Sunil Agrawal Son Of Ghanshyam Agarwal Vs ACIT (Rajasthan High Court)
Rajasthan High Court addressed multiple writ petitions filed by Sunil Agrawal and others challenging penalty notices issued under Sections 271D and 271E of the Income Tax Act, 1961. The case primarily involved a reassessment order dated March 12, 2024, which added amounts under Sections 69A and 69C based on search proceedings. Subsequent penalty notices under Section 271E were issued, leading the petitioner to argue that such penalties were invalid as the assessing officer (AO) failed to record satisfaction for initiating penalty proceedings in the reassessment order. Relying on the Supreme Court’s decision in CIT Vs. Jai Laxmi Rice Mills, the petitioner contended that the absence of recorded satisfaction made the penalty proceedings unsustainable.
The court found merit in the petitioner’s argument, emphasizing that satisfaction for penalty proceedings under Sections 271D and 271E must be explicitly recorded during the reassessment stage. It noted that the Deputy Commissioner of Income Tax’s later referral to the Additional Commissioner and the latter’s satisfaction recording on September 24, 2024, could not substitute the AO’s obligation during reassessment. The court held that the issues were analogous to the precedent set in Jai Laxmi Rice Mills and quashed the penalty proceedings under Section 271E, allowing the petitions in favor of the petitioner.
