Section 271DA penalty fails without recorded satisfaction and transaction-wise proof of cash receipt under section 269ST.

Penalty under section 271DA requires a clear, contemporaneous satisfaction in the assessment order that section 269ST was violated; a later notice or penalty order cannot cure that defect, so the initiation failed for want of jurisdictional satisfaction. On merits, the Revenue must independently prove transaction-wise receipt of cash from an identifiable person in a day, single transaction, or relation to one event or occasion; seized tally data, estimated income, and general admissions were insufficient without corroboration from alleged payers. Rejection of books and income estimation did not justify selective use of the same material for penalty. The penalty was therefore deleted.

---

---

Issues: (i) Whether penalty under section 271DA could be sustained in the absence of a discernible satisfaction in the assessment order regarding contravention of section 269ST; and (ii) whether the penalty was sustainable on merits on the basis of seized tally data, admissions, and estimated income, without independent transaction-wise proof of receipt of cash in violation of section 269ST.

Issue (i): Whether penalty under section 271DA could be sustained in the absence of a discernible satisfaction in the assessment order regarding contravention of section 269ST.

Analysis: Penalty under section 271DA is contingent on a prima facie and conscious satisfaction, recorded in the assessment proceedings, that the ingredients of section 269ST are attracted. A mere reference to possible penalty, without a clear finding that cash was received in the prohibited manner and within the statutory thresholds, does not satisfy the jurisdictional requirement. Such satisfaction cannot be supplied later through the penalty notice, penalty order, or appellate report.

Conclusion: The initiation of penalty proceedings was invalid for want of recorded satisfaction, and the penalty failed on jurisdictional grounds.

Issue (ii): Whether the penalty was sustainable on merits on the basis of seized tally data, admissions, and estimated income, without independent transaction-wise proof of receipt of cash in violation of section 269ST.

Analysis: Section 269ST requires proof of receipt of cash of the prescribed amount from an identifiable person in a day, in a single transaction, or in relation to one event or occasion. The seized tally data, standing alone, did not establish person-wise or transaction-wise contravention, and no independent enquiry with alleged payers was shown. The books had been rejected and income estimated, which made selective reliance on the same material for penalty purposes impermissible without corroboration. An admission of additional income on estimation basis did not amount to an admission of statutory violation.

Conclusion: The penalty was not sustainable on merits and was liable to be deleted.

Final Conclusion: The penalty under section 271DA was quashed for want of jurisdictional satisfaction and for failure to prove a clear, corroborated violation of section 269ST; the assessee succeeded in all appeals.

Ratio Decidendi: A penalty under section 271DA can be imposed only when the assessment order itself records a clear satisfaction about contravention of section 269ST and the Revenue independently proves the statutory ingredients of the default with cogent, transaction-wise evidence.

---