Hari Mohan Dangayach Vs ACIT (Rajasthan High Court)
Summary: Rajasthan High Court allowed a batch of writ petitions challenging penalty proceedings under Sections 271D and 271E of the Income Tax Act, 1961, holding that the issue was squarely covered by the Supreme Court decision in CIT Vs Jai Laxmi Rice Mills Ambala City [(2015) 379 ITR 521 (SC)]. Taking the facts from D.B. Civil Writ Petition No.1102/2025, the Court noted that a search had been conducted at the petitioner’s premises and proceedings under Section 148 culminated in a reassessment order dated 12.03.2024, making additions of Rs.9,90,000/- and Rs.23,785/- under Sections 69A and 69C respectively. A notice dated 01.10.2024 was subsequently issued for imposition of penalty under Section 271E.
Read SC Judgment in this case: Post-Assessment Satisfaction Cannot Sustain Section 271D/271E Penalty: SC
The petitioner objected that the reassessment order contained no satisfaction for initiating proceedings under Section 271E and relied upon Jai Laxmi Rice Mills. The Court found that the DCIT had recorded satisfaction only for proceedings under Section 271(1)(c), and no satisfaction had been recorded for initiating penalty proceedings under Section 271D/271E. It further held that the DCIT’s reference to the ACIT dated 01.08.2024 could not improve the Revenue’s case because it was made after completion of the reassessment proceedings, while satisfaction recorded by the ACIT on 24.09.2024 could not be equated with satisfaction required to be recorded by the concerned Assessing Officer in the reassessment proceedings. Following the Supreme Court ruling, the Rajasthan High Court quashed the notice issued under Section 271E and all proceedings pursuant thereto and allowed the writ petitions.
