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TMI Blog2024 (10) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the explanation of the assessee, the AO did not record any satisfaction in the assessment order to the effect that the provisions of Section 269SS of the Act, are violated and did not contemplate levy of penalty u/s 271D of the Act. In our view, the satisfaction of the AO is required to be recorded because the officer, who passed the assessment order would not be levying the penalty u/s 271D of the Act, unless it is recorded in the assessment order, he cannot refer the file to superior officer i.e., Joint Commissioner, for initiating levy of penalty. Unless the AO who is the primary authority, based on the material before it, during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 23,14,400/-. Notice under Section 143 (2) of the Act, dated 25-04-2022 was issued to the assessee for making assessment under Section 143 (3) read with Section 153C of the Act. Simultaneously notice under Section 142 (1) of the Act was issued requiring the petitioner to produce certain copies of bank accounts, explain the cash transaction with Balakrishna Rao etc., amounting to Rs.6.65 crores. Pursuant to the same, the petitioner submitted his reply dated 12-06-2022 stating that he did not take any loans in cash as alleged that said transactions were received through Banking channels. Thereafter another notice dated 15-06-2022, was issued requesting the petitioner to furnish the information by 22-06-2022. The petitioner submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order. From the said transactions, 60 transactions were tabulated which indicate advances to the petitioner and repayment by the petitioner. The Assessing Officer on the basis of the said material observed that Usha Bala Group had received an amount of Rs, 95,14,267/- towards interest. And it was concluded that the petitioner had accepted an amount of Rs. 6,65,00,000/- as loan and repaid an amount of Rs. 7,70,27,007/- on various dates. He thus paid an amount of Rs. 1,05,27,007/- in excess, out of which Rs.95,14,267/- was identified as interest paid to Usha Bala. The petitioner was thus asked to show cause as to why the excess amount should not be treated as the amount paid by the petitioner during the year, without sources a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain contention of the petitioner is that no satisfaction was recorded in the assessment order with regard to levy of penalty under Section 271D of the Act. The petitioner relying on the decision of the Apex Court in the case of CIT Vs. Jai Laxmi Rice Mills, Ambala City (2015)64 Taxmann.com 75(SC) , contends that there was no evidence before the Assessing Officer to show that the petitioner has accepted the loans in cash. As noted from the assessment proceedings, the assessee was put on notice as regards the loans received in cash. Thepetitioner has stated that he has not received any cash loans and he has denied to have received any cash loans, what all taken as loans were through banking channels alone. There was never any element any elem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been any violation of the provisions of Sec. 269SS of the Act by the assessee, nor was any satisfaction recorded to the effect that the alleged transaction of acceptance of loan would attract penal consequences. In the absence of any finding to the said effect, in our considered view, the penalty cannot be levied. A presumption can be drawn, in the absence of a finding by the Assessing Officer to the effect that the petitioner has violated the provisions of Sec. 269SS of the Act, that the department has accepted the explanation furnished by the petitioner denying allegation of loan in cash. Therefore, it can unhesitatingly be said that, having satisfied with the explanation of the assessee, the Assessing Officer did not record any satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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