Penalty under section 271DA needs recorded satisfaction and transaction-wise proof of a section 269ST violation; estimated income is not enough.

Penalty under section 271DA requires a prior, clear jurisdictional satisfaction in the assessment order that section 269ST was violated. The assessment order here did not identify the payer, transaction, date, or manner of crossing the statutory limit, so the penalty proceedings were without valid jurisdiction and unsustainable. On merits, seized tally data, statements, and estimated income showed unaccounted receipts but did not independently prove transaction-wise and person-wise receipt in contravention of section 269ST. In the absence of corroborative evidence from alleged payers, the Revenue failed to discharge its burden, and the penalty was deleted.

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Issues: (i) Whether penalty under section 271DA of the Income-tax Act, 1961 could be sustained in the absence of a clear and discernible satisfaction in the assessment order regarding violation of section 269ST of the Income-tax Act, 1961; (ii) Whether the penalty could be upheld on merits on the basis of seized tally data, statements and estimated income, without transaction-wise and person-wise corroborative evidence of receipt in contravention of section 269ST.

Issue (i): Whether penalty under section 271DA of the Income-tax Act, 1961 could be sustained in the absence of a clear and discernible satisfaction in the assessment order regarding violation of section 269ST of the Income-tax Act, 1961.

Analysis: Penalty under section 271DA is dependent on a prior and clear foundation that the assessee received sums in contravention of section 269ST. The assessment order did not record a clear finding identifying the statutory ingredients of the default, such as the relevant payer, transaction, date, or the manner in which the threshold was crossed. A mere reference to possible penalty proceedings was held insufficient to confer jurisdiction. The requirement of recorded satisfaction was treated as a jurisdictional condition, and subsequent notices or appellate reports could not cure the defect.

Conclusion: The penalty proceedings were held to be without valid jurisdiction and unsustainable for want of recorded satisfaction.

Issue (ii): Whether the penalty could be upheld on merits on the basis of seized tally data, statements and estimated income, without transaction-wise and person-wise corroborative evidence of receipt in contravention of section 269ST.

Analysis: The seized material and parallel tally data showed unaccounted receipts and supported estimation of income, but they did not by themselves establish the precise statutory violation required by section 269ST. The Revenue did not prove, with independent corroboration, that any identified person paid two lakh rupees or more in the relevant manner, nor did it conduct enquiry with alleged payers. Rejection of books and estimation of profit for assessment purposes did not justify selective reliance on the same material for penalty. In penalty matters, the burden remained on the Revenue to prove the default with cogent evidence, and an admission of additional income on estimation was not treated as an admission of violation of section 269ST.

Conclusion: The penalty was held to be unsustainable on merits and liable to be deleted.

Final Conclusion: The assessee's appeals succeeded, the penalty under section 271DA was deleted, and the appellate orders were set aside.

Ratio Decidendi: Penalty under section 271DA can be imposed only when the assessment order itself records a clear jurisdictional satisfaction, and the Revenue independently proves the precise contravention of section 269ST with cogent transaction-wise evidence; estimated income or uncorroborated admissions are not enough.

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