Initiation of Section 271D/271E penalty must arise out of assessment proceedings

Srinaga Vs ITO (ITAT Bangalore) In the case of Srinaga vs. ITO (ITAT Bangalore), the Bangalore Bench of ITAT ruled that the initiation of penalty under Sections 271D and 271E of the Income Tax Act must be linked to the assessment proceedings and must be clearly mentioned in the assessment order. The Tribunal also noted that a temporary loan borrowed by the assessee from close family members without any interest could not be classified as a loan or deposit subject to these penalty provisions. The assessee faced penalties under Sections 271D and 271E for accepting and repaying cash loans exceedi...