TaxTMI 
TaxTMI 
2026 (5) TMI 740
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....tion of the Ld. Counsel for the assessee that without recording satisfaction for initiation of the penalty in the assessment order, there cannot be any penalty levied on the assessee. It was submitted by the Ld. Counsel that in the assessment order, there has been no addition on the quantum, therefore, there was no initiation of penalty. 4. Per contra, the Ld. Sr. DR submitted that even if there was no initiation of penalty u/s. 271D of the Act, however, it was within the power of the A.O to issue show cause notice separately and pass penalty order u/s. 271D of the Act. It was contended by the Ld. Sr. DR that even if there was no addition in the assessment order, therefore, there arose no opportunity for levy of penalty. However, subsequently if the A.O found that it is relevant to issue show cause notice and impose penalty, such process is valid. 5. Having heard the submissions of the parties herein, I find that the issue is no more "Res-integra". The penalty sustains only if there is addition in the quantum. In the assessment order, there is no demand and the returned income has been accepted by the A.O, therefore, there does not arise any cause for satisfaction to initiate....
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....t 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. These appeals are, accordingly, dismissed." 7. This Bench of the Tribunal after relying on the decision of the Hon'ble Apex Court in the case of CIT, Panchkula Vs. Jai Laxmi Rice Mills Ambala City (supra) in the case of Bhowmick Raj Singh Vs. Jt. Commissioner of Income Tax (2025) 171 taxmann.com 575 (Raipur- Trib) has held as follows: "10. We have heard the ld. Authorized Representatives of both the 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, i.e., the mandate of law whic....
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....Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means loan or deposit of money; (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place." As the failure to comply with the provisions of Section 269SS of the Act results in saddling the assessee with penalty u/s. 271D of the Act; therefore, it would be relevant 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....
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....her appeal, the Hon'ble Apex Court concluded that as the A.O in the fresh assessment order had not recorded his satisfaction regarding penalty u/s. 271D of the Act, therefore, de-hors recording of requisite satisfaction the penalty imposed u/s. 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 Telangana in the case of Shrinivasa Reddy Reddeppagari Vs. JCIT, WP No.44285 of 2022 dated 26.12.2022 wherein the question, for which, indulgence of the Hon'ble High Court was sought, read as under: "....
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....n 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 specified advance received by it otherwise than by an....
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....h 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 Section 271E is concerned, it was without any satisfaction and, theref....
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...., 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. 29. Writ Petition is accordingly allowed. No costs." 14. 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 recorded in the assessment order, therefore, no pe....