Smt. S.B.Patil Vs JCIT (ITAT Bangalore)
The appeals were filed by the assessee against the orders of the Commissioner of Income Tax (Appeals), Belgaum, challenging the levy of penalties under Sections 271D and 271E of the Income-tax Act, 1961. Along with the original grounds, the assessee also raised additional grounds contending that the initiation of penalty proceedings was legally invalid because no satisfaction had been recorded during the assessment proceedings.
The assessee submitted that the additional grounds involved a pure question of law requiring no fresh verification of facts. Relying on the Supreme Court’s decision in CIT v. Jai Laxmi Rice Mills, it was argued that recording satisfaction for initiating penalty proceedings under Sections 271D and 271E in the assessment order was mandatory. The Department opposed the admission of these additional grounds on the ground that they had not been raised before the lower authorities.
The Tribunal admitted the additional grounds, holding that they involved only legal issues and did not require any fresh examination of facts.
The Assessing Officer had originally levied a penalty of ₹57,77,213 under Section 271E, which the Commissioner (Appeals) reduced to ₹7,59,443. Similarly, the penalty under Section 271D of ₹41,35,000 was reduced by the Commissioner (Appeals) to ₹13,50,000. These penalties were imposed for alleged violations of Sections 269SS and 269T relating to acceptance of unsecured or hand loans in cash and repayment of such loans in cash.
