The assessment order said s.269ST and s.271DA. The AO has now passed a s.154 order changing it to s.269SS and s.271D. Can he do that?
No. The Tribunal held that mentioning s.269ST together with its own penalty section s.271DA is not a typographical error — it could only have been one if s.269ST had been typed alongside s.271D — so the original assessment order reflected a conscious application of mind. Substituting s.269SS and s.271D for them under s.154 was a change of opinion between two possible legal views, not the correction of a mistake apparent from the record, and the rectification order was quashed.
Decided by the ITAT (Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member) on 2025-09-17, reported as ITA No.362/PUN/2025; Assessment Year 2018-19; Income Tax Appellate Tribunal, Pune Bench 'A'. It bears on section 154, section 269ST, section 271DA, section 269SS, section 271D, section 153A, section 153C of the Income Tax Act 1961, in Cash Transaction Limits, Penalty, Assessment & Scrutiny and How Tax Law Is Read matters.
This is the sharpest available answer to a very common departmental move. Sections 269SS and 269ST are different charges on different persons doing different things — s.269SS bars taking a loan, deposit or specified sum of Rs 20,000 or more otherwise than through banking channels, s.269ST bars receiving Rs 2,00,000 or more in a day, in a single transaction, or in relation to one event or occasion — and each has its own penalty. Once the AO has committed to one in the assessment order, the s.275(1)(c) clock and the whole penalty proceeding hang off that satisfaction. If he could swap sections later by rectification, he could resurrect a charge that was time-barred or unsustainable under the section he first chose. Note the two-edged part of the same order: at paras 19 and 20 the Tribunal recorded that on the authority of the Delhi High Court in Birmala Projects and the Supreme Court in RBANMS, cash consideration exceeding Rs 2,00,000 for immovable property does violate s.269ST and attracts s.271DA. The assessee won on the s.154 point, not on the merits of the cash receipts.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a firm of developers. On the basis of documents seized in search proceedings, the Assessing Officer found in an assessment order passed under s.153A read with s.153C that the firm had sold flats to various purchasers and received on-money of Rs 2,50,14,000 in cash. He recorded that this contravened s.269ST and made a reference to the Joint Commissioner of Income Tax for initiation of penalty under s.271DA (para 4). Subsequently, by an order under s.154 dated 11 September 2021, the Assessing Officer substituted s.269SS and s.271D for s.269ST and s.271DA, describing the original mention as a mistake apparent from the record. The CIT(A) upheld the rectification, holding that mentioning s.269ST and referring the matter to the JCIT for initiation of penalty under s.271DA instead of s.269SS and s.271D was a glaring mistake apparent from the record (extracted at para 7). The assessee appealed.
The appeal was allowed (para 22). The Assessing Officer could not substitute s.269SS and s.271D for s.269ST and s.271DA in rectification proceedings under s.154: there was no apparent or glaring mistake capable of rectification, and the action amounted to a change of opinion, which s.154 does not permit (para 16). The rectification order and the CIT(A)'s confirmation of it were set aside.
The Tribunal reasoned from the internal logic of the pairing of sections. If s.269ST had been written inadvertently, the corresponding penalty section s.271DA could not also have been a typographical error; it could have been a typographical error only if s.269ST had been typed along with s.271D, which is the penalty for a violation of s.269SS. Since both the charging section and its own penalty section were named, the original assessment order reflected a conscious application of mind by the Assessing Officer (para 14). The Tribunal then framed the solitary question as whether the Assessing Officer could substitute one pair of sections for the other under s.154, and applied the settled rule that only a mistake apparent from the record can be rectified and that where the issue is debatable and two views are possible, rectification is not permissible; here two different legal views were available, one had already been taken, and the other could not be substituted (paras 16 and 18). Separately, at paras 19 and 20, the Tribunal recorded that the Delhi High Court in Birmala Projects (P.) Ltd. v. Ashwani Ahluwalia and the Supreme Court in RBANMS Educational Institution v. B. Gunashekar had dealt with cash in immovable property transactions and had indicated that consideration towards immovable property received in cash exceeding Rs 2,00,000 violates s.269ST and invites penalty under s.271DA — the very view the Assessing Officer had taken originally.
It could be said to be a typographical error only if section 269ST was typed along with penalty section 271D of the IT Act which is applicable for violation of section 269SS of the IT Act.
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Handle my notice → Ask a CA on WhatsAppNo. The Tribunal held that mentioning s.269ST together with its own penalty section s.271DA is not a typographical error — it could only have been one if s.269ST had been typed alongside s.271D — so the original assessment order reflected a conscious application of mind. Substituting s.269SS and s.271D for them under s.154 was a change of opinion between two possible legal views, not the correction of a mistake apparent from the record, and the rectification order was quashed. This was decided by the ITAT (Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member) and bears on section 154, section 269ST, section 271DA, section 269SS, section 271D, section 153A, section 153C of the Income Tax Act 1961. It is reported as ITA No.362/PUN/2025; Assessment Year 2018-19; Income Tax Appellate Tribunal, Pune Bench 'A'. This is the sharpest available answer to a very common departmental move. Sections 269SS and 269ST are different charges on different persons doing different things — s.269SS bars taking a loan, deposit or specified sum of Rs 20,000 or more otherwise than through banking channels, s.269ST bars receiving Rs 2,00,000 or more in a day, in a single transaction, or in relation to one event or occasion — and each has its own penalty. Once the AO has committed to one in the assessment order, the s.275(1)(c) clock and the whole penalty proceeding hang off that satisfaction. If he could swap sections later by rectification, he could resurrect a charge that was time-barred or unsustainable under the section he first chose. Note the two-edged part of the same order: at paras 19 and 20 the Tribunal recorded that on the authority of the Delhi High Court in Birmala Projects and the Supreme Court in RBANMS, cash consideration exceeding Rs 2,00,000 for immovable property does violate s.269ST and attracts s.271DA. The assessee won on the s.154 point, not on the merits of the cash receipts. If it applies to you, the first step is this: Get the assessment order and read the exact satisfaction: which section is named, which penalty section is named, and to which authority the reference was made.
The assessee is a firm of developers. On the basis of documents seized in search proceedings, the Assessing Officer found in an assessment order passed under s.153A read with s.153C that the firm had sold flats to various purchasers and received on-money of Rs 2,50,14,000 in cash. He recorded that this contravened s.269ST and made a reference to the Joint Commissioner of Income Tax for initiation of penalty under s.271DA (para 4). Subsequently, by an order under s.154 dated 11 September 2021, the Assessing Officer substituted s.269SS and s.271D for s.269ST and s.271DA, describing the original mention as a mistake apparent from the record. The CIT(A) upheld the rectification, holding that mentioning s.269ST and referring the matter to the JCIT for initiation of penalty under s.271DA instead of s.269SS and s.271D was a glaring mistake apparent from the record (extracted at para 7). The assessee appealed. The matter was decided on 2025-09-17 by the ITAT (Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed (para 22). The Assessing Officer could not substitute s.269SS and s.271D for s.269ST and s.271DA in rectification proceedings under s.154: there was no apparent or glaring mistake capable of rectification, and the action amounted to a change of opinion, which s.154 does not permit (para 16). The rectification order and the CIT(A)'s confirmation of it were set aside.
The Tribunal reasoned from the internal logic of the pairing of sections. If s.269ST had been written inadvertently, the corresponding penalty section s.271DA could not also have been a typographical error; it could have been a typographical error only if s.269ST had been typed along with s.271D, which is the penalty for a violation of s.269SS. Since both the charging section and its own penalty section were named, the original assessment order reflected a conscious application of mind by the Assessing Officer (para 14). The Tribunal then framed the solitary question as whether the Assessing Officer could substitute one pair of sections for the other under s.154, and applied the settled rule that only a mistake apparent from the record can be rectified and that where the issue is debatable and two views are possible, rectification is not permissible; here two different legal views were available, one had already been taken, and the other could not be substituted (paras 16 and 18). Separately, at paras 19 and 20, the Tribunal recorded that the Delhi High Court in Birmala Projects (P.) Ltd. v. Ashwani Ahluwalia and the Supreme Court in RBANMS Educational Institution v. B. Gunashekar had dealt with cash in immovable property transactions and had indicated that consideration towards immovable property received in cash exceeding Rs 2,00,000 violates s.269ST and invites penalty under s.271DA — the very view the Assessing Officer had taken originally. In the words reproduced by the source cited on this page: "It could be said to be a typographical error only if section 269ST was typed along with penalty section 271D of the IT Act which is applicable for violation of section 269SS of the IT Act." The decision followed or applied Birmala Projects (P.) Ltd. v. Ashwani Ahluwalia (Delhi High Court) — referred to at para 19; Correspondence, RBANMS Educational Institution v. B. Gunashekar (Supreme Court) — referred to at paras 19 and 20.
It was decided by the ITAT on 2025-09-17 and is reported as ITA No.362/PUN/2025; Assessment Year 2018-19; Income Tax Appellate Tribunal, Pune Bench 'A'. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 154, section 269ST, section 271DA, section 269SS, section 271D, section 153A, section 153C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed (para 22). The Assessing Officer could not substitute s.269SS and s.271D for s.269ST and s.271DA in rectification proceedings under s.154: there was no apparent or glaring mistake capable of rectification, and the action amounted to a change of opinion, which s.154 does not permit (para 16). The rectification order and the CIT(A)'s confirmation of it were set aside. It arises in Cash Transaction Limits, Penalty, Assessment & Scrutiny and How Tax Law Is Read matters, on section 154, section 269ST, section 271DA, section 269SS, section 271D, section 153A, section 153C of the Income Tax Act 1961, and was decided by Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the Department later changes the section, take the point that s.154 cannot be used — the pairing of a charging section with its own penalty section shows application of mind, and a change is a change of opinion. Run the s.275(1)(c) limitation from the date of the original satisfaction, not from the rectified order. Do not assume that winning on the section-substitution point protects the on-money receipts themselves — on paras 19 and 20 of this very order, cash consideration over Rs 2,00,000 for immovable property is squarely within s.269ST. Where the penalty is under s.271DA, check that the Joint Commissioner imposed it; where it is under s.271D or s.271E, the same requirement applies.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing and a case-name search across all courts returns only this order. The holding that a s.269ST default cannot be converted into a s.269SS default by rectification has not been followed or doubted, and no appeal to the Bombay High Court was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The paragraphs I read verbatim are 4, 7 (which reproduces the CIT(A)'s finding), 13, 14, 16, 18, 19, 20 and the disposal at para 22; I did not see paragraphs 1 to 3, 5, 6, 8 to 12, 15, 17 or 21. The judgment cites Birmala Projects and RBANMS by their Taxmann citation strings, which are reproduced here only because they appear inside the judgment. The Tribunal's summary of Birmala Projects at para 19 — that the Delhi High Court 'indicated that the aforesaid receipt by the party is a plain violation of section 269ST' — reads more strongly than the Delhi High Court's own reasoning, which was concerned with whether the underlying agreement was void; see the separate entry on Birmala Projects. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed (para 22). The Assessing Officer could not substitute s.269SS and s.271D for s.269ST and s.271DA in rectification proceedings under s.154: there was no apparent or glaring mistake capable of rectification, and the action amounted to a change of opinion, which s.154 does not permit (para 16). The rectification order and the CIT(A)'s confirmation of it were set aside.
TaxSphere, “MCM Developers v DCIT, Central Circle-1, Aurangabad”, https://taxnotice.vittsphere.com/caselaw/case/mcm-developers-269st-cannot-become-269ss-by-rectification/ (validity last checked 2026-09-08)
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We paid Rs 1.5 crore in cash under an agreement. The other side says s.269ST makes the agreement void and our recovery suit is not maintainable. Is it?
The Addl. CIT says we split one customer's bill into two so each stayed under Rs 2,00,000. Is that a s.269ST violation?
The section 269ST penalty falls on the person who receives the cash. If I am the buyer paying cash for property, am I exposed at all?
The Assessing Officer sent a proposal to the Joint Commissioner for penalty on my cash receipts. Does the six month limitation run from that proposal or from the notice the Joint Commissioner later issued?
