TaxTMI 
TaxTMI 
2026 (10) TMI 262
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.... / Del/ 2026 is taken as lead case. 3. Facts in brief as called out from the authorities below are that assessee is a co-operative group housing society and incorporated under the Haryana Co- operative Societies Act, 1984 and it has no income and has only collected the contributions from members for the purpose of purchase of plot and construct flats thereon for the members of the society only and the land to be allotted on the basis of actual cost of plot and construction thereon. It is a non-profit organization based on concept of mutuality. The assessee filed return of income for A.Y. 2016 -17 and on the basis of specific information as per risk management strategy, it was noticed that the assessee has carried out solitary transaction during the year under consideration wherein it has deposited a sum of Rs. 67,51,000/- in the bank account maintained with IDBI bank. The assessee was given opportunity of being heard by serving notice u/s. 148A(b) of the Act to show- cause why notice u/s. 148 of the Act be not issued. The assessee has not filed return of income for the year under consideration and the source of cash deposited remain unexplained. Accordingly, order u/s. 148A(d) o....
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....iew of the facts and circumstances of the case and in law, the initiation and levy of a penalty Rs. 67,51,000/- by the Assessment Unit under Section 271D of the Income Tax Act, 1961 ('the Act') vide penalty order dated 30.08.2024 and upheld by the National Faceless Appeal Centre (' NFAC') vide order dated 06.06.2025 is illegal, bad in law, without jurisdiction, time barred and against the provision of the Act and hence liable to be deleted. 2. That in view of the facts and circumstances of the case and in law, the notice dated 13.02.2024 issued under Section 274 r.w.s. 271D of the Act for initiation penalty is illegal, bad in law, without jurisdiction and against the provision of the Act. 3. That in view of the facts and circumstances of the case and in law, the reference, if any, made by the Assessing Officer to JCIT/ Addl. CIT for initiation of the penalty is illegal and bad in law. 4. That in view of the facts and circumstances of the case and in law, the assessment unit has no jurisdiction to pass the penalty order as the jurisdiction lies with Joint Commissioner to pass the penalty order. Hence, the penalty order deserved to be quashe....
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.... impugned order has been passed as per the 'faceless penalty scheme 2021' notified on 12.01.2021. It is argued that sub-section (4) of section 4 of the penalty scheme has provided the authorities competent to impose penalty which includes Joint Commissioner of income tax also. It is further argued that as per section 4(4) of 'the penalty scheme', the penalty unit was also been allowed by the CBDT to act as assessment unit and as such the name of the penalties authority is not mentioned because of the faceless scheme. Hence, it is argued that the penalty has been imposed by the competent authority provided in the penalty scheme and the legal ground is liable to be dismissed. The ld. DR has also filed written submissions in support of his above arguments while annexing the penalty scheme 2021 with it and submitted that the penalty order passed by the Faceless Assessment Unit was very much within the statutory provisions and related notifications, guidelines and SOPs in place at that time. In support of his arguments, the DR placed reliance on the following: 1. Faceless penalty scheme 2021, introduced vide Notification dated 12.01.2021 2. Directions issued by CBDT on....
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....on of Faceless Penalty Scheme 2021, Faceless Assessment Unit are working as Faceless Penalty Unit and each and every order (Assessment Order or Penalty Order) is being passed with the approval of the Range Head of the respective Unit as per SOP. In the Penalty order u/s. 271D it is nowhere mentioned that Penalty order has not been passed by the Additional CIT/JCIT. Rather, order has been passed by Faceless Assessment Unit working as Faceless Penalty Unit because of non-disclosing of identity of the officer passing the order due to Faceless Scheme of Penalty. Hence the objection raised by Ld.AR that penalty under section 271D has not been imposed by the Additional CIT/ JCIT is factually incorrect and totally unwarranted and liable to be rejected." 9. In response to the additional written submissions filed by the ld. DR, the ld. AR has also filed the written brief submissions as a rejoinder, extracted below as under: "A. The impugned penalty order is in contravention of the Faceless Penalty Scheme, 2021 1. It is humbly submitted that the impugned penalty order dated 29.08.2024 passed under Section 271D of the Income Tax Act, 1961 ("Act") is wholly without juri....
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....t the order passed under Section 271D of the Act by the Assessment Unit is illegal, bad in law and without jurisdiction. C. Without prejudice, the Revenue has failed to establish that the impugned penalty order has been passed by the competent authority i. e. the Joint Commissioner of Income Tax 5. It is humbly submitted that Section 271D of the Act expressly and exclusively vests the jurisdiction to impose a penalty under the said provision in the Joint Commissioner of Income Tax. The mere fact that the impugned order has been issued by an Assessment Unit does not establish compliance with this mandatory jurisdictional requirement. There is nothing on record to demonstrate that the officer constituting, supervising or authorising the Assessment Unit in the present case was the Joint Commissioner or was otherwise competent to exercise the statutory jurisdiction under Section 271D of the Act. In the absence of such foundational material, the mandatory jurisdictional requirement under Section 271D of the Act remains unfulfilled, rendering the impugned penalty order wholly without jurisdiction and liable to be quashed. 6. In view of the aforesaid, it is resp....
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.... assigned to PU, except penalties in respect of: A.1.1 Cases assigned to Central Charges; A.1.2 cases assigned to International Taxation charges; A.1.3 proceedings arising in TDS charges; A.1.4 Cases where pendency could not be created on ITBA because of technical reasons or in no PAN cases; A.1.5 Penalty proceedings arising/pending in the Investigation Wing, Directorate of I& CI, erstwhile DG (Risk Assessment) or before any prescribed authority for the purpose of specified penalties; A.1.6 Cases where penalty is imposable by officer above the rank of Addl./ Jt. CIT." 12. The above extract of the SOP dated 06.09.2022 makes it categorically clear that the penalty unit for imposing penalty including the penalty u/s. 271D of the Act came into operation on 06.09.2022. The impugned order has been passed on 29.08.2024, was thus required to be passed by the Penalty Unit and not by the Assessment Unit. In view of these facts and the SOP dated 06.09.2022 referred (supra), the arguments of the ld. DR and the reliance of the ld. DR on sub-section (4) of section 4 of the Faceless Penalty Scheme 2021 is misplaced. Since, the Penalty Unit ....