot adopt contradictory stances for different individuals involved in the exact same transaction. By delivering a favorable verdict for the assessee, the ITAT reinforced the necessity of uniform tax administration.

Factual Matrix of the Dispute

The controversy stems from the financial assessment of the assessee for the Assessment Year (A.Y.) 2021-22. The assessee, holding joint ownership of an ancestral property alongside other family members, participated in the alienation of this real estate asset. The total negotiated value for the property's transfer was fixed at Rs. 27,90,00,000.

According to the registered conveyance documents, the assessee’s official proportionate share of the proceeds was documented at Rs. 1,16,25,000. However, the transaction involved an off-the-books component. Over and above the documented banking channels, the assessee accepted an additional sum of Rs. 31,95,813 in physical currency as part of the settlement.

Initial Disclosures and Subsequent Rectification

When fulfilling the initial statutory filing obligations, the assessee disclosed only the cheque component (Rs. 1,16,25,000) as reflected in the formal sale deed. The cash portion was entirely omitted from the original tax return.