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2019 (12) TMI 1569 - AT - Income TaxPenalty u/s.271D - default u/s 269SS - Mandation of recording satisfaction for initiation of penalty proceedings - as per AO assessee had accepted deposits exceeding 20, 000/- otherwise the account payee cheques or bank drafts in contravention of provision of section 269SS - HELD THAT - Hon ble Apex Court in the case of CIT vs. Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT dealing with the levy of penalty under section 271D of the Act has held that if there is no satisfaction recorded in the order of assessment regarding initiation of penalty proceedings under section 271D of the Act then no penalty thereunder could be levied. As in the case in hand no satisfaction for initiation of penalty proceedings under sections 271D and 271E of the Act has been recorded in the orders of assessment. In this factual matrix of the case and respectfully following the decision of the Hon ble Apex Court in the case of Jai Laxmi Rice Mills (supra) we hold that since admittedly no satisfaction has been recorded for initiating penalty proceedings under sections 271D and 271E of the Act in the case on hand in the order of assessment for A.Y. 2000-01 therefore no penalty thereunder could be levied. In this view of the matter we cancel the penalty of 1, 45, 000/- each levied under sections 271D and 271E of the Act for A.Y. 2000-01. Consequently the assessee s additional grounds are allowed in both the appeals. Since the position in the present case is identical as no satisfaction has been recorded by the ld.AO before initiating penalty u/s.271D of the I.T.Act therefore while relying upon the judgments as mentioned above we hold that since no satisfaction had been recorded for initiating penalty proceedings u/s.271D of the Act in the case in hand therefore no penalty could be levied. - Decide in favour of assessee.
Issues:
Appeal against order of Ld. Commissioner of Income Tax-(Appeals) confirming penalty under section 271D of the Act. Analysis: The appeal was filed by the Assessee against the order of the Ld. Commissioner of Income Tax-(Appeals) confirming the penalty under section 271D of the Income Tax Act for the assessment year 2010-11. The Assessee had accepted deposits exceeding a certain amount in contravention of section 269SS of the Act, leading to the imposition of a penalty after issuing a show cause notice. The Assessee contended that no satisfaction was recorded by the Assessing Officer before levying the penalty under section 271D of the Act. The Appellate Tribunal referred to relevant judgments, including the case of ITO Vs. Jay Laxmi Rice Mills, where it was held that if no satisfaction was recorded in the assessment order regarding the initiation of penalty proceedings, then no penalty could be levied. The Tribunal also cited the case of Vave Infotainment Network Ltd., Vs. Addl.CIT, wherein it was similarly held that no satisfaction was recorded for initiating penalty proceedings under sections 271D and 271E of the Act. Based on these precedents, the Tribunal concluded that since no satisfaction was recorded for initiating the penalty under section 271D of the Act in the present case, the penalty could not be levied. The Tribunal found that the facts of the present case were identical to the cases referenced in the judgments, where no satisfaction was recorded before initiating penalty proceedings. Therefore, relying on the legal precedents, the Tribunal held that in the absence of recorded satisfaction, the penalty under section 271D of the Act could not be imposed. Consequently, the Tribunal quashed the penalty of ?8,00,000 levied under section 271D of the Act, allowing the appeal filed by the Assessee. The Tribunal pronounced the order in open court on 13-12-2019, allowing the appeal of the Assessee against the penalty imposed under section 271D of the Act for the assessment year 2010-11.
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