Shaikh Sujayat Shaikh Islam Vs ITO (ITAT Nagpur)
Penalty u/s 271D Cannot Be Born Without AO’s Satisfaction: Mere Information About Cash Receipt Is Not Enough
Penalty u/s 271D may be equal to the amount allegedly received in violation of section 269SS. Considering its serious civil consequences, the prescribed jurisdictional procedure cannot be bypassed. The Nagpur Bench of the ITAT has held that where no assessment proceedings were initiated and the AO recorded no satisfaction regarding violation of section 269SS, the penalty proceedings initiated directly on the basis of information were invalid in law.
The assessee, Shaikh Sujayat Shaikh Islam, filed his return of income for AY 2018-19 on 23 March 2019. The return was apparently not selected for scrutiny, and no assessment proceedings were initiated for the relevant assessment year.
The Department, however, received information that the assessee had accepted ₹5,05,000 in cash towards the sale consideration mentioned in a registered sale deed. On the basis of such information, penalty proceedings u/s 271D were directly initiated through a notice dated 1 August 2019 for the alleged violation of section 269SS.
The Addl./JCIT, Range-Amravati, subsequently passed the penalty order on 23 January 2020, imposing a penalty of ₹5,05,000, being an amount equivalent to the alleged cash receipt. The CIT(A)/NFAC confirmed the penalty. The assessee therefore carried the matter before the Tribunal.
