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TMI Blog2023 (9) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the disclosed income i.e. specified sum disclosed in the return. Also we are of the opinion that recording of the satisfaction by the AO is sine qua non for initiating the penalty u/s 271D - AO though had mentioned that the AO has proposed the imposition of penalty u/s 271D for violation of the provisions of section 269SS, however, after looking into the assessment order reproduced herein below, it is abundantly clear that neither such proposal for imposition of penalty u/s 271D was proposed by the Assessing Officer nor any satisfaction for initiation of penalty was recorded in the assessment order. We are of the opinion that the penalty imposed by the AO had been rightly deleted by the learned CIT (A). In view of the above discussion, the appeal of the Revenue is dismissed. - SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER For the Assessee by: Shri P. Murali Mohan Rao, CA For the Revenue by: Shri Kumar Aditya, DR ORDER PER LALIET KUMAR, J.M This appeal filed by the assessee is directed against the order dated 26.08.2022 of the learned CIT (A)-12, Hyderabad relating to A.Y. 2019-20. 2. The Revenue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) who deleted the penalty imposed by the Assessing Officer. 6. The learned DR submitted that in this case, the learned CIT(A) had deleted the penalty imposed by the Assessing Officer and the finding of the learned CIT (A) are given in Para 6.0 to 6.3 which read as under: 6.0 I have considered the submissions of the A.R. and the penalty order. The ground of appeal no. 1 being the legal issue, challenging the treatment of the advance as 'specified sum' after taxing the same as unexplained income, is taken up first. During the course of assessment proceedings, the AO treated the said cash received as advance from the sale of land as unexplained income and taxed the same under the provisions of Section 69A r.w.s. 115BBE of the I.T. Act. There is no dispute on this issue. The A.R. Contended that once the amount so received is treated as unexplained income, it cannot again be treated as 'specified sum' to penalize the assessee under the provisions of Section 269SS r.w.s 271D of the I.T, Act. To examine this issue, for ready reference, Section 2695S is reproduced below: 269SS: Mode of taking or accepting certain loans, deposits and specified sum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Appeals) and the Tribunal have recorded a finding that once the Assessing Officer has treated it as an undisclosed income, it could not have proceeded on the foundation that it is a deposit. In our considered opinion, this submission canvassed by Mr. Kochar has substantial force and the question raised by the Revenue really does not arise in this case. Needless to say that the said question may arise where the facts would be different but the same has no relevance to the case at hand. In view of the aforesaid analysis, the appeal being devoid of merit stands dismissed without any order as to Costs. 6.2 Further, in CIT Vs. Standard Brands Ltd. (2006) 285 ITR 295 (Delhi), the Delhi High Court has held that once the Revenue took a stand that the income was undisclosed A.Y 2019-20 income in the hands of the assessee, it could not resort to proceedings u/s. Z69SS r.w.s. 271D of the Act. The relevant portion of the ratio is reproduced below: 8. On these facts, we are of the view that the Revenue could not, on the one assessee contend and that the amount of Rs. 3 lakhs is undisclosed income in the hands of the at the same time seek to initiate proceedings against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration of Rs. 80 lakhs out of which Rs. 75 lakhs was received in cash at the time of agreement. Later, the said property was registered vide Sale Deed No, S408/2019 on 20.04.2019 for a consideration of Rs.80 lakhs as agreed at the time of Agreement of Sale. A theft happened at the appellant's house and FIR was lodged and the amount was recovered from one Sri Ravi Kumar by the Police. On a prayer before the Metropolitan Magistrate XV, Cyberabad at Medchal, the Hon'ble Magistrate vide his order dated 13-12-18 has ordered its release to the appellant, subject to bank guarantee and has directed the Police to inform the Income Tax Department about cash seizure. The department seized the cash and made addition of the cash as unexplained money u/s. 69A. 5.5.1 The appellant claimed that the cash of Rs. 75 lakhs was received from the purchaser Shri B. Balakrishna Goud towards sale of the land and the above land is an agricultural land, therefore proceeds received from the sale of the agricultural land cannot be accounted as undisclosed income u/s 69A of the Act. The appellant submitted copies of cash receipt, certificate issued by Panchayath Secretary of Kothur Grampa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department but before the Police and the Metropolitan Magistrate. Besides the cash receipt with revenue stamps also prove the source which was also not denied by the buyer. Also the department has made an addition of Rs. 75 lakhs in the hands of the buyer, viz., Bharat Engineering Enterprise vide order dated 29-09-2021 which goes against the view of the AO that the cash is assessee's unexplained income. Since the sources for the cash amount stands explained, Section 69A is not attracted. 8.1 The A.R relied upon the following decisions in support of assessee s case. It was submitted that the undisclosed income and violation of section 269SS are mutually exclusive: a) Hon'ble Delhi High Court in the case of CIT vs. R.P. Singh Co. (P) Ltd (2012) 21 Taxmann.com 50 b) Hon'ble Delhi High Court in the case of CIT vs. Standard Brands Ltd (2006) 155 Taxman 383. c) Hon'ble High Court of Orissa in the case of PCIT vs. Akash Infra-com Projects (P) Ltd (2022) 42 Taxmann.com 281. d) Hon'ble Gujarat High Court in the case of CIT vs. Panchsheel Owners Associations (2017) 88 Taxmann.com 504 e) Hon'ble Madras High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed in the return. 13. Further, we are of the opinion that recording of the satisfaction by the Assessing Officer is sine qua non for initiating the penalty u/s 271D of the Act. The Assessing Officer in Para 3 of his order, though had mentioned that the Assessing Officer has proposed the imposition of penalty u/s 271D for violation of the provisions of section 269SS of the Act, however, after looking into the assessment order reproduced herein below, it is abundantly clear that neither such proposal for imposition of penalty u/s 271D was proposed by the Assessing Officer nor any satisfaction for initiation of penalty was recorded in the assessment order vide Para 4.0 5 are reproduced herein below: 4.0 In his defense, the AR of the assessee claimed that the sale transaction of the agricultural land was entered after the banking hours. However, as per the assessee, by depositing the cash in the day bank, the purchaser agreed to give DD on the next day. On the same was theft took place from the assessee's house and later, the cash recovered by the police. As per direction of the court, the Police Department handed over the cash to the Income Tax Department. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271D of the I.T. Act. We find an identical issue had come up before the Hon'ble jurisdictional High Court in the case of Srinivasa Reddy Reddeppagari vs. Jt. CIT vide writ petition No. 44285 of 2022 dated 26.12.2022 . In that case penalty proceedings were initiated by issue of a show-cause notice u/s 274 r.w.s. 271D on the ground that the assessee has violated the provisions of section 269SS of the I.T. Act which attracts levy of penalty u/s 271D of the I.T. Act. Before the Hon'ble High Court, the assessee, through the writ petition challenged the penalty levied u/s 271D on the ground that no satisfaction was recorded by the Assessing Officer in the assessment order as to imposition of penalty. It was argued that nonrecording of satisfaction is fatal. The decision of the Hon'ble Supreme Court in the case of CIT vs. Jayalakshmi Rice Mills Ambalacity, reported in (2015) 64 Taxmann.com 75 (S.C), was relied upon. Accordingly, the Hon'ble jurisdictional High Court held that provisions of section 271D and 271E are pari materia to each other and the recording of satisfaction is a must. The relevant observation of the Hon'ble High Court reads as under: 13. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of penalty, a sum equal to the amount of the loan or deposit [or specified sum] so taken or accepted.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 19. Thus, what sub-section (1) of Section 271D provides for is that if a person takes or accepts any loan or deposit or specified amount in contravention of the provisions of Section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. Sub-section (2) clarifies that any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 20. It would be useful to refer to Section 271E of the Act also at this stage which deals with penalty for failure to comply with the provisions of Section 269T of the Act. Be it stated that Section 269T of the Act provides that no branch of a banking company or a cooperative bank and no other company or cooperative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction was recorded by the assessing officer regarding initiation of penalty proceedings under Section 271E of the Act. It was noticed that the penalty order was passed before the appeal of the assessee was allowed by the Commissioner of Income Tax (Appeals). It was in that context that Supreme Court held as follows: The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritory of India shall act in aid of the Supreme Court. We are therefore, of the unhesitant view that respondent No. 1 overlooked the relevant considerations while passing the impugned order dated. 29.11.2022. 27. Further, issue in the present writ petition is not the competence of the Joint Commissioner in issuing the order of penalty. Therefore, reference to Grihalaxmi Vision (2 supra) was wholly unnecessary. 28. Consequently, we set aside the impugned order dated 29.11.2022 and remand the matter back to the file of respondent No. 1 to pass a fresh order in accordance with law after giving a reasonable opportunity of hearing to the petitioner. 29. Writ Petition is accordingly allowed. No costs. 14. Since admittedly there is no recording of satisfaction by the Assessing Officer in the body of the assessment order for initiating penalty proceedings u/s 271D of the I.T. Act, therefore, respectfully following the decision of the Hon'ble jurisdictional High Court in the case of Srinivas Reddy Reddeppagari vs. Jt. CIT (Supra) the penalty levied by the Assessing Officer and sustained by the CIT (A) is liable to be quashed. We hold accordingly and direct the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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