Delhi ITAT Deletes Section 271D Penalty on Co-Owner of Property Relying on Rectification Deed and Principle of Parity

Case Overview

Case Name: Neetu Kalra Vs CIT (ITAT Delhi)
Assessment Year: 2017-18
Court: Income Tax Appellate Tribunal, Delhi

The Delhi Bench of the Income Tax Appellate Tribunal rendered a significant ruling in the matter of Neetu Kalra Vs CIT, wherein a penalty imposed under Section 271D of the Income Tax Act, 1961 was directed to be deleted. The Tribunal's decision rested on two crucial pillars — the execution of a registered Deed of Rectification correcting erroneous dates in the original sale deed, and the principle of parity flowing from the identical treatment extended to the other co-owner of the same property.

Background and Facts of the Case

The Property Transaction

The assessee, Ms. Neetu Kalra, along with her mother-in-law, Mrs. Urmila Kalra, held joint ownership of an immovable property situated at B-509, First Floor, Sudershan Park, New Delhi, each holding an equal undivided share of 50%.

Both co-owners entered into an agreement to sell the said property with one Shri Rajesh Mendiratta on 24.10.2014, for a total consideration of Rs. 17,10,000/-. The formal registered sale deed, however, was executed subsequently on 29.10.2016.

Out of the aggregate consideration, an amount of Rs. 5,10,000/- was received in cash at the time of execution of the agreement to sell. Correspondingly, the share attributable to the assessee in the cash component amounted to Rs. 2,55,000/-.

The Error in the Sale Deed

A critical factual error had crept into the registered sale deed — the dates on which the cash consideration was received were incorrectly recorded as falling in the year 2016, whereas the actual receipts had occurred in the year 2014. This inadvertent typographical error became the root cause of the entire dispute.

The table below captures the specific discrepancy between the dates as erroneously recorded and the actual dates of receipt:

Initiation of Penalty Proceedings

Show Cause Notice Under Section 274 r.w.s. 271D

Based on the dates reflected in the original sale deed, the Assessing Officer (AO) interpreted the transaction as involving receipt of cash consideration during the Financial Year 2016-17, which attracted the provisions of Section 269SS of the Income Tax Act, 1961 — a provision that prohibits acceptance of loans, deposits, or specified sums in cash exceeding Rs. 20,000/-.