2017 (3) TMI 1906 - AT - Income Tax

Penalty imposed u/s 271D - necessity of recording of satisfaction regarding initiation of penalty proceedings - HELD THAT - As find that in the Assessment Order there is no mention about initiation of any penalty proceedings in connection with the impugned penalty. In this view of the matter and respectfully following the Hon ble Supreme Court s judgment in the case of CIT vs. Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT wherein it is held that recording of satisfaction regarding initiation of penalty proceedings under section 271E is a condition precedent for imposing the said penalty, we delete the impugned penalty. Assessee appeal is allowed.

Summary

Issues:
Challenge to penalty under section 271D of the Income Tax Act, 1961 for the assessment year 2010-11.

Analysis:

1. Initiation of Penalty Proceedings:
- The appellant challenged the penalty imposed under section 271D of the Income Tax Act, 1961, for the assessment year 2010-11.
- The appellant argued that as per the Hon’ble Supreme Court’s judgment in the case of CIT vs. Jai Laxmi Rice Mills, recording of satisfaction regarding initiation of penalty proceedings is a prerequisite for imposing such penalty.
- It was highlighted that no such satisfaction had been recorded in the present case, which should lead to the deletion of the penalty.

2. Legal Standpoint on Initiation of Penalty Proceedings:
- The Departmental Representative did not dispute the factual aspect of the appellant's submission.
- However, it was argued that it is not a statutory requirement to explicitly state the initiation of penalty proceedings in the Assessment Order.
- The Departmental Representative relied on the judgment in the case of CIT vs. Jai Laxmi Rice Mills but could not provide further substantial arguments.

3. Judicial Analysis and Decision:
- After considering the arguments and legal provisions, the Tribunal examined the Assessment Order and noted the absence of any mention of the initiation of penalty proceedings related to the impugned penalty.
- Citing the Hon’ble Supreme Court’s judgment in the case of CIT vs. Jai Laxmi Rice Mills, the Tribunal concluded that the lack of recording satisfaction regarding penalty initiation warranted the deletion of the penalty.
- Consequently, the Tribunal allowed the appeal and deleted the impugned penalty.

4. Conclusion:
- The Tribunal's decision was based on the legal requirement of recording satisfaction for initiating penalty proceedings, as established by the Hon’ble Supreme Court’s precedent.
- By aligning with the judicial interpretation, the Tribunal ruled in favor of the appellant, leading to the deletion of the penalty under section 271D of the Income Tax Act, 1961 for the relevant assessment year.

This detailed analysis encapsulates the key legal aspects and the Tribunal's decision regarding the challenge to the penalty imposed under section 271D of the Income Tax Act, 1961, for the specified assessment year.