TaxTMI 
TaxTMI 
07 Sep 2026 
Income-tax Act, 1961- related provisions considered in judgments:
Section 271D - Penalty for failure to comply with the provisions of section 269SS related to cash loans accepted.
Section 271E - Penalty for failure to comply with the provisions of section 269T related to repayment of loans in cash.
Critical observations of learned author:
Latest assessment order:
Author has used this phrase because an assessment order can be original u.s. 143.1 or 143.3 or a reassessment u.s. 147/148 or a revised assessment in a remanded case, or a new assessment after search and seizure proceedings.
Recording of satisfaction that too in a proper manner is necessary in the latest assessment order, if a penalty is to be imposed based on it. Satisfaction recorded in earlier assessment order will not be sufficient or valid for levying penalty after revised assessment order is passed unless the ld. AO has recorded satisfaction in latest assessment order.
Un-necessary and undesirable litigations:
In case of these penalties, we find large number of litigations were through Writ Petition (WP)before various High Courts and the Supreme Court. And therefore, proceedings in first and second appeal before CIT(A) and ITAT did not take place. In spite of that we find large number of cases in many of WP
The search results given in this write-up are not exhaustive because in given criteria all such cases may not be captured by software due to different language, phrases and style of drafting. However, these results are enough to indicate disputes being raised by Income Tax Department and contested in appeal including up to the top court. This is in spite of settled legal position long ago.
Many of appeals filed by revenue were for considerably long delay. A delayed filing can be considered an afterthought. It can be said that earlier the judgment now being appealed was accepted, however, later on it was decided afresh to file appeal.
This also shows that the Tax authorities are prompt in initiating litigation but are not diligent to follow statutory provisions and procedures. This means that casual approach is adopted, just to start a new proceeding.
Furthermore, our top brain, and highly paid counsels advise to extend litigation up to the top court, is also a cause of such undesired litigation. This shows standing counsels, and other counsels are looking after their own interest only and causing un-necessary litigation by advising to file appeals though not desirable and not maintainable. When an appeal filed earlier, is subsequently decided by the Supreme Court, against the revenue, it is desirable to withdraw such appeals but instead of withdrawing such appeal, a large team of advocates attend the courts.
For these and similar other reasons learned author many times describes such litigation as un-necessary.
Reproduced relevant portiosn of some of judgments to indicate principals
Search results to indicate extent of litigation
Showing Results for : Law: All Courts: Supreme Court - All Sort : default Search In : Main Text + AI Text Searched Text : penalty for cash loan transactions 147 Results
Showing Results for : Law: Income Tax Courts: Supreme Court - All Sort : default Search In : Main Text + AI Text Searched Text : penalty for cash loan transactions results found 14
Law: Income TaxCourts: Supreme Court - All Statute: Income-tax Act, 1961 Section: Section 271D Sort : default Search In : Main Text + AI Text
Searched Text : penalty for cash loan transactions 1 Results
Law: Income Tax Statute: Income-tax Act, 1961 Section: Section 271D Sort : default Search In : Main Text + AI Text
Searched Text : penalty for cash loan transactions 765 Results
Law: Income Tax Statute: Income-tax Act, 1961 Section: Section 271E Sort : default Search In : Main Text + AI Text Searched Text : penalty for cash loan transactions 376 Results
Summary of some of relevant judgments searched and filtered is given below with highlights added:
Recorded satisfaction in reassessment proceedings remains necessary before initiating penalties for prohibited cash loan or repayment transactions.
Penalty under sections 271D and 271E requires the concerned Assessing Officer to record satisfaction during reassessment proceedings before initiating penalty action. The Supreme Court dismissed the special leave petition both for delay and on merits, thereby confirming the High Court's order on this requirement.
Penalty under Section 271D needs recorded satisfaction and a Section 269SS finding; delay also defeated the challenge.
Penalty under Section 271D requires proper initiation based on a recorded satisfaction and a finding of violation of Section 269SS in the assessment order. The High Court set aside the penalty because the assessment order contained neither. In the Special Leave Petition, the Supreme Court noted a gross delay of 388 days that was not satisfactorily explained and, in any event, found no ground to interfere with the High Court's order, so the petition was dismissed on delay and on merits.
The Principal Commissioner of Income Tax 1 Versus Parivar Television Pvt. Ltd. - 2025 (10) TMI 480 - SC Order
Dated:- 07-10-2025 | In favour of Assessee
In: Income Tax
Sections:- 158BC, 271D,
Special Leave To Appeal (C) No(S). 1782/2025
Assessment annulment wiping out "satisfaction" for Section 271E penalty on alleged cash loan repayment; penalty initiation invalidated.
Where the original assessment order forming the basis for initiation of penalty proceedings under the IT Act was set aside, the "satisfaction" recorded in that assessment for initiating penalty under s. 271E was held to not survive, since the jurisdictional foundation for the penalty was extinguished with the annulment of the assessment order. The HC applied the SC's precedent that a penalty proceeding dependent on satisfaction recorded in an assessment cannot continue once that assessment is nullified. The SC found the issue squarely covered by its earlier decision and dismissed the SLP, leaving the HC's view intact and the penalty initiation invalidated.
COMMISSIONER OF INCOME TAX Versus SAHARA INDIA MUTUAL BENEFIT CO. LTD., THR. ITS MD - 2023 (7) TMI 1053 - SC Order
Dated:- 18-07-2023 | In favour of Assessee
In: Income Tax
Sections:- 269SS, 269T, 271D, 271E, 273B,
CIVIL APPEAL NO. 3883/2014 CIVIL APPEAL No. 3886/2014
Income tax appeals dismissed after the Supreme Court declined to interfere with the impugned orders.
The Supreme Court declined to interfere with the impugned judgment and orders in the connected income tax appeals, and dismissed the appeals. Any pending applications were disposed of accordingly. No further substantive reasoning or legal principle was recorded in the order.
PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL, JAIPUR Versus MEENAKSHI MODI - 2019 (9) TMI 165 - SC Order
Dated:- 16-08-2019 | In favour of Assessee
In: Income Tax
Sections:- 268A, 269T , 271E,
SPECIAL LEAVE PETITION (CIVIL) Diary No. 25076/2019
Special Leave Petition Dismissed by SC India on Tax Grounds, Legal Questions Open
The SC of India dismissed the special leave petition due to tax effect being below Rs. 2 crores, leaving legal questions open. Delay was excused, and pending applications were resolved.
** Tax ground means low tax / revenue effect per author.
Illustrative list of cases on issue:
Assistant Commissioner of Income Tax & Anr. Versus Sunil Agrawal - 2026 (6) TMI 49 - SC Order
HELD THAT:- There is a gross delay of 388 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioners.
Even otherwise, we see no good ground to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.
No.- Special Leave Petition (Civil) Diary No(s). 5831/2026
Dated:- May 26, 2026
HON'BLE MR. JUSTICE J.B. PARDIWALA AND HON'BLE MR. JUSTICE VIJAY BISHNOI
For the Petitioner(s): Mr. N Venkataraman, Solicitor General, Mr. Arijit Prasad, Sr. Adv., Mr. Sudarshan Lamba, AOR, Mr. Pushkar Sharma, Adv., Mr. V Chandrashekhara Bharathi, Adv., Mrs. Alka Aggarwal, Adv.
For Respondent(s): None.
ORDER
1. There is a gross delay of 388 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioners.
2. Even otherwise, we see no good ground to interfere with the impugned order passed by the High Court.
3. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.
4. Pending applications, if any, also stand disposed of.
No.- Writ Petition No. 32873/2023
Dated:- October 4, 2024
Honourable Sri Justice G. Narendar And Honourable Smt. Justice Kiranmayee Mandava
ORDER:
PER HON'BLE SMT. JUSTICE KIRANMAYEE MANDAVA
The order under challenge in the W.P. No. 32873 of 2023 is the proceedings of the assessing officer passed under Section 271D of the Income Tax Act, 1961, (hereinafter referred to as 'Act') levying penalty of Rs. 2,00,00,000/-.
2. The learned counsel for the petitioner contends that penalty under Section 271D of the Act, is levied without recording any satisfaction in contemplating levy of penalty.
3. It is stated that a search and seizure operation was conducted under Section 132 of the Income Tax Act, the case of M/s. Usha Bala Group and V.V. Balaksirshna Rao. During the search proceedings in the case of V.V. Balakrishna Rao, certain incriminating documents relating to the petitioner were found. Applying the provisions of Section 153C of the Act, the petitioner was asked to submit his return of income. Pursuant thereto, the petitioner has furnished his return of income on 18-04-2022 admitting total income of Rs. 22,20,000/-. Notice under Section 143(2) of the Act, dated 25-04-2022 was issued to the assessee for making assessment under Section 143(3) read with Section 153C of the Act. Simultaneously notice under Section 142(1) of the Act was issued requiring the petitioner to produce certain copies of bank accounts, explain the cash transaction with Balakrishna Rao etc., amounting to Rs. 6,00,00,000/-. Pursuant to the same, the petitioner submitted his reply dated 12-05-2022 stating that that he did not take any loans in cash as alleged. The loans were received through Banking channels. Thereafter another notice under Section 142(1) of the Act, dated 15-06-2022, was issued requesting the petitioner to furnish the information by 22-06-2022. The petitioner submitted his explanation reiterating his previous explanation regarding loans stated to have obtained in cash. It is further contended that a similar notice was issued to the creditor of the petitioner, Venkata Balakrishna Rao, under Section 133(6) of the Act, dated 06.07.2022, who, after requesting for time till 22-07-2022 did not respond to the notice issued, therefore, summons under Section 131 of the Act, dated 27.07.2022, was issued. In response to the same, the said Balakrishna Rao, submitted his reply. After examining the reply of the said Balakrishna Rao, with reference to the seized material, the department issued show cause notice dated 10-08-2022, requiring the petitioner to submit reply by 16-08-2022. In the said notice, it was observed that on cross verification of the details furnished by the petitioner and Balakrishna Rao, there are no discrepancies, however, the seized material contains document(s), which includes a letter dated 02-06-2014, stated to have been issued by the petitioner to Balakrishna Rao, acknowledging the availment cash loan of Rs. 6 crores, and pledging of immovable properties as collateral security. By pointing out from the material before it, the AO concluded that (pg.14 of assessment order) the petitioner had financial transaction with Balakrishna Rao, outside the books and outside banking channels for the subject assessment year. The relevant material relied upon by the AO was copied/scanned and pasted in the assessment order (Pgs.15 to 54) making the same as part of the assessment order. From the said transactions, 11 transactions were tabulated which indicate advances to the petitioner and repayment by the petitioner. The Assessing Officer on the basis of the said material observed that Usha Bala Group had received an amount of Rs. 28,18,344/- towards interest. And it was concluded that the petitioner had accepted an amount of Rs. 2,00,00,000/- as loan and repaid an amount of Rs. 1,43,18,344/- on various dates. The petitioner was thus asked to show cause as to why the interest amount of Rs. 28,18,344/- should not be treated as unexplained money under Section 69A of the Act. The petitioner in reply to the show cause notice has stated that no cash loans were either obtained or cash repayments were made much less the interest was paid. The Assessing Officer while concluding the assessment proceedings taking note of the letter of the petitioner dated 02.06.2014, acknowledging the receipt of amount of Rs. 6,00,00,000/- on 22.11.2013 made addition of Rs. 28,18,344/- under Section 69A of the Act. After passing of the assessment order the Assessing Officer, has referred the file to the Joint Commissioner of Income-tax, intimating the violations said to have been committed by the petitioner and for appropriate action. The learned Joint Commissioner of Income-tax, has initiated the penalty proceedings under Section 271D of the Income Tax Act, and levied penalty of Rs. 2,00,00,000/- . Challenging the same, the present Writ Petition is filed.
4. Heard, submissions of the learned counsel for the petitioner and the respondents.
5. Perused the material on record.
6. The main contention of the petitioner is that no satisfaction was recorded in the assessment order with regard to levy of penalty under Section 271D of the Act. The petitioner relying on the decision of the Apex Court in the case of CIT Vs. Jai Laxmi Rice Mills, Ambala City [(2015) 64 Taxmann.com 75 (SC)], contends that there was no evidence before the Assessing Officer to show that the petitioner has accepted the loans in cash. As noted from the assessment proceedings, the assessee was put on notice as regards the loans received in cash. The petitioner has stated that he has not received any cash loans and he has denied to have received any cash loans, what all taken as loans were through banking channels alone. There was never any element any element of cash involved in the transaction.
7. The learned Senior Standing Counsel Sri Vijay Kumar Punna, appearing for the respondents would contend that against the order impugned an alternative remedy of appeal is provided under the provisions of the Act. Without availing such remedy filed the present Writ Petition, which would not be maintainable. He relies on the following decisions in support of his case:- xxx
8. We have gone through the material placed on record. The Assessing Officer, except to base his addition on the letter of the assessee dated 02-06-2014, did not record any finding that there has been any violation of the provisions of Sec. 269SS of the Act by the assessee, nor was any satisfaction recorded to the effect that the alleged transaction of acceptance of loan in cash would attract penal consequences. In the absence of any finding to the said effect, in our considered view, the penalty cannot be levied. A presumption can be drawn, in the absence of a finding by the Assessing Officer to the effect that the petitioner has violated the provisions of Sec. 269SS of the Act, that the department has accepted the explanation furnished by the petitioner denying allegation of loan in cash. Therefore, it can unhesitatingly be said that, having satisfied with the explanation of the Assessing Officer did not record any satisfaction in the assessment order contemplating levy of penalty under Sec.271D of the Act.
9. In our view, the satisfaction of the Assessing Officer is required to be recorded because the officer, who passed the assessment order would not be levying the penalty under Sec.271D of the Act, unless it is recorded in the assessment order, he cannot refer the file to superior officer i.e., Joint Commissioner, for initiating levy of penalty. Unless the Assessing Officer, who is the primary authority, based on the material before it, during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like in the present case, of Section 269SS, there will not be any occasion to the Joint Commissioner, who is not the Assessing Officer, to exercise his jurisdiction to levy Penalty under Section 271D. Following the decision of the Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills referred supra, we set aside the order passed by the 1st respondent dated 23.11.2023 under Sec.271D of the Act.
10. The Writ Petition is accordingly allowed. There shall be no order as to costs.
As a sequel, interlocutory applications pending, if any, shall stand closed.
Commissioner of Income Tax, Panchkula Versus M/s Jai Laxmi Rice Mills
Independence of penalty proceedings from assessment proceedings - penalty proceedings under Section 271E of the Income tax Act and requirement of recorded satisfaction - effect of setting aside an assessment order on satisfication recorded therein - absence of fresh satisfaction renders penalty unsustainable
Effect of setting aside an assessment order on satisfication recorded therein - penalty proceedings under Section 271E of the Income tax Act and requirement of recorded satisfaction
No.- Civil Appeal No. 1457 of 2008, Civil Appeal No. 3614 of 2012
Dated:- November 20, 2015
ORDER
In these appeals, we are concerned with the question as to whether penalty proceeding under Section 271D of the Income Tax Act (hereinafter referred to as "the Act") is independent of the assessment proceeding and this question arises for consideration in respect of Assessment Years 1991-1992 and 1992-1993 under the following circumstances:
In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on the basis of CIB information informing the Department that the assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax return. Ex-parte proceedings were initiated, which resulted in the aforesaid order, as per which net taxable income of the assessee was assessed at Rs. 18,34,584/-. While framing the assessment, the Assessing Officer also observed that the assessee had contravened the provisions of Section 269SS of the Act and because of this the Assessing Officer was satisfied that penalty proceedings under Section 271E of the Act were to be initiated.
The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee.
After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive.
The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order.
As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied.
These appeals are, accordingly, dismissed.
Penalty under Section 271-D - setting aside assessment and effect on consequent proceedings - remand for de novo assessment - survival of penalty proceedings
Penalty under Section 271-D - setting aside assessment and effect on consequent proceedings - survival of penalty proceedings - Whether the penalty proceedings under Section 271-D survive where the assessment orders have been set aside by the Commissioner of Income Tax (Appeals) and the matter remanded for de novo assessment. - HELD THAT: - The CIT(Appeals) set aside the assessment orders for assessment years 1991-92 and 1992-93 and directed framing of fresh assessments after affording adequate opportunity to the assessee. The Court accepted the reasoning that once the original assessment orders were set aside and the matter remanded for de novo assessment, the consequential order passed by the revenue under Section 271-D did not survive independently but was effectively subsumed within the order setting aside the assessments. The fact that the penalty order had an earlier date did not render it immune to the effect of the CIT(A)'s remand; subsequent fresh assessment orders made no reference to the earlier penalty order. In view of this, the deletion of the penalty by the ITAT was not shown to involve any substantial question of law warranting interference.
Penalty under Section 271-D did not survive the setting aside of the assessment orders and the appeal is dismissed for lack of any substantial question of law.
Final Conclusion: The appeal is dismissed; the ITAT's deletion of the penalty under Section 271-D is upheld as the penalty did not survive the CIT(A)'s order setting aside the assessments and remanding the matter for de novo assessment.
HON'BLE MR. JUSTICE ARAVIND KUMAR AND HON'BLE MR. JUSTICE VIPUL M. PANCHOLI
For the Petitioner(s): Mr. S. Dwarakanath, A.S.G., Mr. Sudarshan Lamba, AOR, Mr. S. Vijay Adithya, Adv., Mr. Nikhil Aradhe, Adv., Mr. Ishaan Sharma, Adv., Mr. Sushant Singh, Adv.
For the Respondent(s): None.
ORDER
1. The special leave petition is dismissed on the ground of delay as well as on the merits.
2. Pending application(s), if any, shall stand disposed of.
In this case six counsels appeared for revenue although this was a fit case to withdraw the SLP.