Recorded satisfaction for section 271D penalty is mandatory; omission in the assessment order rendered the penalty invalid.

Penalty under section 271D of the Income-tax Act, 1961 cannot be validly sustained unless the assessment order records satisfaction about the relevant contravention under section 269SS. Here, the assessment order mentioned only initiation of penalty proceedings under section 271(1)(c) and did not record the necessary satisfaction for section 271D. The Tribunal treated this omission as a jurisdictional defect and held that the Joint Commissioner lacked valid authority to impose the penalty on that basis. The penalty was therefore quashed and the assessee succeeded.

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Issues: Whether penalty under section 271D of the Income-tax Act, 1961 was sustainable when the assessment order did not record satisfaction for initiation of penalty proceedings under that provision.

Analysis: The assessment order recorded only initiation of penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 and did not record the requisite satisfaction regarding contravention of section 269SS of the Income-tax Act, 1961 for invoking section 271D. The Tribunal applied the settled principle that penalty under section 271D cannot be validly initiated or sustained unless the Assessing Officer records such satisfaction in the assessment order, and treated the absence of that satisfaction as a jurisdictional defect. Following the binding view adopted in earlier decisions, the Tribunal held that the Joint Commissioner lacked valid jurisdiction to impose the penalty on the basis of an assessment order that did not contain the necessary satisfaction for section 271D.

Conclusion: The penalty under section 271D was held invalid and was quashed, and the assessee succeeded on the issue.

Ratio Decidendi: Penalty under section 271D of the Income-tax Act, 1961 cannot be sustained unless the assessment order contains recorded satisfaction for initiation of proceedings based on the relevant contravention under section 269SS of the Income-tax Act, 1961.

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