SHREE AGRAWAL LOGISTICS,GANDHIDHAM vs. THE ITO WARD 2 GANDHIDHAM, GANDHIDHAM

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ITA 607/RJT/2026Status: DisposedITAT Rajkot25 June 2026AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty proceedings under Section 271D cannot survive if the Assessing Officer has not recorded satisfaction for initiating such proceedings in the assessment order, especially when the assessment was completed without additions.

What were the facts?

The assessee accepted a loan of Rs. 15,00,000/- otherwise than through account payee instruments, violating Section 269SS. The Assessing Officer imposed a penalty under Section 271D, which was upheld by the CIT(A).

What were the issues?

Whether penalty under Section 271D is valid when no satisfaction for its initiation is recorded in the assessment order. Whether the penalty can be sustained when the original assessment accepted the returned income without additions.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri Mehul Ranpura, Ld. AR
For Respondent: Shri Gopi Nath Chaubey, Ld. Sr. DR
Hearing: 22/06/2026Pronounced: 25/06/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 607/RJT/2026 [ �नधा�रण वष�/Assessment Year: 2017-18 ] Shree Agrawal Logistics The Income-tax Officer, Ward-2, 64- Tanker Association Building, Vs. Aayakar Bhavan, Sector-8, Opp. Gokul Hotel, Gandhidham-361008 Gandhidham-370201 Gujarat Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ACMFS3523L (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri Mehul Ranpura, Ld. AR Respondent by : Shri Gopi Nath Chaubey, Ld. Sr. DR Date of Hearing : 22/06/2026 Date of Pronouncement : 25/06/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: The assessee is in appeal against the order passed by the National Faceless Appeal Centre (hereinafter referred to as “NFAC”) dated 09.02.2026, confirming the penalty imposed under section 271D of the Income Tax Act,1961(hereinafter referred to as “Act”) arising out of penalty order passed under section 271D of the Act dated 26.09.2024.

2.

Brief facts of the case are that the assessee had declared total income in the return of income for Assessment Year 2017–18. The case

ITA No. 607/RJT/2026 Sh. Agrawal Logistics was selected for scrutiny and assessment under section 143(3) of the Act was completed accepting the returned income. Subsequently, an order under section 154 read with section 143(3) of the Act was passed determining the total income at Rs. 22,508/-.During the penalty proceedings, it was alleged that the assessee had accepted a loan of Rs.15,00,000/- otherwise than by account payee cheque, account payee bank draft or by use of electronic clearing system through a banking channel, thereby allegedly contravening the provisions of section 269SS of the Act. Consequently, penalty proceedings under section 271D of the Act were initiated and penalty order has been passed. During the course of penalty proceedings, the assessee submitted that the amount of Rs.15,00,000/- represented consideration received on sale of a trailer. However, the assessee failed to furnish supporting documents such as purchase/sale documents or relevant vouchers in support of the claim. Accordingly, the Assessing Officer imposed a penalty of Rs.15,00,000/- under section 271D of the Act.

3.

Being aggrieved, the assessee preferred an appeal before the CIT(A), who sustained the penalty imposed under section 271D of the Act.

4.

Still aggrieved by the aforesaid order, the assessee is in appeal before us.

5.

The learned AR submitted that vide assessment order dated 07.12.2019, the Assessing Officer accepted the return of income under section 143(3) of the Act without making any addition in the hands of the assessee. It was contended that where no addition has been made in the

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ITA No. 607/RJT/2026 Sh. Agrawal Logistics quantum proceedings, penalty proceedings under section 271D cannot be initiated in the absence of any satisfaction recorded by the Assessing Officer in the assessment order. The Ld. AR drew our attention to the assessment order and submitted that there is no mention whatsoever regarding initiation of penalty proceedings under section 271D of the Act in the body of the Assessment order. Reliance was placed on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills, Ambala City, 64 taxman.com 75 (SC) wherein it was held that in the absence of satisfaction recorded by the Assessing Officer regarding initiation of penalty proceedings, such penalty proceedings cannot survive.

6.

On the other hand, the Ld. DR supported the orders of the lower authorities but could not controvert the factual position placed on record by the assessee.

7.

We have heard the rival submissions and perused the material available on record. We find that in the present case, assessment under section 143(3) of the Act was completed accepting the returned income and no addition was made by the Assessing Officer. Further, from the assessment order dated 07.12.2019, it is evident that there is no satisfaction recorded regarding initiation of penalty proceedings under section 271D of the Act.

8.

We, respectfully following the decision of the Hon’ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills, Ambala City, (Supra) we hold that without satisfaction recorded regarding initiation of penalty proceedings under section 271D of the Act in the body of the Assessment

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ITA No. 607/RJT/2026 Sh. Agrawal Logistics order the penalty proceedings under section 271D of the Act cannot survive.

9.

Accordingly, we direct the Assessing Officer to delete the penalty imposed under section 271D of the Act.

10.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 25th day of June, 2026.

Sd/- Sd/ [ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member राजकोट/Rajkot िदनांक/ Date: 25/06/2026 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 //True Copy// Sr. Private Secretary ITAT, Rajkot

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