VELJI PARSOTAMBHAI GOHEL,RAJKOT vs. INCOME TAX OFFICER, WARD-1(2)(1), RAJKOT

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकर अपील सं./ ITA No.283/Rjt/2026 �नधा�रण वष�/Assessment Year : 2018-19 Velji Parsotambhai Gohel, Income Tax Officer, Ward-1(2)(1), Bhaktidham Society, Vs. Aaykar Bhavan, Race Course Upleta, Rajkot, Road, Rajkot, Gujarat-360001 Gujarat-360490 �थायीलेखासं जीआइआरसं PAN/GIR No.: AEMPG7710B /. /. (अपीलाथ�/Appellant) (��यथ�/Respondent) �नधा�रती क� ओर से/Assessee by : Shri Samir Bhuptani, Ld. AR राज�व क� ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR सुनवाई क� तार�ख/Date of Hearing : 20/05/2026 घोषणा क� तार�ख/Date of Pronouncement : 29/06/2026 :: ORDER :: Per Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year 2018-19, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals), dated 10.12.2025, which in turn arises out of penalty order passed by Assessing Officer u/s. 271D of the Act, on 26.12.2024.

ITA No.283/Rjt/2026 [AY 2018-19] Veljibhai Parsotambhai Gohel v. ITO Ld. CIT(A) erred in law and on facts in not recognising the fact that no satisfaction was recorded in the assessment order for initiation of the penalty proceeding u/s 271D of the Act. 4.Ground no. 4-Not following binding decision Ld. CIT(A) erred in law and on facts in not following the binding decision of Hon'ble Supreme Court in the case of PCIT vs Parivar Television Pvt. Ltd. (481 ITR 0014), Jai Laxmi Rice Mills Ambala City., in (2015) 64 taxmann.com 75(SC) and Parivar Television (P) Ltd. (2023) Tax Pub (DT) 6383 (Guj-HC). 5.Ground no. 5-Invalid penalty Ld. AO erred in law as well as on facts in levy penalty of Rs. 1,50,000/- u/s 271D of the Act, whereas Id. CIT(A) erred in law as well as on facts in upholding the same.

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ITA No.283/Rjt/2026 [AY 2018-19] Veljibhai Parsotambhai Gohel v. ITO therefore, assessing officer imposed penalty of Rs.1,50,000/-, for default within the meaning of Section 271D of I.T. Act.

The learned Counsel further submitted that the cash received represents sale consideration of immovable property and therefore does not fall within the purview of Section 269SS of the Act.Besides, the assessee has only his individual share of Rs.11,50,000/- which should be considered for the purposes of Section 269SS and that the threshold of Rs. 2,00,000/- was not breached.Hence no penalty should be imposed on the assessee. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

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ITA No.283/Rjt/2026 [AY 2018-19] Veljibhai Parsotambhai Gohel v. ITO 8. I have considered submissions of both the parties and gone through the assessment order, and noted that penalty u/s 271D of the Act had never been initiated by the Assessing Officer during the assessment stage. The Assessing Officer did not mention about the initiation of penalty u/s 271D of the Act. I note that there is no satisfaction recorded by the assessing officer in the assessment order, to initiate the penalty proceedings u/s 271D of the Act, hence penalty should not be imposed on the assessee. I note that Section 271D deals with penalty for accepting loans or deposits in contravention of Section 269SS of the Act. Unlike penalties under some other provisions, Section 271D proceedings are generally initiated by the Joint Commissioner (or competent authority), however, I note that in the assessee’s case, penalty was not initiated by the joint Commissioner or any competent Authority. I note that Assessing Officer should record the fact of the violation or make a reference to the competent authority during the assessment proceedings, however, the assessing officer has failed to do so. For this, I rely in the case of Jai Laxmi Rice Mills Ambala City, 64 taxmann.com75 (SC), wherein the Hon’ble Supreme Court held that: “In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. 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”.

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ITA No.283/Rjt/2026 [AY 2018-19] Veljibhai Parsotambhai Gohel v. ITO there is no whisper or reference in the assessment order about initiation of penalty under Section 271D. We further find that there is no whisper about making a reference to the Joint Commissioner or Additional commissioner for levying such penalty. We find that the Hon'ble Apex Court in CIT Vs Jai Laxmi Rice Mills (supra), while considering the similar questions of law held that when no satisfaction recording regarding penalty proceedings under Section 271E, in the assessment order was recorded while passing the assessment order, no penalty could be levied. We further find that by following the order of Hon'ble Apex Court in CIT Vs Jai Laxmi Rice Mills (supra), the Coordinate NEUTRAL CITATION C/TAXAP/674/2023 ORDER DATED: 09/10/2023 undefined Bench of Tribunal in The Nizar Taluka Sahkari Kharid Vechan Sangh Ltd. Vs JCIT in ITA No. 3157/Ahd/2015 dated 13/12/2019 also held that when no satisfaction has been recorded by the Assessing Officer before initiating penalty, no penalty under Section 271D could be levied. The order of Hon'ble Supreme Court, which is binding precedent by virtue of Article 141 of the Constitution of India and respectfully following the same the penalty order under section 27D dated 20/06/2005 is set aside/quashed." 6 In the case of Commissioner of Income-Tax, Panchkula vs. Jai Laxmi Rice Mills Ambala City.,reported in [2015] 64 taxmann.com 75 (SC), Hon'ble Supreme Court has held as under: "1. In these appeals, we are concerned with the question as to whether penalty proceeding under Section 271D of the Income Tac Act (hereinafter referred to as "the Act") is independent of the assessment proceeding and this question arises for consideration in respect of Assessment Years 1991- 9992 and 1992-1993 under the following circumstances: In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on the basis of CIB information informing the Department that the assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax. Ex- parte proceedings were initiated, which resulted in the aforesaid order, as per which net taxable income of the assesse was assessed at Rs.18,34,584/-.While framing the assessment, the Assessing Officer also observed that the assessee had contravened the provisions of Section 269SS of the Act and because of this the Assessing Officer was satisfied that NEUTRAL CITATION C/TAXAP/674/2023 ORDER DATED: 09/10/2023 undefined penalty proceedings under Section 271E of the Act were to be initiated. 2. The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee. 3. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. 4. 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 proceedings 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. 5. 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 NEUTRAL CITATION C/TAXAP/674/2023 ORDER DATED: 09/10/2023 undefined the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act.

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ITA No.283/Rjt/2026 [AY 2018-19] Veljibhai Parsotambhai Gohel v. ITO 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." 7 In light of this, no substantial question of law, much less, any substantial question of law is involved. The appeal is dismissed, accordingly…”

Order is pronounced in the open court on 29/06/2026.

Sd/- [ Dr. Arjun Lal Saini ] लेखा सद�य/Accountant Member (True Copy) िदनांक/Date: 29/06/2026 Place: राजकोट/Rajkot Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, RAJKOT 6. Guard File By order

Sr. Private Secretary ITAT, Rajkot

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