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.

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The High Court's decision was affirmed because it "relied upon the decision of this Court in the case of Commissioner of Income Tax, Panchkula v. M/s. Jai Laxmi Rice Mills (Ambala City), Civil Appeal No. 1457 of 2008," which the Court found "squarely covers the issue raised in this petition." The special leave petition was examined in light of that precedent and, finding no arguable legal infirmity, the Court dismissed the petition. Standard procedural relief was addressed: all pending applications were directed to "stand disposed of." The outcome rests on stare decisis to the cited precedent, applying established principles from the earlier decision to the present facts and concluding there is no ground to entertain the special leave petition.

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