2019 (6) TMI 603 - AT - Income Tax

Penalty u/s 271D - violation of provisions of section 269SS - sum received by the assessee as loan by way of cash and not by way of account payee cheques - non-recording of satisfaction regarding penalty proceedings u/s 271D - HELD THAT - As perused the materials available on record and gone through the orders of authorities below. In this case, the assessment was completed u/s 143(3) by assessing total income after making various additions. Moreover, while framing the assessment order, AO has not given any findings/observations that the assessee has contravened the provisions of section 269SS. Against the additions/disallowances, it is an admitted fact that the Assessing Officer proposed for initiating penalty proceedings u/s 271(1)(c). Thus, it is a clear cut case that on perusal of the assessment order, the AO has not recorded any satisfaction recorded regarding penalty proceedings u/s 271D. In the present case in hand, the AO has not at all recorded his satisfaction that the assessee has contravened the provisions of section 269SS warranting levy of penalty u/s 271D whereas, against various additions including disallowance under section 40(a)(ia), the Assessing Officer proposed for initiating penalty proceedings u/s 271(1)(c), which is an identical provisions, where the income escaped assessment or furnishing of inaccurate particulars of income, attracts penalty. We are of the considered opinion that the preposition laid down by the Hon ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT squarely applies to the case of the assessee. Respectfully following the above decision of the Hon ble Supreme Court, the penalty levied u/s 271D stands deleted - decided in favour of assessee.

Summary

Issues:
- Appeal against penalty under section 271D of the Income Tax Act, 1961 for assessment year 2013-14.

Analysis:
1. Background: The assessee filed the return for the assessment year 2013-14, which was selected for scrutiny. The assessment was completed under section 143(3) of the Act, resulting in additions to the total income. Subsequently, penalty proceedings under section 271D were initiated due to the violation of section 269SS regarding a loan received in cash.

2. Penalty Imposition: The Assessing Officer levied a penalty under section 271D for the cash loan received by the assessee, contrary to the provisions of section 269SS. The assessee appealed to the Commissioner of Income Tax (Appeals), who upheld the penalty. The assessee then appealed to the Tribunal, challenging the penalty imposition.

3. Legal Argument: The assessee contended that the Assessing Officer proposed a penalty under section 271(1)(c) for concealment of income, not under section 271D. The Tribunal noted that no satisfaction was recorded regarding penalty proceedings under section 271D in the assessment order. The Tribunal emphasized the importance of the Assessing Officer's satisfaction for penalty imposition under section 271D.

4. Judicial Interpretation: The Tribunal analyzed the appellate order and cited a Supreme Court judgment to support its decision. The Tribunal found that the facts of the case aligned with the Supreme Court's ruling in a similar case, where penalty imposition without recorded satisfaction was deemed invalid. The Tribunal applied this precedent to the present case, leading to the deletion of the penalty under section 271D.

5. Decision: Based on the legal analysis and precedent from the Supreme Court, the Tribunal allowed the assessee's appeal and deleted the penalty under section 271D. The Tribunal's decision was in line with the principle that penalty imposition must be supported by recorded satisfaction, as established by judicial precedent.

6. Conclusion: The Tribunal's decision to delete the penalty under section 271D was based on the lack of recorded satisfaction by the Assessing Officer, in line with established legal principles. The judgment emphasized the importance of adherence to procedural requirements for penalty imposition under the Income Tax Act, ensuring fairness and legal compliance in tax assessments.