Case Law Details
Amir Ahmed Vs JCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the appeals filed by two assessees for Assessment Year 2017-18 against separate orders of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (CIT(A)/NFAC), which had upheld penalties imposed under Section 271D of the Income-tax Act, 1961.
At the outset, the Tribunal considered the assessees’ applications seeking condonation of a delay of 945 days in filing the appeals. The assessees explained that the delay had occurred due to circumstances beyond their control. As the Revenue did not rebut this explanation, the Tribunal condoned the delay by relying on the Supreme Court’s decision in Collector, Land Acquisition vs. Mst. Katiji & Others.
The substantive issue before the Tribunal was the validity of penalties levied under Section 271D for alleged violation of Section 269SS. The Assessing Officer had held that the assessees violated Section 269SS by receiving a part of the sale consideration arising from the transfer of immovable properties in a manner attracting the penalty. These penalties were subsequently upheld by the CIT(A).
Before the Tribunal, the assessees raised a legal objection that neither of the Assessing Officers had initiated penalty proceedings under Section 271D in the corresponding assessment orders. This contention remained unrebutted by the Revenue.
The Tribunal observed that the issue had already been settled by its coordinate bench in M/s Gayatri Villa vs. DCIT (ITA Nos. 615 & 616/Del/2024 dated 31.05.2024). In that decision, the Tribunal had held that failure of the Assessing Officer to record satisfaction in the assessment order for initiating penalty proceedings under Section 271D was fatal to the validity of the penalty. The coordinate bench had relied upon the Supreme Court’s judgment in Jai Laxmi Rice Mills, wherein it was held that penalty under Section 271D could not be levied when no satisfaction for initiating such proceedings had been recorded in the assessment order, even though satisfaction for initiating penalty under Section 271(1)(c) had been recorded.
The Tribunal also referred to the decision of the ITAT Raipur Bench in Shri Bhowmick Raj Singh, which held that in the absence of valid assumption of jurisdiction, penalty under Section 271D could not be sustained. It further noted a similar view taken by the ITAT Chennai Bench in Subramanium Thanu.
The coordinate bench had explained that the Assessing Officer is required to record satisfaction in the assessment order passed under Section 143(3) for initiating penalty proceedings under Section 271D for violation of Section 269SS. In the case before that bench, although the Assessing Officer had recorded that penalty proceedings under Section 271(1)(c) would be initiated, no satisfaction had been recorded for initiating proceedings under Section 271D. Following the ratio laid down by the Supreme Court in Jai Laxmi Rice Mills, the penalties were deleted.
Applying the reasoning of the coordinate bench mutatis mutandis, the Delhi Bench held that the present appeals involved identical facts. Since the Assessing Officers had not recorded satisfaction in the assessment orders for initiating penalty proceedings under Section 271D, the mandatory legal requirement was not fulfilled. Consequently, the Tribunal deleted the penalties levied under Section 271D in the hands of both assessees.
Accordingly, both appeals were allowed.
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FULL TEXT OF THE ORDER OF ITAT DELHI
These instant cases ITA Nos. 6149 86 6150/Del/2024, involve the twin assessees herein Shri Amir Ahmed and Shri Naved Ahmed, for assessment years 2017-18, arise against Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (for short, “CIT(A)/NFAC”), Delhi’s DINs and Orders No. ITBA/NFAC/S/250/2021-22/1040737932(1)86 ITBA/NFAC/S/250/2022-23/1043550780(1), dated 15.03.2022 & 23.06.2022, involving proceedings u/s 271D of the Income Tax Act, 1961; hereinafter referred to as, ‘the Act’.
Heard both the assessees as well as the department at length. Case files perused.
2. For the reasons stated herein in this twin assessee’s respective condonation petition, explaining delay(s) of 945 days each as on account of circumstances beyond control going unrebutted from the Revenue side, we hereby condone the same in the light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
3. Next comes both these assessee’s identical sole substantive ground directed against the learned Assessing Officer’s corresponding findings levying section 271D penalty (ies) in issue which stand upheld in the CIT(A) lower appellate discussion. Both of them hold these twin assessees/appellants to have violated section 269SS of the Act in having received a part of their respective sale consideration (s) in lieu of transfer of immovable properties as attracting the impugned penalty.
4. It is in this factual backdrop that the learned counsel raises his first and foremost legal argumenta that neither of the Assessing Officer herein had initiated the impugned penalty (ies) in the corresponding assessment (s) which has gone unrebutted from the revenue side. This tribunal’s recent decision in M/s Gayatri Villa vs DCIT in ITA Nos. 615 86 616/ De1/2024 dated 31.05.2024 has already settled the very issue that such a non-compliance is indeed fatal to the penalty herein; against the department reading as under:
14. We have heard the rival submissions and have perused the relevant material on record. On careful perusal of the assessment order, we find no satisfaction recorded by the Assessing Officer in his assessment order for initiating penalty u/s 271D of the Act. The Hon’ble Supreme Court in the case of Jai Laxmi Rice Mills [supra] has held as under:
“In the fresh assessment order, there was no satisfaction recorded regarding penalty proceeding under Section 271D of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271D is concerned, it was without any satisfaction and, therefore, no such penalty could be levied.”
15. A similar issue came up before the ITAT, Raipur Bench in the case of Shri Bhowmick Raj Singh in ITA No. 128/RPR/2016 dated 02.01.2024 wherein it was held as under:
“Considering the fact that the issue before us is no more res integre in light of the judgment of the Hon’ble Supreme Court in the. Jai Laxmi Rice Mills Ambala City (supra), therefore, in the backdrop of our aforesaid deliberations, the penalty imposed by the Jt.CIT u/s. 271D of the Act cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction.”
16. Similar decision was taken by the ITAT Chennai Bench in the case of Subramanium Thanu ITA No. 785/Chny/2023 dated 13.03.2024.
17. We have considered the judicial pronouncement and the legal dictum established by the Hon’ble Supreme Court from which it emerges that the Assessing Officer has to record his satisfaction in the assessment order u/s 143(3) of the Act for initiating penalty proceedings u/s 271D of the Act for violation of provisions of section 269SS of the Act. In this case, assessment order u/s 143(3) r.w.s 147 of the Act was passed on 27.12.2019 for A.Y 2016-17 and on 18.12.2019 for A.Y 2017-18. The JCIT issued notice u/s 271 D of the Act on 30.03.2022 for both the A.Ys and levied penalty u/s 271D of the Act on 31.03.2022.
18. The Assessing Officer, in his order u/s 143(3)/147 of the Act for both the A.Ys has recorded penalty proceedings u/s 271(1)(c) of the Act to be initiated separately. The Assessing Officer, however, has not recorded any satisfaction to initiate penalty u/s 271D of the Act for either of the A.Ys and thereby failed to adhere to the mandate of law as laid down by the Hon’ble Supreme Court in the case of Jai Laxmi Rice Mills [supra].
19. Considering the facts of the case in totality and respectfully following the ratio laid down by the Hon’ble Supreme Court [supra], we do not find these to be fit case for levy of penalty u/s 271D of the Act. We accordingly, delete the penalty so levied u/s 271D of the Act in both the A.Ys and allow both the appeals.
5. We adopt the learned co-ordinate bench’s above detailed reasoning mutatis mutandis to delete the impugned identical section 271D penalty (ies) levied in theses assessees’s hands in very terms.
6. Both these assessees’s as many appeals ITA Nos. 6149 86 6150/Del/2024 are allowed. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 29.05.2026 .
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