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2024 (6) TMI 358 - AT - Income TaxIssues Involved: The judgment involves the imposition of penalty u/s 271D of the Income Tax Act, 1961 for contravention of section 269SS, and the validity of the penalty order. Imposition of Penalty u/s 271D: The appellant, a firm, filed its return of income for AY 2017-18, declaring a total income. The assessing officer (AO) accepted the return and assessed the total income. Subsequently, penalty proceedings u/s 271D were initiated by the Joint Commissioner of Income Tax, alleging receipt of cash towards sale consideration of immovable property in violation of section 269SS. The appellant submitted a reply, but the penalty was imposed by the JCIT. The CIT(A)-NFAC upheld the penalty order, stating that the appellant received cash post a specific date. The appellant appealed to the Tribunal, arguing that the penalty was against the law and facts, and the transactions were business-related and not covered by section 269SS. Validity of Penalty Order: The Authorized Representative argued that the penalty was against the law as the AO did not record satisfaction regarding penalty proceedings in the assessment order, as required by precedent. The Departmental Representative supported the penalty, stating it was independent of the assessment proceedings. The Tribunal noted that the AO did not mention the initiation of penalty proceedings in the assessment order, which is mandatory. Referring to a Supreme Court decision, the Tribunal held that recording satisfaction is essential for imposing penalties. As the AO failed to do so, the penalty order was quashed, and the penalty u/s 271D was deleted. The Tribunal emphasized that the penalty is not independent of assessment proceedings. In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalty order and deleting the penalty imposed u/s 271D. The decision was pronounced in open court on 28th May, 2024.
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