TaxTMI 
TaxTMI 
2025 (12) TMI 1797
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....r of the JCIT levying penalty of Rs. 43,50,000/- u/s 271D of the IT Act. 3. The learned Commissioner ought to have appreciated that it is a pre-requisite condition to levy penalty u/s 271D that there must be assessment proceedings in which the violation of 269SS is noticed, in the absence of any assessment proceedings the levy of penalty u/s 271D is bad in law, therefore, the learned CIT erred in confirming the order of the JCIT levying penalty of Rs. 43,50,000/- u/s 271D of the IT Act. 4. The learned Commissioner ought to have appreciated that the time limits for levy of penalty starts from the date on which the AO referred the matter to the JCIT, for initiating proceedings u/s 274 r.w.s 271D and for levy of penalty, in the absence of such a reference no time limits can be determined, therefore, the levy of penalty u/s 271D is bad in law and therefore, the learned Commissioner erred in confirming the order of the JCIT, levying penalty of Rs. 43,50,000/- u/s 271D of the IT Act. 5. The learned CIT ought to have appreciated that the seller of the property and the purchaser are agriculturists residing in rural areas, therefore, the provision of section 269SS....
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....2022 dated 26.12.2022. 2. Order of ITAT, Hyderabad SMC-Bench, Hyderabad in the case of Sultana Begum vs. Addl. CIT in ITA. No. 514/Hyd./2023 dated 18.12.2023. 3. Order of ITAT, Hyderabad in the case of Ramkumar Reddy Satty vs. ACIT in ITA. No. 488/Hyd./2024 dated 19.03.2024. 4. Order of ITAT, Indore in the case of Shri Umakant Sharma vs. JCIT, Ratlam in ITA. No. 364 to 366/Ind./2022 dated 19.07.2023. 4. On the other hand, the learned DR has relied upon the Orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record. The JCIT, Range Head-9, Hyderabad has levied the penalty u/sec.271D vide order dated 10.12.2019 as under: "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX RANGE-9, HYDERABAD To Shri SAMREDDY SUDHAKAR REDDY, 4-34, Karnamguda, IBRAHIMPATNAM, Hyderabad. Telangana. India. Dated 10/12/2019 Letter No. ITBA/COM/F/17/2019-20/1022037588(1) Sir/ Madam/ M/ satisfaction Subject : Penalty Order u/s satisfaction 271D of the Income Tax Act, 1961 - in the case....
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....s of the case, I hereby levy a penalty of Rs.43,50,000/- u/s 271D of the I.T. Act for the A. Yr. 2017-18 for violating the provisions of section 269SS of the I.T. Act i.e., accepting cash of Rs. 43,50,000/- for sale of immovable property. This should be paid as per demand notice u/s. 156 enclosed. Sd/-MOHAN KUMAR R RANGE-9, HYDERABAD Addl. Commr. of Income Tax, Range-9, Hyderabad." 6. Thus, it is clear from the impugned order u/sec. 271D that there was no Reference by the Assessing Officer and also there were no assessment proceedings or any other proceedings in the case of the assessee prior to issuing the show cause notice u/sec. 271D r.w.s. 274 of the Act. An identical issue has been considered by the Indore Bench of the Tribunal and one of us is the Judicial Member/Vice President is party to the Order in the case of Shri Umakant Sharma vs. JCIT, Ratlam in ITA. No. 364 to 366/Ind/2022 dated 19.07.2023 wherein the Tribunal has held in Para Nos. 8 to 11 as under: "8. We have considered rival submissions and carefully perused the relevant material on record. There is no dispute that the assessee has not filed any return of income for the assessment ....
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....relevant assessment or other order is the subject- matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253 or an appeal to the High Court under section 260A or an appeal to the Supreme Court under section 261 or revision under section 263 or section 264 and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the "Principal Chief Commissioner or] Chief Commissioner or the "[Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264: Provided that no order of imposing or enhancing or reducing or c....
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....n'ble Supreme Court in case of CIT vs. Jain Laxmi Rice Mills (supra) has held as under: "The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding Under Sec. 271E would also not survive. This, according to us, is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as fresh assessment order is concerned there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, In so far as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. " 10. Thus, the Hon'ble Supreme Court has affirmed the view of the Hon'ble High Court that in absence of satisfaction recorded regarding the penalty proceedings u/s 271E of the Act the order of levy of penalty is not valid. The Ahmedabad Bench of the Tribunal in c....
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....against the assessee. No such action was taken. Rather, the penalty was imposed on the basis of the finding in the case of assessee's wife." 6. No error or perversity could be shown in the aforesaid findings recorded by the Tribunal. Moreover, the assessee had taken a plea before the Assessing Officer that there was a reasonable cause for the assessee to have made direct payment of Rs. 14,02,600/- to M/s. Babyloan Builders Private Ltd., Gurgaon. It was pleaded that some of the repayments made by the assessee were intercompany transfer for group housing and purchase of flat and at times payments were made after closure of banking hours. It was further submitted that the payments made were genuine and no tax evasion was involved and the default, if any, was of technical nature. The explanation being plausible one, it cannot be said that there was no reasonable cause within the meaning of Section 273B of the Act. No substantial question of law arises in this appeal. 8. We find substances in the submissions made by the Ld. A.R. particularly after considering the order passed by the Hon'ble Punjab and Haryana High Court as cited hereinabove. In fact, on the ide....
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....he Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attracted on a person accepting loan or deposit or specified sum in contravention of Section 269SS of the Act, penalty under Section 271E of the Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T. Therefore, in a way, the two provisions are complimentary to each other. 23. In Jai Laxmi Rice Mills Ambala City (supra), Supreme Court considered the question as to whether penalty proceedings under Section 271D of the Act is independent of the assessment proceeding? In the facts of that case, it was found that the penalty order was issued following the assessment order. However, in appeal, Commissioner of Income Tax (Appeals) had set aside the original assessment order with a direction to frame assessment de novo. In the fresh assessment order, no satisfaction was recorded by the assessing officer regarding initiation of penalty proceedings under Section 271E of the Act. It was noticed that the penalty order was passed before the appeal of the assessee was allowed by the Commissioner of I....
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....t in Jai Laxmi Rice Mills Ambala City (supra). In the said decision as extracted above, Supreme Court had concurred with the view taken by the High Court holding that satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be it an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court. 26. Article 141 of the Constitution of India is clear that law declared by the Supreme Court shall be binding on all courts within the territory of India. This is further clarified in Article 144, which says that all authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court. We are therefore, of the unhesitant view that respondent No. 1 overlooked the relevant considerations while passing the impugned order dated. 29.11.2022. 27 Further, issue in the present writ pe....