Srinivasa Reddy Reddeppagari Vs JCIT (Telangana High Court)
The Telangana High Court, in Srinivasa Reddy Reddeppagari Vs JCIT, set aside a penalty order passed under Section 271D of the Income Tax Act, 1961, and remanded the matter back to the Joint Commissioner for fresh consideration. The petitioner had challenged an order imposing a penalty of ₹87.80 lakh for alleged violation of Section 269SS of the Act. The case arose after the Income Tax Department alleged that the petitioner had accepted cash of ₹87.80 lakh from sale transactions relating to immovable properties, instead of receiving the amount through prescribed banking channels.
The petitioner’s income tax return for Assessment Year 2016-17 had originally been accepted by the Assessing Officer under Section 153A without any adverse finding. Subsequently, the Joint Commissioner issued a show cause notice proposing penalty under Section 271D on the ground that acceptance of cash violated Section 269SS.
In reply, the petitioner contended that the Assessing Officer had not recorded any satisfaction in the assessment order regarding initiation of penalty proceedings under Section 271D. The petitioner relied upon the Supreme Court decision in CIT v. Jai Laxmi Rice Mills Ambala City, arguing that recording of satisfaction in the assessment order was mandatory before initiating penalty proceedings. It was also argued that Sections 271D and 271E are pari materia provisions and the legal principle laid down by the Supreme Court in relation to Section 271E would equally apply to Section 271D.
