PCIT Vs Parivar Television Pvt. Ltd. (Supreme Court of India)
The case concerns a dispute over the validity of a penalty imposed under Section 271D of the Income Tax Act, arising from a search conducted on the Jayraj Group, including the premises of Parivar Television Pvt. Ltd. A block assessment was completed on 31 December 2003 for the period 1 April 1995 to 19 December 2001, determining undisclosed income but containing no reference to initiating penalty proceedings under Section 271D for alleged violations of Section 269SS relating to receipt of cash loans or deposits. Despite this absence of recorded satisfaction, a later reference dated 14 May 2004 led to the Additional Commissioner imposing penalty on 20 June 2005. The CIT(A) upheld the penalty in 2006, but on further appeal, the Tribunal remanded the matter to the CIT(A) to examine additional evidence. After the CIT(A) partially confirmed the penalty in 2016, the assessee again appealed to the Tribunal.
Read HC Judgment: Section 271D Penalty Cannot Be Levied Without Recorded Satisfaction: Gujarat HC
Before the Tribunal, the assessee argued that no satisfaction regarding initiation of penalty proceedings had been recorded in the assessment order, relying on the Supreme Court decision in CIT v. Jai Laxmi Rice Mills, which held that absence of recorded satisfaction in the assessment order rendered a penalty under Section 271E unsustainable. Since Sections 271D and 271E operate similarly—one imposing penalty for accepting cash loans or deposits and the other for repayment in cash—the assessee contended that the same principle applied. The Tribunal found, after reviewing the assessment records, that the Assessing Officer had made no reference to Section 271D, nor had he recorded satisfaction or made any mention of initiating penalty proceedings. Relying on Jai Laxmi Rice Mills and a similar Tribunal decision in Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., the Tribunal held that the penalty was invalid and quashed it.
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