New Delhi, Oct. 29 -- A Chennai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a Rs.26 lakh penalty imposed on a salaried taxpayer who accepted a cash advance for selling his house during demonetisation, ruling that his financial circumstances constituted reasonable cause for the transaction.

In its order dated 13 October 2026 in Murugesan Thulasimani v. ITO, Ward-1(6), Salem (ITA No. 859/Chny/2026), the tribunal held that the penalty under Section 271D of the Income-tax Act, 1961, was not sustainable after considering the taxpayer's outstanding housing loan, the genuineness of the property sale and the circumstances in which he accepted the cash.

The ruling does not exempt cash property transactions from tax law. Instead...