TMI Blog2022 (12) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter was not considered by respondent No.1 while passing the impugned order. Respondent No.1 relying upon the Kerala High Court decision in Grihalaxmi Vision [ 2015 (8) TMI 1214 - KERALA HIGH COURT] noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data Ltd [ 2013 (1) TMI 574 - DELHI HIGH COURT] wherein it was observed that assessing officer has to satisfy himself as to whether penalty proceedings should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No.1 imposed the penalty under Section 271D of the Act. We are afraid respondent No.1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). In the said decision as extracted above, Supreme Court had concurred with the view taken by the High Court holding that satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271D of the Act. It was mentioned therein that petitioner had sold immovable properties for an amount of Rs. 92,13,000.00, the details of which were mentioned in the show cause notice. After noting that petitioner had admitted long term capital gains in the return of income, it was mentioned that petitioner had accepted cash to the tune of Rs. 87,80,000.00. It was alleged that such a transaction otherwise than by an account payee cheque or use of electronic clearing system through a bank account etc., violated Section 269SS of the Act which attracted levy of penalty under Section 271D of the Act. Accordingly, an opportunity was granted to the petitioner to show cause as well as to avail opportunity of personal hearing. 5. Petitioner submitted reply dated 02.06.2022 to the above show cause notice. Amongst other things, it was mentioned that for the purpose of imposing penalty, satisfaction should be recorded by the assessing officer in the assessment order as to imposition of penalty. Non-recording of satisfaction is fatal. In this connection, reference was made to a decision of the Supreme Court in CIT v. Jaya Laxmi Rice Mills Ambala City (2015) 64 Taxmann.com 75 (SC) . It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson making the loan or deposit. 10. Referring to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra), learned Senior Counsel for the petitioner submits that in the facts of that case, order of penalty was passed under Section 271E based on the original assessment order; however, the original assessment order was set aside in appeal; therefore, the satisfaction recorded in the original assessment order no longer survived; in the absence of such satisfaction, penalty proceedings under Section 271E of the Act would also not survive; the view taken by the High Court was accordingly upheld whereafter, it was clarified that penalty under Section 271E of the Act without any recorded satisfaction cannot be levied. 11. Referring to the impugned order, learned Senior Counsel for the petitioner submits that respondent No.1 evaded the point raised by the petitioner that no penalty could be levied under Section 271D of the Act without any recorded satisfaction basing on the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). Instead, respondent No.1 referred to earlier decision of the Kerala High Court in Grihalaxmi Vision v. Addl. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Section 271D of the Act being relevant is extracted hereunder: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit [or specified sum] 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.] [(2) Any penalty imposable under subsection (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 br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding ? In the facts of that case, it was found that the penalty order was issued following the assessment order. However in appeal, Commissioner of Income Tax (Appeals) had set aside the original assessment order with a direction to frame assessment de novo. In the fresh assessment order, no 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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