2018 (6) TMI 1869

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....ed u/s. 271E. 2. The brief facts qua the levy of impugned penalty are that after completion of assessment passed u/s. 143(3), referred the case of the assessee company for initiating the penalty proceedings for violation of Section 269T of the Act after noting as under:- "As per details available from the return of income, it has been perused that the amount of loss has been transferred to the share application money account to the tune of Rs. 75.75 lac as per following details. M/s. Narsi Oil Refinery Pvt. Ltd. 1245000/- M/s. Gunvardhan Vyapaar Pvt. Ltd. 5035000/- M/s. Fiscal Services Pvt. Ltd. 1295000/- Total 7575000/- These transactions are in contravention to the provision of section 269....

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....s of section 269T. In the instant case there has been no actual payment of the money by the appellant company. The amount received has only undergone change of nomenclature. From unsecured loan account the amounts have been transferred to share application money account. The money has been actually returned in the subsequent years in the case of two parties through account payee cheque as mentioned in the assessment order. The amount in respect of the third- party was still pending for repayment by the company. The facts being so, I do not consider there is any merit in holding that the amount has been repaid in contravention of section 269T. Therefore I'm not inclined to sustain the action of the Addl. CIT in this regard. The decision of I....

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.... been done by the Assessing Officer. He thus strongly relied upon the order of the Assessing Officer. 6. After considering the aforesaid submissions, we find from the perusal of the assessment order that Assessing Officer has not recorded any kind of satisfaction nor has he pointed out as to whether there was any violation of Section 269T. It is only during the course of assessment proceedings while analyzing the transaction, AO has to record his satisfaction that there is a violation of Section 269T for which he has to give his satisfaction and initiate the proceedings, and thereafter, he can refer the matter to the Joint/Additional Commissioner for the penalty proceedings. The Hon'ble Supreme Court in the case of the CIT vs. Jai La....