TaxTMI 
TaxTMI 
2026 (3) TMI 61
X X X X Extracts X X X X
X X X X Extracts X X X X
.... without considering the reasons given by the appellant. 2. On the facts and in the circumstances of the case and in law, the Ld. JCIT and Ld. CIT(A) erred in not considering the responses and documents filed by the appellant before them, thereby violating the principles of natural justice. The penalty order is void ab initio. 3. On the facts and in the circumstances of the case and in law, the notice U/s 274 r.ws 2710 dated 31-12-2021 be held invalid being issued after the expiry of the financial year in which the assessment proceedings are completed, particularly in absence of the imposition of penalty in the course of assessment proceedings, completed vide order dated 25-10-2018. Thus, the penalty order is barred by limitation 4. On the facts and in the circumstances of the case and in law, Ld. JCIT and Ld. CIT(A) failed to appreciate that: (a) The seller party to the regd. Power of Attorney dated 07-11-2025 for a consideration of Rs. 33,34,000/- is Mrs. B. Vara Lakshmi, Spouse of appellant. (b) The appellant is neither a buyer nor a seller in the Power of Attorney. (c) The property under the Power of Attorney is not owned by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i H. Srinivasulu, Advocate, Learned Authorized Representative (for short, "Ld. AR") for the assessee, assailed the penalty imposed under section 271D of the Act on two-fold reasons, viz., (I) that the subject property, viz., land admeasuring 333.33 square yards located at Madhurawada, Survey No.97/1-3, Visakhapatnam had been transferred/sold by the assessee's spouse, viz., Smt. Bollapragada Vara Lakshmi vide a General Power of Attorney (GPA) on 07/11/2015 to Shri Nagothi Appala Raju for a sale consideration of Rs. 33.34 lakhs, and the sale consideration was deposited by her in the joint bank account that was held along with the assessee, i.e., Account No.0122101001468 with Andhra Bank, Dilsukhnagar Branch, Hyderabad in three tranches, viz., 02/11/2015: Rs. 5 lakhs; (ii) 07/11/2015: Rs. 20 lakhs; and (iii) 12/11/2015: Rs. 8 lakhs; AND (II) that the AO while framing the assessment in the case of the assessee vide his order under section 143(3) of the Act, dated 25/10/2018 had not recorded any satisfaction for initiating penalty proceedings under section 271D of the Act. Elaborating on his contentions, the Ld. AR submitted that as the subject property had been sold not by the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Bollapragada Vara Lakshmi, i.e., the assessee's spouse. Insofar, the depositing of the amount in Account No. 0122101001468 with Andhra Bank, Dilsukhnagar Branch, Hyderabad is concerned, we find that a perusal of the said bank account reveals that the same is a joint bank account held by the assessee along with his wife, i.e., Smt. Bollapragada Vara Lakshmi, Page No.49 of APB. 12. Considering the aforesaid facts, we are unable to comprehend that now when the subject property was owned and thereafter sold by Smt. Bollapragada Vara Lakshmi, i.e., the assessee's spouse and the sale consideration was deposited by her in her aforementioned joint bank account, then how the penalty regarding the impugned mode of receipt of the sale consideration could have been imposed in the hands of the assessee before us. We thus, in terms of our aforesaid observations find substance in the contentions advanced by the Ld. AR and vacate the penalty of Rs. 33.40 lakhs imposed by the Additional/Joint Commissioner of Income Tax, Range-13, Hyderabad under section 271D of the Act. 13. Apart from that, we find substance in the Ld. AR's alternate contention that as the AO while framing the assessment i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, the penalty imposed under Section 271D of the Act could not be sustained and was liable to be quashed. For the sake of clarity, the relevant observation of the Hon'ble Apex Court is culled out as under: "6. 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, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied." We find that the aforesaid view taken by the Hon'ble Supreme Court had, thereafter, been followed by the Hon'ble High Court of Andhra Pradesh in the case of Grandhi Sri Venkata Amrendra Vs. Joint Commissioner of Income-tax, CWP No. 32872/2023, dated 04.10.2024. The Hon'ble High Court, drawing support from the order of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills (supra), had held as under: "9. In our view, the satisfaction of the Assessing Officer is required to be recorded because the officer, who passe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion that under Section 269SS of the Act, no person shall take or accept from any other person (referred to as a depositor) any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if the amount of such loan or deposit or specified sum is twenty thousand rupees or more. However, as per the first proviso, the rigor of Section 269SS is not applicable to the Government, banking company, post office savings bank or cooperative bank etc. As per the second proviso, this provision would also not be applicable where both the depositor and the receiver are having agricultural income and neither of them has any income chargeable to tax under the Act. 18. Section 271D of the Act deals with penalty for failure to comply with the provisions of Section 269SS of the Act. Section 271D of the Act being relevant is extracted hereunder: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit [or specified sum] in contravention of the provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the provisions of that section, he shall be liable to pay by way of penalty a sum equal to the amount of the loan or deposit or specified advance so repaid. (2) any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 22. From an analysis of Sections 271D and 271E of the 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 wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gs should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No.1 imposed the penalty under Section 271D of the Act. 25. We are afraid respondent No.1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 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....