Section 271D Penalty Fails Without AO Satisfaction or Pending Assessment Proceedings

Somireddy Sudhakar Reddy Vs ITO (ITAT Hyderabad)

The Hyderabad Bench of the ITAT quashed a penalty of ₹43.50 lakh levied under Section 271D for alleged violation of Section 269SS, holding that the penalty proceedings were void ab initio. The Tribunal found that no assessment or other proceedings were pending, nor was any satisfaction recorded by the Assessing Officer before initiation of penalty, which is a mandatory pre-condition. Relying on the Telangana High Court ruling in Srinivas Reddy Reddappagari and the Supreme Court decision in Jai Laxmi Rice Mills, the Tribunal reitera

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