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2023 (1) TMI 366 - AT - Income TaxPenalty u/s 271D - limitation U/s 275(1)(c) - violation of Section 269SS in respect of various deposits/ loan received by the assessee in cash in excess of Rs. 20,000/- - HELD THAT - On careful perusal of the assessment order, we find that there is no whisper or reference in the assessment order about initiation of penalty u/s 271D. We further find that there is no whisper about making a reference to the Joint Commissioner or Additional commissioner for levying such penalty. We find that in Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT , while considering the similar questions of law held that when no satisfaction recording regarding penalty proceedings under Section 271E, in the assessment order was recorded while passing the assessment order, no penalty could be levied. We further find that by following the order of Hon ble Apex Court in CIT Vs Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT the Coordinate Bench of Tribunal in The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd 2019 (12) TMI 1569 - ITAT SURAT also held that when no satisfaction has been recorded by the Assessing Officer before initiating penalty, no penalty under Section 271D could be levied. The order of Hon ble Supreme Court, which is binding precedent by virtue of Article 141 of the Constitution of India and respectfully following the same the penalty order under section 271D dated 20/06/2005 is set aside/quashed. So far as submissions of ld CIT-DR for the revenue that non recording satisfaction of initiation is merely a curable defect, we are not convinced with such submission after clear cut finding of the Hon ble Apex Court in CIT Vs Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT In the result, the second additional ground of appeal is allowed.
Issues:
1. Retention of penalty under section 271D 2. Preparation of statement and examination by tax authorities 3. Justification of penalty on amounts received 4. Confirmation of penalty on amounts not received 5. Consideration of plea for deletion of penalty based on various grounds 6. Time-barred penalty order under Section 275(1)(c) 7. Satisfaction recorded for initiating penalty proceedings under Section 271D Analysis: 1. The appeal was against the order retaining a penalty under section 271D. The appellant argued that the penalty amount was excessive, and the explanation for deposits was based on seized books, not computerized records. The appellant also contended that the details were unexamined by tax authorities, and penalties were unjustified for amounts with cheque numbers and those not received. 2. The appellant raised additional grounds, including the time-barred nature of the penalty order under Section 275(1)(c). The argument was based on legal aspects without introducing new facts, citing relevant legal precedents to support the claim. 3. The case involved the absence of recorded satisfaction for initiating penalty proceedings under Section 271D. The appellant highlighted the lack of mention in the assessment order, relying on legal judgments to support the argument that such absence rendered the penalty invalid. 4. The Tribunal admitted the second additional ground of appeal, considering it as a legal issue without requiring new facts. The decision was based on the legal nature of the argument and the relevance of lower authorities' orders in determining the outcome. 5. The Tribunal found that the absence of satisfaction recording for penalty initiation, as per legal precedents, rendered the penalty order invalid. Citing the Supreme Court's decision, the Tribunal set aside the penalty order under section 271D, emphasizing the importance of recording satisfaction before levying penalties. 6. The Tribunal rejected the revenue's argument that the absence of recorded satisfaction was a curable defect, aligning with the legal precedent's clear stance on the matter. Consequently, the second additional ground of appeal was allowed, leading to the setting aside of the penalty order. 7. The Tribunal's decision to allow the second additional ground of appeal rendered the adjudication of other grounds academic. Ultimately, the appeal of the assessee was allowed based on the invalidity of the penalty order under section 271D due to the absence of recorded satisfaction for penalty initiation.
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