2024 (6) TMI 358

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...., dated 03/01/2023 arising out of the order passed u/s. 271D of the Income Tax Act, 1961 ["the Act"] for the AY 2017-18. 2. Briefly stated the facts of the case are that the assessee, a firm, e-filed its return of income for the AY 2017-18 on 28/10/2017 declaring a total income of Rs. 19,60,770/-. Initially, the return was processed by the CPC on 3/3/2018. Thereafter, the case was selected for scrutiny through CASS and accordingly notice u/s. 143(2) dated 9/8/2018 was sent to the assessee through email and also served manually upon the assessee. Further, notices u/s. 142(1) of the Act were issued on 28/01/2019 and 13/08/2019 and called for certain information in connection with scrutiny proceedings. Since there was no response from the a....

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....rieved by the penalty order of the Ld. Additional / Joint / Deputy / Assistant Commissioner of Income Tax, National Faceless Assessment Centre, Delhi, the assessee filed an appeal before the Ld. CIT(A)-NFAC. On appeal, the Ld. CIT(A)-NFAC dismissed the appeal of the assessee by holding as under: "..................it is observed that the appellant has received cash only after 01/06/2015. Hence, the AO has rightly imposed penalty of Rs. 82,62,000/- vide passed penalty order u/s. 271D of the Income Tax Act, 1961 ie correct and the same is upheld. Thus, the appeal of the appellant is dismissed." 3. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal....

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....rtments and the amounts received, as alleged by the Ld. JCIT in the penalty order, represents sale proceeds upon which profit was offered to tax. This fact was verified by the Ld. AO and accepted the return of income filed by the assessee. Further, the Ld. AR drew our attention to the assessment order passed by the Ld. AO and submitted that while passing the assessment order, the Ld. AO has not even mentioned anything about the initiation penalty proceedings. The Ld. AR further submitted that for the purpose of imposing penalty, satisfaction should be recorded by the Ld. Assessing Officer in the assessment order. Therefore, the Ld. AR pleaded that the penalty levied u/s. 271D of the Act in the case of the assessee is totally against the law....

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....ssessee while passing the assessment order. Thus, it is apparent that the Ld. AO has not recorded any satisfaction regarding the initiation of penalty proceedings u/s. 271D of the Act. It is a trait law that for the purpose of imposing penalty, satisfaction should be recorded by the Ld. AO in the assessment order as to imposition of penalty. Non-recording of satisfaction is fatal. In this connection, it is pertinent to make a reference to the decision of the Hon'ble Supreme Court in the case of CIT vs. Jaya Laxmi Rice Mills Ambala City (supra) wherein the Hon'ble Apex Court in the context of initiation of penalty proceedings u/s. 271E of the Act, it was held that recording of satisfaction is mandatory for initiation of penalty proceedings u....