NATESAN SHANMUGAM,ERODE vs. ITO, WARD-1(1), ERODE

This appeal filed by the assessee is directed against the order dated 12.09.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18.

The assessee raised 5 grounds of appeal, amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the penalty imposed under section 271D of the Income Tax Act, 1961 [“Act” in short] in the facts and circumstances of the case.

The ld. AR Shri S. Sridhar, Advocate argued that the penalty under section 271D of the Act was initiated without recording any satisfaction by the Assessing Officer in the assessment order. He referred to the assessment order dated 10.12.2019 and submits that nowhere in the assessment order, the Assessing Officer found violation of section 269SS of the Act attracting penalty under section 271D of the Act. He drew our attention to the decision of the Hon’ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills Ambala City [2015] 379 ITR 521 (SC) and argued that the Hon’ble Supreme Court held that no penalty could be levied without recording any satisfaction. He prayed to allow the ground of appeal and cancel the penalty imposed therein.

The ld. DR Dr. M.D. Vijay Kumar, JCIT submits that the Assessing Officer made addition under section 50C of the Act being the difference between the total consideration and the stamp duty value to an extent of ₹.39,950/-. The assessee accepted the same and no appeal preferred against the said addition. The ld. DR vehemently argued that the penalty under section 271D of the Act is leviable when the assessee accepted the addition made in the assessment order attracts the provisions of section 271D of the Act.

Having heard both the parties and perused the record, we note that the Assessing Officer made addition under section 50C of the Act in the assessment order, but, however, no satisfaction recorded regarding initiation of proceedings under section 271D of the Act is mentioned in the assessment order. When there is no satisfaction, the penalty under section 271D of the Act could be levied or not is the question before us. On careful reading of the decision of the Hon’ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills Ambala City (supra), the Hon’ble Supreme Court was pleased to uphold the decision of the Hon’ble High Court concerning the proposition of law laid down in so far as whether the penalty under section 271D of the Act is leviable or not without there being any satisfaction. We find that the Hon’ble Supreme Court was pleased to dismiss the Revenue’s appeal by holding that no penalty is leviable without any satisfaction in the assessment order. Admittedly, in the present case, there was no satisfaction recorded in the assessment order. In view of the same, we find force in the arguments of the ld. AR, that no penalty is leviable. Thus, the order of the ld. CIT(A) in confirming the penalty under section 271D of the Act is set aside and the penalty levied under section 271D of the Act is cancelled. Thus, the grounds raised by the assessee are allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 07th March, 2025 at Chennai.