THE NIZAR TALUKA KHEDUT SAHAKARI KHARID VECHAN SANGH LTD.,TAPI vs. THE JT. CIT, RANGE-6, SURAT

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ITA 3157/AHD/2015Status: DisposedITAT Surat13 December 2019AY 2010-115 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the AO did not record any satisfaction in the assessment order before initiating penalty proceedings under Section 271D, the penalty could not be levied. This decision followed precedents from the Supreme Court and other ITAT benches.

What were the facts?

The assessee accepted deposits exceeding Rs. 20,000/- otherwise than through account payee cheques or bank drafts, violating Section 269SS. A penalty under Section 271D was levied by the Assessing Officer (AO).

What were the issues?

Whether a penalty under Section 271D can be levied without the Assessing Officer recording satisfaction in the assessment order. The validity of penalty proceedings initiated without prior satisfaction.

Which sections of the Income-tax Act were involved?

Section 269SS,Section 271D

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI SANDEEP GOSAIN & SHRI O.P.MEENA

Hearing: 11.12.2019

The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., Vs. JCIT, Range-6, Surat/ITA No.3157/AHD/2015 for A.Y. 2010-11 Page 1 of 5

आयकरअपील�यअ�धकरण,सुरत�यायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A No.3157/AHD/2015 �नधा�रण वष�/Assessment Year: 2010-11 The Nizar Taluka Sahkari Kharid V The Joint Commissioner of Vechan Sangh Ltd., s Income Tax, Range-6, Surat. At & Post : Nizar, Tal: Nizar, . Dist: Tapu. [PAN: AAAAT 8798 B] अपीलाथ� / Appellant ��यथ�/Respondent �नधा�रतीक�ओरसे /Assessee by Shri P.M.Jagasheth – CA राज�वक�ओरसे /Revenue by Smt. Anupam Singla – Sr.DR सुनवाईकीतारीख/ Date of hearing: 11.12.2019 उ�घोषणाक�तार�ख/Pronouncement on: 13.12.2019 आदेश /O R D E R PER SANDEEP GOSAIN, JM: 1. This appeal by the Assessee is directed against the order of Ld.Commissioner of Income Tax-(Appeals)-1, Surat dated 25.08.2015 for the assessment year 2010-11.

2.

The solitary ground relates to order that in confirming the order passed of AO u/s.271D of the Act.

3.

As per the facts of the present case, the assessment u/s.143(3) of the Act was completed thereby declaring the total income at

The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., Vs. JCIT, Range-6, Surat/ITA No.3157/AHD/2015 for A.Y. 2010-11 Page 2 of 5

Rs.2,33,850/-. Since the assessee had accepted deposits exceeding Rs.20,000/- otherwise the account payee cheques or bank drafts in contravention of provision of section 269SS of the Act, therefore, after issuing show cause notice and seeking reply of the assessee, penalty was levied.

4.

Against the order of penalty, the assessee preferred appeal before the ld.CIT(A) wherein the ld.CIT(A) dismissed the appeal of the assessee.

5.

Now, before us, the assessee filed appeal on the ground mentioned hereinabove. At the very outset, it was submitted by the ld.Authorised Representative(AR) of the assessee that order of assessment u/s.143(3) of the I.T.Act, no satisfaction was recorded before levy of penalty u/s.271D of the I.T.Act by the ld.Assessing Officer(AO) and in this respect our attention was drawn to the concluding portion of the assessment order.

6.

On perusal of the same, we find that no satisfaction was recorded by the AO before initiating any penalty u/s.271D of the I.T.Act and in this respect it was held by Hon'ble Apex Court in the case of ITO Vs. Jay Laxmi Rice Mills [2015] 64 taxmann.com 75(SC) wherein it was held as “Where pursuant to directions issued by Commissioner (Appeals), Assessing Officer passed a fresh assessment order wherein no satisfaction was recorded for initiating penalty proceedings under section

The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., Vs. JCIT, Range-6, Surat/ITA No.3157/AHD/2015 for A.Y. 2010-11 Page 3 of 5

271E, Impugned penalty order passed under said section deserved to be set aside.” In the case of Vave Infotainment Network Ltd., Vs. Addl.CIT IN ITA No.5668 & 5669/Mum/2013 for A.Y.2000-01 wherein it was held as “4.1.2 Admittedly as per the averments, views and findings rendered by the authorities below, no satisfaction has been recorded by the AO for initiation of penalty proceedings in the orders of assessment, if any, passed for A.Y. 2000-01. According to the learned A.R. for the assessee, the Hon'ble Apex Court in the case of CIT vs. Jai Laxmi Rice Mills reported in (2015) 379 ITR 521 (SC), dealing with the levy of penalty under section 271D of the Act, has held that if there is no satisfaction recorded in the order of assessment regarding initiation of penalty proceedings under section 271D of the Act, then no penalty thereunder could be levied. We have, respectfully perused a copy of the aforesaid judgement of the Hon'ble Apex Court (supra) and find that admittedly, by both AO in the penalty orders and learned CIT(A) in the impugned orders, no satisfaction for initiation of penalty proceedings under sections 271D and 271E of the Act has been recorded in the orders of assessment. In this factual matrix of the case and respectfully following the decision of the Hon'ble Apex Court in the case of Jai Laxmi Rice Mills (supra), we hold that since admittedly no satisfaction has been recorded for initiating penalty proceedings under sections 271D and 271E of the Act in the case on hand in the order of assessment for A.Y. 2000-01, therefore no penalty thereunder could be levied. In this view of the matter we cancel the

The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., Vs. JCIT, Range-6, Surat/ITA No.3157/AHD/2015 for A.Y. 2010-11 Page 4 of 5

penalty of 1,45,000/- each levied under sections 271D and 271E of the Act for A.Y. 2000-01. Consequently the assessee’s additional grounds are allowed in both the appeals.

7.

Since the position in the present case is identical as no satisfaction has been recorded by the ld.AO before initiating penalty u/s.271D of the I.T.Act, therefore while relying upon the judgments as mentioned above, we hold that since no satisfaction had been recorded for initiating penalty proceedings u/s.271D of the Act in the case in hand, therefore, no penalty could be levied.

8.

Therefore, in view of the matter, we quash the penalty of Rs.8,00,000/- levied u/s.271D of the Act, consequently this ground raised by the assessee is allowed and the appeal file by the assessee is allowed.

9.

In the result, appeal of the assessee is allowed.

10.

Order pronounced in the open court on 13-12-2019.

Sd/- Sd/- (O.P.MEENA) (SANDEEP GOSAIN) (लेखा सद�यतथा/ACCOUNTANT MEMBER) (�याियक सद�यकेसम� /JUDICIAL MEMBER) सुरत/ Surat, �दनांक Dated: 13th December, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat

The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd., Vs. JCIT, Range-6, Surat/ITA No.3157/AHD/2015 for A.Y. 2010-11 Page 5 of 5

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