TaxTMI 
TaxTMI 
2025 (7) TMI 2005
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....circumstances of the case, the Learned CIT(Appeals) erred in upholding the levy of imposition of penalty u/s. 271D amounting to Rs. 46,76,000/- by the Assessing Officer. 3. On the facts and circumstances of the case, the notice issued for levy of penalty u/s. 271D of the I.T. Act is invalid in law and consequent penalty order passed is without Jurisdiction in the absence of requisite satisfaction in the Assessment order for the Asst year under consideration. 4. On the facts and circumstance of the case, the Penalty order passed u/s. 271D of I.T. Act for the Asst. Year 2017-18 consequent upon the invalid notice is also to be treated as invalid before eyes of law. 5. On the facts and circumstances of the case, the Learned CIT (A) ought to have appreciated that the amount received is during the registration of the property whereby the provisions of Section 269SS are not applicable. 6. The Appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal." 2. Succinctly stated, the assessee had e-filed his return of income for A.Y. 2017-18 on 31.10.2017, declaring an income of Rs. 34,20,540/- along ....
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....two parties-the buyer and the seller. Even if the appellant has disclosed the entire sale consideration in his return of income, there is nothing on record to conclude as to whether the buyer(s) had disclosed the entire transactions or not. The dual objectives of curbing of generation black money as well as application of black money in the real estate sector are sought to be achieved by disincentivizing cash dealings in immoveable transactions This is the rationale behind the said amendment of Section 269SS of the Act. By entering into cash transactions in immoveable property without any reasonable cause, the appellant was acting against the express intention of the Parliament. 5.13 In the case laws relied upon by the appellant, there was a finding of existence of "reasonable cause" within the meaning of Section 273B of the Act. Thus, these case laws are distinguishable on facts and have no application in the appellant's case as the mitigating factors are absent therein, 5.14 Thus, in the facts and circumstances of the case as discussed above, it is to be inferred that no reasonable cause" exists within the meaning of Section 273B of the Act for the appellant....
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.... in filing the appeal. We thus, in terms of our aforesaid observations, condone the delay involved in filing of the present appeal. 10. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 11. Before proceeding any further, it would be relevant to cull out the provisions of Section 269SS of the Act, which contemplates that no loan/deposit/specified sum exceeding the amount therein prescribed is to be received by an assessee otherwise than as per the modes therein contemplated, which reads as under: "269SS. No person shall take or accept from any other person (herein referred to as the 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 11[or through such other electronic mode as may be prescribed], if,- (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit....
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.... with the penalty u/s. 271D of the Act; therefore, it will be apposite to cull out the same as under: "271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 12. Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not the penalty imposed on the assessee by the Addl/Joint Commissioner of Income Tax, NFAC under Section 271D of the Act, in the absence of the recording of satisfaction by the A.O for initiating the said penalty proceedings in the body of the assessment order under Section 143(3) dated 28.12.2019 is sustainable in the eyes of law? 13. As is discernible from the assessment order, the A.O., while framing the assessment, had not recorded his satisfaction regarding the initiation of the penalty proceedings under Section 271D of the Act. We find that the issue involved in the present appeal, i.e., the sustainability o....
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....evant 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 passed the assessment order would not be levying the penalty under Sec. 271D of the Act. unless it is recorded in the assessment ord....
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.... 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 provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or depos....
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.... 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 with a direction to frame assessment de novo. In the fresh assessment order, no satisfaction was recorded by the assessing officer reg....
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....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, which says that all authorities, civil and judicial, in the territory of India shall act in aid of the S....