AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1778
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....n short "Ld. DR") reported no objection. 4. Ld.AR submits that the Ground No. 3 raised by the assessee challenging the penalty initiated by the A.O under section 271D of Income-tax Act, 1961 (in short "Act") and consequentially penalty imposed thereon is without jurisdiction and not legally valid in the eyes of law. He refers to the A.O order dated 06.09.2018 and submits that the A.O recorded only initiation of penalty proceedings under section 271(1)(c) of the Act for alleged concealment of particulars of income in Para No.3. He argued vehemently that nowhere in the Assessment Order the A.O recorded his satisfaction relating to initiation of penalty proceedings under section 271D of the Act and further argued the very notice issued under section 271D of the Act and consequential penalty order is not justified in the absence of any satisfaction in the Assessment Order. He drew our attention to the Paper Book consisting of 43 pages and referred to order of this Tribunal in the case of Kosanam Rama Rao v. ACIT in ITA No. 226/VIZ/2025 dated 18.07.2025 at page No. 16 of the Paper Book. He referred to the Ground No. 3 raised therein in internal Page No. 2 and submits that the said gr....
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.... Pradesh, Hon'ble High Court of Telangana and ITAT Visakhapatnam benches followed the Hon'ble Supreme Court decision in the case of CIT v. Jai Laxmi Rice Mills Ambala City (supra) which is distinguishable and is not applicable to the present case the same. He prayed to dismiss Ground No. 3 raised by the assessee. 6. Heard both the parties and perused the material available on record. On perusal of the Assessment Order dated 06.09.2018, we note the facts therein are the assessee is an individual filed return of income admitting a total income of Rs. 3,78,340/-. According to A.O, the assessee derives salary income from M/s.Ushodaya Enterprises Private Limited and the said return was processed under section 143(1) of the Act. Further, the case of the assessee was selected for limited scrutiny to examine whether the interest income has been correctly shown in the return of income. By issuing notice under section 143(2) of the Act and 142(1) of the Act, the A.O determined the total income of the assessee inter alia making an addition under the head "Capital Gains" and "income from other sources" to an extent of Rs. 7,54,633/-. It is noted that the assessee accepted the A.O's order an....
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....[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 and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,- (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); ....
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....essment, 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 of the penalty imposed under Section 271D of the Act in the absence of any satisfaction for initiating the said penalty proceedings in the body of the assessment order by the A.O., is no more resintegra, pursuant to the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City, (2015) 379 ITR 521 (SC). The A.O., in the case before the Hon'ble Apex Court, had framed the original assessment vide an ex-parte order dated 26.02.1996, determining the income of the assessee at Rs. 18.34 lacs (approx.). The A.O., while framing the assessment, had in the body of the assessment order taken cognizance of the fact that the assessee had contravened the provisions of Section 269SS of the Act and recorded his satisfaction for initiating penalty proceedings u/s. 271D of the Act. On appeal, the CIT(Appeals) set-aside the assessment order with a direction to frame the assessment de-novo after affording an adequate opportunity to the assessee. After remand, the A....
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....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 order, he cannot refer the file to superior officer i.e., Joint Commissioner, for initiating levy of penalty. Unless the Assessing Officer, who is the primary authority, based on the material before it, during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like in the present case, of Section 269SS, there will not be any occasion to the Joint Commissioner, who is not the Assessing Officer, to exercise his jurisdiction to levy Penalty under Section 271D. Following the decision of the Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills referred supra, we set aside the order passed by the 1" respondent dated 23.11.2023 under Sec.271D of the Act." We find that the aforesaid view taken by the Hon'ble Supreme Court, had, thereafter, been followed by the Hon'ble High Court of Telangana in the case of Shrinivasa Reddy Reddeppagari Vs. JCIT, WP No.44285 of 2022 dated 26.12.2022, wherein the question, for which, the indulgence of....
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....ny 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.] 19. Thus, what sub-section (1) of Section 271D provides for is that if a person takes or accepts any loan or deposit or specified amount 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. Sub-section (2) clarifies that any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 20. It would be useful to refer to Section 271E of the Act also at this stage which deals with penalty for failure to comply with the provisions of Section 269T of the Act. Be it stated that Section 269T of the Act provides that no branch of a banking company or a cooperative bank and no other company or cooperative society and no firm or other person shall repay any loan or deposit made with it or any s....
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....ome 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 Income Tax (Appeals). It was in that context that Supreme Court held as follows: 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 Section 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, insofar as penalty under Secti....
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.... 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 petition is not the competence of the Joint Commissioner in issuing the order of penalty. Therefore, reference to Grihalaxmi Vision (2 supra) was wholly unnecessary. 28. Consequently, we set aside the impugned order dated 29.11.2022 and remand the matter back to the file of respondent No.1 to pass a fresh order in accordance with law after giving a reasonable opportunity of hearing to the petitioner. Writ Petition is accordingly allowed. No costs." 15. Also, a similar view had been taken by the Hon'ble High Court of Gujarat in the case of Pr. CIT Vs. Parivar Television, Tax Appeal No.674/2023 dated 09.10.2023, wherein the Hon'ble High Court had approved the view taken by the Tribunal and observed that as no satisfaction regarding initiation of penalty proceedings u/s. 271E of the Act was....
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....at the penalty imposed under section 271D of the Act could not be sustained and the penalty imposed thereon was liable to be quashed. Further, the Tribunal considered the facts and circumstances before the Hon'ble High Court of Andhra Pradesh and following the same having satisfied the facts and circumstances therein are similar to the facts and circumstances in the case of Kosanam Rama Rao v. ACIT (supra) held the imposition of penalty under section 271D of the Act is not maintainable as there was no satisfaction by the Assessing Officer in the Assessment Order. The Tribunal reproduced the relevant Para No. 9 of Hon'ble High Court of Andhra Pradesh wherein the Hon'ble High Court of Andhra Pradesh was pleased to observe that 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 section 271D of the Act. Unless it is recorded in the Assessment Order, he cannot refer the file to superior officer i.e., Joint commissioner, for initiating levy of penalty. Further, the Hon'ble High Court of Andhra Pradesh was pleased to observe that the Assessing Officer who is a primary authority, b....