NIRMAL KUMAR BARDIYA, SON OF SAGARMAL KALYANMAL JAIN vs. ASSISTANT COMMISSIONER OF INCOME TAX

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CW/17584/2024HC RajasthanRJHC02095690202430 January 2025Bench: AVNEESH JHINGAN,SHUBHA MEHTA10 pages
AI SummaryAllowed

What did the High Court hold?

The Tribunal held that the issue is squarely covered by the Supreme Court's decision in Commissioner of Income Tax Vs. Jai Laxmi Rice Mills (supra). The Court noted that in the present case, the reassessment order was passed on 12.03.2024, and no satisfaction was recorded for initiating penalty proceedings under Section 271E. The subsequent reference by the DCIT to the ACIT and the satisfaction recorded by the ACIT on 24.09.2024 were deemed insufficient to validate the penalty proceedings. The Tribunal reasoned that the satisfaction must be recorded by the concerned Assessing Officer during the reassessment proceedings. Since no such satisfaction was recorded, the penalty proceedings were quashed. The Tribunal explicitly stated that the DCIT had only recorded satisfaction for proceedings under Section 271(1)(c) and not for Section 271D/271E. The ratio decidendi is that penalty under Section 271D/271E requires prior satisfaction of the AO recorded in the assessment/reassessment proceedings.

What were the facts?

The petitioners, including Sunil Agrawal, Vijay Kumar Chordia, Hari Mohan Dangayach, Rakesh Kumar Vijay, Radha Mohan Maheshwari, Nirmal Kumar Bardiya, Dwarka Prasad Khandelwal, Sanjeev Kumar Jain, and Ravi Shankar Jhanwar, filed writ petitions challenging notices issued under Section 271E of the Income Tax Act, 1961, for Assessment Year 2012-2013. In Sunil Agrawal's case, a search led to reassessment proceedings under Section 148, resulting in additions of Rs. 9,90,000/- and Rs. 23,785/-. Subsequently, a notice for penalty under Section 271E was issued. The petitioner contended that no satisfaction was recorded in the reassessment order for initiating penalty proceedings. The revenue argued that a satisfaction was recorded later by the Additional Commissioner of Income Tax.

What were the issues?

1. Whether penalty under Section 271E of the Income Tax Act, 1961, can be imposed in the absence of satisfaction recorded by the Assessing Officer in the reassessment order for initiating such penalty proceedings? Assessee's contention: The petitioners argued that the issue is covered by the Supreme Court's decision in Commissioner of Income Tax Vs. Jai Laxmi Rice Mills, which held that penalty proceedings under Section 271D (analogous to 271E) cannot be initiated without the Assessing Officer recording satisfaction for the same in the assessment or reassessment order. They emphasized that the reassessment order in their case did not record any such satisfaction. Revenue's contention: The revenue contended that there is no requirement for the Assessing Officer to record satisfaction under Section 271E. They relied on a communication dated 01.08.2024 from the Deputy Commissioner of Income Tax to the Additional Commissioner of Income Tax for imposition of penalty, and a satisfaction recorded by the ACIT on 24.09.2024. However, the revenue's counsel could not distinguish the precedent cited by the petitioners.

Which sections of the Income-tax Act were involved?

Section 271E,Section 148,Section 69A,Section 69C,Section 271D,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

[2025:RJ-JP:4235-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 1102/2025 Sunil Agrawal Son Of Ghanshyam Agarwal, Aged About 64 Years, Having His Address At K-6B Adarsh Nagar Jaipur 302004. ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle - 4, Jaipur Having Its Address At Room No 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents Connected With D.B. Civil Writ Petition No. 1129/2025 Sunil Agrawal S/o Ghanshyam Agarwal, Aged About 64 Years, Having His Address At K-6B, Adarsh Nagar, Jaipur 302004 ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 1156/2025 Sunil Agrawal S/o Ghanshyam Agarwal, Aged About 64 Years, Having His Address At K-6B, Adarsh Nagar, Jaipur 302004 ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents

[2025:RJ-JP:4235-DB] (2 of 10) [CW-1102/2025] D.B. Civil Writ Petition No. 1264/2025 Sunil Agrawal S/o Ghanshyam Agarwal, Aged About 64 Years, Having His Address At K-6B, Adarsh Nagar, Jaipur 302004 ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central, Jodhpur, Aayakar Bhawan, Paota, C- Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 15159/2024 Vijay Kumar Chordia Son Of Raj Mal Chordia, Aged About 60 Years, Having His Address At 1631, Chordia Bhawan, Sonthli Waalon Ka Rasta, Choura Rasta, Jaipur ----Petitioner Versus 1. Deputy Commissioner Of Income Tax, Central Circle - 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents Connected With D.B. Civil Writ Petition No. 12783/2024 Hari Mohan Dangayach Son Of Shri Ram Bilas Dangayach, Aged About 75 Years, Resident Of 2, Govind Marg, Jaipur 302004. ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur.

[2025:RJ-JP:4235-DB] (3 of 10) [CW-1102/2025] 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 12784/2024 Rakesh Kumar Vijay S/o Shri Nathu Lal Vijay, Aged About 71 Years, Resident Of C-66, Saket Colony, Opp. Police Station, Adarsh Nagar, Jaipur. ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle -4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 13019/2024 Hari Mohan Dangayach Son Of Shri Ram Bilas Dangayach, Aged About 75 Years, Resident Of 2, Govind Marg, Jaipur 302004 ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle -4, Jaipur, Having Its Address At Room No.416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 13053/2024 Rakesh Kumar Vijay, Son Of Shri Nathu Lal Vijay, Aged About 71 Years, Resident Of C-66, Saket Colony, Opp. Police Station, Adarsh Nagar, Jaipur ----Petitioner Versus 1. Deputy Commissioner Of Income Tax, Central Circle - 4,

[2025:RJ-JP:4235-DB] (4 of 10) [CW-1102/2025] Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents D.B. Civil Writ Petition No. 16619/2024 Radha Mohan Maheshwari S/o Badri Narain Totla, Aged About 55 Years, Having His Address At M-54 Mahesh Colony Tonk Phatak Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416 4Th Floor Jeevan Nidhi Lic Building Ambedkar Circle Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 16628/2024 Radha Mohan Maheshwari Son Of Badri Narain Totla, Aged About 55 Years, Having His Address At M-54, Mahesh Colony, Tonk Phatak, Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle - 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents D.B. Civil Writ Petition No. 16630/2024 Radha Mohan Maheshwari Son Of Badri Narain Totla, Aged About 55 Years, Having His Address At M-54, Mahesh Colony, Tonk Phatak, Jaipur. ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle-4,

[2025:RJ-JP:4235-DB] (5 of 10) [CW-1102/2025] Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C- Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 16631/2024 Radha Mohan Maheshwari S/o Badri Narain Totla, Aged About 55 Years, Having His Address At M-54, Mahesh Colony, Tonk Phatak, Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle- 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 17471/2024 Nirmal Kumar Bardiya, Son Of Sagarmal Kalyanmal Jain, Aged About 63 Years, Having His Address At 24, Bardiya Colony, Museum Road, Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle -4 Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents D.B. Civil Writ Petition No. 17584/2024 Nirmal Kumar Bardiya, Son Of Sagarmal Kalyanmal Jain, Aged About 63 Years, Having His Address At 24, Bardiya Colony, Museum Road, Jaipur ----Petitioner Versus

[2025:RJ-JP:4235-DB] (6 of 10) [CW-1102/2025] 1. Assistant Commissioner Of Income Tax, Central Circle -4 Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents D.B. Civil Writ Petition No. 17600/2024 Nirmal Kumar Bardiya, Son Of Sagarmal Kalyanmal Jain, Aged About 63 Years, having his Address At 24, Bardiya Colony, Museum Road, Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle -4 Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur ----Respondents D.B. Civil Writ Petition No. 18301/2024 Dwarka Prasad Khandelwal Son Of Shri Jagdish Prasad Khandelwal, Aged About 53 Years, Resident Of S-5, Mahaveer Nagar, Tonk Road, Jaipur. ----Petitioner Versus 1. Deputy Commissioner Of Income Tax, Central Circle-4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 18942/2024 Sanjeev Kumar Jain S/o Shri Chand Mal Jain, Aged About 62 Years, R/o S-1A, Mahaveer Nagar, Tonk Road, Jaipur. ----Petitioner Versus 1. Deputy Commissioner Of Income Tax, Central Circle -4,

[2025:RJ-JP:4235-DB] (7 of 10) [CW-1102/2025] Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 18985/2024 Sanjeev Kumar Jain Son Of Shri Chand Mal Jain, Aged About 62 Years, Resident Of 5-1A, Mahaveer Nagar, Tonk Road, Jaipur. ----Petitioner Versus 1. Deputy Commissioner Of Income Tax, Central Circle-4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur. 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents D.B. Civil Writ Petition No. 422/2025 Ravi Shankar Jhanwar Son Of Shri Ghasi Lal Jhanwar, Aged About 63 Years, Resident Of 8, Barkat Nagar, Tonk Road, Jaipur 302018 ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle 4, Jaipur Having Its Address At Room No. 416, 4Th Floor, Jeevan Nidhi, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jodhpur, Aayakar Bhawan, Paota, C-Road, Jodhpur. ----Respondents For Petitioner(s) : Mr.Siddharth Ranka, Adv. with Mr.Rohan Chatter, Adv. Ms.Satwika Jha, Adv., Ms.Apeksha Bapna, Adv., Mr.Muzaffar Iqbal, Adv. & Mr.Saurabh Harsh, Adv. For Respondent(s) : Mr.Siddharth Bapna, Adv., Mr.Sarvesh Jain, Adv., Mr.Meyhul Mittal, Adv. & Mr.Rahul Kumar, Adv.

[2025:RJ-JP:4235-DB] (8 of 10) [CW-1102/2025] HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MRS. JUSTICE SHUBHA MEHTA Order 30/01/2025 AVNEESH JHINGAN, J (ORAL):- 1. These writ petitions are being decided by this order as the facts and issues involved are same. Though in some of the cases penalty under Section 271D and in others under Section 271E of the Income Tax Act, 1961 (hereafter ‘the Act of 1961’) was imposed. The language of Section 271D and Section 271E are analogous. For the sake of convenience, the facts are being taken from D.B. Civil Writ Petition No.1102/2025. 2. This petition is filed seeking quashing of notices dated 01.10.2024, 03.01.2025, 13.01.2025 issued under Section 271E of the Act of 1961, for Assessment Year 2012-2013. 3. The brief facts are that search was conducted on the premises of the petitioner. The proceedings initiated under Section 148 of the Act of 1961 culminated in re-assessment order dated 12.03.2024 resulting in additions of Rs.9,90,000/- and Rs.23,785/- under Sections 69A and 69C of the Act of 1961 respectively. The order was passed after approval from the Additional Commissioner of the Income Tax (hereinafter ‘ACIT’). On 01.10.2024 notice was issued to the petitioner for imposition of penalty under Section 271E of the Act of 1961. In the response dated 16.10.2024 the petitioner relied upon the decision of the Supreme Court in Commissioner of Income Tax Vs. Jai Laxmi Rice Mills reported in [(2015) 379 ITR 521 (SC)] to contend that there was no satisfaction recorded in the reassessment order

[2025:RJ-JP:4235-DB] (9 of 10) [CW-1102/2025] for initiating the penalty proceedings under section 271E of the Act of 1961. The objections filed were rejected and a notice dated 03.01.2025 was issued. Hence, the present writ petition. 4. Learned counsel for the petitioners submitted that the issue involved that penalty under section 271D cannot be imposed if there was intent of AO to do so, is covered by decision of the Supreme Court in Jai Laxmi Rice Mills (supra). 5. Learned counsel for the respondent submitted that reply filed in the present writ petition is adopted in all the connected matters. Reliance is placed upon the annexures filed with the reply to the submit that the Deputy Commissioner of Income Tax (hereafter ‘DCIT’) vide communication dated 01.08.2024 referred the matter to the ACIT for imposition of penalty under section 271E and the ACIT on 24.09.2024 recorded the satisfaction. It is argued that there is no requirement under section 271E for assessing officer (hereinafter ‘AO’) to record the satisfaction. The counsel is not able to distinguish the citation relied upon by counsel for the petitioner. 6. The reassessment order was passed on 12.03.2024 and no satisfaction was recorded for initiating the penalty proceedings under Section 271E. 7. The reliance on the reference made by the DCIT to ACIT on 01.08.2024 shall not enhance case of the department as the reference was after the conclusion of reassessment proceedings by the DCIT.

[2025:RJ-JP:4235-DB] (10 of 10) [CW-1102/2025] 8. The satisfaction dated 24.09.2024 recorded by the ACIT cannot be equated with the satisfaction to be recorded in the reassessment proceedings by the concerned AO. 9. In Jai Laxmi Rice Mills (supra) the Supreme Court was dealing with the issue as to whether the penalty proceedings under section 271D are independent of the assessment proceedings. In that case, in the assessment order passed in pursuance to the remand no satisfaction was recorded for initiating the proceedings under section 271E. Though the AO stated for initiation of proceedings under section 271(1)(c). The penalty proceeding was quashed on the ground that in absence of satisfaction recorded by the AO the penalty can not be imposed. 11. In the case in hand the DCIT had only recorded satisfaction for proceedings under Section 271(1)(c) of the Act of 1961 and no satisfaction was recorded to initiate penalty proceedings under Section 271D. 12. The issue involved in the present writ petition is squarely covered by the decision of the Supreme Court in Jai Laxmi Rice Mills (supra). The notice issued under Section 271E and the proceedings in pursuance thereto are quashed. 13. The writ petitions are allowed. (SHUBHA MEHTA), J (AVNEESH JHINGAN), J Himanshu Soni/30-32, 85, 92-107 Reportable:- Yes

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