LAKSHMI ESWAR KALYAN VELAGAPUDI,HYDERABAD vs. JCIT, RANGE- 8, HYDERABAD

आयकर अपीलीय अिधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad Before Shri Manjunatha G., Accountant Member and Shri Ravish Sood, Judicial Member आ.अपी.सं /ITA No.318/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2017-18) Lakshmi Eswar Kalyan Vs. JCIT, Velagapudi, Range-8, Hyderabad. Hyderabad. PAN: AFVPV8208D (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri T Ranjendra Prasad, CA राज� व �ारा/Revenue by: Shri K Prasad, Sr-AR सुनवाई की तारीख/Date of Hearing: 17/06/2026 घोषणा की तारीख/Date of 03/07/2026 Pronouncement: आदेश / ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 09/12/2025, which in turn arises from the order passed by the Assessment Unit, Income Tax Department under section 271D of the Income Tax Act, 1961 (for short, “the Act”), dated 27/08/2024. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:

2 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT

“1. The CIT-A of the NFAC erred in the facts and circumstances of the case in confirming the penalty order of the Assessing officer who levied penalty of Rs 100,76,556/- U/s 271D; 2. The Penalty Order passed U/s 271D is erroneous in the facts and circumstances of the case as it is passed without there being a mention of the initiation of the penalty proceedings in the Assessment Order; 3. The Penalty order passed U/s 271D is bad in law as there is a complete difference between 'the contraventions specified in the Show Cause Notices' and 'the final discussion in the penalty order'; 4. Without prejudice to the above grounds, the CIT-A of the NFAC and the AO ought to have appreciated that there is a reasonable cause for violation of the provisions of Sec 269SS and hence ought not to have levied/confirmed the penalty U/S 271D: 5. The Appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal.” 2. Succinctly stated, the assessee had filed his return of income for AY 2017-18 on 26/07/2017, declaring an income of Rs.5,82,940/-. Subsequently, the assessee's case was selected for scrutiny under “CASS” to examine the cash deposits during the demonetization period.

3 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT Attorney (GOPA) and had received the sale proceeds in cash. The plots of land belonging to his father, Shri V Hareendra Babu, vide a General Power of Attorney (GPOA), and had received part of the sale consideration in cash. The assessee, to support his aforesaid claim, had filed with the AO the copies of the sale deeds, which revealed that he had sold the subject property as a GPOA holder. Elaborating further, the bank account, which was thereafter transferred to his father. Further, the assessee, to dispel all doubts, had filed before the AO a copy of the return of income of his father for AY 2017-18, wherein he had admitted capital gains arising from the aforementioned sale transactions and had placed on record affidavits in support thereof. Thereafter, the Jt. CIT, Jurisdictional Charge, issued notice under section 271D of the Act. wherein the assessee was called upon to explain as to why a penalty for receipt of cash on the sale of the subject property may not be imposed upon him under section 271D of the Act.

4 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT may not be imposed in his case for the reasons stated as under (as culled out in the penalty order): “Reasons for not levying Penalty U/s. 271D. IGNORANCE OF LAW & General market conditions to receive the payment in cash: 1. The Agriculture land situated at YANAMALAKUDURU Village, PENAMALURU Mandal, Krishna Dist., Andhra Pradesh. The buyers are either poor /lower middle class having purchased areas that 13 nos of buyers purchased less than 75.00 Sq Yds each, two (2) buyers purchased more than 76 Sq yds and less than 100.00 Sq yds, 4 buyers purchased more than 101.00 and less than 110.00 Sq yds, one each purchased 126.67 Sq.yds, 181.56 sq yds & 228 Sq Yds respectively. From this it can be assessed that the buyers of the land were Poor/BPL/Lower middle class category. 2. However, the land sold situated in a village to 22 Vendees as per the details attached the consideration was received partly in cash 10076556/ and balance amount Rs.7278444/-by cheque/draft. Copies of all sale deeds enclosed. 3. I was under the Bonafide belief that I can accept the payment in cash for sale of their lands and purchase of lands. I accepted the payment in cash and as I was not aware of the Act. I have accepted the payment in cash under a bonafide belief that I am not making or thinking to avoid taxes and felt no difference in cash as well as bank. I accepted the payment in cash as buyer wanted to make the part payment in cash. 4. The land sold by me during the year is located in a small village named Yenamalakuduru in Penamaluru Mandal, Andhra Pradesh and as it is rural area predominantly occupied by small and medium agriculturalists, and agricultural labour, finding and retaining a buyer is difficult task, and as such we have executed sale deeds on the same day of sale and received consideration from the buyers. From the sale deeds it can be seen that 13 nos of buyers purchased less than 75.00 Sq Yds each, two (2) buyers purchased less than 100.00 Sq yds, 4 buyers purchased less than 110.00 Sq yds, (3 number) one each purchased 126.67 Sq.yds, 181.56 sq yds & 228 Sq Yds respectively. From this it can be assessed that the buyers of the land were Poor/BPL/Lower middle class category, like now a days what the state govts are allotting one Cent(48.40 Sq Yds) to 2 cents(96.80 Sq. Yds) SC/ST/BC/BPL families for constructing houses by house less families. Due to compulsions of the situation, I have accepted cash from such persons 90% of the buyers, which warranted to accept cash from small and medium agriculturalists, agricultural labour. Hence

5 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT keeping the above a lenient view may be taken and prayed not to levy penalty U/s.271D. to and 5. I am blessed with baby girl on 01.06.2016 Viz., "Deshna" with severe permanent health issues and she has been suffering from seizures by birth. She is still undergoing treatment, bed ridden and is permanently disabled requiring 24/7, 365 days attention. She was admitted in hospital for more than 10 times a year in 2016 and 2017 and I am in a panic state on my daughter's health condition. I am herewith enclosing some medical reports, discharge summaries and hospital paid bills for your kind perusal. Annexure-11. (Divided in to 4 parts due to large size of the file) 6. No one has told me about the changes in law. Not buyer, not tax advisor, not registrar, not document writer who prepared the document and have been doing many registrations of the lands on daily. Law was nascent to the public at large particularly for the people. 7. I am absolutely not known to the law when accepted cash from the buyer of the land. It was my bonafide belief that sale of the property in cash as in the rural area numerous cases are there where sale and purchase of lands were made in cash. This was bonafide belief not doing any wrong and not avoiding taxes. No one told me, not to accept the cash neither the Registrar, nor stamp vendor, nor my tax consultant. Out of ignorance of the law I have accepted cash. As I don't know the Law, there arose no difference in accepting the payment in cash as well as through banking channel.

6 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT 7. The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 8. We have heard the Learned Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 9. Shri T Rajendra Prasad, Learned Authorised Representative (for short, “Ld. AR”) for the assessee, has assailed the impugned penalty imposed by the Jt. CIT under section 271D of the Act, dated 27/08/2024, based on his three contentions, viz., (i) that the AO, while framing the assessment, had not recorded his satisfaction regarding the initiation of the penalty proceedings under section 271D of the Act; (ii) that the Jt. CIT vide his “Show Cause Notice” (SCN), dated 21/02/2024 initiated the penalty for violation of the provisions of section 269SS of the Act, but thereafter imposed the same for the default contemplated under section 269ST of the Act; and (iii) that the authorities below had grossly erred in summarily brushing aside the multi-facet reasons which squarely brought the case of the assessee within the meaning of a reasonable cause contemplated under section 273B of the Act, as a result whereof no penalty under section 271D of the Act was even otherwise called for in his case.

7 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT 10. The Ld. AR took us through the assessment order passed by the AO under section 143(3) of the Act, dated 07/03/2019, and submitted that though the AO while framing the assessment had taken cognizance of the fact that the assessee during the subject year had sod the subject property, i.e., plots belonging to his father, Shri V Hareendra Babu, as a GPOA holder, and had received part of the sale proceeds in cash which had sourced the cash deposit of Rs.75 lakhs made in his bank account during the demonetization period, but had not recorded any satisfaction to the effect that there was any violation of the provisions of section 269ST of the Act. The Ld. AR relied upon the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax, Panchkula vs. Jai Laxmi Rice Mills Ambala City (2015)379 ITR 521 (SC), wherein it was observed that as the AO had passed the fresh assessment order wherein no satisfaction was recorded for initiating penalty proceedings under section 271E of the Act, the impugned penalty order passed under the said section was liable to be set aside. Also, the Ld. AR had pressed into service the judgment of the Hon’ble Supreme Court in the case of Joint Commissioner of Income Tax vs. Grandhi Sri Venkata Amarendra (2026) 309 Taxman 419 (SC), wherein the “Special Leave Petition” (SLP) arising from the order passed by the Hon’ble High Court of Andhra Pradesh in Grandhi Sri Venkata Amarendra vs. Joint Commissioner of Income Tax (2026) 183 taxmann.com 323 (Andhra Pradesh) was

8 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT dismissed. The Ld. AR submitted that the Hon’ble Supreme Court in the aforementioned case has observed that, as the AO had not recorded any finding about the violation of section 269SS of the Act by the assessee, nor any satisfaction to effect that the alleged transaction of acceptance of loan in cash would attract penal consequences, thus, the penalty imposed under section 271D of the Act was liable to be quashed. Also, the Ld.AR had relied upon the judgment of the Hon’ble High Court of Telangana in the case of Srinivasa Reddy Reddeppagari vs. Joint Commissioner of Income Tax, Writ Petition No.44285 of 2022, dated 26/12/2022, wherein following the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax, Panchkula vs. Jai Laxmi Rice Mills Ambala City (supra), the penalty imposed under section 271D and under section 271E of the Act was quashed by the Hon’ble High Court. 11. Per contra, Shri K. Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the order passed by the Jt. CIT under section 271D of the Act. It was submitted that as the jurisdiction to initiate penalty under section 271D of the Act for the violation of the provisions of section 269ST of the Act remained with the Jt. CIT, the latter had rightly exercised the same and, after validly initiating the penalty proceedings vide his SCN dated 21/02/2024, imposed the same under section 271D of the Act dated 27/08/2024.

9 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT 12. Apropos the mention of the default under section 269SS of the Act by the Jt. CIT in the SCN, dated 21/02/2024, and the penalty order, the Ld. AR submitted that the same was a typographical mistake, which, thus, by no means would be fatal to the validity of the penalty imposed by him. Lastly, it was submitted that as the ignorance of the law cannot be brought within the meaning of a reasonable cause, the Jt. CIT had rightly rejected the explanation of the assessee and had imposed the penalty under section 271D of the Act. 13. We have given thoughtful consideration to the contentions advanced by the Learned Authorised Representatives of both parties in the backdrop of the orders of the authorities below. 14. Before proceeding any further, we deem it apposite to cull out the provisions of Section 269ST of the Act, which contemplates that no loan/deposit/specified sum exceeding the amount therein prescribed is to be received by an assessee otherwise than as per the modes therein contemplated, which reads as under:

“Mode of undertaking transactions.

269ST. No person shall receive an amount of two lakh rupees or more— (a) in aggregate from a person in a day; or (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from person,

10 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

Provided that the provisions of this section shall not apply to— (i) any receipt by— (a) Government; (b) any banking company, post office savings bank or co-operative bank; (ii) transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. Explanation.—For the purposes of this section,—

(a) "banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; (b) "co-operative bank" shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.”

As the failure to comply with the provisions of Section 269ST of the Act results in saddling an assessee with a penalty u/s. 271D of the Act; therefore, it will be apposite to cull out the same as under:

“271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.”

11 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT of the Act, in the absence of the recording of satisfaction by the A.O for initiating the said penalty proceedings in the body of the assessment order under Section 143(3) dated 07/03/2019 is sustainable in the eyes of law?

12 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT framed de novo after affording the assessee an adequate opportunity. After remand, the A.O. passed a fresh assessment order but failed to record his satisfaction regarding the initiation of the penalty proceedings u/s. 271D of the Act. During the pendency of the assessee’s quantum appeal, which had not yet come up before the CIT(Appeals), the Jt. CIT, based on the original assessment order dated 26.02.1996, issued a “Show cause notice” (“SCN”) to the assessee and imposed the penalty under Section 271D of the Act dated 23.09.1996. It was, thus, in the backdrop of the aforesaid facts that the sustainability of the penalty imposed under Section 271D of the Act, based on the original assessment order that no longer survived, surfaced. On being tested on the touchstone of the fact that the original assessment order, wherein satisfaction for initiating penalty proceedings under Section 271D of the Act was recorded, having been set aside, thus, did no more survive, the Tribunal and the High Court concluded that the penalty imposed under Section 271D of the Act could not be sustained.

13 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT be quashed. For the sake of clarity, the observation of the Hon’ble Apex Court is culled out as under:

“6. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied.”

We find that the aforesaid view taken by the Hon’ble Supreme Court had, thereafter, been followed by the Hon’ble High Court of Telangana in the case of Shrinivasa Reddy Reddeppagari Vs. JCIT, WP No.44285 of 2022 dated 26.12.2022, wherein the question, for which the indulgence of the Hon’ble High Court was sought, read as under:

“14. Issue raised in the writ petition is whether without satisfaction being recorded in the assessment order, penalty can be levied by the Jt. CIT under S. 271D of the Act?”

Answering the aforesaid question, the Hon’ble High Court, after drawing support from the judgment of the Hon’ble Apex Court in the case of CIT Vs. Jai Laxmi Rice Mills, Ambala City (supra), had held as under:

“15. Insofar the present case is concerned, we find that in the assessment order dated 24.03.2022 passed under Section 153A of the Act, return of income filed by the petitioner was accepted by the assessing officer and accordingly, the total income was assessed. In the return of income, petitioner had admitted receiving total income of Rs. 80,84,180.00 which was also accepted by the assessing officer. 16. Subsequently, respondent No.1 took the view that petitioner had sold immovable properties for a total sale

14 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT consideration of Rs. 92,13,000.00 out of which he had accepted cash to the tune of Rs. 87,80,000.00 which was in violation of Section 269SS of the Act, attracting penalty under Section 271D of the Act. 17. Before we advert to the reply submitted by the petitioner, we may mention that under Section 269SS of the Act, no person shall take or accept from any other person (referred to as a depositor) any loan or deposit or any specified sum otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if the amount of such loan or deposit or specified sum is twenty thousand rupees or more. However, as per the first proviso, the rigor of Section 269SS is not applicable to the Government, banking company, post office savings bank or cooperative bank etc. As per the second proviso, this provision would also not be applicable where both the depositor and the receiver are having agricultural income and neither of them has any income chargeable to tax under the Act. 18. Section 271D of the Act deals with penalty for failure to comply with the provisions of Section 269SS of the Act. Section 271D of the Act being relevant is extracted hereunder: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit [or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit [or specified sum] so taken or accepted.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 19. Thus, what sub-section (1) of Section 271D provides for is that if a person takes or accepts any loan or deposit or specified amount in contravention of the provisions of Section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. Sub-section (2) clarifies that any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.

15 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT 20. It would be useful to refer to Section 271E of the Act also at this stage which deals with penalty for failure to comply with the provisions of Section 269T of the Act. Be it stated that Section 269T of the Act provides that no branch of a banking company or a cooperative bank and no other company or cooperative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who had made the loan or deposit or who had paid the specified advance or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if such an amount is twenty thousand rupees or more. As in the case of Section 269SS, Section 269T of the Act also does not apply to the Government, banking company, post office savings bank etc. Section 271E of the Act reads as under: Penalty for failure to comply with the provisions of section 269T. 271E. [(1)] If a person repays any [loan or] deposit [or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit [or specified advance] so repaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 21. Thus, sub-section (1) of Section 271E of the Act provides that if a person repays any loan or deposit or specified advance referred to in Section 269T of the Act otherwise than in accordance with the provisions of that section, he shall be liable to pay by way of penalty a sum equal to the amount of the loan or deposit or specified advance so repaid. (2) any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 22. From an analysis of Sections 271D and 271E of the Act, it is seen that both the provisions are pari materia to each other. While Section 271D of the Act would be attracted on a person accepting loan or deposit or specified sum in contravention of Section 269SS of the Act, penalty under Section 271E of the Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T.

16 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT Therefore, in a way, the two provisions are complimentary to each other. 23. In Jai Laxmi Rice Mills Ambala City (supra), Supreme Court considered the question as to whether penalty proceedings under Section 271D of the Act is independent of the assessment proceeding ? In the facts of that case, it was found that the penalty order was issued following the assessment order. However in appeal, Commissioner of Income Tax (Appeals) had set aside the original assessment order with a direction to frame assessment de novo. In the fresh assessment order, no satisfaction was recorded by the assessing officer regarding initiation of penalty proceedings under Section 271E of the Act. It was noticed that the penalty order was passed before the appeal of the assessee was allowed by the Commissioner of Income Tax (Appeals). It was in that context that Supreme Court held as follows: The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. 24. Reverting back to the facts of the present case, we find that petitioner had submitted reply to the show cause notice on 02.06.2022. In his reply, petitioner mentioned that no satisfaction was recorded by the assessing officer in the assessment order as to infraction of Section 269SS of the Act. Therefore, no penalty could be levied under Section 271D of the Act without recorded satisfaction. In this connection, reference was made to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act. However, this aspect of the

17 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT matter was not considered by respondent No.1 while passing the impugned order. Respondent No.1 relying upon the Kerala High Court decision in Grihalaxmi Vision (2 supra) noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data Ltd.3 wherein it was observed that assessing officer has to satisfy himself as to whether penalty proceedings should be initiated or not. Assessing officer is not required to record his satisfaction in a particular manner or reduce it into writing. Therefore, respondent No.1 imposed the penalty under Section 271D of the Act. 25. We are afraid respondent No.1 had completely overlooked the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra). In the said decision as extracted above, Supreme Court had concurred with the view taken by the High Court holding that satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be it an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court. 26. Article 141 of the Constitution of India is clear that law declared by the Supreme Court shall be binding on all courts within the territory of India. This is further clarified in Article 144, which says that all authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court. We are therefore, of the unhesitant view that respondent No.1 overlooked the relevant considerations while passing the impugned order dated.29.11.2022. 27. Further, issue in the present writ petition is not the competence of the Joint Commissioner in issuing the order of penalty. Therefore, reference to Grihalaxmi Vision (2 supra) was wholly unnecessary. 28. Consequently, we set aside the impugned order dated 29.11.2022 and remand the matter back to the file of respondent No.1 to pass a fresh order in accordance with law after giving a reasonable opportunity of hearing to the petitioner. Writ Petition is accordingly allowed. No costs.”

18 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT Also, we find that the aforesaid view taken by the Hon’ble Supreme Court had, thereafter, been followed by the Hon’ble High Court of Andhra Pradesh in the case of Grandhi Sri Venkata Amrendra Vs. Joint Commissioner of Income-tax, CWP No. 32872/2023, dated 04.10.2024. The Hon'ble High Court, drawing support from the order of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills (supra), had held as under:

“9. In our view, the satisfaction of the Assessing Officer is required to be recorded because the officer, who passed the assessment order would not be levying the penalty under Sec. 271D of the Act. unless it is recorded in the assessment order, he cannot refer the file to superior officer i.e., Joint Commissioner, for initiating levy of penalty. Unless the Assessing Officer, who is the primary authority, based on the material before it, during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like in the present case, of Section 269SS, there will not be any occasion to the Joint Commissioner, who is not the Assessing Officer, to exercise his jurisdiction to levy Penalty under Section 271D. Following the decision of the Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills referred supra, we set aside the order passed by the 1" respondent dated 23.11.2023 under Sec.271D of the Act.”

19 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT of ACIT Vs. Bapu Reddy Jala Nizamabad, ITA No.606/Hyd/2022 dated 15.06.2023 and Raja Reddy Nalla Vs. Addl. CIT, ITA No.520/Hyd/2022 dated 31.05.2023 and also by the ITAT, Raipur in the case of Shri Bhowmick Raj Singh Vs. Jt. CIT, Bhilai-Range, Bhilai ITA No. 128/RPR/2016 29 and the ITAT, Amritsar in the case of Ram Lubhaya Jassal Vs. Addl. CIT, ITA No.747/Asr/2017 dated 24.09.2021.

20 ITA No.318/Hyd/2026 Lakshmi Eswar Kalyan Velagapudi vs. JCIT Order pronounced in the open court on 03rd July, 2026.

Sd/- Sd/- (MANJUNATHA G.) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 03rd July, 2026. **OKK / SPS Copy to: S.No Addresses 1 Lakshmi Eswar Kalyan Velagapudi Plot 6, HIG 84, 1st Floor, Exotica, HIG HUDA Colony, Tanasha Nagar, Manikonda, Hyderabad, Hyderabad, Telangana-500089 2 JCIT, RANGE-8 Signature towers, Kondapur, Opp Botanical Gardens. Kothaguda, Hyderabad, Hyderabad, Telangana-500084 3 The Pr.CIT, Hyderabad 4 The DR, ITAT Hyderabad Benches 5 Guard File By Order Digitally signed by KAMALA KAMALA KUMAR KUMAR ORUGANTI ORUGANTI Date: 2026.07.07 10:56:45 +05'30' Sr. Private Secretary, ITAT, Hyderabad.