Case Law Details
Ram Lubhaya Jassal Vs ACIT (ITAT Amritsar)
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) dated 29 June 2017, which had confirmed the penalty imposed under Section 271D of the Income-tax Act. Before the Tribunal, the assessee contended that the Assessing Officer had failed to record the mandatory satisfaction for initiating penalty proceedings under Section 271D in the assessment order. The assessee relied upon the Supreme Court’s decision in Jai Lakshmi Rice Mills (64 taxmann.com 75), wherein it was held that if the required satisfaction is not recorded in the original assessment order, the initiation of penalty proceedings under Section 271E cannot survive.
The assessee submitted that the same principle applied to the present case and that the penalty proceedings were liable to be quashed. The Revenue, on the other hand, supported the orders of the Assessing Officer and the Commissioner (Appeals).
After considering the rival submissions, examining the assessment order, and perusing the judgments cited by both sides, the Tribunal found that the assessment order was completely silent regarding the recording of satisfaction by the Assessing Officer for initiating penalty proceedings under Section 271D. The Tribunal held that recording such satisfaction is an essential requirement for initiation of penalty under Section 271D. It further observed that failure to record the satisfaction in the manner required by law, particularly in light of the Supreme Court’s judgment relied upon by the assessee, is fatal to the penalty proceedings.
Accordingly, the Tribunal held that the penalty proceedings initiated by the Assessing Officer and confirmed by the Commissioner (Appeals) could not be sustained. The penalty was quashed, and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
1. The present appeal was filed by the assessee feeling aggrieved by the order passed by the CIT(A) in respect of the penalty order confirmed by him vide the impugned order dated 29 June 2017 on the grounds mentioned in the memo of appeal.
2. At the outset the Ld.AR had drawn our attention to the order passed by the assessing officer, and it was submitted by the Ld.AR that in the assessment order the assessing officer has not mentioned about the satisfaction required to be mentioned for initiation of the penalty under section 271 D of the Income Tax Act he relied upon the decision of the Hon’ble Apex Court in the matter of Jai Lakshmi Rice Mills. 64 taxmann.com 75 wherein the Hon’ble Supreme Court in the identical facts and decided that in case the satisfaction is not recorded in the original assessment itself, then the initiation of penalty proceeding under section 271 E, would not survive.
3. Feeling aggrieved by the order passed by the assessing officer, assessee preferred appeal before CIT (A). The learned CIT had decided the grounds raised by the assessee in the appellate proceedings, against the assessee.
4. Now the assessee is in appeal before us on the ground mentioned in the memo of appeal. The Ld. AR relied upon the submission that no satisfaction was recorded in the order of assessment therefore the penalty proceedings are required to be quashed.
5. Per contra DR for the revenue had vehemently relied upon the order passed by the assessing officer as well as by the CIT (A).
6. We have considered the rival contention of the parties and perused the material available on record, including the judgments cited at bar during the course of hearing by both the parties. We have perused the assessment order passed by the assessing officer the assessment order is conspicuously silent on recording of any satisfaction by the assessing officer for the purpose of initiative the penalty under section 271D of the Income Tax Act. In our considered opinion the recording of satisfaction by the assessing officer is essential for initiation of any penalty under section 271D of the act and failure to record, the satisfaction in the manner provided by the law and more particularly in the light of the judgement, is fatal, and accordingly the penalty proceedings initiated against the assessee by the assessing officer and confirmed by the CIT(A) are required to be quashed. We accordingly quashed the same .
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 24/09/2021.
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