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2023 (12) TMI 542 - AT - Income TaxPenalty u/s 271D - acceptance of in cash in contravention to the provision of section 269SS - whether without satisfaction being recorded in the assessment order, penalty can be levied under section 271D of the Act? - HELD THAT - This question has directly and substantially been dealt with by the Hon ble jurisdictional High Court in the case of Srinivasa Reddy Reddeppagari 2022 (12) TMI 1446 - TELANGANA HIGH COURT wherein as referring to the decision of Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT held that the provisions under section 271E and 271D of the Act are in pari materia and since in terms of the decision in Jai Laxmi Rice Mills (supra), satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under section 271E of the Act, the same is equally applicable for initiation of penalty proceedings under section 271D of the Act. Hon ble High Court further observed that when there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be in an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court - Penalty deleted - Decided in favour of assessee.
Issues Involved:
1. Whether the penalty under section 271D of the Income Tax Act, 1961 can be levied without satisfaction being recorded in the assessment order. 2. The applicability of section 273B of the Act in providing relief from penalty under section 271D. Summary: Issue 1: Penalty under Section 271D without Recorded Satisfaction The primary issue in this case was whether the penalty under section 271D of the Income Tax Act, 1961 can be levied without satisfaction being recorded in the assessment order. The assessee sold a house and accepted the sale consideration in cash, which led to the Assessing Officer levying a penalty under section 271D for contravening section 269SS of the Act. The CIT(A) confirmed the penalty, stating that the only provision that could help the assessee was section 273B, which the assessee failed to satisfy by not providing a reasonable cause for accepting the cash amount. The assessee contended that the penalty was levied without satisfaction being recorded in the assessment order, relying on the Supreme Court's decision in CIT vs. Jai Laxmi Rice Mills and the jurisdictional High Court's decision in Srinivasa Reddy Reddeppagari vs. JCIT. The Tribunal examined the decisions cited and noted that the jurisdictional High Court had held that satisfaction must be recorded in the original assessment order for the initiation of penalty proceedings under section 271D. The Tribunal emphasized that the Supreme Court's decision in Jai Laxmi Rice Mills, which stated that the satisfaction recorded in the original assessment order is necessary for penalty proceedings, is binding on all authorities. Therefore, the Tribunal concluded that the penalty order was bad in law as it was not based on recorded satisfaction in the assessment order. Issue 2: Applicability of Section 273B The CIT(A) had observed that section 273B provides that no penalty shall be imposable if the assessee proves that there was a reasonable cause for the failure. However, the assessee failed to provide any reasonable cause for accepting the cash amount, leading to the confirmation of the penalty. The Tribunal, while addressing the primary issue, did not find it necessary to delve further into the applicability of section 273B, as the penalty itself was quashed on the grounds of non-recorded satisfaction in the assessment order. Conclusion The Tribunal allowed the appeal of the assessee, holding that the impugned orders were bad in law and quashed the penalty under section 271D. The decision was pronounced in the open court on November 29, 2023.
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