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2024 (6) TMI 101 - AT - Income TaxLevy of penalty u/s 271D without recording valid satisfaction as recorded qua the alleged violation u/s 269SS - HELD THAT - AO has to record his satisfaction in the assessment order u/s 143(3) of the Act for initiating penalty proceedings u/s 271D for violation of provisions of section 269SS - In this case, assessment order u/s 143(3) r.w.s 147 was passed on 27.12.2019 for A.Y 2016-17 and on 18.12.2019 for A.Y 2017-18. JCIT issued notice u/s 271D of the Act on 30.03.2022 for both the A.Ys and levied penalty u/s 271D of the Act on 31.03.2022. AO in his order u/s 143(3)/147 of the Act for both the A.Ys has recorded penalty proceedings u/s 271(1)(c) of the Act to be initiated separately. AO, however, has not recorded any satisfaction to initiate penalty u/s 271D of the Act for either of the A.Ys and thereby failed to adhere to the mandate of law as laid down in the case of Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT We do not find these to be fit case for levy of penalty u/s 271D of the Act. We accordingly, delete the penalty so levied u/s 271D in both the A.Ys and allow both the appeals. Appeal of assessee allowed.
Issues:
The judgment involves the levy of penalty u/s 271D of the Income-tax Act, 1961 without valid satisfaction recorded in the assessment order u/s 143(3) for the alleged violation u/s 269SS of the Act. Summary: The appeals by the assessee were directed towards two separate orders of the CIT(A) - 3, Noida dated 13.12.2023 pertaining to A.Ys. 2016-17 and 2017-18. The grievance of the assessee was against the penalty u/s 271D amounting to Rs. 93,80,000/- in A.Y 2016-17 and Rs. 44,00,000/- in A.Y 2017-18, as no valid satisfaction was recorded in the order passed u/s 147/143(3) of the Act regarding the alleged violation u/s 269SS. A survey u/s 133A was conducted at the business premises, leading to scrutiny assessment u/s 147 to verify income, investments, and expenses. The assessment was completed, and notice u/s 271D was issued, followed by the imposition of penalties by the JCIT, which was sustained by the CIT(A). The assessee contended that no valid satisfaction was recorded by the Assessing Officer in the assessment order u/s 143(3) for initiating penalty u/s 271D. The ITAT, after considering relevant judicial pronouncements, noted the absence of satisfaction recorded by the Assessing Officer for initiating penalty proceedings u/s 271D. Citing precedents, including the decision of the Hon'ble Supreme Court, the ITAT concluded that the penalty imposed was without valid assumption of jurisdiction. As per the legal dictum, the Assessing Officer must record satisfaction in the assessment order u/s 143(3) for initiating penalty proceedings u/s 271D for violation of section 269SS. Since no such satisfaction was recorded, the ITAT held that the penalties were not justified and deleted them, allowing both appeals. In conclusion, the ITAT ruled in favor of the assessee, deleting the penalties imposed u/s 271D in both A.Ys and allowing the appeals.
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