Grandhi Sri Venkata Amarendra Vs JCIT (Andhra Pradesh High Court)
The writ petition challenged proceedings dated 23.11.2023 passed under Section 271D of the Income Tax Act, 1961, levying a penalty of Rs.1,50,00,000/-. The petitioner contended that no satisfaction was recorded in the assessment order regarding initiation of penalty under Section 271D. The case arose from a search and seizure operation under Section 132 in the case of M/s Usha Bala Group and V.V. Balakrishna Rao. Certain documents relating to the petitioner were found, and proceedings under Section 153C were initiated. The petitioner filed a return admitting total income of Rs.24,13,920/-. During assessment under Section 143(3) read with Section 153C, notices were issued regarding alleged cash loans. The petitioner denied receiving any loans in cash and maintained that all transactions were through banking channels. The Assessing Officer relied on a letter dated 02.06.2014 and tabulated 17 transactions, concluding that Rs.1,50,00,000/- was accepted as loan and additions under Section 69A were made. The matter was thereafter referred to the Joint Commissioner, who initiated penalty proceedings under Section 271D.
Read SC Judgment in this case: SC Upholds HC View That Failure to Record Satisfaction Bars Section 271D Penalty
The petitioner argued that the assessment order did not record any finding of violation of Section 269SS or satisfaction for initiating penalty. The respondents raised objection regarding availability of alternative remedy and relied on several judicial precedents. The High Court examined the material and noted that the Assessing Officer did not record any finding of violation of Section 269SS nor any satisfaction that the alleged acceptance of loan in cash attracted penal consequences. The Court observed that absence of such finding indicated acceptance of the petitioner’s explanation denying receipt of cash loans. It held that satisfaction must be recorded by the Assessing Officer during assessment, especially since the penalty under Section 271D is levied by the Joint Commissioner and not by the Assessing Officer. In the absence of recorded satisfaction regarding violation of Section 269SS, there was no occasion for the Joint Commissioner to exercise jurisdiction under Section 271D. Relying on the decision of the Supreme Court in CIT vs. Jai Laxmi Rice Mills, the Court set aside the penalty order dated 23.11.2023. The writ petition was allowed with no order as to costs.
